Senegal - Technical and Agricultural Education Project

RESTRICTED FfLIE COPY Report No. P-949 This report is for official use only by the Bank Group and specifically authorized organizations or persons. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accurcy or completeness of the report. INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF SENEGAL FOR A TECHNICAL AND AGRICULTURAL EDUCATION PROJECT May 28, 1971  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOI"fDENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF SENEGAL FOR A TECHNICAL AND AGRICULTURAL EDUCATION PROJECT 1. I submit the following report and recommendation on a proposed credit to the Republic of Senegal in amounts in various currencies equivalent to US$ 2.0 million for a technical and agricultural education project. PART I - HISTORICAL 2. In March 1970, the Government of Senegal submitted to the Association a proposal, prepared with the assistance of UNESCO, for the financing of an education project. The proposal stemmed from a reform program, including reorganization of Senegal's general education system, which was thon being prepared. 3. The project was appraised in September/October 1970, with a follow-up mission in March 1971 to appraise a modification requested by the Government in February 1971. The appraisal mission found that the proposed reforms had not been fully defined and agreed upon within the Senegalese Government, and it was therefore decided to defer consideration of the secondary education and teacher-training items, thereby limiting the project to technical and agricultural education. 4. Negotiations with a delegation led by Mr. Ousmane Seck, Secretary of State for Planning, were completed on May 7. 5. The proposed credit would be the first Bank Group assistance to education in Senegal. Most of the Bank Group's lending in Senegal (Annex 1) has been for transportation, in particular for economically justified projects which could not easily be financed by traditional lenders. The 1966 railway project is about three years behind schedule, because of delays in bidding procedures, difficulties on the managerial and financial side and the use of savings for further track relaying. However, satisfactory measures are now being taken by the Senegalese authorities and a follow-up operation is being considered in the Bank Group. In 1967, a loan was made to the Port of Dakar. All new con- struction work has been completed; only dredging, because of the unex- pected presence of hard material, is delaying completion and will require  further extension of the closing date. Execution of the 1970 highway project, which focuses on the improvement of feeder roads, is progressing satisfactorily. The contract for construction was awarded in March, and work is expected to start soon. The road improvement and maintenance study financed by this project began in November 1970. The status of the agricultural credit project was reviewed in detail in the Report and Recommendation of the President submitted to the Executive Directors in connection with the two credits for agriculture (Terres Neuvres Resettlement and Casamance Rice Projects) approved on May 11, 1971 (see R71-25/1 dated May 6, 1971). 6. In August 1966, IFC made an equity investment of US$ 0.8 million and a long-term loan of US$ 2.46 million to Societ6 Industrielle d'Engrais au Senegal (SIES), a Senegalese company which operates a fertilizer plant near Dakar. Adverse developments in agriculture have caused fertilizer consumption to drop sharply. As a result, the company has had to invoke the clauses in its agreement with the Government which entitle it to receive payments from the Government so long as production remains below a certain level. Discussions are under way between representatives of the Government, IFC and the shareholders on these matters. 7. Preparatory work for projects in various fields is well advanced, and projects for public utilities, urban development and railways are scheduled for consideration by the Executive Directors in FY 1972. Institution building is a major feature of these projects. This is an endeavor of great importance to Senegal and to which the contribution of the Bank Group's expertise is actively sought by the Government. Over the longer term, projects ;ill o. prepared to continue diversification of agriculture. PART II - CCUNTRY BACKGROUND Economic Situation 8. A report on "The Current Economic Position and Prospects of Senegal" (AlW-15a) was distributed to Executive Directors on June 10, 1970 (R70-113). A Basic Data sheet is attached (Annex 3). 