Namibia - First Education and Training Sector Improvement Program

Documentof The World Bank FOR OFFICIAL USE ONLY ReportNo: 38571 INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPMENT PROGRAMDOCUMENT FORA PROPOSEDFIRST DEVELOPMENTPOLICY LOAN INTHE AMOUNT OFUSS7.5 MILLION TO THE REPUBLIC OF NAMIBIA FORA FIRST EDUCATIONAND TRAINING SECTORIMPROVEMENT PROGRAM April 27,2007 Human Development 1 Country Department 1 Africa Region 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.  NAMIBIA GOVERNMENT FISCALYEAR April 1-March 31 CURRENCY EQUIVALENTS (Exchange rate effective as of April 27,2007) Currency Unit = NamibiaDollar (N$) N$7.03 = US$1 U S $ l = SDR0.65 WEIGHTSAND MEASURES Metric System ABBREVIATIONS AND ACRONYMS AAA Analytical and Advisory Activities AAP Africa Action Plan ABET Adult Basic EducationandTraining ACTE Advisory Committee on Teacher Education APCI Adjusted Per Capita Income BETD Basic EducationTeacher Diploma B o N Bank o f Namibia CBET Competency Based Education and Training CBO Community Based Organization CER Country Economic Report CIFA Country Integrated Fiduciary Assessment C M A Common Monetary Area COSDECs Community Skills Development Centers CPD Continuous Professional Development DNEA Directorate o fNational Examinationsand Assessment DOL Division o fLabor DP Development Partners DPLs Development Policy Loans DVET Directorate o f Vocational Education and Training EC European Commission ECD Early Childhood Development EFA Education For All EMIS EducationManagement Information System EPCC ETSIP ProgramCoordinating Committee ESMF Environmental and Social Management Framework ESW Economic and Sector Work ETSDS Education, Training, & Skills Development Sector ETSIP1 FirstEducationand Training Sector Improvement Program FCA Foreign Currency Account FDI Foreign Direct Investment FSAP Financial Sector Assessment Program FSL Fixed Spread Loan GDP Gross Domestic Product .. 11  GER Gross Enrolment Ratio FOR OFFICIAL USE ONLY GPI Gender Parity Index GRN Government o f the Republic o f Namibia GTZ German Gesellschaft fur Technische Zusammenarbeit HAMU HIV/AIDS Management Unit HDI HumanDevelopment Index H N / A I D S Human Immunodeficiency Virus/ Acquired Immunodeficiency Syndrome HRD HumanResources Development HRM Human Resources Management IALL Information, Adult and Lifelong Learning ICB International Competitive Bidding ICT Information and Communication Technology IDF Institutional Development Fund IFMIS Integrated Financial Management Information System IMF International Monetary Fund INTOSAI International Organizationo f Supreme Audit Institution ISCBF Institutional Strengthening and Capacity BuildingFund I S N Interim Strategy Note KBE Knowledge-Based Economy K P I S Key Performance Indicators LLL Lifelong Learning LTR Learner to Teacher Ratio MBESC Ministryo fBasic Education Sport and Culture M&E Monitoring and Evaluation M G E C W MinistryofGender Equality and Child Welfare MHETEC Ministryo fHigherEducation, Training and Employment Creation MIB MinistryofInformation andBroadcasting MLA Monitoring Learning Achievement M o E Ministryo fEducation M o F Ministryo fFinance M o U Memorandum of Understanding MoHSS MinistryofHealthand Social Services MTEF Medium-term Expenditure Framework MWTC Ministryo f Works Transport and Communications MYNSS Ministryo fYouth National Service and Sport N A M A S Namibia Association o f Norway N A E C National A I D S Executive Committee N A M C O L Namibian College o f Open Learning NAMPOWER Namibia Power Corporation NEACB National Examination andAssessment Council Board N C B National Competitive Bidding N C H E National Council for Higher Education NCRST National Commission on Research, Science, and Technology NDP National Development Plan NER Net Enrolment Ratio NGOs Nongovernmental Organizations NED National Institute for Educational Development NKIS National Knowledge and Innovation System N L C Namibia Literacy Competency N L P N National Literacy Program o f Namibia NRSTF National Research, Science and Technology Fund 111 I.. I - This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not be otherwise disclosed without World Bank authorization.  NTA Namibia Training Authority OPM Office o f the Prime Minister ovc Orphans and Vulnerable Children PAD Planning and Development Directorate PEFA Public Expenditure and Financial Accountability PETS Public ExpenditureTracking Survey P D ProgramDocument P F M Public Finance Management PM ProgramManager PMRs Program MonitoringReports PMS Performance Management System PoN Polytechnic o fNamibia QA Quality Assurance RACE Regional AIDS Committees for Education RF Resettlement Framework ROSC Report on Observance of Standards and Codes SACMEQ Southern Africa Consortium for Monitoring Education Quality SACU Southern Africa Customs Union SADC Southern Africa Development Community SCA Special Control Account SIDA Swedish InternationalDevelopmentAgency SP-ETSIP Strategic Plan for Educationand Training Sector ImprovementProgram SRF State Revenue Fund SRN School Register o fNeeds SSA Sub-Saharan Afnca SWAP Sector Wide Approach TA Technical Assistance TFP Total Factor Productivity UMAM University o f Namibia UNESCO UnitedNations Educational, Scientific, and Cultural Organization UNICEF United Nations Children's Fund USAID United States Agency for InternationalDevelopment VET Vocational Education and Training VTCs Vocational Training Centers WIMSA Working Group o f Indigenous Minorities o f Southern Africa ZAR South African Rand Acting Vice President: Hartwig Schafer Country Managermirector: RitvaReinikka Sector Manager: Dzingai Mutumbuka Task Team Leader: MmantsetsaMarope iv  ACKNOWLEDGMENTS The World Bank Group greatly appreciates its close collaboration with the political and technical leadership o f the Government of the Republic o f Namibia (GRN); a broad base o f stakeholders in the education sector; and technical teams of the Education Sector Ministries in preparing the Education and Training Sector Improvement Program (ETSIP l), which provides a base for this program document. Invaluable inputswere also received from the World Bank's Namibia Country Team Members. The document was prepared by a World Bank team comprising Mmantsetsa Marope (Team Leader, Senior Education Specialist, AFTHl), Debbie Peterson (Program Assistant, AFTHl), Helen Perry (Economist), Sam Bartlett (Monitoring and Evaluation Specialist), and Yves Tencalla (Operations and Implementation Specialist). Other team members were Richard Johanson (Education and Training Specialist), Brighton Musungwa (Senior Financial Management Specialist, AFTFM), Henri Aka (Procurement Specialist, AFTPl), Kristine Schwebach (Operations Analyst, AFTS l), and Eleizer Orbach (Institutional and Management Capacity Specialist): V   REPUBLIC OF NAMIBIA FIRST SECTOR DEVELOPMENT POLICY LOAN TABLE OF CONTENTS LOANAND PROGRAM SUMMARY ........................................................................................................... ... v111 I INTRODUCTION . ...................................................................................................................................... 1 I1 COUNTRY CONTEXT . ............................................................................................................................. 1 1. Namibia's Recent Economic Developments and Outlook............................................................ 3 2. Persisting Challenges and the Government's Response ............................................................... 5 I11 THE GOVERNMENT'S EDUCATIONPROGRAM (ETSIP12006-2011) . ......................................... 6 IV.BANK SUPPORT TO THE GOVERNMENT'S PROGRAM ............................................................... 8 1. Linkto the Interim StrategyNote and the Africa Action Plan...................................................... 8 2. Collaboration with the IMFand Other Donors............................................................................. 8 3. Relationshipto other Bank Operations ......................................................................................... 9 4. Analytical Underpinnings............................................................................................................. 9 5. Lessons Learned.......................................................................................................................... 10 V. PROPOSEDNAMIBIA DPLl ................................................................................................................ 12 1. Choice of LendingInstrument.................................................................................................... 12 2. Descriptionof DPLl ................................................................................................................... 