Mozambique - Higher Education Project : additional financing credit

Document of The World Bank FOROFFICIALUSEONLY ReportNo: 40152-MZ PROJECTPAPER ONA PROPOSEDADDITIONAL FINANCING CREDIT INTHEAMOUNT OF SDR9.9 MILLION (US15 MILLIONEQUIVALENT) TO THE REPUBLIC OF MOZAMBIQUE FOR A HIGHEREDUCATIONPROJECT June 28,2007 Africa Region HumanDevelopment Country Department2 This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosedwithout World Bank authorization.  CURRENCY EQUIVALENTS ExchangeRate Effective May 31,2007 Currency Unit = Meticais 26.275 = US$1 1.515US$ = SDRl FISCAL YEAR January 1 - December31 ABBREVIATIONS AND ACRONYMS AAP Africa Action Plan CPS Country Partnership Strategy DCA Development Credit Agreement EA Environmental Assessment EMP Environmental Management Plan FM Financial Management FMR Financial ManagementReport GoM Government ofMozambique GDP Gross Domestic Product HEIs Higher Education Institutions HEP Higher Education Project ICR Implementation Completion Report ICT InformationCommunication Technologies IDA International Development Association ISR Implementation Status Report I S R I Higher Institute for InternationalRelations MDLN Mozambique Distance Learning Network MCT Ministry of Science andTechnology MEC Ministry of Education and Culture NRF NationalResearchFund PCU Project Coordination Unit PDO Project Development Objectives PIM Project Implementation Manual PRSP Poverty Reduction StrategyPaper PSF Provincial Scholarship Fund QP Quality Enhancement and InnovationFacility TORS Terms of Reference WB The World Bank UEM UniversidadeEduardo Mondlane (Eduardo Mondlane University) UP Universidade Pedag6gica( PedagogicalUniversity)  FOROFFICIAL USE ONLY Vice President: Obiageli K.Ezekwesili Country Director Michael Baxter Sector Manager: Dzingai B.Mutumbuka Task Team Leader: Xiaoyan Liang This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. 2   REPUBLICOF MOZAMBIQUE ADDITIONAL FINANCINGCREDIT FORTHE HIGHEREDUCATIONPROJECT TABLE OF CONTENTS ProjectPaperData Sheet..................................................................................................... 1 IINTRODUCTION.......................................................................................................... . 1 I1.BACKGROUNDAND RATIONALEFORADDITIONAL FINANCING................2 A.Higher EducationProjectProgressto Date:Achievement ofObjectivesand 2 B.Additional FinancingJustification andDescription....................................................... Implementation Progress.................................................................................................... 4 I11.PROPOSEDCHANGES.............................................................................................. 6 IV.CONSISTENCY WITHCAS OR CPS........................................................................ 7 V ECONOMIC ANALYSIS OF COST OVERRUN ORFINANCINGGAP ................ 8 . VI APPRAISAL OF RESTRUCTURED OR SCALED-UP PROJECTACTIVITIES....9 . VI1.EXPECTED OUTCOMES........................................................................................ 10 VI11 .BENEFITS AND RISKS......................................................................................... 10 IX.FINANCIALTERMS AND CONDITIONS FOR THE ADDITIONAL FINANCING Annex: Results Frameworkand Monitoring .................................................................... ........................................................................................................................................... 11 12   REPUBLIC OF MOZAMBIQUE ADDITIONAL FINANCING CREDIT FOR THE HIGHEREDUCATION PROJECT ProjectPaper Data Sheet Date: June 28, 2007 Team Leader: Xiaoyan Liang Country: Mozambique Sector Manager: Dzingai B.Mutumbuka rEducationProject Borrower: Republic o f Mozambique Responsible agency: Ministryo f Education and Culture; Ministry o f Science and r Technology - Revisedestimated disbursements (BankFY/US$m) P P P FY I FY08 I FY09 Bank policies? Revisedproject development objectives/outcomes: Not applicable. Does the scaled-up or restructuredproject trigger any new safeguard policies? No. - - - - - - P For Additional Financing [ ] Loan [X ] Credit [] Grant For Loans/Credits/Grants: Total Bank financing (US$15 m.): Proposed terms: IDA IDA Others   I.INTRODUCTION 1. This Project Paper seeks the approval o f the Executive Directors to provide an additional financing credit in the amount o f US$15 million to the Republic o f Mozambique Higher EducationProject (HEP, P069824, Cr. 3609). 2. The proposed additional financing credit of US$15 million would be used: (1) to cover a financing gap in the original project HEP stemming from cost overruns in the area o f civil works and equipment and (2) to scale up successful on-going programs being implemented under the project including the provincial scholarship fund and the competitive Quality Enhancement and Innovation Facility (QIF) and National Research Fund(NRF). 