Mozambique - Education and Manpower Development Project

Document of The World Bank FOR OFFIM!AL USE ONLY C-i /qc'7- k3-'& Report No. 7084-MOZ STAFF APPRAISAL REPORT MOZAMBIQUE EDUCATION AND MANPOWER DEVELOPMENT PROJECT April 15, 1988 Southern Africa Department Population and Human Resources Division lbis document has a restricted distributiou and may be used by redp ents only in the performance of their official duties. Its colltents may not otherwse be dblocksed wtout Woxld Ban authodzidon.  CURRENCY EQUIVALENTS Currency Unit - Metical (pl. Meticais) At appraisal US$1 - 400 Meticais (October 1987) !f100 US$0.25 At negotiations US$l - 450 Meticais (March 1988) M100 US$0.22 MEASURES 1 Meter (m) . 3.28 Feet 1 Square Meter (m sq.) 10.76 Squate Feet ABBREVIATIONS AND ACRONYMS CIF - Cost, insurance and freight DECCM - Education and Culture Directore,te of the City of Maputo, School Construction Office EP1 - Grades 1 through 5 (primary education, level 1) EP2 - Grades 6 and 7 (primary education, level 2) ERP - Economic Recovery Program ICM - Commercial Institute of Maputo INDE - National Institute for Educational Development ISP - Instituto Superior Pedagogico (Institute for Advanced Pedagogical Training) MINED - Ministry of Education PROFORMA - Gabinete Tecnico de Gestao de Projectos Educacionais (Project Management Unit) SETEP - State Secretariat for Technical and Vocational Training UEM - University Eduardo Mondlane ZIP - Zona de Influencia Pedagogica IDA FISCAL YEAR July 1 - June 30 GOVERNMENT FISCAL YEAR SCHOOL YEAR UNIVERSITY YEAR January 1 - December 31 February - December August - June  FM OFFICmL USE ONLY MOZAMBIQUE STAFF APPRAISAL REPORT EDUCATION AND MANPOWER DEVELOPMENT PROJECT TABLE OF CONTENTS Pate No. CREDIT AND PROJECT SUMMARY ............... ......................... i I . INTRODUCTION ..................................... ...... ...o... 1 II . THE EDUCATION SECTOR .................................................. 2 A. Sectoral Context ..... ... .............................. 2 B. Key Sectoral Issues . .......... ....... ... *.. . ......... 5 1. Poor Quality and Low Efficiency of Primary Education.. 5 2. Insufficient Production of Middle-Level Technicians ... 6 3. Shortage of University-Level Graduates ............... 6 4. Need to Strengthen Educational Planning and Financial Management .................. .... ...... 7 5. High Unit Costs ....6 .................. ......... 7 C. The Goverrment's Strategy so* .... ..... . . ........... ....... 8 D. The Bank Group's Role .........................I... . 9 III. THE PROJECT . ........................................... 10 A. Project Objectives and Description ...... ................. 10 1. Improving the Quality and Efficiency of Primary Education in the City of Maputo ..........**......... 10 2. Strengthening the Quality and Relevance of Post-Secondary Training .......................... 12 3. Improving Education Sector Financial Management, Planning, and Project Implementation ... o.......... 14 B. Project Costs and Financing Plan ............... ......... 17 C. Project Admini;tration ... ......... .. . .. . .. .. . .. .. . .. . .. . 20 1. Preparation, Management, and Implementation .......... 20 2. Procurement Plan ....... . ......................... .... . 23 3. Disbursement .. ............... ....................... 24 4. Special Account . ..................................... 24 5. Accounting, Auditing, and Reporting .................. 25 IV. BENEFITS AND RISKS ........... ............................... 25 V. AGREEMENTS REACHED AND RECOMMENDATIONS ...................... 26 This report is based on the findings of the appraisal mission that visited Mozambique in October 1987. Mission members were Ms. Himelda Martinez (educator, task manager), Ms. Teresa Genta-Fons (counsel), Mr. Ernesto Schiefelbein (economist), and Mr. Luis Secco (architect, UNESCO). The report was drafted by Janet Leno (consultant). Ms. Shelly Thorpe assisted in preparation of cost tables and was responsible for report processing. A contribution on the Faculty of Engineering was prepared by Dean Carlos Quadros. IThis document has a restricted distribution and may be used by rowipints- only in the performancem |of their offcial duties. Its contents may not otherwise be disclosed without World Bankc authorizgtio J  TABLE OF CONTENTS (Cont'd) ANNEXES 1-1 Documents Contained in the Project Files 1-2 Basic Data Sheet 1-3 Comparative Education Indicators 1-4 Ministry of Education - Organigram 2-1 Basic Enrollment Data 2-2 Evolution of Chief Indicators of the Education System (1975-1984) 2-3 Structure of the Education System - Comparison of Old and New Structures 2-4 State Expenditure on Educations Mozambique and Other Countries 2-5 Guidelines for the Development of the Faculty of Engineering 2-6 Education Unit Costs 2-7 National Education Operational Budget (1984) 3-1 Deficit of Classrooms in the City of Maputo Area 3-2 Neighborhoods in the City of Maputo where Schools will be Constructed or Repaired 3-3 School Building Construction Cos;.s 3-4 Training Plan for School Principals and Managers 3-5 School of Engineering Equipment List 3-6 List of Accommodation Units for Electronic Laboratories and Workshops 3-7 Terms of Reference for Studies on Mother-Tongue Languages, Financing and Management 3-8 Project Monitoring and Evaluation Indicators 3-9 PROFORMA List of Staff and Salaries 3-10 PROFORMA Costs of Furniture, Equipment, Materials, and Vehicles 3-11 City of Maputo School Construction Office: Costs of Equipment, Vehicles, Salaries, and Operational Costs 3-12 Detailed Project Costs 3-13 PROFORMA within the Government Structure 3-14 PROFORMA Structure 3-15 List of Mer;)ers of the Project Coordinating Committee 3-16 Terms of Reference for Experts 3-17 Experts and U.N. Volunteers 3-18 Fellowships and Study Trips 3-19 Project Implementation Schedule MaB IBRD No. 20704  MOZAMBIQUE EDUCATION AND MANPOWER DEVELOPMENT PROJECT CREDIT AND PROJECT SUMMARY Borrowers The People's Republic of Mozambique Beneficiary: Ministry of Education IDA Credit Amount: SDR11.7 million (US$15.9 million equivalent) Terms: Standard with 40 years maturity Proiect Description The project has been designed within the context of Mozambique's Economic Rehabilitation Program. It supports activities that are feasible under present economic and internal security constraints and that will have long- range impact on the education sector. The project's objectives are threefold. First, it will contribute to increasing literacy and numeracy among primary school-age children. Second, it will strengthen the education and training system in order to fill critical manpower gaps. Third, it will asrengthen educational financial planning and project implementation capacity. Specifically, it will: 1. Improve the quality and elficiency of primary education in the City of Maputo through: (a) renovating and enlarginS primary school facilities to reduce overcrowding and improve the learning environment for pupils currently being taught in make-shift accommodations; training for school managers and principals; (b) training for school managers and principals; and (c) providing pupils with essential school supplies. 2. Strengthen the quality and relevance of training for: (a) accountants, office managers and customs officials at the Commercial Institute of Maputo by developing commercial curricula and examinations and reducing the current shortage of textbooks and reference materials, and for (b) engineers and economists at the University Eduardo Mondlane by providing instructional materials and equipment. At the Faculty of Economics, assistance will be provided to reorient and update the curriculum and to support fellowships. 3. _umqrove education sector financial management and planning by supporting:  - il - (a) training in financial planning and management for about 50 high-level officials from HINED nd provincial educational directorate.; (b) use of a manpower planning model to forecast and analyze labor and manpower requirements and to illustrate future education and manpower possibilities; (c) the preparation of studies to support development of a long- term strategy including (i) the financing of the education system; (ii) mother-tongue languages; (iii) education sector management; and (iv) the preparation of future investment projects; (d) establishing and operating a Project Management Unit in MINED (PROFORMA) and by strengthening the School Construction Office in the City of Maputo. Recurrent cost implications will be limited to school maintenance. There will be no increase in the number of classes or teachers at the primary level, and no additional personnel will be required at other institutions. Project Benefits and Risks: The project will strengthen Mozambique's educational system to make it more responsive to the country's urgent needs for skilled manpower and effective human resource development. Higher quality primary education will help pupils and the nation develop a stronger foundation for sustainable long-term growth. Upgruded training in commercial fields, engineering, and economics will help alleviate shortages and enhance quality in key areas essential for economic planning, industrial development, and construction activities and will compensate for the loss of expatriate university-level professionals. Development of a long-term education sector strategy and improvement of MINED's financial management and planning capability will permit more efficient use of education sector resources. Finally, the project will help to support ongoing efforts to build education project management skills within MINED. Rists are twofold: First, Mozambique's experience in managing education projects is still quite limited, there are few trained managers in the sector and there is very little experience in international bidding processes, project monitoring, in keeping accounts or performing audits. This risk is being addressed through the creation of PROFORMA, the Project Management Unit within MINED, which wili be supported through intensive staff training and the provision of technical assistance. Second, the ongoing security situation presents special difficulties. This risk has been talen into account by targeting project activities predominantly in Maputo, which is a secure area. In light of these design features, the risks would be minimized and the proposed project would constitute a suitablo basis for initial investment in educational sector improvement in Mozambique. AF6PH April 1988  - iii - Summarv of Proiect Cost Egttmates (in USS'000) % Total Base Local Foreign Total Cost 1. Improving Primary Education 2,556.9 5,559.4 8,116.3 55 2. Strengthening Post-Secondary Education: 377.2 3,239.3 3,616.5 24 Manpower Training Improvements - Commercial Institute of Maputo 83.3 763.6 846.9 6 Faculty of Economics 57,8 725.6 783.4 5 Faculty of Engineering 236.1 1,750.1 1,986.3 13 3. Sector Plazning and Management 719.3 2,307.7 3,027.0 21 Total base costs 3,653.4 11,106.4 14,759.8 100 Physical contingencies 406.5 1,331.3 1,737.8 12 Price contingencies 334.9 1,020.8 1,355.7 9 Total Project Costs 4,394.8 13,458.5 17,853.3 121 FINANCING PLAN: (in USS '000) IDA 2,396.8 13,458.5 15,855.3 89 Government 1.998 0 0.0 1.998.0 11 Total 4,394.8 13,458.5 17,853.3 100 ESTIMATED IDA DISBURSEMENTS: IDA Fiscal Year 1989 1990 1991 1992 1993 1994 Amount Disbursed 1.6 1.6 3.0 3.5 3.5 2.7 Cumulative Amount 1.6 3.2 6.2 9.7 13.2 15.9 Percentage of Total 10 20 39 61 83 100 Economic Rate of Return: Not applic-able  MOZAMBIQUE EDUCATION AND MANPOWER DEVELOPMENT PROJECT I. INTRODUCTION 1.1 The Government has requested IDA assistance in financing a project to aid development of the education sector by improving the quality of primary education, upgrading the training of accountants, office managers, and university-level engineers and economists, and strengthening sector planning and management. Total project costs are estimated at US$17.9 million equivalent, with a foreign exchange component of $13.5 million. The Government would contribute US$2.0 million, and the remaining US$15.9 million would be financed by an IDA Credit. 