Malawi - Primary Education Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-6757-MAI MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN THE AMOUNT EQUIVALENT TO SDR 15.1 MILLION TO THE REPUBLIC OF MALAWI FOR A PRIMARY EDUCATION PROJECT DECEMBER 21, 1995 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (as of October, 1995) Currency Unit = Malawi Kwacha (MK) US$1.00 = MK15.7 FISCAL YEAR (FY) April I to March 31 WEIGHTS AND MEASURES I meter (m) = 3.281 feet (ft) 1 kilometer (km) = 0.621 miles (mi) 1 square kilometer (sq km) = 0.386 square miles (sq mi) 1 cubic meter (m3) = 264.2 US gallons GLOSSARY OF ABBREVIATIONS CAS = Country Assistance Strategy CIDA = Canadian International Development Agency DDEO = Deputy District Education Officer DEO = District Education Officer EDMU = Education Development Management Unit (integrated into MOE structure) GABLE = Girls' Attaimnent in-Basic Literacy and Education GAC = Gender-appropriate Curriculum GOM = Government of Malawi GTZ = Gesellschaft fuer Technische Zusammernarbeit (German Technical Cooperation Agency) ICB = International Competitive Bidding ICR = Implementation Completion Report IEC = Information, Education and Communication IDA = International Development Association KfW = German Bank for Reconstruction MIE = Malawi Institute of Education MIITEP = Malawi Integrated In-service Teacher Education Program MOE = Ministry of Education MTEF = Medium Term Expenditure Framework NCB = National Competitive Bidding NGO = Non-governmental Organization ODA = Overseas Development Administration PEA = Primary Education Adviser PEP = Primary Education Project PICMO = Private and Independent Construction Management Organization PIU = Project Implementation Unit PPF = Project Preparation Facility SCC = Systematic Client Consultation SPFP = Sector Policy Framework Paper SSA = Sub-Saharan Africa SU = Supplies Unit TA = Technical Assistance TDP = Teacher Development Program TESC = Third Education Sector Credit USAID = United States Agency for International Development  FOR OFFICLL USE ONLY MALAWI PRIMARY EDUCATION PROJECT CREDIT AND PROJECT SUMMARY Borrower: Government of Malawi Implementing Agency: Ministry of Education Beneficiaries: Ministry of Education, Local Communities, and Primary School Students Poverty: Program of Targeted Interventions (PTI). The project would contribute to poverty reduction by improving access to and the quality of primary education. Amount: SDR 15.1 million (US$22.5million equivalent). Terms: Standard IDA terms with a maturity of 40 years including a 10-year grace period. Commitment Fee: 0.50% on undisbursed credit balances, beginning 60 days after signing, less any waiver. Financing Plan: See Schedule A. Net Present Value: Not applicable. However, least-cost, cost-effectiveness, and fiscal impact analyses have been undertaken (see Annex 3 of SAR). See also Schedule B showing the results of the overall private and social rates of return to investing in education in Malawi. Staff Appraisal Report: Report No. 15127-MAI Map: Map No. 27693 Project Identification Number: 42305 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed wiihout World Bank authorization.  1 I l  MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF MALAWI FOR A PRIMARY EDUCATION PROJECT 1. I submit for your approval the following memorandum and recommendation for a proposed Develo pment Credit to the Republic of Malawi for SDR15.1 million, the equivalent of US$22.5 million , on standard International Development Association (IDA) terms with a maturity of 40 years. The Credit will help to finance urgently needed primary school activities under the overall umbrella of the Government's Education Sector Policy and Investment Framework Paper. Government and Beneficiaries will contribute US$1.2 million equivalent and US$1.6 million equivalent respectively. 2. Background. The Government of Malawi has made significant progress in developing the education system since Malawi gained its independence in 1964. The World Bank has been actively involved in assisting Malawi's education sector, with the first project approved in 1967. Six projects have been completed so far; one project (the Second Education Sector Project) is ongoing. These projects primarily focused on expanding primary and secondary education, teacher tTaining, and strengthening management and planning. Although Malawi's education system has benefited considerably from the assistance of the Bank and other donors in the past, that support has not produced the desired impact because a well-conceived and comprehensive policy framework and coordination has not been in place. 3. In 1994 the Bank began preparing a new operation, the Third Education Sector Credit (TESC), which will pursue an integrated sector approach to support the Government's program for the development and improvement of the sector as a whole. The approach is outlined in the Sector Policy and Investment Framework Paper which emphasizes primary education and improvement in school quality and girls' participation. Its ambitious targets include achieving a 90% primary school net enrollment for every district; reduction of primary teacher:pupil ratio from 1:70 at present to 1:45 by 2005; and provision of one textbook per primary pupil for each of the three main subjects (Mathematics, English and General Studies). The principal measures for achieving these targets are higher budgetary allocations to education in general and to the primary sub-sector in particular, greater community and private sector participation in construction and operation of schools, and increased construction and focus on community schools (Grades 1-4) combined with a social mobilization campaign aimed at girls and their parents. For post-primary education, the Government envisages more day schooling and increased cost recovery. 