3. The additional financing credit will contribute to further achievement o f the original Project Development Objectives (PDO): (i) enhance the internal efficiency to and expand the output of graduates; (ii) to improve equitable access; and (iii) improve to the quality of teaching and learning and the relevance o f the curriculum. The outcome indicators have been revised upwards to reflect the scaled-up activities. The additional financing credit will finance specific outputs including the completion o f the Higher Institute o f International Relations (in Portuguese, Instituto Superior de ReZap%s Internacionais) (ISRI) campus, the rehabilitation o f selected faculties and resource centers, the fbrnishing and equipping o f new buildings constructed inthe original project, 20-30 research, quality improvement, and innovation projects, scholarships and basic science programs benefiting students from disadvantaged background and students of excellence inthe area o f science and technology. 4. Implementation arrangements o f the additional financing credit will remain the same as the original project. There are no major changes being proposed, except for the financing parameter. The original project HEP requires counterpart contribution o f 15% for local expenditures in civil works and goods, 5% for consultants, and 50% for operating costs. The additional financing credit, however, i s expected to provide 100% IDA financing based on the new financing parameter established for Mozambique, and also in view of the Government's commitment to education manifested by its consistent budgetaryallocationo f about 20% to education over the last few years. 5. The additional financing credit will maintain the same partnership arrangements. The Netherlands and the Swedish Embassies are supporting the Provincial Scholarship Fund through parallel financing. They have also agreed to continue financing the students who are currently supported by the International Development Association (IDA) after the IDA credit closes. There is no other co-financier except the Government o fMozambique through in-kindcontributions. 1  11.BACKGROUNDAND RATIONALE FORADDITIONAL FINANCING 6. A key development constraint to Afhca's success in the global market is the limited capacity to adopt and master advances in technology and innovation, thus increasingproductivity. Mozambique i s no exception. Since the end o f civil war in early 1990s, Mozambique has made great strides inimproving the access to primary education. Gross primary enrollment i s about 110% and net primary enrollment reached more than 80%. But progress inimproving post-primary education has been slower. The enrollment pyramid in 2005 shows that while Mozambique has 4 million students in primary education; it has less than 400,000 students in secondary education, and less than 30,000 in tertiary programs. The magnitude of demand for secondary, technical, and tertiary education i s immense and it poses a major challenge to education policy makers in Mozambique. 7. InAugust 2000, the Government of Mozambique approved a ten-year Strategic Plan for Higher Education in Mozambique. The Plan aims to increase the access, improve the equity, quality and relevance o f higher education in Mozambique, The Government requested IDA'Ssupport for the implementation o f this Strategic Plan. The HEP credit became effective on June 20, 2002 with a total IDA allocation o f SDR 47.1 million (US$60 million equivalent). The Project Development Objectives (PDOs) o f the project are: (i) enhance the internal efficiency and expand the output o f graduates; (ii) to to improve equitable access; and (iii) improve the quality o f teaching and learning and to the relevance o f the curriculum. 8. The HEP has four components. Part A o f the project (US$ 6.2 million) supports system-wide reform and policy development, Part B (US$ 52 million) supports the hrther development o f and investment in four public institutions and a Quality Enhancement and Innovation Facility (QIF), and Part C (US$ 1.8) provides scholarships for students from provinces other than Maputo to attend higher education institutions o f their own choice. InNovember 2005, at the request o f the Government, Part D (US3 million) was reallocated to support initiatives in science and technology. The closing date o f HEP was extended once from M a y 2007 to December 2007. A. Higher EducationProject(HEP) Progressto Date:Achievement of Objectives andImplementationProgress 9. Progress towards achieving the PDOs is satisfactory to date. The targets for access, efficiency, and equity have been achieved since 2005. By that time, the higher education system in Mozambique had a total enrollment o f 28,298 students in 16 public and private institutions, more than doubling the figures in 1999. Total annual intake capacity was about 5,600 and the annual output (graduates) was