12 3. Policy Areas ................................................................................................................................ 13 VI IMPLEMENTATION OFDPLl . ............................................................................................................. 21 1. Poverty and Social Impact .......................................................................................................... 21 2. Participatory Aspects .................................................................................................................. 22 3. Implementation. Monitoring. and Evaluation............................................................................. 22 4. Fiduciary Aspects........................................................................................................................ 23 5. Disbursement and Auditing ........................................................................................................ 24 6. Environmental Aspects ............................................................................................................... 25 7. Risksand RiskMitigation........................................................................................................... 25 vi  ANNEXES ANNEX 1: LETTER OF DEVELOPMENT POLICY ................................................................................... 28 ANNEX 2: SUMMARY OF ETSIPl POLICY OBJECTIVES AND TARGETS ........................................ 34 ANNEX 3: DPL POLICY MATRIX ................................................................................................................ 41 ANNEX 4: JOINT DPs' OPERATIONPOLICY MATRIXFORETSIPl .................................................. 45 ANNEX 5: ETSIPl IMPLEMENTATIONARRANGEMENTS ................................................................... 62 ANNEX 6: PROJECTEDCOST AND FINANCINGOF ETSIPl BY SOURCE ........................................ 66 ANNEX 7: DISCUSSIONDRAFT MEMORANDUMOF UNDERSTANDING ........................................ 68 ANNEX 8: ANALYTICAL WORK THAT INFORMEDTHE DESIGNOF THE DPL SERIES .............80 ANNEX 9: POVERTY AND SOCIAL IMPACT ............................................................................................ 82 ANNEX 10: ENVIRONMENTASPECTS AND REQUIREMENTS ........................................................... 86 ANNEX 11:IMFPUBLIC INFORMATIONNOTICE ONTHE 2006 ARTICLE I V ................................ 88 CONSULTATION WITH NAMIBIA ANNEX 12: COUNTRY AT A GLANCE ........................................................................................................ 91 ANNEX 13: MAPS ............................................................................................................................................. 93 TABLES Table 1: Sector budget and cost estimates (US$-million) ................................................................................... 18 FIGURES Figure 1 GDP. GDP GROWTH RATEAND CPI 2002-2009............................................................................ . 3 Figure 2: Balance ofpayments. exports and imports ............................................................................................. 3 Figure 3: Government accounts. revenue. spending and overall balance 2002-2009 ............................................ 4 Figure 4: Debt sustainability. debt and reserves..................................................................................................... 5 Figure 5: SACMEQ Reading and Math Score 2000 ............................................................................................ 14 Figure 6: Total education efficiency to effectivenessplotted against cost ........................................................... 17 Figure 7: Projected primaryand secondary enrolment with and without efficiency savings ............................... 19 vii  LOANAND PROGRAMSUMMARY 1I Republic of Namibia ImplementingAgency: Ministry of Education US$7.5 million Fixed Spread Loan (FSL) inUSDollars, to be converted to South African Rand(ZAR) upon disbursement, repayable inthree years, with I a single bullet payment due at maturity (2010). Single tranche to bereleasedupon effectiveness, expected inJuly Tranching: 2007. This loan is the first oftwo single-tranche sector DevelopmentPolicy Loans (DPLs) of US$7.5 million each. It supports the implementation of the first phase ofNamibia's Education and Training Sector Improvement Program (ETSIPl). It i s also the first InternationalBank for Reconstruction and Development (IBRD) lendingoperation for Namibia. ETSIPl (2006-2011)is the first implementationphaseo fthe government's 15-year strategic plan for the improvement of the education and training sector (SP-ETSIP 2005-2020). Inspiredby Vision 2030, the strategic plan aims to transform the education and training system into a more effective tool for supportingthe attainment o f core national development goals to accelerate growth, reduce poverty and social inequalities, and curb the spread of HIV/AIDS. DPLl supports: (i) development of specific policies and policy the instruments to guide and give effect to planned sector reforms; (ii) instrumentstoenforcepolicyimplementation; and legal (iii)institutional capacities requiredfor effective implementation of planned sector reforms. DPLl provides about 14percent of the financing for the first year of ETSIP1. Inaddition, Banktechnical support inpreparationof DPL1, assistedthe government to raise US$323.8 million external funding for ETSIPl,to beusedmainly inthe last three years of implementation. Bank technical support also ensures the credibility, technical integrity, and development relevance ofproposed sector reforms. The preparation process deepeneddevelopment partners' coordination and harmonization, leadingto ajoint appraisal o f ETSIPl inOctober 2006. Italso strengthened government leadership, ownership, andtechnical capacity to design and implementsector reforms. The effective implementation of reforms should set Namibia on track toward meetingthe MillenniumDevelopment Goals (MDGs), Africa Action Plan (AAP)and, Educationfor All (EFA) goals, and answering Vision 2030's call to heightenthe sector's contributionto national development. (9 Interest-based resistance toproposed policy reforms: To mitigate this risk, GRNhas sustainedinclusive stakeholder consultationto improve support for and ownership of proposed policy, legal, and institutional reforms. Recently, the GRNhas also demonstrated determination to withstandpressurefrom special interests. ... Vlll  (ii)Program implementation delays due to consultations and consensus-building: The ETSIPl preparationprocessprovided adequate lead time for stakeholder consultations. Several rounds o f consultations have been completedand more are planned as implementationprogresses. (iii)VulnerabilitytoexternalshocksmayunderminetheGRN'sability to meet itsfinancial commitment to theprogram: Prudent macro- economic and fiscal policies should sustain macro-economic stability, thusreducingthisrisk. WithWorldBank support, the GRNraised substantial grants to cover initial capital investments, which are key cost drivers. ETSIPl emphasizes efficiency measures that will contribute to the sustainability o f recurrent cost implications o f externally funded capital investments. The GRNhas also developed base, medium, and highcase scenarios for scaling ETSIPl activities up or down, ifcompellingreasons arise. (iv) Potential discontinuity offinancial support by one of the 13 developmentpartners: The GRNteam articulated scenarios for scaling ETSIPl up or down ifneed should arise. (v) Fiduciary risk: Immediate andmedium-term mitigation measures have been agreed. The implementation o f immediate measures i s advanced. Recent Bank assessments concludedthat procurement and financial management reforms made the government fiduciary system suitable for direct budget support. The GRNalso committed to apply relevant recommendations from a planned Country Integrated Fiduciary Assessment (CIFA) to further strengthen its fiduciary system. (vi) Implementation capacity: DPLl buildsan enabling policy, legal, and institutional environment for the effective implementation o f planned sector reforms. It also front-loads actions to strengthen the delivery capacity at the central level and to assess and strengthen delivery capacity at the decentralized levels. The annual design o f DPLs allows for a flexible matching o fthe scope o f work to implementationcapacity as it strengthens. The broader program supported by D P L l entails detailed planning for effective implementationand a capacity development sub-program. (vii)Adverse effects of HIV/AIDSonsectorpe$ormance: The HIV/AIDSmanagement unito fthe Ministry andregional AIDS committees will be strengthened. The mainstreamingo f HIV/AIDS in curricula will be intensified, including life skills curriculum. A system o f substitute teachers will be introducedto abate adverse effects o f teacher absenteeism. An increasednumber o f Orphans and Vulnerable Children (OVCs) will receive nutritional andpsychosocial support. OperationIDNumber: PO86875 ix  I.INTRODUCTION 1. Despite beinga middle-income country, Namibia faces formidable development challenges mostly associatedwith low-income countries. With a Gini coefficient of 0.6, income inequalitiesare among the highest inthe world. Poverty i s pervasive. Unemployment i s estimated at 34 percent and even higher for youth and for the unskilled. Since independence in 1990, average growth has been lower than government projections.' The incidence o f HIV/AIDS i s among the highest worldwide. These realities challenge Namibia's ambition to become a high-income knowledge-based economy by 2030. 