4. Project Rationale. While the TESC was being prepared, the new democratically-elected Government announced that all primary school fees would be abolished in October, 1994. While this action was consistent with the Government's overall goal of poverty reduction through economic growth and investment in human capital, it led to an education crisis caused by an influx of over one million additional students into the primary system and the hiring of nearly 20,000 new teachers from among secondary school leavers. These hastily recruited young people were given only three weeks of "induction" training before being posted to schools. Retired teachers were called back to help with the crisis. Government has estimated that about 38,000 additional classrooms will be required to accommodate this influx of children if they do not drop out from 'Total cost includes US$1.4 million allocated to Project Preparation Facility (PPF)  2 the system. At present classrooms are grossly overcrowded and thousands of children take their lessons in various temporary facilities and in the open air. While access to schooling has increased, the quality of education has fallen: many young students have virtually no learning materials and only a few young untrained teachers to guide them. Unless these pressing needs are quickly addressed, there is a risk of losing the public's enthusiastic support for primary education. 5. At the request of the Government, the Bank agreed to 'fast-track' urgently needed primary school activities of the TESC under the overall umbrella of the Government's Education Sector Policy and Investment Framework. The Malawi Primary Education Project (PEP), amounting to approximately $US25.2 million, will have three major components: construction of classrooms, provision of teaching and learning materials, and implementation of selected activities for strengthening teacher skills. These urgently needed components are well-focused, simple, ready, and capable of being delivered quickly. The Government is highly committed and enthusiastic as shown by its sector policy, and the increase in the share of education of its total budget (from about 8% in 1988 to about 24% in 1995 for the recurrent budget). The share of recurrent education expenditure allocated to primary education increased from 45% in 1990/91 to 71% in 1994/95. 6. Project Objectives. The objectives of this fast-track operation are to: (i) ensure that the quantitative gains in enrollments are maintained through retaining newly-enrolled children in the system; and (ii) improve the quality of primary education through providing teaching and learning materials and pedagogical support to, and in-service training for, teachers so that the education provided will produce real learning gains. 7. Project Description. The three main project components, all focused on primary education, are: (i) primary classroom construction; (ii) pedagogical support and in-service teacher training; and (iii) provision of teaching and learning materials. 8. Primary Classroom Construction (US$11.8 million). The project would finance the construction and provision of furniture for 1,600 primary classrooms. Six hundred of these will be in 75 new sites (new primary schools) mainly in rural areas; the remainder will expand especially overcrowded schools. PEP will finance the construction of an administration block, two teacher houses, two pit latrines and a borehole in each new school, as well as the planting of sapling shade trees at all new sites to provide shade for the many hot months. Classroom construction will follow the shell model, a low-cost high-quality construction design. Though new to Malawi, the model has proved successful in other parts of Africa (e.g. Ghana). MOE, through a private and independent construction management organization (PICMO), will put up shells (foundation, steel columns, and roof), which communities will complete with in-fills using blocks made with hydraform machines, or other local materials. This shell can be constructed very quickly, permitting school-children to move from their "classroom" in the open air, to the shade and shelter of a classroom shell, even before the in-fill is completed. District officials and NGOs will help to mobilize the community in completing the classroom shells. To ensure that this is attainable, orientation sessions of 2-3 days are being held for key officials from each district, and community leaders to encourage a sense of ownership by the communities. 9. Pedagogical Support and In-service Teacher Training (US$4.7 million). The long-term goal of this component is to improve the learning in Malawi's primary schools by establishing a teacher support system that provides regular, sustained assistance to every school and to every teacher. This component will provide support to: (a) the Malawi Integrated In-service Teacher Education  3 Program (MIITEP) for certification of untrained teachers, and (b) pedagogical support for all primary teachers. MOE has involved ODA, GTZ/KfW and the Bank in planning this program. These other donors have agreed to provide parallel financing for activities to supplement those being supported by the Bank. The activities being financed by these other donors include: training and support for Regional Education Office staff, District and Deputy-district Education Officers, Primary Education Advisers, head-teachers and deputy heads; construction of resource centers; strengthening of MIE; and the provision of technical assistance. PEP would finance: * Preparatory activities for implementing the Teacher Development Program (TDP) including: (i) setting-up an apex coordinating body for the primary education TDP; (ii) designing a curriculum; (iii) developing training manuals, modules and handbooks; (iv) training trainers; and (v) staff development. A campaign to inform all key players about the program and their responsibilities has been launched with PPF financing. * Planning and preparation of course