Tunisia - Higher Education Restructuring Project

Docunment of -The World Bank FOR OmCAL USE ONLY MICROFICHE COPY Report No. P- 5607-TUN Type: (PM) EXPERTON, / X37128 / H7 019/ EM2PH Report No. P-5607-TUN MEMORANDUM AND RECOMKENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$75 MILLION TO THE REPUBLIC OF TUNISIA FOR A HIGHER EDUCATION RESTRUCTURING PROJECT MARCH 11, 1992 This document has a restricted distribution and may be used by recipiets oiny In the performance of their offcial duties. Its contents may not otherwise be dislosed without World Bank authorization.  CURRENCY EQUIVALENTS (As of October 1991) Currency Unit Tunisian Dinar (TD) US$1.00 TD 0.92 TD 1.00 US$1.08 FISCAL W January 1 - December 31 GLOSSARY OF ABBREVIATIONS CRU Committee for University Improvement (Comit6 de Renovation Universitaire) ISET Higher Institute of Technology (Institut Superieur d'Etudes Technologiques) MES Ministry of Education and Sciences (Minist6re de 1'Education et des Sciences) PNRU National Program for University Improvement (Programme National de Renovation Universitaire)  FOR OMCIAL USE ONLY REPUBLIC OP TUNISIA HIGRER EDUCATION RESTRUCTURING PROJECT Loan and Project Summary Borrower: Republic of Tunisia Beneficiaries: Ministry of Education and Sciences (MES) kaount: US$75 million equivalent Terms: Repayable in seventeen years, including a five- year grace period, at the Bank's standard variable interest rate. Financing Plan: Government US$ 51.3 million IBRD USA 75.0 million TOTAL US$ 126.3 million Economic Rate of Return: NA Stagff ApMraisal Retort: Report No. 9795-TUN ,.This docunent has a rstictd dtuibution and may be usd by reciients only in the performnce of. heiroficOa dutes. Its content may not otherwi be disclosed without World Dank authorization.  MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR AECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF TUNISIA FOR A HIGHER EDUCATION RESTRUCTURING PROJECT 1. The following memorandum ar.d recommendation on a proposed loan to the Rep,uiuic of Tunisia for US$75 million equivalent are submitted for approval. The proposed loan would help finance a Higher Education Restructuring Project which aims at making the higher education system more cost-effective and responsive to the needs of the Tunisian economy. The loan would have a term of seventeen years, including a five-year grace period, at the standard variable interest rate. 2. Backgro . To sustain growth, Tunisia must increase the efficiency of its investments and continue to attract foreign investment in an environment made more competitive by price and trade liberalization. The skills of the labor force are critical to the drive for higher productivity and real incomes. Successive governments have placed human resource investments center stage in their development strategies, giving special emphasis to basic education, primary health care and family planning, and obtaining social welfare indicators that place Tunisia in the forefront of the African continent and the Arab world. The current administration has also introduced major changes in the management of hospitals and of employment training services, aimed at creating greater accountability and responsiveness to client needs. It now intends to introduce complementary reforms in the higher education syst3m, a seriously underutilized development asset. 3. Since independence in 1956, Tunisia has made considerable progress in developing higher education. Since the creation in 1960 of a National U-niversity, enrollment has grown from 2 thousand to nearly 69 thousand, and in 1990, nearly 6 thousand students graduated from six universities. Nine out of ten academic staff are now Tunisian nationals. Higher education plays an important role in social mobility : about 401 of enrollments are first-generation university students, and the same proportion are women. Despite such achievements, there are still serious shortcomings as measured against the needs of the economy and the aspirations of students and parents. The number of available graduates falls short of the number of managerial and technical vacancies to be filled, especially for the fast-growing service and export industry sectors, but also for well-established professions such as secondary school teaching. This shortage is symptomatic of rigid course offerings still biased toward long theoretical studies designed for entry into the higher echelons of the civil service, as opposed to shorter applied programs now in greater demand. The university planning system is largely unresponsive to such market signals; at the same time, arbitrary cutoffs for admission based only on subject-specific exam scores result in many students taking courses which are not their first choice. 