2. A high-quality and equitable education, training, and skills development systemcould substantially contribute to redressing Namibia's development challenges. Butrecent Bank analysis found the system to be too weak for supporting national development. The mainweakness is poor quality, evident inlow student learningoutcomes. Performance onregional sixth grade mathematics andreading tests i s the worst among the 14participating countries. Highproportions of adults who have hadprimary and even secondary education are functionally illiterate. Opportunities for post-secondary education and training are limited. So the systemcannot supply the skills required to meet current labor market demands and to support the futuredevelopment strategy. Another major weakness i s the inequality inthe distribution of education outcomes and attainment. That makes the system a weak tool for redressingpoverty, and social and income inequalities. Other weaknesses are inefficient use of available resources, the weak capacity to deliver education services, andthe weak responseto HIV/AIDS. 3. These weaknesses persist despite highinvestmentand appropriate broad sector policies. Over 1997 to 2006 the education systemclaimed on average 7.5 percent of the gross domestic product (GDP) and 23 percent o f government expenditure. Lacking are specific policies that respond to specific sector challenges within a specific Namibia context, legal instrumentsto enact specific policies, and institutional capacities to effectively implementpolicies. 4. The GRNhas asked for sustainedBank technical support to transform its Education, Training and Skills Development System into a more effective tool for supportingnational development. Bank technical support provideda solid analyticalbase to guide plannedsector reforms. It also enabled Namibia to articulate a 15-year strategic plan for the education and training sector improvement program (SP-ETSIP 2005-2020) and the first 5-year sector program (ETSIPl) that will beginto operationalize the strategic plan. ETSIPl wasjointly appraisedby development partners inOctober 2006. 5. The GRNhas also asked for two US$7.5 million single-tranche programmatic development policy loans (DPLs) to meet the ETSIPl financing gap duringthe first two years. DPLl constitutes nearly 14 percent of the funds for the first year of ETSIP1. Inaddition to technical outputs, the Bank's technical support, together with government efforts, successfully leveraged an additional US$323.8 million external fundingfor ETSIPl-US$278.8 million ingrants andUS$45 million as a soft loan. 11. COUNTRY CONTEXT 6. Since its independenceon March21, 1990, Namibia has maintaineda multiparty parliamentary democracy, with good governance, basic civil freedoms, respect for humanrights, and a fairly contained level of corruption. InMarch 2005 President SamNujomahandedthe presidency to President Hifikepunye Pohamba, after leading the country for the first 15 years of independence. 'Detaileddiscussionpresentedin: World Bank (2005). NamibiaHumanCapitalandKnowledgeDevelopmentfor EconomicGrowthwith Equity.Afiica RegionHumanDevelopmentWorking Paper Series -No 84.  7. Poverty and social indicators: Poverty and inequality trends show improvements from the levels recorded by the 1993/1994 household income and expenditure survey. All the same, income distribution i s still highly skewed. Against its middle-income status and per capita income of US$3,157 (2006 est.),' Namibia stillranks among the most unequal societies, with a Gini coefficient of 0.6.3 According to the preliminary results of the 2003/2004 survey, 10percent of the richest households account for nearly 50 percent of total consumption. The per capita income for the 90 percent o f households with the lowest income i s about US$262, a hundredtho f the US$25,000 for the richest 2 percent o f the households. The per capita consumption o fthe richest2 percent ofthe householdsi s 12times that o fthe 90 percent of households with the lowest adjusted per capita income. 8. While income inequalities seem to be narrowing, broadmeasures o f inequalities, such as the human development index (HDI), show signs of deterioration and confirm that poverty i s pervasive. The HDIfell from 0.734 in 1996to 0.626 in2006, partly becauseof the decline inlife expectancy owing to the impact of HIV/AIDS.Life expectancy at birthdeclined from 61 in 1991to 41 in2005. Between2001and 2021, the number oforphansis expected to rise from 84,000 to about 250,000 with HIV/AIDSorphans accounting for 198,000. The national unemployment rate averages 34 percent, and is highest among the unskilled (56 percent) and youth (40 percent). 9. On the positive side, a few social indicators are improving. Access to basic education has become more equitable. Primary health care facilities cover a substantial proportion of communities. On average, 87 percent (98 percent inurban and 80 percent inrural areas) of households have access to safe water; compared with 30 percent before independence.Households with safe sanitation increased from 39 percent in 1991 to 47 percent in2003. Inquantitative terms, Namibia i s well poised to meet MDGs for education. About 83 percent o f adults (15+ years) and 90 percent of the youth (15 to 24 years) are literate. For 2005, net enrolment ratios for primary, basic education and senior secondary education were 94 percent, 93 percent, and 50 percent respectively. Survivalrates for grades 5, 8 and 11were 90 percent, 73 percent and 31percent respectively. In2001, the gross enrolment rate for tertiary education (taking into account enrolment abroad) was estimated at 11percent. On average, gender parity is attained at all levels, with a gender parity index o f more than 1infavor of females. 10. Macroeconomic context: Since independence, Namibia has maintaineda strong recordo f macroeconomic ~tability.~ Ithasalso developed afairly free market-oriented economy, underpinned by a credible exchangerate pegto the South Africa Randandprudent fiscal policie~.~Economic freedom ratings are particularly highon variables relating to low barriers to capital floks and foreign investment, low government intervention on wages and prices, protection ofproperty rights, fairly well functioning financial markets, and price stability. Ratings are lower for government expenditure andtrade protectionism. Low scores on trade protectionism are mainly due to barriers imposed by Namibia's membershipto the Southern Africa Customs Union(SACU) rather than to internalregulatory frameworks. As a result, Namibia has experienced robust growth, moderate inflation, strong external surpluses, and sustainedlow indebtedness. InJanuary, 2006, the Fitchgave Namibia the first sovereign investment graderating o f BBB for long-term foreign currency. 2 International Monetary Fund(2007) Namibia: StaffReport for the 2006 Article IV Consultation, Washington: International Monetary Fund. 3 The sources o f the sharp decline inthe Gini coefficient from 0.7 based onthe 1993/1994HIES to 0.6 based on the 2003/2004 HIES are still unknown. However, it is noteworthy that the level o f decline seem very high, and requires further investigationandexplanation. 4 The 2006 IMFArticle IV discussions reaffirmedthe authorities' prudent macroeconomic framework. Namibia i s also a member o f the Common Monetary Area (CMA)-which includes Lesotho, South Africa, and Swaziland-and allows free trade and capital flows among members. 2  NAMIBIA'S RECENT ECONOMICDEVELOPMENTS OUTLOOK AND 11. Between 1991 and 2005, Namibia maintainedannual average GDP growth o f 4.3 Figure 1: GDP, GDPGROWTH RATE AND CPI percent. Recent real GDP growth has been strong 2002-2009 butvolatile. (Figure 1). In2006, real GDP growth measured an estimated 4.6 percent, helpedby a ~"""",7 12 recovery o f diamondproductionand strong growth inthe financialandtelecommunication sectors. 