about 3,700. The proportions o f students from the North and the Center had reached 17% and 29%. The efficiency indicator, new admission over total enrollment ratio, increased to about 20%. The remaining targets are more qualitative and aim at assessing the impact o f curricula 2  change, especially inthe area o f ICT, on the teaching and learning process and on student outcomes. The Ministry o f Education and Culture i s preparing to conduct studies to investigate the project's impact on quality before the current closing date. 10. Past Implementation Status Results and Reports (ISRs) have rated the implementation progress as "Satisfactory" including the rating on financial management. The project has disbursed about SDR 37.6 million by June 2007, 80% o f the total credit amount. The remaining credit has been committed to planned civil works, development o f pilot courses in distance learning, consultancies (including project staff) and scholarships. 11. In the process of preparing the additional financing credit, it was discovered, however, that there were two issues which had not been addressed under the original credit, including (a) the outstanding Environmental Assessment (EA) report for the construction o f the ISRI campus site (classified as a category "B" project for Bank EA purposes) and (b) the qualifications o f the audit report for the financial year ending on December 31,2005. 12. On the EA, the implementing agency had assumed that since the land was given by the Maputo Municipal Government and was not occupied prior to construction, there were no potential environmental and social issues and hence did not conduct a proper environmental and social assessment. The Ministry o f Education and Culture (MEC) completed only a geophysical and geotechnical study which included partial discussion o f the environmental issues and measures for mitigation. After realizing the non- compliance and with guidance and draft TORSfrom the Bank's environmental specialist, on April 30, 2007, the borrower hired a reputable local environmental firm to conduct the environmental and social assessment, including the associated mitigation measures. The Environmental Assessment (EA) Report for the construction o f the I S R I university campus was officially submitted to IDA and found to be satisfactory on May 30, 2007. Further the G o M confirmed that the EA was disclosed inits territory ina public forum on May 14, 2007 and that a period o f two weeks was provided for public comment or suggestions on the impact assessment and for mitigation measures proposals and that no substantial comments were received. Inaddition, the EA Report that was cleared by IDA was sent for disclosure through the Bank's InfoShop on June 8,2007. 13. The audit reDort for the financial year ending on December 31, 2005 was qualified. The qualifications were due primarily to: (i) about US$370,05 1 advanced under a competitive Quality Enhancement and Innovation Facility (QIF) had not been accounted for by the end o f 2005, and (ii) in Tete Province the documentation for the purchase o f office equipment in an amount equivalent to US$600 was missingat the time o f the audit signing. The first was due to the fact that QIF implementation cycles are different from the financial year cycles. Funds advanced in one particular year are not always utilized (justified) in the same year and sometimes are justified in the following year. The second was due to the fact that documentation for the office equipment was not presented to the auditor on time. The auditors further highlighted internal control deficiencies. 3  14. In agreement with the Bank team, the recipient developed an Action Plan to address the QIF advances and internal control deficiencies. The Action Plan has been fully implemented. On June 5, 2007, the borrower submitted a clean audit report including a management letter for the financial year ending on December 31, 2006, which indicates satisfactory progress towards addressing weaknesses identified in the 2005 audit report. 15. Therefore, both issues have now been resolved. All other covenants have been complied with. The Government (represented by both the Ministry o f Education and Culture and the Ministry o f Science and Technology) i s committed to the project. IDA remains the most significant external financier o f higher education, science and technology inMozambique. B.AdditionalFinancingJustificationandDescription 16. Since November 2005, IDA supervision has consistently pointed out the cost- overrun in civil works and equipment due to severe under-budgeting and lack o f specification inworks at the design stage. The cost overrun was so significant that even the savings achieved from currency exchange rate fluctuations was not able to fill the gap* 17. In its letter dated June 16, 2006, the Government requested continued IDA support for higher education, science