9. Since independence in 1960, Senegal has experienced low economic growth rates. Having been the economic and administrative center of French West Africa, Senegal had, at the time of independence, an artificially high standard of living, out of proportion to the limited economic potential of the country and the generally low% standard of education. The very diffi- cult adaptation process was aggravated by the loss of preferential prices for groundnuts on the French market in 1967/68 and in recent years by poor groundnut harvests.  - 3 - 10. Ihe Report and Recommendation of the President on the Terres Neuves Settlement Project and the Casamance Rice Project (P-923) dated April 29, 1971 provided a detailed account of the structure, problems and prospects of the Senegalese economy, focusing particularly on the ground- nut sector, which is of overriding importance. Between 1964 and 1968, gross public capital inflow averaged $ 19 million per year or 53 percent of total public investment but increased to over $ 36 million in 1969 largely due to increased disburseiments of aid from the European Economic Community (EEC) and the Federal Republic of Germany. Of the remainder, about 43 percent was financed by public savings (Government and public enterprises) and 4 percent by running down treasury reserves and by some local borroiing. Total external aid including technical assistance was about US $ 64 million in 1969. The share of grants has fallen from over 75 percent during the period 1964-68 to under 50 percent in 1969. The high inflow of grant aid in the past explains Senegal's small external public debt and the low debt service ratio of 2 percent of total exports in 1970. Half of foreign financial aid during 1964-69 was provided by the EEC and another 30 percent by France. The remainder came mainly from the Bank Group, the United States and Germany. Technical assistance has averaged $ 29 million per year or over 20 percent of the Government's budget; almost 83 percent was provided by France. Most technical as- sistance is used to assist the Government in carrying out its normal administrative functions, mainly in education. The Government is also gradually improving its capacity to execute projects, and future foreign aid can be expected to make a more substantial contribution to growth than in the past. 11. Since independence, the Government has maintained a conservative financial policy but public finances have nevertheless shown a steady deterioration since 1965 mainly because of a decline in economic activity. While the current budget is likely to remain in surplus it can make little contribution to the financing of investment over the next few years. A very large share of public investment will therefore have to be financed by foreign aid which will have to cover some local as well as foreign expenditure. As the difficult public finance situation limits the scope for conventional borrowing, most foreign aid will have to be on soft terms. Manpower Needs 12. The population of Senegal is about 3.9 million and is growing at about 2.2 percent per annum. Dakar, the capital, has a population of almost 600,000. About 75 percent of the total labor force is engaged in the traditional occupations, mainly agriculture. The training of Senegalese extension workers is a condition for improvement of extension services in agriculture. Since the majority of farmers are illiterate, adequate oral presentation and demonstration are virtually  - 4 - the sole means of transmitting information on techniques to improve productivity. Progress has been slow, as the extension service is poorly coordinated and most technicians are inadequately trained. A reorganization of the extension services is underway, giving increased responsibilities to the centrally managed agricultural services instead of to a number of local autonomous agencies. 13. Output from Senegalts important fish resources has increased rapidly in recent years, reaching about-200,000 tons with a value of CFAF 7.8 billion ($ 28 million) in 1969. Positions as officers and mechanics in the industrial fishing fleet, now held by expatriates, could be filled by Senegalese if adequate training were provided. 