50000 .- 10 Nonetheless, with a population growth o f one 40000 percent a year, projectedeconomic growth will not Mllions) be sufficient to reach the 5% percent annual per 30000 capita growth which the UnitedNations estimates Inflation as necessary to cut poverty inhalfby 2015. And it 20000 may not be sufficient to putNamibia on track 10000 toward high-income knowledge-based economies it aspires to join by 2030. 0 i o 12. Average annual inflation fell rapidly from 11.3 percent in2002 to 2.3 percent in2005, inline withthe appreciation o fthe Randand declining food prices. In2006, with a depreciation o f the Figure 2: Balanceof payments,exports and imports Rand, inflation increased to an estimated 5.0 percent. Inflation i s projectedto remain inthe 4.5 to 5.5 percent range for 2007 and 2O0fL6 13. The current account surplus remains strong, +Current averaging 6.5 percent o f GDP from 2002-2005 and Account reaching an estimated 14percent o fthe GDP in -Exports 2006 (Figure 2). The increaseresulted from a surge incustoms union(SACU) revenues alongwith 20 Imports strong growth inthe export o f diamonds and other commodities. The trade deficit more than halved between 2003 and 2006, even as the cost o f oil I I 0- imports rose. Projections for the medium term show a steady decline inthe current account surplus as a I I Year percent o f GDP. This i s largely the result o f a fall in SACU receipts due to a new revenue-sharing formula and declining tariffrates. Internationalreserves fell to less than two months o f imports in2004 and are projectedto remain at this level for the next several years. ... . a 14. -.riscai .policy.nas.been .. tne main instrument or aemana management. inNamibia as monetary . . . I . . .I policy has been anchored to preserve the currency peg to the South African Rand. Government expenditure i s a major component o f domestic demand and the government actively manages public expenditures (the bulk o f which i s satisfied through imports) to contain aggregate demand and ensure macroeconomic stability and sustainability o fpublic debt. The Government has been committed.to maintain macroeconomic stability through fiscal discipline. Ithas embarked upon a number of budgetary International Monetary Fund(2006) Namibia: Staff Report for the 2006 Article IV Consultation, Washington: International Monetary Fund. 3  1Figure 3: Governmentaccounts, revenue,spendingand overall balance2002-2009 40 35 Revenues reforms, such as the MediumTerm Expenditure 30 Framework, MediumTerm Plans and Performance 25 and Effectiveness Management Program with the 'aim to strengthen macroeconomic management and improve the efficiency and effectiveness of public expenditures. Balance 15. As a result, the fiscal deficit dropped from 7.5 -5 (includin percent o f GDP in2003/04 to an estimated 0.7 percent in2005/06 (Figure 4). The government i s expected to register a small surplus in2006/07.' The decline inthe fiscal deficit was due to more effective collection o f income and value-added I taxes and a windfall in SACU revenues as well as a decline inspending on goods and services, capital expenditures, and net lending. The deficit i s projectedto rise again to 3% percent o f GDP by 2008. Most o f the deficit has been financed through domestic borrowing. 16. Prospectsfor future growth: For 2007 and beyond, growth is expected to stabilize at 4 to 5 percent. Growth i s expected to be broad-based with manufacturing, tourism, and miningas key drivers. Miningi s expected to rise inthe medium term as diamond production shifts from land to sea-based miningand new mines and technology boost output o f uranium and zinc. Local polishing and cutting has the potential to raise value added inthe diamond industry.Strong contributions to growth are also expected from tourism, the wholesale and retail trades, telecommunications, and financial services. 17. Inthe short to mediumterm, critical risks to growth couldinclude a decline indemandbytrading partners, further appreciation o f the Namibian dollar, or rising oil prices. Inthe long term, growth will depend on the continuation o f prudent macroeconomic policies, a buildupo fthe knowledge and skill base HIV/AIDS. o f the work force, technological boosts to productivity, and diligent implementation o f the strategy for 18. Debt sustuinubility: At year-end 2005/2006 Namibia's external debt (public and private) was 20.9 percent o f GDP, lower than most other Sub-Saharan African (SSA) countries. The external debt to export ratio i s estimated at 51percent, indicating a healthy situation. Public debt as a percent o f GDP peaked at 34 percent in2004/05 and is projected to fall to 26 percent in2007/08, close the authorities' target o f 25 percent. Government-guaranteed debt stood at 8.9 percent o f GDP at year-end 2005/06 (Figure 4). However, without sufficient fiscal consolidation, the IMFprojects that the public debt ratio will begin to rise again in2008/09 as SACUrevenues fall. Avoiding this outcome will require concerted efforts to boost income and VAT collections, restrain the public sector wage bill, and curb subsidies to the parastatals. Other factors that could negatively affect external and public sector debt ratio include a significant drop inexport earnings, a rise inthe interest rate, slower GDP growth, or a depreciation of the Namibian dollar. Ifthe government continues to adhere to prudentmacroeconomic policies, external debt sustainability should not be a major concern. 'hid. 4  1Figure 4: Debt sustainability, debt and reserves 002-2009 , 3 E5 vi 19. Overall, the Bank has determined that Namibia's macroeconomic framework is 35 - 5 appropriate for engaging with the GRNon a DPL. 30 - y 2 1 (months 2 $5 - PERSISTINGCHALLENGESAND THE E20 - GOVERNMENT'SRESPONSE 2 2 1 5 - 10 - --tExternal Debt (% 20. Despite key achievements, challenges 5 - pertaining to widespread poverty and inequality, 0 7 highunemployment, andHIV/AIDS persist. Moreover, recent growth has been fuelled by increases inthe miningsector outputs. Today, export o f raw materials and primary products play a - 21. Inresponse, the authorities strengthenedtheir commitment to prudent macroeconomic policies, with a focus on preserving Namibia's relatively low public debt ratio compared to other SSA countries. Efforts are also ongoing to boost the flexibility o f labor markets, improve the performanceo fparastatals and limit their impact on the budget, clarify landreform, and enhance governance. 22. Beyond macroeconomic stability and debt management, the government has developed Vision 2030 as a broad framework for accelerating growth and social equity. Vision 2030 sets an ambitious goal that Namibia should become a high-income knowledge-based economy with a quality of life for all Namibians comparable to that o f the developed world. The attainment o f this goal demands a substantially heightened and sustainedcontribution o f all sectors o f the economy to core national development goals: accelerating growth, reducing unemployment, especially youth unemployment, reducingpoverty and social inequalities, and curbing the spread o f HIV/AIDS. The authorities are therefore pursuinga strategy to diversify the economy and to achieve broad-based growth. 23. To achieve broad based growth would require the transformationo f natural resource-based industries into more knowledge-intensive natural resource-based industries. The government plans to do this byapplyingknowledge andtechnology to increasethe range andvalue o fproductsderivedfrom Namibia's richnaturalresources. Higher value-added productivity i s expected to increase Namibia's gains from exports. Productivity growth i s also expected to improve profitability, local investment returns and, to reduce domestic capital flight, while attracting foreign direct investment. 24. Skill shortage has been identified as one o f the bindingconstraints to productivity growth. Employershave stated that a shortage o f qualifiedbusiness managers, artisans, technicians, and trainable labor i s a critical constraint to increasing productivity. Professional cadres that are particularly scarce include natural scientists, social scientists, medical doctors, engineers, researchers, business managers, technicians, healthnurses, and teachers for mathematics, science, and arts. The skill shortages also limit Namibia's global competitiveness. Internationalcompetitiveness reports rank Namibia very low on its ability to meet hiringneeds o f firms and on its investment inresearchand development. Namibia ranks fairly highon the availability and sophistication o f its technology, but low on the capacity o f firms to absorb that technology. These ratings further suggest the failure o f the education, training, and skills 5  development system to supply the level and quality o f labor that would allow firms to pushthe knowledge and technology frontier. 