1.2 Between 1980 and 1986 Mozambique suffered a severe economic crisis, compounded by the continuing burden of unrelenting, widespread warfare. GDP dropped by 35Z in real terms, and state expenditure plummeted by about 60%. During 1987 the Government initiated the Economic Rehabilitation Program (ERP) designed to begin the process of stabilization and structural reform. Its objectives are to: (a) increase production and improve consumption and income for the population, especially in rural areas; (b) reduce crucial domestic financial imbalances and strengthen the country's external payments position; and (c) establish the conditions for more rapid and more efficient economic growth in the medium and longer term. So far the program has been successful and the economic decline appears to have been reversed. After devaluing the currency by about 1000%, reducing government expenditure, and increasing privatization of production and distribution systems, the Government can point to an increase in agricultural production, construction, and service activities. A growth rate of between 2X and 42 ia projected for 1988. 1.3 The education project will support the activities of the ERP and assist the Government in upgrading its human resources and in reducing manpower shortages. In the context of multiple requirements for sector improvement, and in line with the need to streamline educational expenditures the project has been designed to respond to sectoral priorities that require only limited increases in recurrent costs. As of 1990 increases will be needed for maintenance of primary schools, but no institutions will be expanded, and there will be minimal needs for additional personnel. 1.4 The project also takes into account the constraints imposed by the existing security problems. While the project's activities concentrate on priorities considered to be basic for long-term educational development, they represent selective choices that are feasible under present circumstances. New construction will be undertaken only in the City of Maputo, which is a secure area. 1.5 Documents contained in the project file are listed in Annex 1-1. The basic data sheet is in Annex 1-2. Comparativo education indicators are in Annex 1-3. An organigram showing the structure of the Ministry of Education is found in Annex 1-4.  - 2 - II. THE EDUCATION SECTOR A. Sectoral Context 2.1 Background. Public education in Mozambique prior to Indepondence had been designed principally for the advancement of white Portuguese settlers, while a separate, segregated system was administered by the missions to serve the African population. Only the children of those few Africans who had managed to struggle up to lassimilado" (assimilated) status had access to the higher quality public education system. Host African students were prevented from continuing their studies due to the inaccessibility of schools to many villages, the incompleteness of the primary cycle in the mission schools, and the legal age limitations for entrance into secondary schools. In 1975 it is estimated that only about 302 oZ primary school-age children were enrolled in school, most of whom were either white or Asian. In the same year less than 102 of the adult population was literate. 2.2 Following Independence in 1975 the Government nationalized education, suspended all colonial textbooks and curricula, and asserted the right to basic education for all Mozambicans in the new national constitution. Since then major efforts have been made to increase access to education, despite the departure of the majority of.-axpatriate teachers, an ongoing war, and severe fiscal constraints. A major accomplishment has been the production and distribution of textbooks for all primary school children. With assistance from SIDA and NORAD the Government has produced and provided textbooks for one grade each year, beginning in 1983 with grade one. In 1987, accordingly, textbooks were provided for pupils in grades one to five. 2.3 Another major accomplishment has been the increase in enrollments. Between 1975 and 1986 primary enrollments more than tripled, growing from 350,000 to 1.2 million, and secondary enrollments more than quintupled, increasing from 26,000 to 136,000. During this same period over 1.5 million adults were enrolled at all levels of the education system in specially- designed courses, producing an increase in the literacy rate to an estimated 382. The effects of the high priority given to education are apparent in the 1980 census data, which show literacy rates for the 15-24 year age cohert reaching 40-50S, as opposed to less than 82 for the over-60 population. Annex 2-1 shows enrollment data, and Annex 2-2 displays chief indicators of the educational system between 1975 and 1984. 2.4 Although this progress has been impressive, the education sector continues to be plagued by serious problems. Net enrollment is only 472 (i.e., only 472 of schobl-age children are attending school), and has slowed in recent years. The system continues to be very wide at the bottom, with about 500,000 children in first grade, and narrow at the top, with only 1,000 students in the 10th grade and about 300 entering university each year. Moreover, at the primary level enrollment expansion has been achieved at the expense of quality and efficiency. In particular, learning is hindered by large class size (60 students per classroom on average), the short number of classroom hours caused by the imposition of a triple-shift system, the use of Portuguese as the only language of instruction (about 1S of Mozambican children learn Portuguese in the home), as well as poor  nutritiob. At the secondary level, while enrollments have grown dramaticll17, the gross enrollment ratio remains at only 61, cowmared with an average of 202 for all sub-Saharan A'rican countries. Moreover, only modest gains have been achieved in technical education, and university enrollments tave not yet recovered to pre-Independence levels. As a result there is an acute shortage of professionals, technicians, and skilled and semi-skilled workers. Over 601 of the oopulation is illiterate, 221 have leos than two years of schooling, 61 have tour years of schooling, and the more highly educated few -- those with secondary level education -- constitute less than 2%. These problems ar- compounded by weak managerial structures at the provincial and local levels, a cumbersome central administrative svatem, and serious financial constraints. All of these issues combine to hinder effective implementation of national plans and policies. 2.5 Structure. In March 1983 the Government issued a comprehensive education law that established a new National Education System (NES). It %mbodied major structural changes by extending the primary cycle from four .o seven years (comprised of grade levels 1-5 and 6-7) and reducing the ;econdary cycle by two years. Thus the combined primary and secondary cycle under the new system has been increased from 11 to 12 years. The new system, like the old, includes vocational education at technical secondary schools and provides adult education at primary and secondary levels. University education is provided at the University Eduardo Mondlane in courses that range in duration between three and five years. Annex 2-3 provides a comparison of the old and new structures. The law also requires that all seven year-olds register for school, requires that all who start primary school be given an opportunity to complete at least five years, permits reentry of vocational and technical education students into the general education stream, and increases the leagth of teacher training courses. If fully implemented, these provisions would require vastly expanded facilities and large numbers of better-trained teachers. 2.6 Although official comitment to the reform is strong, serious financial constraints have hindered implementation. Recently, in the context of the Economic Rehabilitation Program the Government has begun to take a new look at the educational system in order to develop a better understanding of educational system financial requirements as a foundation for bolstering the efficiency and management of the system. In addition to keeping schools open whenever possible and providing essential inputs (e.g., teachers and books), the Government is initiating mid- and long-term planning efforts. It is expected that this will eventually lead to revision of existing policies, in accordance with pragmatic considerations such as financing possibilities and capacity to implement change in rural areas. 2.7 Education Finance. The bulk of education expenditure in Mozambique is covered by the budget of the Ministry of Education. Between 1980 and 1986 average recurrent 4xpenditures of MINED accounted for approximately 17Z of the country's recurrent budget and about 21 of its investment budget. Average public expenditure during this period represented 4% of GDP. These ratios are below the average for sub-Saharan Africa. Mozambique spends 11% of its resources on education, while the average for all sub-Saharan African countries is 161. Nevertheless, in light of the fact that the security situation is draining increasing shares of the country's recurrent budget to defense and security (44X in 1984), these ratios reflect the Govornment's  -4- commitment to providing education. Annex 2-4 compares public educational expenditure in Mozambique with that in other countries in the region. 2.8 The education system draws on several other sources of finance. Approximately 6X of educational expenditures are obtained from registration and boarding fees charged to general and technical secondary students, and which are collected in the form of fiscal stamps. Ptimary students are exempt from these fees. Mozambican university students pay only a modest registration fee, but foreign students are charged a substantially higher fee. Students' school supplies, including books, are financed by the parents. 2 9 Some limited extra-budgetary resources for education come from c-ntributions made by enterprises directly to technical schools and the University, and from services provided by some university departments (such as engineering, computer science or veterinary medicine). More important budgetary contributions are provided through production programs carried out by technical establishments. Other in-kind contributions to education include the literacy and technical training programs provided within enterprises, and some limited school construction schemes carried out by rural communities. 