4. This lack of flexibility and motivation is compounded by the cumulative effects of congestion. The low level of recurrent expenditures available per student per year, combined with inadequate teaching methods and support services,  -2- has contributed to high repetition and drop-out rates. These imply very high costs per graduate and massive waste of physical and teaching staff resources. The low productivity of post-graduate studies results in the declining availability of qualified lecturers. Excessive uniformity of course structure, content and delivery, the absence of independent evaluation, and overcentralized management irhibit iritiatives for improvement. 5. overMent strategy. The Government is committed to developing Tunisia's higher-level human resources potential and opening further avenues of social mobility for lower income groups and for women. It intends to increase enrollment rates for 20-24 year-olds from the present 8Z to about 141 by the year 2000. To expand access within likely budget constraints and still improve the system's responsiveness to user needs, the Government has opted for a cost-reduction strategy based primarily on a sharp decrease in the average duration of studies. This is attainable through a combination of (a) rapid development of a new type of higher education institution offering only short vocationalized courses, and (b) restructuring of existing university programs so as to emphasize shorter, self-contained cycles of study, and greater choice and selectivity in moving between cycles. 6. Rt&ionale for Bank involvement. The Bank's advice has been instrumental in helping the Tunisian Government to design the two main institutional elements of this strategy: an incentive mechanism to encourage reform of existing courses, and market-friendly governance arrangements for new institutions. Continued involvement will be essential to launch, implement, and monitor them. This effort will also complement Bank support for the reforms initiated in primary and secondary education (FY 89 Education and Training Sector Loan, Loan no. 3054-TUN) and the measures taken to increase labor mobility (Employment and Training Fund, Loan no. 3255-TUN). In particular, improved efficiency in higher education will reduce the shortage of qualified secondary school teachers. More broadly, the proposed project complements the macroeconomic reforms already introduced, with Bank support, to improve the competitiveness of an increasingly outward-oriented economy. 7. Project objectives. The project supports the government strategy of modernizing and diversifying higher education programs so as to enhance labor market relevance and student choice and shorten the average length of studies. It would do so by developing an alternative model of para-university institutions responsive to business needs, by providing direct incentives for internal change within existing universities, and by improving evaluation and resource management capacity throughout the system. 8. Project Descrintion. The first component of the project would help create a new generation of Higher Institutes of Tecbnology (ISET) (US$75.2 million base cost). These autonomous institutes would offer two-year intensive programs aimed at training technicians and middle managers. Five ISETs would be developed in the main economic and industrial regions. Three ISETs would be constructed in Tunis, Sousse and Sfax, and existing sites at Nabeul and Gabbs would be converted into ISETs. They represent a radical departure from the conventional university framework: seIection based on individual screening for aptitude and motivation  -3- in addition to exam results; enrollment limited to some 1800 students; a total attendance requirement of 2,000 hours in 2 years (compare 400 hours per year in university) including compulsory internships in businesses; correspondingly higher workload, and improved career and salary structure, for teactling staff. Curricula would include disciplines related to industry (e.g. mechanical, electrical and electronic engineering, and maintenance) and services (e.g. accounting, computer science and marketing), adapted to local enterprise and regional employment characteristics. 