and technology after HEP closes. Given the possibility o f usingthe additional financing instrument and the uncertainly in future IDA allocation, inApril 30 2007 the Government requested that an additional financing credit o f US$15 million be provided: (1) to cover the financing gap in HEP stemming from cost overruns in the area o f civil works and equipment: (2) to scale up successful activities including the Provincial Scholarship Fund and the competitive Quality Enhancement and Innovation FundandNational Research Funds. ADDRESSNG OVERRUNS COST KJS$8MILLION) 18. Even though the HEP targets o f access, equity, and efficiency have been achieved, much o f the civil works exceeded the original budget allocations owing mainly to cost overrun. The current situation i s that virtually 100% o f project funds i s already disbursed or committed, and no funding remains to equip some o f the new buildings completed or now under construction. In addition, the I S R I Campus risks being completed only partially. Not to complete and equip these buildings will result in an underutilization o f the facilities and substantial waste in the investments already made and poses a reputational risk for the Bank. About US$8 million from the additional financing credit will be allocated to address the cost overrun in civil works and equipment. 4  SCALINGUP: COMPETITIVEFUNDS,SCHOLARSHIPS,AND BASICSCIENCEPROGRAMS JUS$7 MILLION) 19. The additional financing credit would also finance another round o f competitive funds under the Quality Enhancement and Innovation Facility (QIF) and the National Research Fund (NRF). While in-depth impact evaluation studies are being planned and will be completed by September 2007, field visits and anecdotal evidence indicate that these programs are regarded as having been very successful in fostering initiative and raising quality at the institutional level - at universities accessing the QIF and inresearch institutes eligible for support under the NRF. The provision of QIF especially assured funding for innovative teaching and learning programs and prevented quality erosion at the time o f enrollment expansion inbeneficiary private and public institutions. Another cycle of QIF and NRF will finance about 20-30 research, quality improvement, and innovationprojects, benefiting about ten public and private higher education and research institutions. 20. In addition, the Provincial Scholarship Fund (PSF) will be continued, to ensure that the 264 scholarship students now being financed will be able to continue their study programs for another year. The PSF was designed to address equity in access to higher education and to encourage students who are from outside o f Maputo provinces to attend higher education institutions. The Ministry o f Education and Culture i s conducting an in- depth impact evaluation for the scheme. Again, there is evidence that the PSF has been very successful in leveling the playing field for the poor but able students in the provinces. The Netherlands Embassy has agreed to take over the cost o f educating these students after HEP closes untilthey finish their study programs. 21. A new scholarship scheme for science and technology is being developed to encourage an increase in the number of students (at the master's and Ph.D. levels) specializing in high-priority scientific and technical areas, supporting the Government strategy on Human Resource Development Plan endorsed in 2006 by the Cabinet. IDA review and approval of the eligibility criteria for the science and technology scholarship scheme is a condition for disbursement under the respective category in the Table in Schedule 2 to the Financing Agreement. Further, the additional financing credit will support the development o f basic science programs for talented secondary school students. 22. After HEP closes and upon successful evaluation, it is expected that IDA may provide a follow-up credit to continue supporting these schemes, inpartnership with the GoM and other partners. The World Bank Mozambique Country Partnership Strategy (FY08 to FY11) (CPS) for the next four years already made such a provision. ADDITIONAL FINANCING CREDIT PROJECTDESCRIPTION 23. The additional financing credit o f US$15 million will be integrated into the original four project components: A) system-wide reform and policy development (US$0.5 million), to support the project management, monitoring and evaluation 5  activities; B) Institutional Development and Investment (US$ 10 million) including the completion o f I S M campus construction, the rehabilitation o f the Faculty o f Engineering inthe Universidude Eduurdo MondZune (UEM) and the Mozambique Distance Learning Network (MDLN) Lichinga Resource Center, the furniture and equipping o f ISH, Universidude Pedugogicu (UP), UEM Central library, and MDLN Lichinga Resource Center, andthe development and implementation o f