2.10 With respect to external assistance to the education sector, it is estimated that in 1983 bilateral and multilateral donors provided US$6.2 million, which represented 9.42 of total foreign aid. This amount increased in 1984 to US$12.4 million, which included US$5 million from the World Food Program in food aid to primary schools in war-torn areas. Bilateral aid for the provision of instructional materials comes from Norway and Canada (in the form of paper); Finland (textbook printing); Holland (equipment for hostels, geometry instruments, and basic school materials); Sweden (publishing and printing); Italy and GDR (laboratories); and the Federal Republic of Germany (library books). A number of bilateral donors -- including Sweden, Denmark, the Soviet Union, Switzerland, the Federal Republic of Germany, and Holland -- contribute to infrastructure development such as the construction and equipping of technical schools, teacher training institutes, primary schools, and adult education training centers. Donors also contribute to the training of personnel, either through technical assistance (GDR, Sweden, UK, USSR), scholarships (GDR, UK, USA, USSR), or provision of schools abroad (Cuba, GDR). In addition, Italy, Sweden, UNICEF and the World Lutheran Federation support experimental projects and personnel development at various levels of the system, and Holland and the USSR provide personnel support at the University. A number of non-governmental organizations are also involved in educational projects in Mozambique. 2.11 Special attention is being given by donors to training of teachers. The AfDB is preparing a US$54 million project (base cost) to finance in- service training of primary school teachers. In addition, UNDP has a long- term commitment to MINED staff training. Also, SETEP is receiving assistance from Sweden and Denmark to train technical education teachers.  5 B. Key Sectoral Issues 2.12 Despite strong official comitment to providing *ducation, sector development has been hindered by the poor quality of the system inherited at Independence, economic decline, and social upheaval caused by the armed insurrection. In the context of vast needs for assistance to the education and training sector, the demands for economic development point to five issues that require priority attention. 1. Poor Quality and Low Efficiency of Primary Education 2.13 Improvement of primary education is given high priority at the national level since it is seen as a basic right for all Mozambicans as well as the foundation for all manpower training. At present, however, the quality and efficiency of education provided at the first level is very low. It is clear that children are not learning very much: the average student will attain 2.8 years of education, and in 1985 it took 14.6 years to produce one graduate. In addition, there is little time for students to learn. Only 53Z of the country's primary schools offer a complete four-year cycle, which is an extremely short time in which to secure basic numeracy and literacy skills under any circumstances. This situation is compounded by the fact that, in response to rapid enrollment expansion, primary edtwation is being provided on a double-, and often triple-, shift system, which means that the number of hours of instruction and contact with teachers is shortened. 2.14 Moreover, rapid urbanization combined with enrollment expansion at the primary level have far outpaced the construction of classrooms, traini-g of teachers, and provision of essential instructional materials. As a result of this expansion -- and the financial strain that it implies -- many schools hold classes in the open air, only 8Z of teachers have had more than six years of schooling and only half have received pedagogical training, and notebooks, paper and pencils are in short supply. Taken together, these circumstances seriously threaten the quality of learning at the primary level, and ultimately the production of a literate and numerate population necessary for long-term development progress. 2.15 Low quality and efficiency are also likely to be exacerbated by the use of Portuguese as the language of instruction beginning in first grade, since the vast majority of Mozambicans are not Portuguese speakers. In 1980 Portuguese was the mother-tongue of only one percent of the population, was spoken by 242, and was not spoken by 752. Although no language studies have been conducted in Mozambique, research in other countries suggests that without a strong foundation in a first language, it is more difficult for children to acquire verbal fluency and literacy in a second language -- in this case Portuguese. It is also known that academic skills learned in school transfer readily from one l&nguage to the other, so that skills taught in the first language in transitional programs do not have to be re- learned in the second language. Thus, if instruction is ultimately to be given in Portuguese, the most effective policy educationally would be to initiate instruction using :he mother language as medium, followed by a gradual transition to the national language as medium.  -6- 2. Insufficient Production of Middle-Level Technicians 2.16 The system of post-primary technicallvocational training (which includes commercial, agricultural, and industrial streams) that existed at Independence was extremely weak. It consisted of 28 schools with very few teachers and little in the way of instructional materials, equipment or proper installations. In recent years progress has been achieved regarding curriculum development, staffing, and equipping of these schools, and enrollments have increased from approximately 7,000 in 1973 to over 10,000 today. Industrial training is being assisted primarily by the Soviet Union, Sweden, and Denmrk. 2.17 Nonetheless, severe shortages persist in commercial skill areas such as accountancy, secretarial, customs, and computer programming. These shortages stem from a range of problems in the technical/vocational education system, including the low level of qualification of entrants; shortages of technical subject teachers; insufficient supply of books, tools, raw materials and spare parts; and the sub-standard condition of many buildings. In addition, curricula are outdated: for example, accountancy training relies on textbooks produced in the 1960s, and much of the secretarial training does not include word processing. Moreover, there is a need to strengthen the certification procedure for the accountancy profession in Mosambique, although the Minister of Finance has recently established a National Board of Accountancy to be responsible for the licensing of accountants. Failure to increase the number of well-trained graduates in accountancy and other commercial fields seriously limits development of the country's administrative and management activities. 3. Shortage of University-Level Graduates 2.18 Since Independence economic development has also been hampered by the severe shortage of university-level professionals. Although detailed manpower studies have not been carri i out, there is particular concern in Government over the lack of trained engineers and economists. Prior to Independence positions in these critical areas had been filled entirely by Portuguese settlers; expatriates ran the nation's commercial and industrial sectors. While there were 700 engineers working in Mozambique before Independence, currently there are 450, only one-third of whom are nationals. Similarly, there are fewer than 100 econemistP in the country at present. 2.19 At the University's Faculty of Engineering a major problem has been tie low level of qualification of entering students. Efforts have been made to maintain high academic standards through use of selective admissions standards and provision of remedial courses to entering students whose secondary education is weak. Efforts are also being made to upgrade the engineering faculty; four professors have recently returned from post- graduate studies abroad while eight others are continuing their post- graduate training at the Master of Science and Ph.D. level. Nonetheless, the Faculty is hindered in its attempt to provide high quality engineering education owing to a severe lack of necessary laboratory facilities and essential equipment. This problem is particularly acute in light of the fact that many of the Mozambican students who enter the engineering program come from rural areas or small towns where their contact with a technological environment is very limited. Guidelines for the development of the Faculty of Engineering are included in Annex 2-5.  2.20 At the University's Faculty of Economics both curriculum and staff development require improvement. In 1977, in response to pressure to increase the number of graduates, the Faculty shortened its five-year program, which led to the 'Licenciatura' degree, to a thr-e-year cycle leading to a "Bachalirato" degree. This shorted program, howvver, proved to be inadequate and has recently been restored to five years. While the longer program is considered appropriate, the curriculum does not yet meet elther academic standards or labor market needs and is currently being revised. There is a need to revise the sequencing of macro-economic courses and to introduce courses in price theory and other micro-economic topics not covered at present. Furthermore, special additional training must be provided to graduates of the abandoned three-year program, most of whom hold high-level government positions and are responsible, in part, for implementation of the ERP. 4. Need to StrenRthen Educational Planning and Financial HanaRement 2.21 If enrollment rates are to be raised and quality improved at all levels of the educational system, at the same time that the country faces economic decline and continuing armed insurrection, it is essential that education sector resources be used efficiently. While a range of system inputs and policy changes will be necessary to improve education in Mosambique, these alone will not be enough. Merely adding classrooms or changing the structure of the system, for example, will not have the intended effect unless such measures are linked to improved sector planning and financial management. Currently sector planning is impedod by a shortage of staff trained to collect and analyze relevant data. In addition, sector management is hindered by a budgetary system that provides for budget submissions to be prepared in every province, with different budgeting criteria and no requirement for consistency. The effect of this practice is disorganization and an inability to implement national policies and use limited resources wiaely. 2.22 There is also a need to reorient the education system in line with present manpower needs. Traditional technical and agricultural schools are not adequate vehicles for training in the short term the number of technicians and mid-level managers needed at present. At the same time there are other areas for which the supply of graduates is larger than required. In the case of production of teachers, not only are there too many graduates, but there is no training provided to teachers already in service. Although Government officials recognize the problem, they lack adequate data on manpower requirement3 and flows of students througi, the training system. Due to this lack of data, and the lack of experience to analyze it, no attempt has yet been made to put into a coherent framework the relationship between total supply of the education system and manpower requirements. 