9. The ISETs' specially-designed legal status would allow for incroased financial and administrative autonomy, participation of employers iTl the management board, ability to charge fees for services, recruitment of teaching staff under fixed-term contracts and free-for-service training contracts with enterprises. To reduce the serious shortage of qualified teachers in technical sciences (1,100 positions in the existing institutions, of which 25X are foreigners) and to avoid the wastage rates inherent in formal postgraduate training overseas, a new postgraduate training network, relying heavily on contracts with specialized Tunisian institutes and twinning with foreign technical colleges, has been designed and will be implemented under the project. Thi.s system will train the required 600 technical teaching staff for the ISETs under the project. 10. The second component would be a National Program for University Improvement (PNRU) (US$31 million). This program would channel funds, through a competitive and transparent process, towards existing universities for the introduction of new courses, improvements and restructuring of existing courses, and/or improvements in facilities benefiting several programs, such as libraries. Sub-projects proposed by universities would be selected by a structured peer- review process (the Committee for University Improvement, CRU). Resources would be allocated according to well-defined selection criteria and operational guidelines included in a procedural manual developed before appraisal and already in use in draft form. The selection criteria reflect the main features of the Government university reform program: they provide incentives for accelerated self-contained first-degree programs, for diversification of masters-level streams to increase career options, for improving and condensing secondary teacher training programs, and for reorganizing doctoral studies. 11. Finally, the project would finance improved evaluation and resource management capacities (US$6.1 million base cost) at both the MRS and higher education institutions levels. This would involve: the design and implementation of a performance-based budgetary allocation system; the introduction of appropriate management information systems, in particular with regard to student admissions and records, facility utilization and course timetables; the establishment of an evaluation body and the implementation of an accreditation system for the higher education system; the training of university administrative and management staff; and the strengthening of MES organizational structure, through the creation of units in charge of the implementation of the PNRU and ISET programs and of academic planning and development.  -4- 12. Cg8t and Financing. The proposed project of US$ 126.3 million equivalent, to be implemented in seven years, would be financed as follows: (i) a proposed IBRD loan of US$75 million would finance 1001 of the foreign exchange component of the project, equivalent to 64.51 of total project costs net of taxes; (Hi) the Government would finance the balance of project costs of US$51.3 million, including US$9.6 million equivalent in taxes and duties. A breakdown of project costs and the financing plan are shcwn in Schedule A. In order to facilitate the timely development of project activities, retroactive financing of up to US$4 million would be included. Amounts and methods of procurement and the disbursement schedule are shown in Schedule B. A timetable of key processing events and the status of Bank Group operations in Tunisia are given in Schedules C and D, respectively. The staff appraisal report No. 9795-TUN, dated December 20, 1991, is being dlstributed separately. 