materials and the implementation of the MIITEP aimed at about 20,000 untrained teachers. MIITEP will start in January, 1997 with 3,000 students on a three-month residential course. Thereafter, the students will be deployed to schools and continue their training for 21 months through sub-zonal seminars and supervised teaching in their schools. A formative evaluation will be conducted after three consecutive residential courses. To be certified, students will be required to write a final examination in addition to writing a specified number of projects and assignments. * School and sub-zonal in-service training for all primary teachers. Each resource center and school will be provided with packages of teaching and learning materials. * Provision of motorcycles for all the 315 primary education advisers to increase their mobility in visiting schools and providing assistance to teachers. 10. Learning Materials and Textbook-related Activities (US$3.1 million). The ongoing Bank- financed Second Education Sector Credit has a major component for the development, production and distribution of textbooks to all primary school grades, with a planned target of one textbook for two students and one guide per teacher in four subjects - Mathematics, Chichewa, English, and General Studies. Additional needs for textbooks resulting from the massive influx of children into the system in 1994 are being covered by parallel support from CIDA. PEP would concentrate on: a) acquiring and distributing basic learning materials, including exercise books, pencils, slates, chalk and boards; b) furnishing book storage rooms in new primary schools; c) strengthening the Supplies Unit of MOE including the computerization of book-distribution operations and provision of associated training and technical assistance; d) training teachers and primary education advisers on the effective use of textbooks; and e) evaluating the content and durability of textbooks developed under the IDA-financed Second Education Sector Credit for possible revision under TESC. 11. Project Cost and Financing. The total project cost is estimated at US$25.2 million equivalent. The foreign exchange component of the project is estimated at 48% (US$12.4 million) of the total cost. The IDA Credit would finance 89.0% of the total project cost (US$22.5 million); Government and communities would finance about 4.8% and 6.2%, respectively (approximately US$1.2 million and US$1.6 million equivalent, respectively). Parallel financing totaling about US$27.0 million equivalent is being provided by KfW, ODA, CIDA and GTZ for the financing of urgently needed supplementary activities under the three main components of PEP. A summary of  4 the project costs and financing plan is provided in Schedule A. Procurement arrangements and the disbursement schedule are summarized in Schedule B. A timetable of key processing steps and the status of Bank group operations in Malawi are provided in Schedule C and Schedule D, respectively. Staff Appraisal Report No. 15127-MAI and Map IBRD No. 27693 are attached. 12. Project Management and Implementation. Day-to-day management and implementation of the project will be carried out by the relevant units of the Ministry of Education. The Education Development Management Unit (EDMU), recently created under the direct responsibility of the Permanent Secretary, will coordinate project activities, administrative, procurement, and financial matters, contacts with IDA and inter-agency coordination. Management of the civil works program and related furniture and equipment needs will be delegated to PICMO, under contract to MOE, and following a procedural manual acceptable to IDA. The provision of teaching and learning materials will be handled and coordinated by the Supplies Unit in the Ministry of Education; the implementation of the Pedagogical Support and In-service Teacher Training Program will be undertaken by MOE's newly established Coordinating Unit for the Primary Education Teacher Development Program. 13. Lessons from Previous IDA Involvement. Unlike previous projects which provided ad-hoc interventions, and thus resulted in a limited impact, this project, and the TESC will share in the financing of a time-slice of the Government's overall program as specified in MOE's draft SPFP. Given this framework, the projects should be more effective in improving the sector. Lessons learnt from past projects have been incorporated in designing this operation. The design of classroom construction has been modified to reduce construction time and cost and maximize community participation. The school designs will consist of a shell, which communities will complete with in-fills. This process is expected to generate a strong sense of school ownership by the local communities. Given that communities did not participate as fully as expected under the First Education Sector Credit, as reported in the Implementation Completion Report (ICR), community participation under PEP will not be taken for granted. A vigorous public awareness campaign and community mobilization activities as well as training for district and community leaders, are planned. An incentive mechanism for communities to participate fully has been built into the project by making the provision and delivery of furniture and learning materials conditional on the completion of the in-fills. Project implementation will be expedited by modifying the contracting arrangements so that contracts are awarded through a private and independent construction management organization (PICMO) rather than via the existing Project Implementation Unit (PIU) which is being phased-out. Textbook distribution will also be privatized rather than being undertaken expensively by the PIU. 14. Rationale for IDA Support. Poverty alleviation and human resource development are at the core of IDA's strategy in Malawi because both are essential elements of the