5. High Unit Costs 2.23 Although distortions in the pricing systes and in official exchange rates limit the usefulness of international comparisons, available data show that unit costs at all levels of education are high in comparison with sub- Saharan regional averages. Unit costs of education in Mozambique as a  -8- percentage of GNP per capita in 1984 were as follows: primary schooling, 0.28 (compared with 0.24 in the r-gion overall); secondary grades 5 to 9, 0.96 and secondary grades 10 and 11, 3.64 (compared to 0.98 for all secondary schooling in the region); technical, 4.5; teacher training, 6.0: and university education, 32.4 (in comparison with the regional average of 8.6). Annex 2-6 displays unit costs at all levels of the educational system. 2.24 High unit costs are due to three factors. First, administrative costs are very high; about 26Z of the education budget is allocated for administration, of which 121 is for central administration, 10% for provincial administration, and 41 for management of post-primary student hostels. Second, there is a high degree of subsidization of secondary boarding schools. And third, at the UEM there is a large number of non- teaching staff combined with low student-teacher ratios and very low tuition fees. Annex 2-7 shows Mozambique's 1984 operational budget for national education. 2.25 The need to reduce unit costs is particularly critical in light of the country's difficult financial situation. In line with ERP requirements to cut the current accounts deficit from 30Z at present to zero by 1991, the Government will need to set specific growth targets for educational expenditures and aim at reducing unit costs and improving sector efficiency. Moreover, education expenditures must be protected to achieve the crucial goals of raising literacy levels and increasing the supply of much-needed graduates from technical schools and university. Within this framework critical decisions to be taken in the coming years include: (a) whether to increase cost recovery at the University, and how to proceed in this regard; (b) whether to expand technical/vocational education as opposed to general secondary education, which is less expensive; and (c) whether to continue to charge primary school children for books. Studies are being undertaken by the Ministry's Planning Unit to address these issues. C. The Government's Strategy 2.26 With enactment of the 1983 education law the Government set out the priority objectives for educational development in Mozambique, emphasizing in particular universal access to formal education for all children and adults. However, the strategy to achieve this objective was not feasible in light of the shortages of resources, security-related restrictions, and population increases (including high migration to urban areas). Due to these constraints the objectives set out in the 1983 law have not been fully met, and decisions on expansion of the educational system are made year by year, depending on the availability of resources and security limitations. Achievements have fallen far short of expectations. Only 501 of primary schools have managed to offer five years of education, the number of adults attending literacy courses has been decreasing sharply in recent years, and there has been only limited expansion of secondary and university facilities. In 1987 a 201 reduction in expenditures was introduced. The Ministry was able to meet its budget target, in part, by sacrificing planned enrollment increases.  2.27 The lack of a long-term strategy is particularly obvious in the development of secondary education, since data on which to base decisions on necessary expansion is lacking at that level. SETEP has directed its offorts exclusively at maintaining the existing system, and has not been able to gather and analyze data on labor market requirements. Similarly, at the University attention has been given to reaching pre-Independence enrollment levels at the expense of long-term planning. Recently, however, an initial study of the situation at UEM was undertaken by the Gulbenkian Foundation; findings are expected by mid-1988. 2.28 Improved education is a basic requirement for sustained economic development in Mozambique. The Planning Unit of MINED recognizes that a strategy of expanding educational access in the current environment is subject to considerable uncertainty. However, it also believes that it needs to develop a more effective educational strategy, which will take into account growing demand for urban educational services, greater cost effectiveness of expenditures, and, in the longer run, increased capacity of the system. A policy/research group is being established within the Ministry to develop a long term strategy for the sector. 2.29 Development of a long-term strategy for the sector began in 1988 with definition of the work program and initiation of key studies on management and financing. Data to be collected during 1989 will be ready for analysis in 1990. A draft policy paper, to be discussed internally as well as with donors, will be ready in 1990-1991. While this strategy is being developed, the Government will have three short-term objectives: to keep the education system running in the face of serious security constraints; to maintain supplies such as textbooks, pencils, notebooks; and to meet 4mmediate manpower needs (e.g., training of engineers and economists). This approach seems to be realistic under present economic and political circumstances. D. The Bank Group's Role 2.30 The Bank will assist Mozambique in developing its long-term education sector strategy, in line with the objectives of the ERP, and support the Government in keeping essential services going, improving the quality and efficiency of its operations, and meeting manpower requirements. It is recognized that the overall low average level of cd_..cational attainment at Independence, exacerbated by the mass exodus of trained and experienced expatriate residents, have created severe manpower shortages that today represent a critical constraint on economic growth in Mozambique. Efforts to strengthen the country's education and training sector -- and thereby facilitate the development of essential manpower -- will set the stage for sustained economic development. 2.31 It is expected that under the project the Government will develop the capacity to generate data on manpower requirements, internal and external efficiency, and sector financial needs. With this foundation the Government will be better able to construct a strategy for short as well as long term development of the educational system, reallocate resources in line with its priority objectives, and achieve its central goals in spite of a constrained financial environment. 2.32 Bank assistance will be implemented through the present operation, sector work to be undertaken in IDA's FY 1989, and a second operation to be appraised in FY 1990.  - 10 - III. THE PROJECT A. Prolect Obiectives and Description 3.1 The project was identified by a Bank mission that visited Maputo shortly after Mozambique became an IDA member. It was intended as a first IDA operation that would selectively respond to immediate needs, while assisting in developing a better knowledge of system requirements and a longer-term strategy for the education system. Preparation was carried out by the Government with UNESCO assistance. The project's major objectives are threefold. First, it aims to increase literacy and numeracy among primary school-age children in the City of Maputo. Second, it is intended to fill critical manpower gaps. Third, it would strengthen educational management and planning. These objectives would be achieved through: (1) raising the quality and efficiency of primary education by (a) renovating and enlarging facilities, (b) training school managers and principals, and (c) providing children with essential school supplies; (2) strengthening the quality and relevance of training for accountants, office managers, bookkeepers, customs officials, economists and engineers through (a) provision of educational materials and equipment, (b) curricula development, and (c) support of fellowships; and (3) improving education sector planning and financial manaftement, through technical assistance, preparation of studies and in-country training. 1. Improving the Quality and Efficiency of Primary Education in the City of Maputo a. ExpandinR and Improving Primary School Facilities. 3.2 The project would support the construction, furnishing, and rehabilitation of primary schools (grades 1 through 5) in the most educationally under-equipped areas of Maputo. Specifically it will: (a) construct, equip, and furnish 14 new schools; (b) rehabilitate, expand, equip, and furnish 11 existing school3; (c) refurbish, equip, and furnish 90 existing schools; and (d) complete construction of 12 schools already under construction with Government resources. Annex 3-1 showt the school construction program for the City of Maputo, indicating the existing deficit of classrooms. 3.3 The shortage of primary school classrooms is due both to the relatively successful introduction of compulsory primary education begun in 1983 and to the deterioration of existing space. The response to this shortage in urban areas has been institution of a triple-shift system of instruction. Every classroom is used three times daily and most teachers teach two shifts. By increasing the number of classrooms (but not the number of pupils or the number of classes) the project will reduce overutilization of existing space since each classroom will be used only twice daily. It will also improve the learning environment for pupils who are currently being taught in dilapidated, make-shift accommodation. In 1986 approximately 200 *teaching spaces' (in addition to about 800 classrooms) were in use In Maputo. These included any sort of room, abandoned workshop, roc_ed terrace, or simply the shade of either a tree or an outside wall found in the neighborhood of an existing school. It is estimated that about 400 new classrooms are needed (see Annex 3-1).  - 11 - 3.4 Each new classroom in designed to be used by 50 students. Use will be restricted to two shifts per day (Monday through Friday) so that the full curriculum can be taught, instead of the truncated curriculum imposed by the triple-shift system. The provision of 260 classrooms in 25 project schools would house 520 classes, providing learning space for 26,000 pupils. Each classroom will be equipped with 25 double benches, a teacher's desk and chair, a chalk board, and a small open shelving space. In addition, construction will include a teachers' room, administrative space, a storage room, teachers' toilets and latrines, as well as the construction and installation of water wells and septic tanks. The project will also provide retroactive financing for the completion of 12 schools initiated by the Government, which will accommodate 10,000 additional pupils in about 100 classrooms. 