another cycle o f QIF; C) Provincial Scholarship Fund (US$1.5 million), to finance the 264 provincial students to continue their study until June 2009; and D) Science and Technology (US$3 million) for capacity building and policy development, another cycle of the National Research Fund and for development and implementation o f the science and technology scholarship scheme and the basic science program. Table 1 below provides the estimated project costs information for the additional financing. Table 1:Project Costs by Component ProjectCost by Component US$ million A. System-wide ReformandDevelopment 0.5 B.InstitutionalDevelopment andInvestments B1.UEM,UP,ISM, MDLN 7.5 B2: Quality Enhancement andInnovationFacility (QIF) 2.5 C. Provincial Scholarships 1.5 D.Science andTechnology D1,MCTCapacity BuildingandProject Implementation 0.7 D2. National ResearchFund 1.2 D3. Science and Technology Scholarships 0.8 D4.Basic Science Camp 0.3 Total ProjectCost 15 TotalFinancingRequired 15 Project Cost by ExpenditureCategory US$ million Goods 4.5 Works 3.4 Consultants' Services 0.5 Traing andWorkshops 0.3 Grants (QIF andNRF) 3.2 Scholarships 2 Operating Costs 1.1 Total Project Cost 15 TotalFinancingRequired 15 111.PROPOSEDCHANGES 24. The additional financing credit will continue to support the achievement o f the Development Objectives o f the parent Higher Education Project, which are; (i)to enhance the internal efficiency and expand the output o f graduates; (ii)to improve equitable access, and (iii)to improve the quality o f teaching and learning and the 6  relevance o f the curriculum. Activities financed by the additional financing credit are aligned with the original components A, B, C, and D. Under Component D, however, two new subcomponents are added which are the provision o f scholarships for science and technology andthe support for basic science program. 25. The same implementation arrangement will also be maintained to implement the additional financing credit. Specifically, the additional financing credit will be implemented by two government agencies, the Ministry o f Education and Culture through Designated Account A and the Ministry o f Science and Technology through Designated Account B for Component D only. 26. In the Ministry of Education and Culture, the Project Coordination Unit (PCU) will continue to provide oversight and coordination. The institutional project implementation teams located in UEM, ISRI, and UP will also continue to function. In the Ministry o f Science and Technology, the Director o f Planning has the overall responsibility for project coordination. The project will continue to finance the key consultant positions infinancial management and procurement inboth Ministries. 27. However, the additional financing credit o f US$15 million will have a different IDA financing parameter from the original project. The original credit requires counterpart contribution for local expenditures: 85% for works and goods, 5% for consultancies, and 50% for operating costs. The additional financing credit is expected to provide 100% financing. This can be justified both by the new Mozambique country financing parameter o f 100% for all expenditure categories and by the government commitment to the education sector as evidenced by the consistent budgetary allocation o f about 20% to education over the last few years. 28. The same financial management, disbursement, and procurement arrangement will be used. The project, upon approval, will be implemented from effectiveness until June 30, 2009, allowing sufficient time to complete the remaining civil works and procurement of equipment and the implementation o f another cycle o f scholarships, QIF and the NRF. A disbursement condition on science and technology scholarships i s added for IDA to review the eligibility criteria to ensure proper implementation o f this new subcomponent, under the respective category inthe Table in Schedule 2 o f the Financing Agreement. 29. The Project Implementation Manual(PIM) has been developed. The new PIM for the additional financing credit includes original operational manuals for QIF,NRF, PSF and the newlydeveloped manuals for the science and technology scholarship scheme and the manual for the basic science program. Procurement Plans have been updated and approvedby the Bank. The final approval o f P I Mwill be a condition for effectiveness. IV. CONSISTENCYWITH CAS OR Country PartnershipStrategy (CPS) 7  30. The financing o f cost overruns in civil works and equipment fits within the original project design. The additional financing o f scholarships and quality improvement and research finds is also consistent with the GoM's overall economic growth and poverty reduction strategy and the WBG's Country Partnership Strategy (CPS) for the next four years. Overall the CPS calls for a balanced approach to the development o f the education sector by focusing more on the provision o f post basic education and training. 