country's development approach. This project is consistent with the Bank's Country Assistance Strategy (CAS) in Malawi, presented to the Board on June 9, 1994 (Report No. P6236-MAI). The major objective of the CAS is sustainable poverty reduction through economic growth with equity. To attain this objective the strategy focuses on: (i) human capital development through improved education, health and other social services; (ii) expanding employment opportunities through a liberal environment for private sector entrepreneurship and initiative, expanded access to financial capital, and policies and programs that encourage labor-intensive activities and participation of women; (iii) enhancing agricultural productivity for poor, small farmers and ensuring sustainable use of land resources; and (iv) introduction of an integrated family-planning strategy to curb population growth and reduce fertility rates. Education is central to all four dimensions of the  5 strategy and primary education is among the factors most critical for poverty reduction. IDA has been associated with Malawi's education system for the last thirty years. IDA has incorporated lessons learned in project preparation and implementation during those years and is now well positioned to assist the implementation of the Government's sector development plan. PEP will provide timely assistance to alleviate the extreme pressure the primary education system faces at present. 15. Agreed Actions. Key issues critical for project implementation and sustainability have been identified, and appropriate actions to deal with them have been agreed with GOM. These include: (i) Limited implementation capacity: To deal with implementation capacity constraints, a completely new arrangement involving the private sector is envisaged, along with MOE's newly created EDMU to ensure quality control and oversight. GOM has selected a private and independent construction management organization (PICMO) to manage and supervise the PEP construction program. PICMO's selection was a condition of Board presentation. In addition, during negotiations, GOM gave assurances that it will: maintain EDMU with adequate professional and support staff under terms of reference acceptable to IDA and consult with IDA on any changes in EDMU staffing or responsibilities; and submit semi-annual progress reports, annual audit reports, and an implementation completion report within four months of completing the project. A mid-term review will be scheduled during the second year of implementation. Furthermore, MOE is preparing a Project Implementation Manual to assist the various implementing units in preparing their tasks. As a condition of Credit Effectiveness, GOM has agreed to submit a copy of the completed Project Implementation Manual to IDA; (ii) Inadequate procurement planning and processes: Implementation may slow down unless satisfactory procurement planning and processes are in place. During appraisal, EDMU prepared a procurement plan which identifies each procurement package with its estimated value, procurement method, and time schedule. The plan will be used by PICMO in monitoring actual procurement performance, and will be updated on a quarterly basis and included in a written progress report to IDA. Standard IDA bidding documents will be used for ICB, while GOM prepared NCB bidding documents, which the appraisal mission reviewed and found satisfactory; (iii) Need to use transparent and poverty-focused criteria for classroom and school site selection: During negotiations, MOE provided a list of districts in which new classrooms will be constructed and the total number of classrooms to be constructed in each. These were selected on the basis of a ranking of the districts using a formula that combined poverty level, enrollment ratios, gender disparities and pupil:classroom ratios across the districts. The Government has submitted to IDA, as a condition of Board presentation, the list of sites selected in consultation with communities (within each district) where new schools will be constructed as well as the names of the existing schools to be expanded, ensuring that these list contains at least 80% of the total number of classrooms to be constructed under PEP; and (iv) Severe financial constraints coupled with the problem of financing the recurrent costs of GOM's educational development program: Some measures envisaged in the SPFP include increased cost recovery at post-primary education levels, increased community involvement, cost-saving measures such as more secondary day schooling and double-shifting, encouragement of the private sector, and the choice of least- cost alternatives in project design. It will also be necessary to improve the efficiency of expenditures and of delivery systems. The Government has submitted to IDA, as a condition of Board presentation, a prioritized summary of its policies in the sector as a whole in a manner that demonstrates that a critical assessment of trade-offs and policy options has been considered to arrive at programs and targets that are affordable and sustainable. Meanwhile, donor financing of recurrent expenditures (on an increasing or constant basis) in the short-run will provide some respite until Malawi's growth is more sustainable.  6 16. Poverty Category. The project is part of the core poverty program for Malawi and is included in the program of targeted interventions. Poverty in Malawi is widespread and severe. Reducing poverty is a central policy objective of the new Government which in 1994 initiated the Poverty Alleviation Program. The Bank is assisting the Government's poverty alleviation efforts. The major objective of the Bank's Country Assistance Strategy (CAS) for Malawi is sustainable poverty reduction through economic growth with equity. This project would contribute to poverty reduction by improving access to and quality of primary education. In the selection of communities and districts where classrooms will be constructed under this project, the level of poverty was prominent among the five major criteria used. The main beneficiaries of this project will be primarily children in poor communities in mainly rural and peri-urban areas. 