25. The demand for skilled labor and the continuing skills shortage indicates a constraint on the supply side. Thus, increasingthe supply o f skilled labor would likely contributeto the national development goal ofreducing unemployment, especially youth unemployment.* Expanding employment opportunities would also likely increase incomes for a broader base of Namibians, helping the government to attain its goal o freducing income inequalities and promoting social equity. 26. Namibia's growth strategy cannot be realizedwithout substantially raising the quality o f skilled labor. For the most part, meaningful employment will depend on creating productivejobs through the extension o f value chains, which itself requires a highly skilled labor force. Namibia's growth strategy thus demands arapidbuildupo ftrainable laborthat isreadily adaptableto rapidly changing knowledge and technologies. The training and adaptability o f labor are mainly a function o f good quality general education, combined with good opportunities for just-in-time training and life-long learning, which Namibia currently lacks. Improving the supply o f skills through good quality and equitable education, training, and skills development i s thus critical to accelerating Namibia's growth. Section I11below presents the government strategy and program for addressingthe skills shortage. 111. THE GOVERNMENT'SEDUCATIONPROGRAM(ETSIP12006-2011) 27. Strengthening educationsector knowledge: The preparation of the government's program (ETSIP1) started inJanuary 2003 with President SamNujoma's launching o f a Bank-supported economic and sector work (ESW), which identified five key areas for reform: Increase the supply o f skills where demand i s high. Improve learning outcomes, particularly inmathematics, science, ICTs, and English. Redistribute resource inputsas a way o f increasing education achievement and attainment among the currently underserved segments o f the population. Improve efficiency inthe mobilization o fnon-government resources for the sector and improve efficiency inthe use o f available resources. Strengthen the capacity to implement reforms, including the response to HIV/AIDS. 28. InSeptember 2004, the Cabinet adoptedthese recommendations as abase for developinga long- term strategic plan for sector improvement. 29. Long-term sector strategicplan: InFebruary 2005 the Cabinet approved a 15-year strategic plan for implementing the reforms proposed by the ESW. The plan, known as the strategic plan for the improvement o f the education and training sector (SP-ETSIP 2005-2020), was developed with substantial Bank technical support and the participationo f 13 development partners. Consistent with recommendations o f the ESW, SP-ETSIP focuses on five strategic policy objectives: Equitable expansion o f access to post-basic education and training, with a view to increasing the supply o f skills. * Those with some level oftraining quickly find employment. For example, unemploymentamongsecondaryschool graduates with some leveloftraining stands at only 4 percent.For those with some form oftertiary education, it is 2 percent. Inaddition,20 percent ofthose attending vocationaltraining centers dropoutto accept employment.Giventhe demandfor skilled labor,the continuingskills shortageindicates aconstrainton the supply side. 6  0 Improvement o f education quality and effectiveness, demonstrated inincreased education outcomes and outputs. e Improvement o f equity inthe distribution o f educationresource inputs and learning outcomes. 0 More efficient mobilization o f resources requiredto finance the sector and more efficient use o f those resources. 0 Strengthenedcapacity to implement proposed reforms and to respond to the adverse impact o f HIV/AIDS. 30. The priority accorded to each o f these policy objectives differs across sub-sectors based on specific challenges facing them. For instance, ingeneral education, the first priority objective i s to improve learning outcomes. For early childhood education (ECD) and pre-primary education, it i s to strengthen institutional capacities requiredto expand access at these levels. 31. Thejirst medium-term sectorprogram: Over its 15 years, SP-ETSIP will be operationalized through three five-year education and training sector improvementprograms (ETSIP 1/2/3). InAugust 2005, the Cabinet approved ETSIPl for implementationbetween 2006 and 2011. Its strategic objective i s to equitably increase the immediate supply o f middle to highlevel skills required to meet current labor market demands and, to lay a foundation for a sustainable supply o f skills required for future equitable growth and for facilitating Namibia's transition to a knowledge-based economy. ETSIPl covers the entire sector (from early childhood development (ECD) to higher education and knowledge and innovation) but its focus i s limited to a carefully selected set o f actions that will quickly advance the attainment o f its strategic objective. 32. A prime strategy for increasing the immediate supply o f skills is the expansion anddiversification o f opportunities for post-basic education and training with a focus on bringinginthe previously excluded. Specific actions include a pro-poor expansion o f access to high-quality senior secondary education. A range o f measures elaboratedunder the policy areas in section V will create an additional 7,533 senior secondary school places, at least 60 percent o f them indisadvantaged areas. Six secondary magnet schools with a focus on science, mathematics and ICTs will be established insix o f the poorest regions (Caprivi, Kunene, Otjozondjupa, Omaheke, Oshikoto, Ohangwena, Omusati, Oshana and Kavango). The latter region has a highproportion o f the San people. The enrolment o f these schools i s yet to be determined. An additional 2,267 places will be created inhigh-quality, market-responsive, and competency-based vocational and education training (VET) programs, at least 60 percent for trainees from disadvantagedhouseholds. At the tertiary level, 200 places will be created inpre-entry science, mathematics, and ICT programs. 33. Actions to builda sustainable supply o f skilled labor will start with strengthening the foundation for good quality education, training, and slulls development. This will entail the expansion o f access to good quality ECD, pre-primary education, and competency-based basic education. By 2011, it i s expected that 50 percent o f 4 to 5 year olds and older will meet a Namibia-specific holistic child development index, 50 percent o f grade 1intake will meet school readiness criteria, and at least 50 percent of learners will meet minimumcompetencies for eachcompleted phase o ftheir basic education cycle. The mainstreamingo f ICTs as a tool for improving instructional quality and as a subject will be intensified to cover at least 60 percent o f secondary education and training institutions by 2011. Opportunities for adult and lifelong learning will be increasedthrough higher enrolment inthe Namibia Literacy Programand the Namibia College o f Open Learning (NAMCOL). 34. To ensure feasibility o f all other actions, delivery capacity will be strengthened through direct training, skills transfer, and on-the-job training o f key sub-program management teams. Inaddition, 7  institutions critical for the management and delivery o f HIV/AIDS programs, pre-primary, ICTs, higher education, and vocational education and training will be established and competently staffed (see Annex 2 for a summary o f ETSIPl objectives and targets). 35. ETSIPl implementation arrangements: ETSIP1will be implementedthrough improved GRN system (see Annex 5). Key improvements, informed by the results o f a capacity assessment, include clear definition o froles and responsibilities and enhanced lines o f accountability from the Cabinet to teachers. New institutionswill be established and old ones elaborated to improve the delivery o fpre-primary programs, VET, and tertiary education and training. ETSIPl also includes a capacity development sub- program, which focuses on strengthening sector leadership and effective management o f procurement processes, human resources, assets, information, and howledge through training and skills transfer. The sub-program will also strengthenthe strategic partnerships for sector development that started during ` program preparation. Direct training and skills transfer will strengthen the newly establishedprocurement unito fthe Ministryo fEducation(MoE) andthe budgetingand financial division. Activities o fthe sub- program will also include a thorough analysis o f implementationcapacity at decentralized levels. 