3.5 Construction would be concentrated in the City of Maputo because conditions for implementation of such a program are relatively more secure there than in the rest of the country. At present the distribution of schools throughout the city is highly uneven; 15 of Maputo's approximately 92 neighborhoods ("bairros") have no school. New classrooms will be constructed first in those neighborhoods where currently there is no school, then in districts with overcrowded schools. AAnnex 3-2 lists neighborhoods where schools will be constructed and repaired. Annex 3-3 shows school building construction costs. 3.6 Additionally, the project will help to rehabilitate about 100 schools and establish a system of permanent maintenance for all schools in the City of Maputo. While maintenance is important in the education sector in general -- as in all other sectors -- it takes on particular importance in the City of Maputo, where very little maintenance has been done in over ten years. With respect to school maintenance countrywide, the project will include a study to determine requirement, procedures, and costs. During negotiations the Government gave assurances that it will introduce in the national budget for 1990 a school maintenance line item and allocate to it funds sufficient to carry out annual maintenance of schools built, expanded, rehabilitated, and refurbished under the project. 3.7 The credit would finance: (a) civil works contracts for construction of new and rehabilitated schools, and repairs for existing classrooms; (b) force account for school renovation and maintenance; (c) furniture for students, classrooms, and schools; and (d) architectural services. The credit will retroactively finance work done by the Government between October 1987 and July 1988 for the construction of 12 schools (approximate cost is US$200,000). b. Trainina of School Managers and Principals 3.8 The project would upgrade the quality of school-level management in the City of Maputo through training. First, those principals currently working in shacks or other dilapidated spaces will be trained for their future responsibilities as managers of large, modern schools. Training will include such things as building maintenance, supervisory skills, and textbook usage. In addition to the principal, every school in Maputo has two teachers who assist with managerial tasks (e.g., school finances, nutrition programs, and preparation of lesson plans). The project would  - 12 - provide training for these teachers, known as school managers, in the area of their particular responsibility. The program will be designed in cooperation with UNDP's "Strengthening Educational Management and Leadership Program," which is intended to strengthen management nationwide, and will be carried out by the Instituto Superior Pedagogico (ISP). 3.9 The credit would finance: (a) specialist services (12 man-months international expert and 24 man-months local consultant) to prepare training modules and provide training; (b) equipment and vehicles for training institutions; (c) documents and bibliographic materials; (d) 8 one-month study tours for training outside Mozambique (e.g., EDI courses); and (e) 30 one-week training courses for 50 participants each. Annex 3-4 presents a plan for training of school principals and managers. c. Providing School Supplies 3 10 Although official policy requires that students purchase the necessary instructional materials, including books, notebooks, and pencils, it is becoming increasingly evident that under current economic conditions many parents cannot afford to pay for these supplies. The project would therefore distribute, on an experimental basis, for each one of 300 classrooms (260 project classrooms plus 40 additional classrooms) one basic school kit that includes black and colored pencils, erasers, slates and chalk, two notebooks per child, scissors, and rulers. The supplies of pencils, chalk and notebooks would be provided once each year to these 300 classrooms during the life of the project. On a one-time basis the project would also provide for each school a small library (50 titles), two globes, five maps, and a metric set. All supplies provided by the project will be considered to be school property. 2. Strengtheninz the Quality and Relevance of Post-Secondary Training 3.11 The project would support Government efforts to meet essential manpower requirements by strengthening the quality and relevance of post- secondary training in three skills areas: commerce, engineering, and economics. a. Commercial Institute of Maputo (ICM) 3.12 First, a range of inputs would upgrade the training of accountants, office managers, bookkeepers, and customs officials at the ICM. The country faces severe shortages in these areas, and ICM is the only commercial training institution in Mozambique. Support for the commercial stream, as opposed to the industrial and agricultural streams, would be particularly useful since this is the only area that does not already receive some donor assistance. One key area for support is the development of accountancy curricula and examinations that would be of sufficiently high standard to be internationally competitive. The project would also provide for curriculum development in all other areas of commercial training provided at ICM. Curriculum development efforts would be accompanied by the provision of necessary reference materials and textbooks, microcomputers and software packages, and furniture for the microcomputer room. Additionally, seminars  - 13 - would be held in which curriculum developers would receive feedback from consumers of the training courses (e.g., secretaries would be able to provide feedback on the -quality and relevance of the proposed secretarial curriculum), study tours would be provided for ICM staff to see how similar commercial activities (such as office management or accounting) are carried out elsewhere, and fellowships would help to upgrade ICM staff. 3.13 In addition to curriculum development, the project would support management strengthening at ICM. This would be accomplished through preparation of an administrative manual for ICM, provision of fellowships in areas such as institutional administration, and training of Mozambican teachers to facilitate the replacement of expatriate personnel. The project would include study tours for ICM staff and would cover the cost of bringing international experts to Mozambique for national meetings on selected topics such as accountancy training. The Government has arranged for the Commercial Institute of Lisbon to team up with ICM for future collaboration. This collaboration would include the use of curricula, books, and people to provide relevant training at ICM. 3 14 The credit would finance curriculum development through: (a) expert assistance (12 man-months) for development of accounting curriculum and examinations, and (12 man-months) for general coammercial curriculum development; (b) meaterials and textbooks; (c) microcomputers and software packages; (d) furniture for the microcomputer room; (e) 10 one-week seminars with 10'participants each and 12 months of study tours; and (f) 72 months of fellowships. 3.15 It would also finance management strengthening through: (f) expert ssistance (12 man-months); (g) printing equipment; and (h) 12 months of fellowships and 18 months of study tours. The Government will continue to finance all local salaries for ICM staff. b. Faculty of Engineering 3.16 Second, the component would support Improved training at the Faculty of Engineering at the University Eduardo Mondlane. Currently nearly all training being carried out in the initial courses is theoretical due to the serious lack of equipment. No procurement has been done since the early 19709. The project would include assistance for four fully-equipped electronics laboratories with eight places each for telecommunications, analogic electronics, digital electronics, and automatic control. Physical facilities for four mechanical workshops, each with eight working places, would also be provided for locksmith, machine tools (lathes and milling), prefabrication (welding, foundry, and blading), and auto-mechanics. Since most students have no prior introduction to these specialty areas, rotation through all four would give them an opportunity to learn the essentials of each. 3.17 The pro4ect would also aim to support cost recovery initiatives at the Faculty of Engineering through the sale of engineering services. Although the staff are well-trained and the students of high quality, the Faculty cannot provide these services without basic equipment such as photocopiers and micro-computers. In addition, these initiatives, as well as study visits by students to industrial plants and construction sites,  - 14 - require transport. In a situation vhere public transportation is completely unreliable, provision of vehicles is essential. A description of the cost recovery activities being undertaken through the Production Unit at the Faculty of Engineering is found in Annex 2-5. 3.18 The credit would finance, for both electronics laboratories and mechanical workshops: (a) site development and civil works; (b) professional fees; (c) furniture; and (d) equipment. It would also finance: (e) computers, printing equipment required for cost recovery initiatives, and audio-visual equipment for teaching and extension activities (courses for industry, paid by industry); and (f) vehicles required for both the cost recovery initiatives and a program of study visits. Annex 3-5 shows the equipment list for the laboratories. Annex 3-6 details the accommodation units and architectural plans. c. Faculty of Economics 3.19 This component would also provide assistance to strengthen the curriculum and upgrade the academic qualifications of national teaching staff at the University's Faculty of Economics. Such assistance is particularly needed in light of recent problems brought on by implementation of a shortened (three-year) economics training course in the late 1970s. Owing to the concern that graduates of the three-year program were insufficiently prepared for the labor market, the Faculty is now restoring a five-year program to provide more extensive economics education. It coasists of a general three-year core progrtm plus two specialized streams of two years each, one focusing on management, the other on economics. 3.20 The Faculty of Economics receives ongoing assistance from the UNDP and will rely on assistance from the World Bank to establish the program. UNDP assistance, on the order of US$1 million, supports the general three- year course and specialized management stream, while the World Bank will finance improvements in the specialized economics stream (which receives no other external assistance). UNDP support is already in place and includes equipment, books, fellowships, and technical assistance in computer science and quantitative methods for general courses. 3.21 The credit would finance: (a) technical assistance for curriculum development and revision of the examination system (12 man-months); (b) specialized training seminars for faculty members (10 man-months); (c) expert assistance for the development of modular programs (48 man-months) in such subjects as monetary and fiscal policy, development economics, and economic policy planning; (d) three doctoral fellowships (total 72 man- months) for the most promising national teaching staff at the "Licenciatura" level, who would take up responsibility for a teaching division upon their return to Mozambique; (e) books for the library; and (f) 3 microcomputers and software. 