17. Environmental Impact. The project's environmental category is C. Minimal environmental risks are foreseen. The 75 new schools to be constructed will be small and will be dispersed in rural areas; most of the new classrooms will be provided by expanding existing schools, with little detrimental environmental effect. The use of blocks made with hydraform machines (which apply pressure on cement-soil mixtures) and not burnt bricks would reduce the need for firewood and would also not be detrimental to the environment. The planting of sapling shade trees at all new schools will have positive effects on the environment. 18. Program Objective Category. PEP will expand access to and improve the quality of primary education, a cornerstone of poverty reduction and the foundation for human resource development. Through its specific targeting of the poor, PEP constitutes a program of targeted interventions (PTI). 19. Participatory Approach. In developing and implementing the Bank's education strategy a feedback from systematic client consultation (SCC) has been playing an important role. As the findings in a 1995 SCC exercise carried out in the country show,2 the need for schools was ranked by the communities as one of two top priorities (the other was credit). Many communities have been participating in the implementation of school construction, through labor and monetary contribution, and some have generated, managed and implemented their projects without assistance from outside. Communities consistently ranked school committees as organizations valued for their ability to deliver the needed services. This seems to validate the contention that communities have the provision of schools as their top priority and that with some facilitation, they will be enthusiastic participants. PEP is combining a supply orientation (to provide a quick response to this high demand for education by the communities and to facilitate their involvement) with a demand-driven approach (through the active involvement of the communities). An information, education, and communication (IEC) campaign and community mobilization are planned while some training for community members and leaders, and district officials has already begun. 20. NGO Involvement. Non-governmental organizations have increasingly become active in Malawi recently, due largely to the newly-instituted democratic environment which has opened doors for NGO activities. Most NGOs have a comparative advantage in the social sectors, given their proximity to grassroots levels, and also have existing capacity (though not nationwide) to deal with community-based assignments. NGOs will be increasingly called upon to play a major 2The SCC was done for the Malawi Social Action Fund project preparation. Nineteen representative communities in all three regions were surveyed.  7 role in the implementation of PEP especially in the areas of community mobilization, sensitization, capacity building and training for leadership and transformation, selecting good caliber people, and putting into place monitoring and evaluation mechanisms. This project will finance some of these activities through NGO technical assistance and the participation of NGOs as resource persons for training and capacity building efforts at the community level. NGOs will be encouraged to bid for construction contracts, preferably on a joint venture basis with local contractors, particularly in areas where they may have comparative advantage such as the construction of boreholes, pit latrines, landscaping and external works. 21. Project Benefits. The major benefits of the project would be increased coverage and improved quality of primary education. Over a three-year period, the project would increase effective access to education (as distinct from simply access to a school) through the construction of classrooms to provide shelter and adequate learning conditions for about 100,000 children currently taking their lessons in the open air. Most of these classrooms will be built in rural and underserved peri-urban areas. Qualitative improvements, through better-trained teachers and adequate supply of teaching and learning materials, would improve learning for all primary school children (around 3 million children) and reduce repetition and drop-out rates. Efficiency gains attributable to reductions in repetition and drop-out rates should result in a reduction of education's share of the GOM total recurrent budget. If average repetition rates drop from their present level of over 15% to 5% over the next decade, then all other things being equal efficiency gains will reduce education's annual share of GOM's total recurrent budget by an average of 3 to 4 percentage points. The project would support innovative measures such as school-based supervision and delegation of pedagogical support from the central ministry to regional and departmental levels to make the system more responsive to local needs. Local communities would be required to participate financially and in-kind in primary school construction and maintenance, so reducing the burden on the Government budget and increasing ownership and sustainability. Furthermore, a cost-benefit study using the Malawi 1990/91 household survey data, illustrates that the private and social rates of return to primary education in Malawi are quite high, estimated at about 23% and 20%, respectively3. 