13. Princival Actions Agreed Unon. (i) Effectiveness conditions as follows: (i) the formal establishment (parliamentary approval and enabling decrees) of the legal statutes of the ISETs and their teaching staff, and creation of the JSETs of Tunis, Sfax and Sousse; (ii) the transmission to the Bank of the procedural manual for the PNRU; (iii) the appointment, within MES, of a Project Coordinator; and (iv) the establishment of the organizational units in charge of the implementation of the PNRU and ISET within the MES and the appointment of their managers. (ii) In addition, the Government has provided assurances that (i) the law changing the legal personality of the existing institutions of Nabeul and Gabbs to that of an ISET should be published no later than December 31, 1992; (ii) sub-project proposals selected for financing under the PNRU and estimated at an amount equal to or in excess of US$500,000, and the first ten sub-project proposals regardless of their cost, will be submitted to the Bank for prior review; (iii) the new budgeting system will be implemented for the preparation and allocation of the higher education Budget beginning in 1995. 14. Benefits. The project is expected to lower public outlays per graduate and expand the range of undergraduate and postgraduate qualifications. An improved response by the higher education system to the demands of the economy, i.e. producing graduates with the appropriate skills, would lead to increased economic productivity and growth. 15. Risks. The success of the reform being implemented by the Government will depend upon the ISETs' ability to fulfill their mandate as originally laid out in their statute, as well as the willingness of the university community to implement the reform program. These risks have been reduced through extensive Government consultations with the academic community since 1990 to ensure participation of all concerned parties in elaborating the objectives of reform and the measures to be implemented. In addition, the project will minimize the potential impact of these risks by: creating ISETs as independent entities outside the university system, employing their staff under new conditions of  .5- service and providing them with appropriate training; and using the University Improvement component and the new budgeting procedures as incentives for individual university departments to buy into the reform process. 16. E.nmromegntalimnpact. This proposed project was reviewed under the Bank's Environmental Assessment procedures and was determined to be in screening Category C, which includes projects which are not expected to result in significant negative environmental impact. 17. RecoMmendation: I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve the proposed loan. Lewis T. Preston President Attachments Washington D.C. March 11, 1992  -6- .. - ..... Schr~~~~~~~~~~~gbdulef REUBICOP sUM3! lpBR SR=C RBUR PQ:C2 3t.timted CRoas and Fi1otna Plan -- US$ MILUON - LOCAL FOREIGN TOTAL JESlMTED COSTS 11 HlUE INSTUTES OF TECHNOLOG fOS) Pgram Dopmet 0.2 0.4 06 Constncon 25.3 11.8 37.1 Equipment & Ped.matedls 2.8 15.8 18.6 Human Rsmes DomeM 6.8 12.2 190 Sub-toal 2J 35.1 40.2 75.2 NATIONAL PROGRAM FOR UNIVUWTY PIPROVNEMWFQPll 6.3 24.? 31.0 MWAGMENT& PLANNING CAPACITIES RaOurc aUwatl system 0.2 0.2 0.5 Managent and Maintenanc systems 0.2 0.? 0.9 Evalatlon Q.1 0.1 0.2 Managn TrainIng 2.4 0.9 3.3 Proet managemen 0'8 0.5 1.3 Sub-totl 2J 3.7 24 6.1 Tom a"coskts 45S 1 3 Phyica Contingencies 1.3 1.S 2.8 Pricecontngeies 4.9 6.2 11.1 - ---- -- --- -- -- - TOTAL PHU CTS 3i:Q 126.3 FIANCING PLAN Govemment 51.3 51.3 IBRD 75.0 75.0 1/ INCLUDNG US$ s.6 VAL,, 1X IN TAXES AND DUTIES 2r SUB-TOTALS MAY NVr A 'JD UP DUE TO ROUNDIN.  7- REUC OF TUNIS7A Sh A Pro(.-:Ixgt 1gtomd SUMMARY OFP PROPOSC PFMUREMENT ARRA4EMENT8 af (inludn ContIn , Wme & dute) (US$ mllion equvivaent PRUDIN ICa UlS LC SKPPING OTHER N TOTAL WON-HER fN6T_ E OF TCb_NWL_Y (sLn9- LaOW Acquiiton 8.5 5.5 l,.2td AseqtddUz~~~~~~~~~~~~~~~~~~~~~~~6 6.S S s z ** w 3 ;R t v | t ;00 0 OO CilM works uding arch. ftoes) 34.1 4.0 36.1 Eqpm. Books& pod.a 20.0 3.5 0.5 24.6 17.8. = 0.3, . 30. ExpttO Traltiningailc 19.3 19.3 &hols t ii 1 g P - ~~~~ P wr 1.5. 12.5-,,'* schcwtashps I.01. ab4aIal 20.0 0.0 30 7.8 2.0 5.5 86t dEofwcbanIcA 17.'O 0. 0 11, ' 4i2g '- .0,0. '46 P p fOR UNIVEMSITY I MPOVDAV NT-(P tJ1 bl CbH Waft 2.5 0. Equlprne books & pd. maL 140 7.0 2.5 0.5 24.6 Expert svIc 1. 1 Plowe 1 1.e } '. .' Z ';~~~~~~~~LU. ab4" 146 7. 0 s aa 3J.0 , ~ ~ ~ V, E_uipntoffl & PedsoooW maWK b 1.0 004 A.4 Exp"andTehAch3an 1A 1~'2.b%'~ Sub-fd 1D OOA Q OA 4.7u TOTAL PROJT: 37 36 11.2 a"52 5 126. d Shaded flOgwathe do repectwaniun financed byX t ank loan. bi Pr_urent wangemntr tho PNRU are only Indcea and have be dved frm a same of sb-prot reevd frm unwhrs.  -8- REPUBLIC OF TUNISIA 5chgdue B