3. Improving Education Sector Financial Management, Planning. and Prolect Implementation 3.22 Efficient utilization of limited resources is essential for the Government to improve and expand its educational system in the midst of economic crisis and armed hostilities. Administrators and planners must be  - 15 - trained for this purpose. Although the Government is already pursuing an active training policy, often in cooperation with external donors, there is a need to complement these efforts with additional management training programs in finance and education planning. 3.23 In addition, studies are needed to assist Government in determining long-term financial requirements for the sector, as well as a more efficient organizational structure. Results of these studies are to be integrated into a comprehensive long-term strategy for the education sector. Within this context the project will finance training and studies, as described below, and it will assist government in the preparation of a long-term strategy for the sector. 3.24 First, this component would provide training in financial planning, budgeting, and accounting for high-level officials from both the Ministry of Education and provincial education directorates in order to coordinate and strengthen the budgetary system. A Mozambican consultant will travel to provincial offices in order to determine training needs and subsequently to design the training program. The program would consist of preparation of teaching materials in Portuguese, a range of courses and workshops, and training of trainers. 3.25 Training materials will include basic information for budgeting purposes (e.g., the unified teacher salary scales and all laws and regulations on accounting procedures), plus special case studies to demonstrate alternative mechanisms for costing inputs, prioritizing expenditures, scheduling activities, and estimating contingencies. The workshops will deal with specific topics such as teacher promotions and related salary increases, analysis of unit costs, and expenditure forecasting. These activities would allow the budgetary process to continue to be handled in a decentralized way, but would institute uniform and standard procedures across the country. It is expected that about half of the initial &,iig of trainees ultimately would be able to provide training on educational finance to heads of administration and planning at the provincial level. In addition, fellowships would be provided for provincial budget officers to visit each other as well as budget officers in other countries to observe how budget offices are organized and how accounting is performed. 3.26 The credit will finance: (a) 8 man-months of consultant services for budgeting and accounting; (b) 16 man-months of local consultant services for preparation of budgeting guidelines and training of provincial budget directors; (c) fellowships and study trips; (d) training courses for about 50 officials; (e) calculators; and (f) vehicles for the Planning Unit of MINED. 3.27 Second, the component would strengthen manpower planning. The Ministry of Labor and the Planning Unit in the Ministry of Education, in cooperation with the Ministry of Planning and ILO, will use a manpower and education model to forecast and analyze labor and manpower requirements and to illustrate future education and manpower possibilities. Specifically the model would: (a) project manpower demands to meet specified sectoral targets (e.g., manpower needs in the Beira corridor); (b) forecast flows through the education system under a variety of policy options; and (c) compare projected manpower demands and supplies under different  - 16 _ scenarios and assuming different pattorns of migration and employment possibilities. Results would load to identification of problems regarding the structure and efficiency of the education and training systems and to recommendations on policies needed to improve efficiencies (participation, repetition and drop-out rates, as well as eligibility criteria of different programs). 3.28 The project would support expert assistance as well as a range of inputs such as microcomputers, software packag*s, calculators, books and documentation. Results of the manpower planning exercise will be presented by March 31, 1991 (and will be discussed in a seminar with participation from MINED, Ministry of Finance, and external donors) and will be used to identify future investment projects in Mozambique. 3.29 The credit will finance: (a) 12 man-months for expert services for manpower planning; (b) microcomputers and software packages; and (c) books and documentation. 3.30 Third, the component would also support the preparation of studies including: (a) the financing of the educational system; (b) mother-tongue languages; (c) education sector management; (d) school maintenance; (e) four annual evaluations and one final evaluat ion of the project; and (f) the preparation of future projects in the education sector. During negotiations the. Government gave assurances that it would prepare and furnish to IDA for its review and comment (a) progress reports on the financial, language, management and manpower planning studies (not later than March 31, 1989 and March 31, 1990) and (b) final results of the studies (not later than March 31, 1991). Annex 3-7 shows terms of reference for the financing, language, and management studies. Project monitoring and evaluation indicators are listed in Annex 3-8. 3.31 Preparation of a long-term strategy for the education sector will be the responsibility of the Vice Minister of Education and a group of Mozambican researchers and policy-makers working with him. During negotiations assurances were given by Government that it would prepare by March 31, 1992 a strategy for financing and managing the development of the education system. The strategy would incorporate findings of the financial, managerial and language studies carried out under the project, as well as results of the manpower planning exercise, and it would include: (a) a statement on growth targets for the education system; (b) levels of recurrent expenditures needed to increase of primary, secondary and university education; (c) a statement of priority investments to be financed between 1990-2000; and (d) a plan for strengthening the managerial structure and efficient administration of education at national and provincial levels. 3.32 Fourth, the component will strengthen all institutions responsible for project implementation. In particular it will strengthen the recently established unit responsible for the preparation and implementation of externally-financed projects. This unit, called PROFORMA (Gabinete Tecnico de Gestao de Projectos Educacionais) has so far been responsible for conducting the feasibility studies for the AfDB teacher training project and for assisting in the preparation of this World Bank project. In the future PROFORMA should take responsibility for all procurement, accounting, and reporting activities for which the Ministry of Education obtains external financing. In addition, the component will strengthen other units  - 17 - responsible for implementation of their respective components, including: ICM, the Faculty of Engineering, the Faculty of Economics, and the Planning Unit of MINED. 3.33 In line with the Government's general approach toward decentralization, the DECC0 will be responsible for implementing school repairs and school maintenance activities. For these activities the project will strengthen the DECCM. 3.34 The credit would finance strengthening of PT`-IRMA throught (a) furniture, equipment, materials, and vehicles; kw, expert architect services (8 man-months); (c) expert accountant services (8 man-months); (d) travel to international meetings and courses (4); and (e) salaries. Annex 3-9 includes a list of staff and salaries. Annex 3-10 shows the costs of furniture, equipment, materials and vehicles. The credit would finance strengthening of the DECCM through: (f) equipment, vehicles, and vehicle maintenance; and (g) salaries. Annex 3-11 lists the costs of equipment, vehicles, salaries, and operating activities associated with DECCM. B. Proiect Costs and FinancinR Plan 3.35 Cost and Financin2 Plan. The total cost of the project is estimated at US$17.9 million equivalent, of which US$13.5, or 75Z, are foreign exchange costs, and taxes levied on construction contracts amount to approximately US$1.0 million. The Government does not levy import duties on internationally-financed goods for the education sector. Consequently, all capital items included in project costs are net of taxes. Detailed project costs are found in Annex 3-12. 3.36 The project would be financed by the proposed IDA credit of US$15.9 million, and by the Government's contribution of US$2.0 million. IDA Vould finance the project's foreign exchange costs as well as 70% of the local coats for construction, operating expenses and local salaries. The Government's contribution will finance 30% of local costs including local salaries and operating expenses, in addition to taxes. FINANCING PLAN (US$ '000) IDA Government Total Foreign 13.5 0.0 13.5 Local 2.4 1.0 3.4 Taxes _ 1.0 1.0 Total 15.9 2.0 17.9  _ 18 - Sumnary Accounts Cost Summary (in US$ '000) Local For.izn Total I. INVtSTMCNT COSTS A. CIVIL WORKS 2,484.8 5,154.2 7,6;9.0 Construction 1,680.5 3,921.3 5,601.8 Site Development 367.5 857.5 1,225.0 Architectural Foes 108.5 27.1 135.6 Completion of Government- Financed Schools 328.3 328.3 656.6 B. FURNITURE, EQUIPMENT & MATERIALS 412.3 2,846.6 3,258.9 Furniture 235.8 157.2 393.0 Equipment 89.6 1,701.8 1,791.4 Materials & Textbooks 86.9 782.6 869.5 Vehicle Procurement -- 205.0 205.0 C. TECHNICAL ASSISTANCE, STUDIES, AUDITS, AND TRAINING 445.5 2,254.5 2,700.0 Experts 58.7 1,116.3 1,175.0 United Nations Volunteers 36.0 144.0 180.0 Fellowships 18.3 347.7 366.0 Study Trips 10.5 198.5 209.0 Training Courses 42.0 28.0 70.0 Studies 280.0 420.0 700.0 D. INCREMENTAL SALARIES 18.1 4.5 22.6 E. PROJECT PREPARATION FACILITY -- 640.0 640.0 II. RECURRENT COSTS A. LOCAL SALARIES 141.6 -- 141.6 B. BUILDING OPERATION AND MAINTENANCE 107.9 161.8 269.7 C. OPERATING EXPENSES 43.2 64.8 108.0 TOTAL BASELINE COSTS 3,653.4 11,106.4 14,759.8 Physical Contingencies 406.5 1,331.3 1,737.8 Price Contingencies 334.9 1,020.8 1,355.7 TOTAL PROJECT COSTS 4,394.8 13,458.5 17,853.3  _ 19 - 3.37 Basis of Cost Estimates. Except for local salaries, all project costs shown in Annex 3-11 were estimated in US$ terms and converted to meticais using the official exchange rate prevailing at the tim of negotiations: US$1 - 450 meticais. Foreign exchange costs were estimated at: 1002 for vehicles; 95Z for equipment, materials, fellowships, study trips and experts; 80X for U.N. Volunteers; 702 for construction and site development; 602 for studies, building operation and maintenance, and school maintenance and operating costs; 50 for Government-financed classrooms; 402 for training courses and furniture; and 20X for salaries and architectural fees. Physical contingencies of US$1.7 million are estimated at 202 of base costs for furniture, equipment, and materials, and 