22. Project Sustainability. Donor support in the education sector is critical until a sustainable growth path has been established. In the long-run, sustainability of the sector needs to be enhanced. The sector program will develop a strategy - with quantifiable benchmarks - to lower recurrent expenditures to more sustainable levels. Government commitment and the involvement of communities and the private sector in financing and implementation of the project, will enhance the project's sustainability in the long run. Efficiency gains as a result of quality improvements, and the expansion of day schooling (instead of government-subsidized boarding) as well as increased cost-recovery at post-primary education levels will lead to substantial savings and mobilization of increased resources, and will make the system more affordable and sustainable. 23. Project Risks. The main risks the project faces are four-fold. First, the Government's capacity to rapidly implement the fast track activities and the overall sector program is not assured. For the civil works components, this risk would be addressed by transferring responsibility for implementing construction from the MOE to PICMO and communities, and limiting the Government's role to overseeing and quality control. Second, the capacity of the construction industry in Malawi to build a relatively large number of classrooms quickly is not assured. To counter this risk, an analysis was undertaken to assist the Government to assess this 3See Schedule B and Annex 3 of the SAR for details on rate of return analysis.  8 capacity. It became clear that the traditional way of building (small contractors using bricks and mortar, and managed by PIU) put a serious cap on the number of classrooms that could be built in a year. This led to the shell classroom scheme, which has been discussed and analyzed with construction practitioners (architects and builders) and has been successfully piloted under PPF financing. Third, the innovative programs proposed under the project, in particular those to enhance decentralized school-based supervision, may not fully reach their objectives. These risks would be addressed by careful monitoring and annual reviews of progress, expecting that these programs may need to be modified during implementation. Finally, there are macro-economic 4 risks. The loss in revenues from the abolition of fees and the rapid increases in education expenditures (caused by the massive influx of students and the hiring of teachers) have exacerbated an already difficult macro-economic situation. The Government is committed to human resource development as a means to achieve its objective of poverty reduction. The major challenge now is how to do more with less resources. GOM has put the emphasis on prudent fiscal management at the economy-wide level, better prioritization, and the need for efficiency and financial sustainability measures at the sector level. In the Bank's dialogue with GOM, the challenge for fiscal sustainability is being discussed in the context of a Medium Term Expenditure Framework (MTEF) which is coordinated by the Ministry of Finance. Under the MTEF, fiscal policies involving expenditure restraint, prioritization and revenue mobilization are being explored. At the sectoral level, a simulation model for education has been developed. This will assist MOE to assess the viability of alternative efficiency, cost-saving and resource mobilization options. We expect that economic growth will increase in the next couple of years. There is some risk, however, that if economic growth prospects are not achieved, poor economic performance may make it difficult to achieve sustainability with regard to financing the necessary recurrent expenditures. To mitigate this risk, donor financing of some recurrent costs on a constant or increasing basis for about five years under TESC is being considered. After that period, we expect financing on a declining basis to be possible. 24. Recommendation. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve it. James D. Wolfensohn President Washington, DC December 21, 1995 Attachments 4Just before their abolition, revenues from school fees amounted to about US$1.5 million per year.  9 Schedule A Page 1 of I MALAWI PRIMARY EDUCATION PROJECT Project Costs and Financing Plan (US$ million, including taxes and duties) Local Foreign Total Primary School Construction Program 6.2 5.6 11.8 Teacher Support & Training Program 2.4 2.4 4.7 Learning Materials & Textbook-related 0.4 2.7 3.1 Activities Project Management, and Strengthening of 0.3 0.2 0.5 EDMU/PIU Total Baseline Costs 9.2 10.9 20.1 Physical Contingencies 0.5 0.5 1.0 Price Contingencies 3.1 1.0 4.1 Total Project Costs 12.8 12.4 25.2 (Totals may not add up because of rounding) Financing Plan Local Foreign Total IDA 10.1 12.4 22.5 Government of Malawi 1.2 1.2 Communities 1.6 1.6 Total Project Costs 12.8 12.4 25.2  I  10 Schedule B Page 1 of 4 MALAWI PRIMARY EDUCATION PROJECT Private and Social Rates of Return (ROR) to Investment in Education(%)' Primary Education over Secondary Education over No Education Primary Education Wages Private ROR, including all private costs 22.76 15.27 Private ROR, with private costs except 28.11 15.27 fees and uniforms Private ROR: using forgone costs only 36.31 29.69 Social ROR 19.88 14.13 Income3 Private ROR, including fees and 21.95 8.65 associated private cost Private ROR, with private costs except 28.11 8.64 fees and uniforms Private ROR: using forgone costs only 28.21 25.20 Social ROR 20.02 7.66 Sensitivity Analysis using Wages No Secondary Fee Increase 15.27 Secondary Fees Increase by 10% 14.74 Secondary Fees Increase by 20% 14.25 Bank staff estimate using 1990/91 Household Expenditure and Small-scale Economic Activities (HESSEA) data. ' Calculations use wages and total income, and considering foregone costs only, then include fees and other associated private costs of education. 2Only urban areas. 