14. Manufacturing industries - including groundnut processing - constitute about 15 percent of GDP, a higher percentage than in most West African countries. This relatively high rate of industrialization is due to the central position Senegal enjoyed in French West Africa. Manufacturing relies heavily on expatriate management and skills; as many as half of the smiall industrial "family" enterprises (employing 10-20 people) aro under foreign onerslip, while 9C porcent of busi- nossos omploying -:iore than 20 wjorkers are foreign c.med. Because of the relatively high costs of expatriate manpower and low capital costs, industrial investment has been capital-intensive, and employment in this sector grew by only 3.5 percent annually since 1959, reaching 18,000 in 1968. The reduced importance of Dakar as an administrative and economic center has resulted in virbaal stagnation of salaried employment since independence. Employment in the modern sector fell from 135,000 in 1960 to 125,000 in 1968; of this total about half is employed by the private sector, one-third by Government and local administration and one-fifth by public enterprises. Because of the predominance of foreign ownership in industry, and because of a lack of sufficiently trained and experienced Senegalese, it is probable that even by 1980 as much as 75 percent of the managerial staff in Senegal will still be high-salaried expatriates. It is at the middle level that industry could effect economies in its salary bill if adequately trained Senegalese were available to replace expatriates and to occupy new vacandes as industry expands. The Government's objective is to replace all non-Senegalese-occupying middle-level positions in industry and commerce by 1980. Education and Employment 15. The Senegalese school system tends to cater to the small minority who proceed to higher education and it neglects the more practical needs of the majority. French is the language of instruction and the literacy rate for the 14-plus age group is about 10 percent. IThiile all primary teachers are Senegalese, three-fourths of the second- ary level teachers are expatriates.  - 5 - 16. There is an urgent need to make the school system more responsive to the country's economic and social requirements in rela- tion to: (i) the continuous growth in rural migration, which is causing increasingly difficult problems of employment in the cities; and (ii) the skills required in the modern sector to replace non-Senegalese staff and to increase productivity of local manpower. The Government is aware of this need. 17. Total educational expenditures in 1969/70 were equivalent to about US$ 11 per capita or 5.7 percent of GDP. This high propor- tion reflects the exceptionally large and high-cost support which Senegal receives from France. If the additional cost of expatriate over Senegalese personnel is discounted, educational expenditures as a proportion of GDP wsould be about 4.7 percent. Of current budget expenditure, education at present accounts for about 20 percent and expenditure on the institutions included in the project, less than one percent. 18. The slowr growth of modern sector employment and a contin- uous rural exodus are leading to rapidly rising urban unemployment, while the Senegalese wage system appears to be an incentive for a "6apital deepening" process in industry. According to a rough cal- culation, around one-third of Dakar's manpower is unemployed. It has been estii,iated that Dakar's population is increasing by some 6 percent a ycar (about 36,000), half of whiiclh is due to natural g'rouTth and harlf to migraticn from the countr2yside. The majority of those iLrc'nto ,,ro unlikcly to find -,ork in Darkar and wjill swell the ran.!z of the unemployed. PART 3Il - THE PROJECT 19. Along with the reform of general education, which is still being discussed and which will lay the foundation for a subsequent project, Senegal requires assistance to (a) rehabilitate existing training schools for skilled manpower in industry, agriculture and fishing; and (b) provide expanded schools to train middle-level staff for those occupations. Industry could effect substantial savings in its salary bill and hence improve its competitive strength, if adequately trained Senegalese technicians were available to re- place expatriates and to incr_ase labor productivity. In agriculture, improvement of the existing pre - service  - 6 - and in-serv. ce training of extension workers is needed. The training of Senegalese officers and mechanics for the fishing fleet must also be developed in order to provide a permanent manpower base for the fishing industry and to reduce operating costs through progressive replacement of foreigners. The proposed project, although relatively small, would therefore have a significant economic impact. 20. The project includes specifically: (i) Technology Institute at Dakar University: construction, equipment and furnishing for about 565 students; (ii) Delafosse Technical School at Dakar: rehabilitation, including laboratories and workshops, equipment and furnishing, for at least 800 upper-secondary level students; (iii) Peytavin Technical School at St. Louis: reconstruction, including five new classrooms and equipment and furnishing for at least 300 upper-secondary level students; (iv) School for Agricultural Agents at Ziguinchor: construction including a science laboratory, staff housing, equipment, tools and furnishing for about 120 students. (v) A three man-months' study with a view to reorganizing the Merchant Marine School at Dakar, including the preparation of a training program, of courses of study and of lists of equipment and the establish- ment of entrance requirements; and (vi) Equipping the Merchant Marine School at Dakar following completion of the above-mentioned study. 