36. ETSIPlfinancial and substantivesustainability: Sector improvementsentailedinETSIPl will cost an additional US354.9 million. Together with government efforts, the Bank's technical support leveraged US$323.8 million external funds, leaving a financing gap o f US$31.1 million. Most o f the external funds are programmedfor the thirdto fifthyears o fprogram implementation. The GRN requestedthe Bank to meet halfo f this financing gap (US$l5 million) to be disbursed over the first two years o fprogram implementation. This bringsthe total o f external funds to US$338.8 million. The GRN has made a special allocation duringthe medium-term expenditure framework (MTEF) periodto cover the remaining gap. internal system efficiency - are expected to generate substantial savings and make the program financially 37. A range o f efficiency measures - primarily better management o fteachers' salaries andimproved sustainable (elaborated on under section V: Policy Areas). T o ensure the program's technical sustainability the GRNhas set aside US$2 million to pay for Bank technical support beyond the first two years of the loan. On a need base, this fundmay also be used to cover upstream analytical work that will reinforce implementationdownstream. IV. BANK SUPPORT TO THE GOVERNMENT'SPROGRAM LINKTOTHEINTERIMSTRATEGYNOTE THEAFRICAACTION PLAN AND 38. Namibia's Interim Strategy Note (ISN) highlightsthe need for education, training, and skills . development sector reform as critical to the country's goal o fbecoming a knowledge society by 2030 and achievingbroad-based growth. This operation is also consistent with the Bank's Africa Action Plan (AAP)flagship goal o fbuildingshlls for competitiveness ina global economy, which supports activities that accelerate the attainment o f education MDGs, buildskills to promote growth, strengthen partnershps, and strengthen partner counties' capacity to design, implement, and monitor their own sector development plans andprograms. COLLABORATION WITH THE IMFAND OTHER DONORS 39. Namibia does not have a formal programwith the IMF,but collaboration has been improving. Discussions duringthe 2004 Article IV consultations led to ajoint IMF/World BankFSAP (Financial Sector Assessment Program), a fiscal Report on Observance o f Standards and Codes (ROSC), and technical support delivered through IMFmissions. Future IMF support i s expected to focus on long-term 8  growth prospects, fiscal policy for 2006/07 and beyond, monetary policy and the exchangerate peg, the health of the financial sector (especially the non-bank financial sector), and possible reforms of the pension system and parastatals.The 2006 Article IV discussions strongly supported education sector reforms developed with Bank technical support. Duringprogrampreparation the Bank and Fundstaff exchanged ideas and briefedeachother. 40. DPLl was developed incollaborationwith 13 development partners working toward consistent policy dialogue and reduced transaction costs for the GRN. The EuropeanCommission (EC) currently serves as the leadcoordinatingagency, the World Bank as the leadtechnical agency. Development partners that may provide direct budget support have endorsed thejoint operation policy matrix, prior actions for the release of the first tranche, and triggers for the release of subsequenttranches preparedby theWorld Bank (see Annex 4). All development partners areexpectedto endorseapartnership framework inthe form of a Memorandum o fUnderstanding (MoU) developed by GRN, the World Bank, For the DPLl period - April 2007 to March 2008 - the development partners' group has committed about and the EC (see Annex 7). Development partners have also endorsed an internal coordination framework. US$54 million - includingthe InternationalBank for Reconstruction and Development(IBRD) loan. RELATIONSHIPToOTHERBANKOPERATIONS 41. DPL1, the first lendingoperation inNamibia, complements an ongoing InstitutionalDevelopment Fund(IDF) Grant for strengthening organizational arrangementsandbuildingcapacity ingovernment bodies, particularly National AIDS Executive Committee (NAEC), the private sector and non- governmental organizations (NGOs) to address the challenges o f HIV/AIDSthrough public-private partnerships and improved coordinationinthe fight against the disease. DPLl supports the strengthening of the Ministryo f Education (MoE) HIV/AIDSManagement Unit (HAMU) andregional AIDS committees Regional AIDS Committees for Education(RACES) to implement a sector HIV/AIDS policy and programs. It also supports the mainstreaming of HIV/AIDS within ETSIPl. ANALYTICAL UNDERPINNINGS 42. Inadditionto the GRN'sbroadpolicydocuments, the design ofthis operation was guidedby extensive analytical work, with strikingly congruent findings andrecommendations (see Annex 8). Government commissionedanalyticwork 43. TowardEducationfor All (1993): Soon after independence the GRN, with the support of the United States Agency for InternationalDevelopment (USAID), reviewed the state of the education and training systemto chart a direction for futuresector development. This work definedsectorpolicy objectives for democratic Namibia as equitable expansion o f access, improved internal efficiency, improved quality, enhanceddemocratic participation, and more opportunities for lifelong learning (LLL). 44. Presidential Commission on Education, Culture and Training (1999): Toward the close of the first decade o f independence (1990-2000) the State President commissioned a critical review of sector performance against policies set after independence, and to recommend directions for the seconddecade (2000-2010). This work was undertaken mainly with support from the Swedish International DevelopmentAgency (SIDA).The presidential commissionnoted a critical achievement o f the first decade as the establishment o f a unitary national education system from the 11racially and ethnically segregatedsystems of the pre-independence period. The commission declared 1990-2000 to be the decade of access. Itrecommendedthat the second decade should be the decade of equity. The commission also recommended that more attention be given to poor education quality and inefficiency (see Annex 8). 9 r  45. The commission's report was the first document to explicitly expressthat Namibia shouldbecome a "learning nation inwhich all citizens have opportunities for learningthroughout their lives." It was also the first report to warn that "because of globalization, Namibia must compete inthe knowledge-based production of goods and services, or face increasingmarginalization." 46. Vision 2030 background study on Human ResourcesDevelopment and Institutional Capacity Building (2001): Backgroundwork for Vision 2030 benefitedfrom the support o f diverse development partners, with the EC as the main financier and provider of technical assistance (TA).This analysis was to identify critical issues inhuman resource development and institutional capacity development and to develop a future vision and broad strategy for these areas. The overall conclusion was that shortages of skills would persist through the Vision 2030 period irrespective of the growth scenario. The report recommendedthe expansion o f technicians, natural scientists, engineers, pharmacists, dentists, medical doctors, and healthprofessionals. Poor secondary school science and mathematics teaching were highlighted as critical constraints to expand intake inthese areas of study at the tertiary levels. 47. Vision 2030 backgroundpaper on Knowledge, Information and Technology (2002): The report recognized that the education andtraining system i s aprime vehicle for creatingand disseminating knowledge. Itrecommendedthat Namibia investmore inthe education and training system and sharpen the system's responsivenessto the needs o f firms. It called for more emphasis on the development of scienceand technology to enable Namibia not only to take advantageo f the new economy-but also to succeed init. It also recommendedimproving the use of ICTs to expand access to post-basic education and training. Like the presidential commission, it recommendedthat Namibia construct a vision for developinga truly knowledge-based economy. Bank-led Analytical and Advisory Activities (AAA) 48. Namibia Human Capital and KnowledgeDevelopmentfor Economic Growth with Equity (2005): This synthesis report summarizes findingsandrecommendations ofextensive analytical work conducted between 2003 and 2005. The background work comprised 14pieces of Analytical and Advisory Activities (AAA) work. It covered an in-depthanalysis o f eachlevel of the sector (except adult education and lifelong learning), seven thematic areas (teacher training and professional development, curriculum, reading, ICTs and education, training levy, textbook provision, and measurement andevaluation), an analysis of prospects for growth, and a labor market survey (selected specific recommendations are presentedinAnnex 8). 