3Everybody between ages of 10 to 50. Expenditure was used as a proxy for Income in rural areas where wage data are not available. Main Beneficiaries and Nature of Benefits The main beneficiaries would be rural and urban households with primary students. There would be an overall improvement in the quality of primary education through wider distribution of teaching and learning materials, better trained teachers, improved teacher support and supervision, and increased number of classrooms. In the selection of districts and communities to locate new schools and for expansion of existing schools, transparent criteria have been used, with a particular focus on the poor, and gender disparities in primary school enrollment. These criteria include: poverty levels, enrollment ratios, girls' enrollment ratios, student:classroom ratios, and classroom construction activities already underway.  11 Schedule B Page 2 of 4 MALAWI PRIMARY EDUCATION PROJECT Financial Summary (Million MK) FY 1996 FY1997 FY 1998 FY 1999 Project Costs Investment Costs 1,325.0 7,568.4 12,054.4 2,779.0 Recurrent Costs 63.4 344.4 586.8 516.7 Total 1,388.4 7,912.8 12,641.2 3,295.7 Financing Sources Percentages IDA 100 93.7 89.7 69.7 Government 2.5 6.3 6.1 Communities 3.8 4.0 24.2 Total 100 100 100 100  12 Schedule MALAWI Page 3 of 4 PRIMARY EDUCATION PROJECT Key Education Performance Indicators Most Recent Year Data Indicators Estimate Source Inputs _ ________ Finance % of expenditure from total GOM budget 21 1994/95 MOE % of GDP assigned to education 7.5 1994/95 Pov.Prof. % of ed. development expend. from total dev. budget 8 " " MOE % of ed. recurrent expend. from total recurrent budget 25 " " % of education expenditure assigned to primary 73 __"_"____ % of education expenditure assigned to secondary 1 5 % of education expenditure assigned to tertiary 1 2 Teachers Number of primary teachers 45,765 1994/95 MOE Number of secondary teachers 2,672 1993/94 % of primary unqualified teachers 42 1994/95 Primary pupil-teacher ratio 61 1994/95 School buildings & facilities Number of primary classrooms 20,036 1993/94 MOE Number of primary schools 3,118 1992/93 Pupils per primary classrooms: permanent 154 1994/95 Instructional materials & equipment Students per textbooks (Chichewa, Mt bh, English) 3 1994/95 MOE Primary: proportion with access to desks 7 1994/95 General Attendance Primary enrollment: all 2,860,819 1994/95 MOE % of girls in primary 47 1994/95 % of girls in upper-primary (Std.6-8) 42 1994/95 Primary Gross Enrollment rate (GER) Female 127 1994/95 MOE Ali 134 1994/95 " Secondary schools: total enrollment (Formsi-4) 45,990 1993/94 % of girls in secondary schools 39 1993/94 MCDEs: Total Enrollment 56,319 1993/94 " % of girls in MCDEs 3 1993/94 " Secondary Gross Enrollment rate (GER): 1987-1992 4 1994 SID Outputs/outcomes % Literacy rates: all 45 BDDCA Female 30 BDDCA Percentage reaching Std.4 (1987-1992) 69 1994 SID % completing primary wlin normal period (1981/82 class) 19 USAID.. Official PSLCE pass rate 79 1994 MOE % of transition rate (PSLCE) 12 1993 _ _ Official MCE pass rate 65 1993 Dropout rate: all 17 1993/94 Males 16 1993/94 Females 17 1993/94 Dropout rate: Std.6-7: All 14 1993/941 Males 11 1993/94 _ Females 18 1993/94 _ Primary repetition rate: all (1987-1992) 17 1993/94 _ Average number of years taken to complete primary, males 13 1993/94 USAID Average number of years taken to complete primary, females 16.1 1993/94 USAID  13 Schedule B Page 4 of 4 PRIMARY EDUCATION PROJECT Key Project Performance Indicators Indicators 1995/96 1996/97 1997/98 1998/99 All (PPF) A. Inputs l.Construction Program Classrooms 96 452 848 204 1600 Cladding of classrooms 96 452 848 204 1600 Administration blocks 12 19 31 13 75 Teacher houses 24 38 62 26 150 Pit latrines 24 113 212 51 400 Boreholes 12 19 31 13 75 Furniture 2880 13560 25440 6120 48000 2. Learning materials and textbook-related activities Procurement of learning materials 50% 50% Distribution of learning materials 50% 50% Manual for materials management 100% Printing of training modules for teacher training 9% 46% 46% Materials for school-based in-service training 60% 20% 20% Teaching and learning material packages for teachers 60% 20% 20% 3. Training Mobilization and orientation for DEOs and community leaders 50% 50% Two week workshop for MIE staff on effective use of textbooks 100% Orientation of 300 trainers to train teachers on effective use of textbooks 50% 25% 25% Staff development for trainers at TTCs, PEAs, and head-teachers 50% 50% School-based in-service training for PEAs, heads, and deputy-heads 60% 20% 20% Sub-zonal in-service training: PEAs, head-teachers & experienced teachers 60% 20% 20% 4. Miscellaneous Hydraform machines 28 Vehicles for SU and EDMU 100% Computers for SU, EDMU 100% Motorcycles for PEAs 315 B. Process PEAs- frequency of visit Primary teachers qualified (%) 58% 58% Frequency of headmaster-teacher interaction Computerization of the Supply Unit 100% Textbook evaluation 50% 25% 25% Set-up of PICMO 80% 20% C. Outputs/Outcome Number of primary student places : all 5760 27120 50880 12240 96000 Primary student places: female (%) 47 47 48 49 48 Pupil:permanent classroom ratio 153 150 143 142 147 Repetition rate (%)* 17 15 13 11 Dropout rate (%)* 1 7 15 13 11 * 1993/94 rates reported (MOE). Governments target is to reduce these rates to 5% by 2005. These and other indicators will be monitored to ensure improvement in internal efficiency.  