102 of base costs for all other categories except for PPF activities. Price contintencies of US$1.4 million represent about 82 of base cost plus physical contingencies and were estimated for all costs on the basis of annual inflation rates shown below, which reflect IDA's most recent guidelines for foreign price increases. Because all costs were estimated in dollars, no distinction is made between local and foreign costs* Price Contingencies Estimates (percentages) Costs 1988 1989 1990-1993 Foreign 5.6 5.4 1 Local 5.6 5.4 1 3.38 Unit Costs. The baseline school construction costs are based on space standards developed by the Ministry of Education and the Ministry of Construction and Works. They amoutit on average to US$197 per m2 (including circulation and walls). The base cost of an isolated classroom is US$159600. Site development costs have been estimated at US$40,000 per school and they include water well, septic tank, fence and exterior paths. Rehabilitation of existing classrooms is estimated to average US$5,500 per classroom (352 of the cost of a new classroom). Construction costs for the Faculty of Engineering are estimated at US$280/m2 for electronic laboratories and at US$175/m2 for workshops. According with their requirements, site development and professional fees are estimated at 42 of construction costs for both units. Professional fees for architectural work are estimated as follows: Topographical plans US$500 per site Designs of school prototypes 10% of construction costs per prototype Designs for specific schools 22 of construction costs 3.39 Furniture per student place is estimated to cost US$15. Additionally classroom furniture, including blackboard and book shelf is estimated to cost US$150 and furniture for school administration areas is estimated to cost US$300 per school. Expert services are estimated at US$7,500 per month. Salary suRplements for PROFORMA staff were included in total project cost to be able to hire and retain competent staff. However, since the civil service salary structure is being reviewed by Government  - 20 - under the ERP, these supplements will only be needed for a short time (two or three years). The salary structure and supplements are shown in Annex 3-9. 3.40 Recurrent cost implications. The project has been designed in an effort to minimize incremental recurrent costs. Although additional primary school classrooms will be constructed, no new teachers will be hired. All students to be accommodated in the new facilities have a teacher at present. However, in the long run the Government will need to increase the number of teachers (in response to population growth) as well as teacher salaries. In addition, allocations for school supplies and textbooks whic1- amount to approximately US$10 per student will have to grow. This represents about 10% of annual expenditures in primary education. Moreover, the Government will need to allocate funds for school maintenance (para. 3.6). Apart from these 1!Jm1ted recurrent cost implications of the project's primary scho.6 co tponent, there are no recurrent cost implications associated wi. othcr project components. C. Prolect Administration 1. Preparation, Manatement and Implementation 3.41 Present Status of Preparation. The project was prepared by a comnittee of six Government officials appointed by the Government and by a team from UNESCO. Subsequently, a PPF was approved by the Bank to finalize preparatory activities, including: (a) topographic site surveys for school construction and contract with architectural firm for school design work; (b) consultant services for educational planning and administration; (c) consultant services for preparation of a revised program of studies at ICM and the Faculty of Economics; (d) consultant services for preparation of equipment lists for the Faculty of Engineering; and (e) consultant services for organizing PROFORMA, the project management unit. 3.42 De pite provisions included in the PPF and extensive project preparation, there remain t-io obstacles to the prompt initiation of project activities: (a) 36 families are currently living on 6 out of the 25 sites designated for school construction or expansion, and the Government needs to resettle these families before construction can take place; and (b) housing for project experts is not readily available in Maputo and might delay the arrival of proposed consultants.  - 21 - 3.43 In response to the first obstacle, the Government presented a plan for the resettlement of the 36 families now living on these sites. The plan, which is based on a survey of households currently occupying these sites, was found to be satisfactory by IDA. It includes provision for compensation to cover the costs of materials and labor to reconstruct housing, as well as transportation, for these ferilies. Replacement plots of adequate size have been identified, but tley are located at some distance from the original plots. As part oi the agreed resettlement plan, the Cit,f of Maputo is in the process of identifying plots that are closer and giving each of the families a choice of relocation site. Responsibility for implementation of the resettlement plan will rest with DECCM, assisted by PROFORMA. During negotiations, the Government gave assurances that, not later than June 30, 1989, it will have taken all necessary measures to free of all occupants the sites formally attributed to DECCM to carry out the primary school construction program. 3.44 In response to the second obstacle, the project will finance construction, equipping and furnishing for ten houses for project experts. After project completion, these houses will remain under MINED's control and administration, subject to Government housing policies. 3.45 Project Management. The PROFORMA director will have overall responsibility for coordinating and supervising project implementation. He will be directly responsible to the Vice Minister of Education, and will serve as the liaison between MINED, the various project implementing instititions, the National Bank of Mozambique, and the World Bank. He will meet regularly with a Coordinating Committee to oversee the activities and financial aspects of the project and prepare reports required by the Government and the World Bank. He will also be responsible for organization of PROFORMA, its staff, documentation, and the compilation and maintenance of project files. The location of PROFORMA within the Governmental structure !a shcwn in Annex 3-13, and the PROFORMA organization is shown in Annex 3-14. 3.46 PROFORKA basic staff will consist of a deputy director, an engineer, an administrative officer, an accountant, two procurement officers, and two construction supervisors. Both the accountant and procurement officers will report to the administrative officer and the construction supervisors will report to the engineer. The administrative officer will provide overall administrative assistance to the director and other staff members. The accountant will keep financial records of project accounts and prepare applications for withdrawal of funds from the Bank of Mozambique. The procurement officers will supervise all relevant procedures concerning furniture and equipment, including tendering and contractual procedures, order planning, and reception and delivery of furniture and equipment with the responsible project agencies. The engineer will supervise the implementation of the technical and architactural aspects of the project. He will also participate in the selection and appointment of engineering and architectural consultants, the approval of designs and other technical studies, and supervision of all tendering and contractual procedures, preparation of payment certificates and the acceptance of buildings.  - 22 - 3.47 Responsibility for implementing the technical components will be divided as follows: The directorate for studies and projects of the University Eduardo Mondlane will .e responsible for implementing the components of the Faculty of EngiLeering and the Faculty of Economics. SETEP (the State Secretariat for Technical and Vocational Training) will be responsible for the component at ICM. MINED's Planning Unit will be responsible for educational planning and financial management activities. ISP will implement the training program for school managers and principals. 3.48 Sckool repairs and maintenance will be carried out by DECCM. While PROFOhhA would be responsible for bidding processes and supervision of works, DECCM would assist in school location planning, reparation of existing classrooms, and maintenance of newly constructed classrooms. 3.49 The PROFORMA director will be assisted by a Coordinating Committee chaired by the Vice Minister of Education and consisting of representatives of each of the institutions responsible for project implementation (the University, the Faculties of Engineering and Economics, the director of the MINED Planning Unit, INDE, SETEP, and ISP). Annex 3-15 lists the members of the Coordinating Committee. 3.50 Technical Assistance. Technical assistance requirements for this project have been carefully designed to take into account high costs of consultants, the small number of local counterpart staff available to work with internationally-recruited consultants, as well as housing shortages in the City of Maputo. For each technical assistance position the Government is now in the process of identifying a suitable counterpart. A detailed list of consultant positions, terms of reference, and Mozambican counterpart positions is found in Annex 3-16. Annex 3-17 provides details regarding project expert and U.N. Volunteer services. At negotiations, assurances were given by the Government that it would (i) select, not later than December 31, 1988, all consultants needed to assist the Government in project implementation, and (ii) appoint all said consultants not later than May 30, 1989. 3.51 Fellowships. Fellowships and study tours will contribute to improved management in project institutions as well as provide advanced training to faculty at ICM and UEM. Selection of candidates for fellowships will be made by the implementing institutions, which will also prepare detailed TORs for each fellowship a&,d study trip. Additional information concerning fellowships and study trips is found in Annex 3-18. 3.52 Proiect Implementation Schedule. Implementation is expected to take six years beginning in October 1988. The project would be completed by December 31, 1994 and it would be closed by December 31, 1995. An implementation schedule showing implementation activities for the first five years of the project is shown in Annex 3-19. 3.53 Proiect Implementation Reviews and Proiect Evaluation. Annually, PROFORMA will prepare an evaluation report on project activities (par&. 3.30). This report will be discussed with IDA in an annual project review meeting to be held every year in April. Project monitoring indicators are found in Annex 3-8. During negotiations the Government gave assurances that it would conduct jointly with IDA project implementation reviews on an annual basis and not later than April 30 of each year in order to: (a) discuss the annual evaluation report prepared by PROFORMA; (b) monitor  - 23 - progress in achievi-s project objectives; (c) identify implementation issues and proposed solutions; (d) promote exchange of ideas among staff Involved in project implementation; and (e) update project timetables and cost estimates. 