31. Further, the proposed additional financing credit is inline with the World Bank's Africa Action Plan. In September 2006, the World Bank's Development Committee endorsed the Bank's Africa Action Plan (AAP).The AAP focuses on building state capacity and improving governance; strengthening the drivers o f growth; and promoting broad participation in growth and sharing its benefits. It calls for identifying and supporting the key drivers o f growth including the development o f relevant skills for competitiveness and growth. In the past, a larger share o f IDA support in education supported the basic education sector. The AAP envisages a progressive realignment o f IDA allocations in support of post-primary education, from the current share o f about 22% (6% for secondary education, 3% for vocational training, and 13% for higher education) to a share o f at least 35%. V. ECONOMICANALYSIS OF COST OVERRUNOR FINANCING GAP 32. It is by now well understood that humandevelopment significantly contributes to economic growth; better education, a healthy population, and improved social protection are imperative to improve labor force productivity and economic performance. Improvement in schooling, life expectancy, nutrition, and skills has resulted in gains in GDP growth andpoverty reduction, e.g. increasingthe labor force's average education by one year raises GDP by 4 to 9 percent; while an HIV/AIDSepidemic reduces GDP by up to 1.O percent per year. 33. HEP was firther justified in 2002 on the following grounds: (1) to increase enrollments in higher education, given that the existing Gross Enrollment Ratio of 1% was low by comparison with other countries at comparable income levels; (2) to address internal efficiency issues in the production o f higher education graduates, reducing student repetition and increasing graduation rates; (3) to reduce disparities in access to higher education on the part o f those from different geographic locations, gender and socioeconomic backgrounds; and (4) to increase the output of higher education graduates to meet the growing demand for highly skilled labor in Mozambique's formal modem sector, particularly in such fields as management, engineering, accounting and the physical sciences. These arguments remain valid today as the Project approaches its closing at the end o f 2007. The additional financing credit will further improve the access, equity, and efficiency goals and will not alter the economic justification in investment inhigher education, science, andtechnology. 34. Interms o fthe financial or fiscal implications, the additional financing credit will have little or no impact on future recurrent costs. The new funding ensures that 8  investments appraised as part o f the original project will now be completed. In fact, the cancellation o f some construction activities not yet begun will result in a small reduction infuture recurrentcosts, below the levels originally estimated. 35. Given the significant funding for civil works and equipment under the project, attention to their future maintenance i s very important. Since the start o f HEP, the public universities have increased their generation o f own revenues (over and above the allocations from the budget and from external donors) through modest increases in student tuition fees and the privatization of auxiliary (non-academic) services such as student housing, dining and laundry. These revenues provide an adequate cushion for maintaining the new (and existing) facilities, and Government will supervise such maintenance as a condition for full institutional funding when the New Funding Model now being developed by the Directorate for the Coordination o f Higher Education inthe Ministry o f Education and Culture has been approved and introduced. VI. APPRAISAL OF RESTRUCTUREDOR SCALED-UPPROJECT ACTIVITIES 36. As described above, the scaled-up project activities are mainly in the areas o f competitive funds (both Quality Enhancement and Innovation Fund and the National Research Fund), scholarships (both the Provincial Scholarship Fund and the new Science and Technology Scholarships), and basic science camps. 37. These project activities are designed as demand-side interventions to enhance equitable access to higher education and research as well as to improve the quality and efficiency of higher education institutions. For the competitive funds, the same Operational Manual developed inHEP will be used. For the provincial scholarships, also the same criteria and procedures will be used in the implementation of the additional financing credit. 