49. The purpose ofthis work was to comprehensively assess the education, training, and skills development sector and to advise on how it may best support the national development reformenvisioned in Vision2030. The reportconcluded that the current educationandtraining systemwas too weak to provide the envisagedlevel o f support. Itnotedphenomenal achievementsregistered since 1990, but focused on the persisting challenges (see Section 3 and Annex 8). LESSONSLEARNED 50. The Bank has no prior lendingexperience inNamibia. Lessonsthat informedthe design o f this operation came from the four years of intensive dialogue and AAA that precededthis operation. Other relevant lessons are derivedfrom similar operations inother African countries and inmiddle-income countries such as Brazil. 10  51. Government ownership is criticalfor implementation success: The Bank's involvement inthe sector was at the invitation o f the highest level o f the GRN. As part o f the Vision 2030process, the GRN asked the Bank for technical guidance on how to strengthen its education, training and skills development sector (ETSDS) to best support the national development reform agenda. Because the recommendations of the Bank-ledAAA supported the GRN's reformagenda, they were easily adopted and translated into an implementable long-term strategic plan and medium-term program. The design o f the DPLl sustained the GRN's ownership. Specific policies and legal and institutional reforms supported by DPLl are derived from the GRN's program-ETSIP1. Prior actions for the release o f DPLl and triggers for the release o f the second tranche (DPL2) were identified, prioritized, and sequenced inclose consultation withthe GRN's technical andpolitical leadership. Improvedownership is changingNamibia's implementationrecord. Well before the Bank appraisal of DPL1, over 90 percent o f prior actions were met, and the remaining actions were on track. Before the M o U could be signed, development partners agreed on the reportingprocedures required to be put inplace. These have now been established and are infact already inpractice. Quarterly reports arebeingsubmittedontime andwith acceptable detail and quality. 52. Both technical andpolitical leadership and commitment are criticalfor implementation success: Based on lessons from the upstream AAA, the design o f the government program supported by D P L l was led by the GRNtechnical and political leadership. Fromthe political side, every milestone decision inthe design process was approved by the Cabinet. The participation o fthe political leadership inbackground work that preceded the DPLl was unprecedented. Progress inmeetingprior actions is attributable to the strengthened M o E technical leadership and to the contributions o ftechnical leaders-from permanent secretaries to chief officers-f other GRNministries, chiefs o f parastatals, the private sector, and civil society. 53. Inclusive consultation is criticalfor effective ownership and support: As with upstreamAAA and (TA), the design o fthis operation was premised on participationby eight GRNministries, more than 20 private and parastatal sectors, representatives o f civil society, teacher's unions, and 13 international development partners. Broad-based consultation buttressedbroad-based ownership and the resulting support for implementation. Development partners that provide direct budget support have agreed to a common operation policy matrix, prior actions for the release o fthe first tranche and triggers for the release o f the second tranche. All development partners have agreed to a partnership framework captured through a M o U (Annex 7), and to an internal coordination framework. 54. Technical credibility of theprogram is criticalfor broad-based support: Duringupstream AAA and the preparation of the sector strategy and program, the Bank brought technical expertise and international experience from more than 15 countries. 55. Detailedplanning boosts the technical confidence required tofacilitate implementation: The upstream development o f ETSIPl was characterized by painstakingly detailedplanning for implementation. Detailedplanning helpedthe GRNtechnocrats meet prior actions and keep program implementation on track and it i s now paying dividends. 56. Consideration of client implementation capacity is criticalfor implementation success: The design of DPL1benefited from assessing the client's implementationcapacity and thus focuses on strengthening institutional capacities and upfront actions that will facilitate the implementation o freforms downstream. The operation design was accompanied by deliberate capacity development through direct training, skills transfer to counterparts, and on-the-job training. DPLl focuses the client's attention on priority policy outcomes to be accomplished yearly. It has also strengthened development partner coordination and 11 a  harmonizationto reduce transaction costs and the demands on client capacities. The annual design o f DPLs allows for a flexible matching o f the scope o fwork to real andproven implementationcapacity. 57. Alignment with the government budget andplanning cycle eases implementation: The proposed DPL series i s aligned with the GRN's budget cycle, the planning cycle o f five-year development plans, and the annual sector planning cycle. V. PROPOSEDNAMIBIADPLl CHOICE OFLENDING INSTRUMENT 58. Although Namibia i s a first time IBRDborrower, a DPL i s suitable because the proposed support focuses on policy, institutional, and legalreforms rather than on specific investments. The DPL improves government ownership o f sector reforms and enhances strategic partnership insupport of those reforms. The strengthening o f government delivery systems inherent to a DPL preparation process, lays a solid foundation for easier implementationo f planned sector reforms. Inaddition, a DPL i s suitable because Namibia provides a conducive environment for direct budget support. Recent Bank analysis concluded that with marginal fine-tuning, the GRN's fiduciary system i s adequate for delivering direct budget support. Another reason i s that the country has had experience with budget support provided by the EC and SIDA for the sector. A D P L catalyzes systemic capacity improvements beyond the sector. As part o f the technical dialogue for the preparation o f this loan, the GRNcommitted to undertake a Country Integrated Fiduciary Assessment (CIFA) and to apply relevant recommendations toward hrther strengthening o f its fiduciary system. Prospects o f an improved fiduciary system encouraged development partners to provide substantial financial support for the sector. Excluding the IBRDloan, external funds amount to US$323.8 million, o f which US$278.8 i s grants and US$45 million i s a soft loan negotiated with substantial World Bank support. Given Namibia's lack o f familiarity with the Bank and its fiduciary procedures, a D P L i s appropriate because it doesnot divert the energies o f government officials toward learning Bank procedures and away from program implementation. This i s critical for reducing transaction costs on the officials, especially given the demand that ETSIPl will place on their implementation capacity. Usingthe DPL has strengthenedthe delivery capacity o f the M o E structures. At the same time, its annual design provides flexibility for matching the scope o f work with client capacities as they progressively improve. DESCRIPTION OFDPL~ 59. DPLl isthe first lendingoperation to Namibia insupport o fthe first implementationphase o fthe GRN's sector reformprogram(ETSP1). Itis the first o ftwo single tranche DPLso fUS$7.5 million each. DPLl specifically supports policy, legal, and institutionalreformsjointly prioritized bythe GRN, the Bank, and other Development Partners (DPs) for their strategic importance in facilitating the implementation o f ETSIPl policy areas outlined below. The GRNhas demonstrated strong ownership and commitment to implement reforms. The Bank's assessment i s that except for one, all prior actions for DPLl havebeen adequately met. The remainingone will be met beforeBoardpresentation(Annex 3 presents the status o f each action). 