2. Procurement Plan 3.54 The following procurement arrangements would apply: Amounts and Methods of Procurement (USS Million) LCB and local Total ICB shooppin Other Cost Civil Works 8.1 a/ 0.7 b/ 0.3 c/ 9.1 (7.3) (0.2) (0.3) (7.8) Furniture - 0.5 - 0.5 (0.2) (0.4) Equipment, Materials, Vehicles 2.4 a/ 0.8 d/ 0.6 el 3.8 (2.4) (0.6) (0.6) (3.6) Consultants' Services, Fellowships, Study Trips, Training, Audits, and Studies - - 3.3 f/ 3.3 (3.3) (3.3) Operating Costs and Salaries - - 0.6 31 0.6 (0.2) (0.2) PPF - - 0.6 0.6 iO 6) (0.6S TOTAL 10.5 2.0 5.4 17.9 (9.7) (1.2) (5.0) (15.9) NOTE: Figures in parenthesis indicate the amount to be financed by the IDA credit. a/ Contracts in excess of US$60,000 would be awarded through ICB according to IDA Procurement Guid3lines. Qualifying domestic manufacturers would receive a preference in bid evaluation of 15Z of CIF price, or the import duty, whichever is lower, and domestic contractors will receive a preference of 7.52 following IDA guidelines. bI Local contracts for finalizing schools which are already under construction with government financing; IDA contribution would be limited to US$200,000. cl Force account for school repairs and maintenance, with a maximum of US$300,000. d/ Items below US$60,000 might be procured by comparing quotations from at least three reliable suppliers, with a US$600,000 maximum. el About US$600,000 worth of school supplies financed by IDA and procured through direct contracting with UNICEF, or through limited competitive bidding, in consultation with IDA, for other qualified contractors with capacity to deliver school kits. f/ Includes architectural fees, and will be procured following IDA guidelines. &I Procurement through regular Government procedures.  - 24 - 3.55 Contract Review. Bidding packages for construction and for goods valued at more than US$100,000 equivalent would be subject to IDA's prior review of procurement documentation resulting in a coverage of about 80Z of the total estimated value of contracts. Smaller packages would be subject to random post review by IDA after contract award. 3. Disbursement 3.56 The IDA Credit would be disbursed over a period of six years (between 1988 and 1994). The credit proceeds would be disbursed on the basis of the table shown below. All disbursements from the IDA credit account would be fully documented except expenditures for: (a) contracts, purchase orders or overseas training programs valued at less than US$20,000; (b) local training programs; and (c) force account, operating costs and salaries for which expenses would be made against certified statements of expenditures (SOE). Documentation would be retained by PROFORMA for review by Bank supervision missions and project auditors. Allocation and Disbursements of IDA Credit (US$ Million) IDA Z of Expenditure Catesory of Expenditure Allocation to be Financed 1. Civil Works 7.0 100% of foreign expenditures 90% of local expenditures 2. Furniture 0.4 100l of foreign expenditures 90% of local expenditures 3. Equipment, Materials, Vehicles 3.0 100l of foreign expenditures 90% of local expenditures 4. Consultant Services, Studies, and Audits 1.5 1001 of total expenditures 5. Training 1.5 100% " " 6. Operating Costs for PROFORMA and DECCM office and salary supplements for PROFORMA* 0.2 100% 7. PPF 0.6 8. Unallocated 1.7 Total 15 9 *See para. 3.39 4. Special Account 3.57 In order to expedite disbursements, the Government would establish a Special Account for the project in a commercial bank acceptable to IDA. An initial amount of US$1,000,000 equivalent would be deposited by IDA after receipt and approval of a withdrawal application. This amount is estimated to cover about four months of eligible payments. Replenishment application would be submitted monthly and would be accompanied by the full  - 25 - documentation except for items eligible for disbursement on the basis of certified statements of expenditures. 5. Accounting. Auditing and Reporting 3.58 PROFORNA would establish an accounting system with assistance from an experienced administrator. Auditing would be financed by IDA and contracted with a specialized private firm. Statements of Expenditures would be audited every six months and audit reports would be furnished to IDA annually. To facilitate close monitoring of the project, PROFORMA would also submit to IDA: (a) annual progress reports; and (b) within six months of the project's closing date, a final report on the implementation experience and project outcomes. Preparation of annual reports would also be financed by the project (para. 3.30) and every year they will be presented in the April review meeting (para. 3.53). IV. BENEFITS AND RISKS 4.1 Benefits. The project would strengthen Mozambique's educational system in an effort to make it more responsive to the country's urgent needs for skilled manpower and effective human resource development. It would also support the generation of data to assist the Government in its development of a comprehensive education sector strategy. At the primary level, pupils in Maputo will benefit from increased class hours and an expanded curriculum as a result of improved school facilities, as well as from the provision of school supplies. Support for improvements at the Commercial Institute of Maputo and at the University Eduardo Mondlane's Faculties of Engineering and Economics will lead to the production of graduates who can strengthen the country's industrial and commercial sectors and help to alleviate shortages in these areas. Improvement in MINED's planning and financial management capability will permit more efficient use of education sector resources. The project will also build education project management skills within the Ministry of Education. 4.2 Risks. Risks are two-fold. First, Mozambique's experierne in managing education projects is limited. There are few trained managers in the sector and there is very little experience in international bidding processes, project management and monitoring, in keeping accounts or performing audits. This risk is being addressed through the creation of a Project Management Unit within MINED as well as intensive staff training and the provision of technical assistance. Second, the severe political and economic instability associated with the ongoing war represents a highly inhospitable atmosphere in which to implement development projects. This risk has been taken into account by targetting project activities exclusively in Maputo, which is relatively secure from fighting and the population upheaval caused by the war. In light of these design features, risks would be minimized and the proposed project would constitute a suitable basis for investment in the improvement of the educational sector in Mozambique.  - 26 - V. AGREEMENTS REACHED AND RECOMMENDATIONS 5 1 Airements Reached at Ne*otiations During negotiations assurances were sought from the Government that it would: A. Prepare by March 31, 1992 a strategy for financing and managing the development of the education system. The strategy would incorporate findings of the financial, managerial and language studies carried out under the project, as well as results of the manpower planning exercise, and it would include: (a) a statement on growth targets for the formal education system; (b) levels of recurrent expenditures needed to increase of primary, secondary and university education; (c) a statement of priority investments to be financed between 1990-2000 and (d) a plan for strengthening the managerial structure and efficient administration of education at national and provincial levels (para. 3.31). B. Conduct jointly with IDA, project implementation reviews on an annual basis and not later than April 30 of each year, in order to: (i) discuss annuel project evaluations carried out by PROFORMA; (ii) monitor progress made in achieving project objectives; (iii) exchange information among staff responsible for project implementation and propose solutions to any current problems; and (iv) update project timetables and cost estimates (para. 3.53); C. Prepare and furnish to IDA for its review and comment: (i) not later than March 31, 1989 and not later than March 31, 1990 the progress reports on (a) the study on financing of the education system; (b) the language study; (c) the education sector management study; and (d) the manpower planning study; (ii) not later than March 31, 1991 the final results of the studies mentioned above (para. 3.30); D. In order to assure timely project implementation, select all consultants needed to assist the Government in project execution by December 31, 1988, and appoint all said consultants by May 30, 1989 (para. 3.50);  - 27 - S. Introduce in the national budget for 1990 a school maintenanee line item and allocate to it funds sufficient to carry out annual maintenanee of schools built, expanded, rehabilitated, and refurbished under the Project (para. 3.6); and F. Take all necessary measures, not later than June 30, 1989, to free of all occupants the sites formally attributed to DECCH to carry out the primary school construction program (par&. 3.43). 5.2 Subject to the above assurances, the project constitutes a suitable basis for an IDA credit of US$15.9 million equivalent to the People's Republic of Moxambique.  - 28 - Annex 1-1 MOZAMBIQU! EDUCATION AND MANPOWER DEMVLOPMENT PROJECT Documents Contained in the Prolect File Ref. No. Documents Document Code Government of Moxambibue 1. An Education Project Credit Request Document D10033 (March 1987) 2. Analise dos Resultados do ler Recenseamento Geral de Populacao D10041 3. Projecto da Racionalizacao do Aparelho Administrativo da Educacao D10042 4. Working Documents D11025 UNESCO 5. A Financial Feasibility Study of the National Education System in Mozambique (Duvicusart, March 1986) D09307 6. Profil du systeme educatif en Mozambique (Hugon and Chabrillac, 1986) D10034 7. Educational Policy in Mosambique - Analysis and Constraints (Deble, 1986) D09304 8. Mission de Preparation - Banque Africaine de Developpement (December 1983) D10035 9. Institut National Pour le Developpement de L'Education Rapport de la Mission d'Evaluation (April 1986) D10036 SIDA 10. Joint Annual Review - Swedish Support to Education D10037 in Mozambique (1985 and 1986) D10038 11. Education in Mozambique 1975-84 (Johnston) D10039 12. Education and Economic Crisis - The Cases of Mozambique and Zambia (Johnston, Kaluba, Karlason, Nystrom - October 1987) D10040  - 29 - Annex 1-2 MOZUMBIOUE Education and Manpower Develonment Proiect Basic Data Sheet General (1980 - 1986) GNP per capita US$150 Land area 800,000 square kilometers Total population 14 million of which - rural 87! - urban 13S Population growth rate - natioual 2.6Z - urban 7.6S Life expectancy at birth 46 years Languages - official Portuguese (spoken by 24? of the population) - national 16 other languages Enrollments in Education (1986) Enrollment Growth Total Ratio Rate Primary 1,200,000 80.0 0.22 Secondary 132,000 8.8 6.42 Higher 1,630 0.2 8.5? Education Expenditures Total Ministry of Education expenditures (1985): US$20.8 million (4,165 million meticais) Percent of total Government budget (1983): 11.1?  -3- Annex 1-3 Page 1 of 2 ImOL. 9)s in S WAI Um lf