14 Schedule C Page 1 of 2 MALAWI PRIMARY EDUCATION PROJECT Summary Procurement Arrangements (US$ million equivalent, including taxes and contingencies) Procurement Method Procurement Arrangements International National - Non ICB/NCB Aggregated as Competitive Competitive Consulting Non-IDA Other Bidding Bidding Other Services Financing Total 1. Civil Works 4.89 4.19 0.0 0.0 0.93 10.00 (4.65) (4.00) (8.65) 2. Goods i) Equipment, Motorcycles, 0.70 0.0 0.30 0.0 0.45 1.45 Cars (0.67) (0.29) (0.96) ii) Furniture 0.0 1.16 0.17 0.0 0.0 1.33 (1.10) (0.16) (1.26) iii) Teaching and Learning 3.92 0.70 0.68 0.0 0.0 5.30 Materials (3.92) (0.70) (0.68) (5.30) 3. Consultancies and Training i) Technical Assistance 0.0 0.0 0.0 2.28 0.0 2.28 (2.28) (2.28) ii) Training a) Teacher Training 0.0 0.0 2.7 0.0 0.0 2.70 (2.7) (2.70) b) Other Training 0.0 0.0 0.66 0.0 0.0 0.66 (0.66) (0.66) 4. Miscellaneous i) Recurrent Expenditure 0.0 0.0 0.71 0.0 0.80 1.51 (0.64) (0.64) Total 9.51 6.05 5.21 2.28 2.18 25.24 (9.24) (5.80) (5.13) (2.28) (22.46) Note: Figures in parenthesis are the amounts financed by International Development Association  15 Schedule C Page 2 of 2 MALAWI PRIMARY EDUCATION PROJECT Summary Disbursements Schedule Amount of the Credit Percent of Expenditures Allocated to be Financed by IDA (US$ Million) Association Category Amount % I. Investment Costs 1. Civil Works 7.43 100% For. & 95% Loc. 2. Furniture 1.19 100% For. & 95% Loc. 3. Equipment and Vehicles 0.74 100% For. & 95% Loc. 4. Teaching and Learning Materials 4.90 100% For. & 95% Loc. 5. Technical Assistance 2.08 100% Tot. 6. Training / Workshops 3.12 100%Tot. Total Investment Costs 19.46 II. Recurrent Costs 7. Incremental Operating Costs 0.45 95% through March 31, 1997, and 80% thereafter Ill. PPF 1.35 IV. Unallocated 1.19 TOTAL CREDIT AMOUNT 22.46 Tot. = Total Cost For. Foreign Cost Loc. Local Cost Estimated IDA Disbursement Schedule (US$ million) Program Years FY 1996 FY 1997 FY 1998 FY 1999 Annual disbursement 1.4 7.4 11.3 2.3 Cumulative disbursement 1.4 8.8 20.1 22.5  16 Schedule D Page I of I MALAWI PRIMARY EDUCATION PROJECT Timetable of Key Project Processing Events Identification May 1995 Preparation June 1995 Appraisal and Negotiations September 1995 - October 1995 Planned Board Date January 1996 Planned Date of Effectiveness March 1996  I  17 Schedule E Page 1 of 3 MALAWI PRIMARY EDUCATION PROJECT The Status of Bank Group Operations in Malawi Summary Statement of IDA Credits (as at December, 95) Amount in $US millions (less cancellations) Loan or Fiscal Undis- Closing Credit No. Year Borrower Purpose Bank IDA bursed Date Credits 53 Credits Closed 910.70 C19660-MW 1989 Malawi Agri. Marketing & Est. 18.30 0.59 06/30/96(R) C19900-MW 1989 Malawi Energy I 46.70 3.99 02/28/96(R) C20360-MW 1989 Malawi Instit. Dev. 11.30 1.25 06/31/95(R) C20690-MW 1990 Malawi Infrastructure I 28.80 4.66 12/31/95(R) C20830-MW 1990 Malawi Educ. Sec. II 36.90 20.48 06/30/96(R) C22200-MW 1991 Malawi PHN Sector Credit 55.50 44.91 06/30/97(R) C22210-MW 1991 Malawi Financial & Enterprise 32.00 14.55 06/30/97(R) C22250-MW 1991 Malawi Fisheries Dev. 8.80 6.78 06/30/99(R) C23790-MW 1992 Malawi Local Dev. 24.00 18.95 12/31/99(R) C23860-MW 1992 Ma;awi Power V 55.00 51.27 06/30/98(R) C25130-MW 1993 Malawi Rural Fin. Services 25.00 23.60 12/31/96(R) C25140-MW 1993 Malawi Agric. Services 45.80 36.57 09/30/99(R) C26240-MW 1994 Malawi Instit. Dev. II 22.60 22.21 06/30/00(R) C23963-MW(S) 1995 Malawi Entrepreneur Dev. & D 40.00 3.29 03/31/96(R) C23964-MW(S) 1995 Malawi Entrepreneur Dev. & D 4.60 .49 03/31/96(R) C26960-MW 1995 Malawi Malawi Railway Rest. 16.16 16.69 12/31/98(R) *C27530-MW 1995 Malawi Nat. Water Dev. 79.20 74.96 06/30/03(R) TOTAL Number of Credits = 17 Credits 550.66 345.24 Loans 10 Loan(s) closed 104.52 All closed for MALAWI TOTAL number of loans = 0 TOTAL 104.52 1,461.36 of which repaid 62.41 39.51 TOTAL held by Bank&IDA 42.11 1,421.85 Amount sold .72 which repaid .72 TOTAL Undisbursed 345.24 Notes: * Not yet effective * Notyet signed *** Total Approved, Repayments, & Outstanding balance represent both active and inactive Loans & Credits. (R) Indicates formally revised Closing Date. (S) Indicates SAL/SECAL Loans and Credits. The Net Approved and Bank Repayments are historical value, all others are market value. The Signing, Effective and Closing dates are based upon the Loan Department official data and are not taken from the Task Budget file.  18 Schedule E Page 2 of 3 MALAWI PRIMARY EDUCATION PROJECT Statement of IFC Investments as of December 31, 1993 (US$ Million) FY Type of Obligor Business Loan Equity Total 1987 Viphya Plywood Plywood 3.9 0.5 4.4 1986 Leasing & Fin. Co. Money/Capital Markets 0.7 0.2 0.9 1982 Ethanol Co. Ltd. Chem/Petrochem 2.3 0.2 2.5 1980/84 Malawi Hotel Ltd. Tourism 2.1 - 2.1 1979 Indebank Development - 0.6 0.6 1977/81 Dwanga Sugar Corp. Sugar 11.3 - 11.3 1982 D. Whitehead & Son Textiles 10.8 - 10.8 Total Gross Commitments 31.1 1.5 32.6 LESS: Cancellations, Exchange, Adjustments, Repayments Write-offs & Syndicate Sales 26.1 1.1 27.2 TOTAL IFC COMMITMENTS 5.0 0.4 5.4  19 Schedule E Page 3 of 3 MALAWI PRIMARY EDUCATION PROJECT Disbursement Performance The Bank's portfolio in Malawi includes 17 ongoing operations. While some improvement in project implementation has been recorded, the Government's limited capacity to implement projects remains a major constraint. One issue observed in project implementation is disbursement, slower than originally anticipated in the SAR. The overall disbursements (as of November 28, 1995) were about 35% of the approved credits. The major generic problems in disbursements are (a) procedures; (b) frequent turnover of disbursement staff in implementing agencies; (c) lack of counterpart funds; and (d) lack of staff incentives. On the Bank's side, disbursements are slowed by: (a) staff delays in procurement approval; and (b) project budget issues not being resolved at project negotiations. To remedy these problems, several disbursement workshops have been held. In addition, the following actions were taken beginning in FY93: (i) disbursement workshops were conducted in Malawi (and will continue to be held yearly) for disbursement officers working in Government and in parastatals; (ii) Bank disbursement officers have visited Malawi periodically to assist ministries/agencies in resolving pending disbursement issues and clearing the backlog; and (iii) departmental procurement specialists have provided significant assistance to local procurement authorities to speed the procurement process.  i I  IBRD 27693 32 3