21. The Technology Institute would offer two-year, sub-professional training courses in mechanical and electrical engineering, civil engi- neering, chemistry and food technology, and business studies. Between 110 and 130 of the students graduating each year are expected to be employed by industrial and commercial enterprises. The remainder would enter Government service, pursue higher education or receive additional training as technical teachers and instructors. During negotiations the Government agreed to revise the curricula and to submit them to the Association for review. 22. The Lycee Delafosse at Dakar and the Lyc6e Peytavin in St. Louis are the only institutions in Senegal which can provide upper-secondary level technician training with a practical bias. Curricula are satis- factory but thc buiidings arr; obsolete.  - 7 - 23. Agricultural technician training at the junior level is at present provided in two schools, one in Louga and the other in Ziguinchor. Both institutions are uneconomically small, resulting in very high costs per pupil. As a result of the project, improved training and better facilities will be provided at Ziguinchor. The Louga school will discontinue pre-service training thus enabling the Ziguinchor institution to operate at capacity and reduce costs. In-service training, which is highly desirable, will go on at Ziguinchor and most probably also at Louga. 24. The project provides for technical assistance and equipment for a new program at the Merchant Marine School in Dakar to train officers and mechanics. The new program would be submitted to the Association for agreement. 25. Totql project costs are $ 2.5 million enuivalent, of which the forcign exchange .componcnt is about S 1.3 million eruivalent (Annex 2). Th. proposed , 2.0 million ID., credit wrould amount.to 80 percent of total project cost andSwould cover all foreign expenditurws and US$ 0.7 million -of local expenditures. 26. The project would be executed in 4-1/2 years and would be managed by the Director of Public Works with the guidance of a project unit, includi-ng a full-time architect and accountant. The project unit would be assisted by an advisory group comprising representatives of the Jlinistries of National Education, of Technical Education and Vocational Training, and of Planning. For the planning and supervision of construction of project institutions, the services of consulting engineers would be secured. ' - PART IV - LEGAL INSTRTMENTS AND AUIHORITY 27. The draft Development Credit Agreement (Technical and Agricultural Education Project) between the Republic of Senegal and the Association, the Recommendation of the Committee provided for in Article V, Section 1 (d) of the Articles of Agreement of the Association and the text of a Resolution approving the proposed credit are being distributed to the Executive Directors separately. Appointment of a project director and an accountant, in consultation with the Association, would be a condition of effectiveness of the credit. Agreement by the Association on the Technology Institute's curricula and on a training program for the Merchant Marine School would be conditions of disbursement for these project items.  - 8 - 28. I am sa-tisfied that the proposed Development Credit for Technical and Agricultural Education would comply with the Articles of Agreement of the Association. PART V - RECCONYENDATICN 29. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President Attachments Washington, D.C. May 28, 197.  ANTEX 1 Summary Statement of Bank Loans and IDA Credits to Senegal as of April 30, 1971 Loan or Credit Lnount (US$ !i1lioji) Number Year Borrower Purpose Bank IDA Undisbursod 96-SE 1966 Senegal Railway 9.0 2.3 493-SE 1967 Port of Port 4.0 1.4 Dakar 140-SE 1969 Senegal Agricul- 6.o 30S tural Credit 198-SE 1970 Senegal Highways 2.1 2.0o Total (less cancellation) 4.0 of which has been repaid to Bank and others .1 Total now outstanding 3.9 Amount sold .4 of which has been repaid .1 .3 Total now held by Bank and IDA 3.6 1741 Total undisbursed 1.4 7.8 9.2 A loan oV t3.5 millidn for agricultural credit (584 SE) made in 1969 was cancelled on March 25 1971. May 28, 1971  Annex 2 SENEGAL CREDIT SUOIARY - TECHNICAL AND AGRICULTURAL EDUCATION PROJECT Borrower: The Republic of Senegal Beneficiary: The Republic of Senegal Amount and Terms of Credit: $US 2.0 million equivalent, renayabffe 1971 - 2021;