38. Based on the Government's Human Resource Development Plan approvedby the Cabinet, the Ministry o f Science and Technology already developed a draft Operational Manual for the new scholarship scheme on science and technology. The scheme will target selected priority areas in natural sciences, engineering, and technology. The Ministry o f Science and Technology already appointed a scholarship manager within the Department o f Planning. It i s further expected that the beneficiaries o f the scheme will sign a binding contract in accordance with existing regulation to minimize the potential brain drain. Eligibility criteria for the scholarships will be reviewed and approved by IDA before disbursement. 39. A draft Operational Manual on the basic science program has also beenprepared. The Department of Basic Science within the Ministryo f Science and Technology will be the implementer o f this subcomponent. The program will be implementedat least once a year for a week during school break from the three Regional Centers o f Science and 9  Technology and will target about 100talented secondary school students from each of the three regions every year. VII. EXPECTEDOUTCOMES 40. The additional financing credit will further contribute to the achievement o f Development Objectives andwill allow new andhigher level indicators to be achieved by June 30, 2009. Table 2 below updates the outcome indicators. A detailed Results Framework i s attached inthe Annex. Tab1 2: Project Development Objecti :s and Outcome Indicators Project OutcomeIndicators Progressto Date Proposednew Development (2006) targets by June Objectives Are to: (i) Absolute number of students Target surpassed. Number o f graduates enhance the graduating increased from 786 in Annual graduates increasedto 4,000 internal efficiency 2000 to 1,500 in2006 inall HEIs was 3,700 in2006 based on 2008 data. and expand the output of Increasedby 5% point the number o f Considered achieved; Increasedby another graduates, (ii) students from the North (from 10% 17% and 29% 3 percentage points improve equitable to 15%) and Center (from30% to respectively (North from 17% to access, and (iii) 35%) enrolled into public HEIsby 20%; Center from improve the 2006 29% to 32%) quality o f teaching and learning and Reduce the licenciatura completion Achieved. Efficiency ratio the relevance of time by increasing the (new admission over the curriculum admissiodenrollment ratio from total enrollment) 16.6% to 17.4% (20% would be further increasedto ideal) by 2006 22% Positive impact o n the quality o f MEC will Increased use o f new higher education as evidenced by an commission a study curriculum, updated increaseduse o f new curriculum, to be completed by materials, ICT, and updated materials, ICT, and student- the closing date student-centered centeredpedagogy pedagogy inthe classrooms, to be confirmed by a survey study VIII. BENEFITSAND RISKS 41. The closing of the financing gap incivil works and equipment will provide access to an additional 1000 students to study in the new I S M campus, and will allow proper 10  functioning of the UEM Central Library, UP Beira and UP Maputo campus, and the Lichinga Resource Center for distance learning. 42. The scaled-up activities in competitive funds, scholarships, and basic science programs will benefit 20-30 higher education and research institutes in quality improvement, innovation, and research outputs. Further, it will benefit 264 students from outside o f Maputo to continue their education for another year. Those who do not finish at the end o f the project will be supported by the Netherlands and Swedish funds until they complete their programs. The new science and technology scholarship will benefit approximately 12 students to pursue master or Ph.D level studies inthe highly demanded areas o f science and technology. At the completion o f the additional financing credit, the Government intends to continue this program with its own budget with support o f other partners including IDA. The basic science programs will be carried out by the three Regional Centers o f Science and Technology, at least once a year, during school break about one week long, benefiting at least 100 secondary school students in each o f the three regions. 43. Interms ofimplementationrisks, the MinistryofScience and Technology hasless experience in managing IDA projects and its team needs intensive training. To mitigate against this, the project has built in systematic training not only intechnical areas but also in key fiduciary functions o f financial management and procurement. The implementation o f the original project to date has also given them valuable exposure to IDApractices. 44. There is always a country-wide risk o f brain drain in low income African countries. The risk i s higher for investment in higher education as the graduates and beneficiaries will indeed become more marketable at the regional and international labor markets. The project will try to minimize such risks by requiring the beneficiaries to sign a binding contract in accordance with existing regulation to minimize the potential o f brain drain. The expectation is, however, that in the long term the continued economic growth inMozambique will bringback its talents from the diaspora. IX. FINANCIAL TERMS AND CONDITIONS FOR THE ADDITIONAL FINANCING 45. The additional financing credit will be on standard IDA terms. The Financing Agreement attached describes in detail these terms. Specifically, compared to the original HEP credit, the changes (reflected in the Financing Agreement) include: i)the financing parameter (from partial IDA financing o f local expenditures to 100% IDA financing); ii)the Closing Date (to June 30, 2009); iii)the amounts to be disbursed; (iv) disbursement categories; and (v) project description including the inclusion o f two new subcomponents in the project description under Component D Science and Technology. Table 3 below lists the eligible expenditure categories, the amount o f the credit allocated to each category, and the percentage o f expenditures to be financed by the credit. 11  Table3: Withdrawalfrom theProceedsofthe Financing Category Amount of the Credit Percentageof Expenditures Allocated (expressed in to be Financed USD) (inclusive of Taxes) (1) Goods under Part B1of the 4,000,000 100% Project (l)(a) Goods under Part D1 of 500,000 100% the Project (2) Works under Part B1of the 3,100,000 100% Project (2)(a) Works under Part D1 of 300,000 100% the Project (3) Consultants' services, under 300,000 100% Parts A, B2 and, C of the Project (3)(a) Consultants' services 200,000 under Part Dof the Project (4) Training and Workshops 200,000 100% under Part A o fthe Project (4)(a) Training and Workshops 100,000 under Part D of the Project (5) QIFGrants and QIFSub- 2,200,000 100% Loans under Part B2 of the Project (5)(a) NRF Grants underPart D2 1,000,000 100% ofthe Project (6) Scholarships underPart C1 1,200,000 100% ofthe Project (6)(a) Scholarships underPart 800,000 100% D3 ofthe Project (7) Operating Costs under Part 900,000 100% A1 of the Project (7)(a) Operating Costs under 200,000 100% Part D1 of the Project TOTAL AMOUNT 15,000,000 12  Annex: ResultsFrameworkandMonitoring MOZAMBIQUE: HIGHER EDUCATION PROJECTADDITIONALFINANCING (P105205) RESULTS FRAMEWORK are to: (i)enhance the Indicator 1: Absolute Annual data from the internal efficiency and number o f students institutions will be usedto expand the output o f graduating increased from update the achievement o f graduates, (ii)improve 3,700 in2006 to 4,000 in the indicators. equitable access, and (iii) 2008 inall HEIs improve the quality o f A studywill be teaching and learning and Indicator 2: Increasedby 3% commissioned and the relevance o f the point the number o f students completed by the end o f the curriculum from the North (from 17% project to have an to 20%) and Center (from assessment on the 29% to 32%) enrolled into qualitative impact that HEP I public HEIs by 2008 has on the teaching and learning o f students. I Indicator 3: increase the efficiency indicator: admissiodenrollment ratio from 19% in2006 to 22% by2008 Indicator 4: Positive impact on the quality o fhigher education as evidenced by an increased use of new curriculum, updated materials, ICT, and student- centered pedagogy ComponentA: ComponentA: System-wide Reform and A1: Revisiono fthe legal Law amendments and/or framework for higher revision and decrees passed education by authorities A2:Monitoringand Annual Higher Education Evaluation systems, Statistics and graduate including student tracking to tracer studies 13  monitor internal and external efficiencies A3: Successful project Supervision missions, ISRs coordination andcompletion ratings, Progress Reports of evaluational studies and ICR ComponentB: ComponentB : ComponentB: Institutional Development B1: Numberofgraduates Annual HigherEducation and Investments andgraduation rate Statistics increased inUEM,UP and I S R I Progress Reports and B2: Distance learning MDLNprogramdelivery programs implemented reports B3: QIFfully operational and implementedwell Progress Reports and QIF evaluation report ComponentC: ComponentC: Component C: Provincial Scholarships C1: scholarship scheme Progress Reports and established inthree Scholarship Evaluation provinces (Gaza, Tete and Report Cab0 Delgado) C2: at least 200 students beingsupported by the scholarship scheme ComponentD: ComponentD: ComponentD: Science andTechnology D1:Ministryof Science and Progress Reports Technology capacity strengthened Project Progress Reports D2: 20 NRFprojects andNRF Evaluation Report successfully supported and completed Project Progress Reports and D3: 12 master and Ph.D Scholarship Evaluation level students supported by Report the science and technology scholarship scheme D4: 200 talented secondary Project Progress Reports students benefited annually andBasic Science Program from the basic science Evaluation Report Drograms 14  h  3 z 3 3 m d ba tA 3 * a m W  U 0 a 0 00 N $1 m 0 0 m $1 0m m v1 &I I a %, m 4 0 0