12  POLICYAREAS Policy Area# 1:Equitableexpansionof accessto post-basic educationandtraining 60. Emerging inMarch 1990 from South Africa's apartheid rule and institutionalizedinequalities, Namibia's democratic government adoptedthe principle o f equal opportunity, including equal education opportunities. The constitutiondeclared basic education (grade 1to 10) abasic humanright.Basic education i s free. These principlesopened access mainly to basic education. A decade and a halfafter independence, close to half(40 percent) o f4 to 5 year olds and older are enrolled insome form of early childhooddevelopment or pre-primary education program. The adult (15+ years) literacy rate i s 83 percent and youth literacy (ages 15 to 24) i s about 90 percent. In2005, net enrolment ratios were 94 percent for primary (grades 1-7), 93 percent for grades 1-10, and 50 percent for secondary education (grades 8-12). The primary completion rate was 92 percent and 90 percent ofthe cohort reached grade 5. Progression between primary and secondary education i s 85 percent, but much lower (53 percent) betweenjunior secondary and senior secondary levels. The tertiary gross enrolment ratio i s estimated at 11percent, taking into account enrolment abroad. About 35,000 adults (70 percent women) are enrolled intheNationalLiteracyProgramandnearly 25,000 inanalternative secondary education program offered by the Namibian College o f Open Learning (NAMCOL). 61. Mainchallenges:Despite impressive progress inopening access, Namibia's education and training systemstill fails to supply the middle-to high-levelskilled laborrequiredto meet current labor market demands and to facilitate the national growth strategy. That strategy i s premisedon the capacity to apply knowledge and technology to extend the range and value o fproducts from the country's richnatural resource base. 62. A core cause of skills deficit is the lowtransitionrate to post-basic education andtraining. Only 31 percent of a grade 1cohort reaches senior secondary school. Opportunities for vocational education and training are sharply limited.Only 3 percent of grade 10 completers gain access to vocational training centers. Tertiary enrolment rates still fall well below those of the countries that Namibia wants tojoin by 2030. Outputs are extremely low infields that require a mathematics and sciencebase such as technical and engineeringfields, natural scientists, medical doctors, and nurses. The university produces only about one-tenth of the projected annual demand for degree level scientists. Post-graduate programs are limited. 63. Government actions:The first phaseofthe GRN's sector reformprogram(ETSIP1) prioritizes the supply of middle-to high-level skilled labor by expanding accessto post-basic education andtraining. Grade 11places will be increasedfrom 14,967 in2005 to 22,500 by 2011, by increasingclass size to no more than 35 where the student populationpermits, efficient use o f existingspace through better organized scheduling, extending good performing senior secondary schools, and constructingnew senior secondary schools. Six science, mathematics, and ICT secondarymagnet schools will also be established inthe poorest regions to boost quality output inthese subjects. EnrolmentinVocational Training Center (VTC) programs that meet the criteria of quality, efficiency, and cost-effectiveness will beraised from 2,733 in2005 to 5,000 by 2011. Specific measuresfor doing so are to increase intake inVTCs that meet the criteria o f quality and efficiency, the provision of scholarships for external training where itproves to be cost-effective ando f good quality, and the construction ofnewVTCs. Universityscience, mathematics, and technology pre-entryprograms will be established, rapidly increasingenrolments to 200 by 2011. This should enablemore learners to qualify for entry into mathematics, science, andtechnology specializations. Intake inuniversity andpolytechnic Englishfoundationcourses will be increased from 1,148 in2005 to2,416by2011. 13  64. Prior actionsfor DPL1:Overall, DPLl supports the equitable expansion and diversification of opportunities for post-basic education and training. A range o fpolicy actions will be taken to expand access to senior secondary education, vocational education and training and tertiary education and training (ref. Annex 3). The first prior action i s for the M o E to adopt an action plan that will enable an annual 7 percentage point increase insenior secondary intake (grade 1l), with 60 percent o fnew places created inthe poorest regions. This action addresses the needto equitably expand access to post-basic education. The second prior action i s for the M o E to develop a plan for increasing the intake inuniversity pre-entry mathematics, science and ICTsprograms. The planwill enable a cumulative annual intake o f 50 students ineach o f the three priority areas. Expanded intake inthese areas should help Namibia address its critical scarce skills- engineers, technologists, healthprofessionals,dmedicaldoctors, etc. PolicyArea # 2: Improvingeducationqualityand effectiveness, as manifestinstudent learning outcomes 65. In1990Namibia's democratic government inheriteda system that was deliberately designedto provide inferior education and training for the majority o f the non-white population. Great strides have been taken toward increasing such quality-enhancing inputsas qualified teachers, books and instructional materials, permanent classrooms, and blueprints for fairly progressive curricula and pedagogy. 66. Mainchallenges: Inqualitative terms, the systemremainsineffective. Although adult literacy rates are high, a 2003 World Bank assessment showed.that a highproportion o f adults are functionally illiterate. Namibia ranks lowest among its peers inthe I Figure5: SACMEQ Readingand MathScore2000 1 Southern Aflica Development Community (SADC) region instudentperformance onreadingandmathematics (Figure 5). Recent Monitoring Learning Achievement (MLA) tests show that two-thirds o fgrade 6 learners cannot readwith any level o f competence. Primary school leavers are therefore likely to add to the pool o f functionally illiterate youth and adults. Over halfthe graduates o fjunior secondary school do not meet the academic entry requirements for senior secondary school. L o w academic performance in general education leads to problems intertiary education. L o w learning achievement contributes to exceptionally low university completion rates o f 20 percent inscience, 35 percent inhumanities, and 44 percent ineducation. 67. Governmentactions: Specific actions to improve quality will betaken at each level o fthe sector. 68. For early childhood development: The international index for holistic child development will be adapted for the Namibia context and Early Childhood Development (ECD) programs will be revised to facilitate holistic child development. A training programwill be developed for ECDcare-givers to enable themto implement the revisedprograms andthe MoEwill provide relevant learningmaterials. Child development assessment instruments will be improved with a view to include key elements o f the adapted international index. 69. For pre-primary education: The National Institute for Education Development (NIED)will clearly articulate competencies that constitute adequate learner readiness for primary schooling. The list of competencies will be used as a base to revise the pre-school teacher training program and to revise the current ten-week school readiness program into a one-year program. The revised pre-primary teacher training programwill be modularizedand integrated into the lower primary education pre-service and 14  in-service teacher training. Enhanced assessment tools will be developed and usedto assess learner school readiness. 70. For general education: Competencies and skills to be acquired by learners at eachphase o ftheir general education will be clearly articulated. Curricula will berevisedinline with defined skills and competencies, taking note of competencies associatedwith effective functioning ina knowledge-based economy. Teacher pre-service and in-service training programs will be alignedwith the revisedlearner curricula. Inaddition, structured in-service training programs will be expanded to qualify 100percent of primary and secondary school teachers by 2011. To sustain teacher professional currency, a time-bound teaching license will be introduced. A substitute teacher systemwill also be introducedto abate the impact of teacher absenteeism- associatedwith HIV/AIDS- on student learning. Textbooks and instructional materials will be increased and ICTs will be mainstreamed to facilitate teaching. The current systemof monitoring learner acquisitionofagreedskills and competencies will be strengthenedthrough the introductionof standardized and diagnostic tests at grades 5 and 8. 71. To further improve student learning, performance targets will be set for schools, and school management will be held accountable for meetingthose standards. To support principals intheir role as instructional leaders, school-basedteacher professional development will be strengthenedby deploying an expert mathematics, science, English, and ICT teacher to each school that i s unlikelyto meet its performance target. Finally six science, mathematics, and ICT magnet schools will be established inthe most disadvantagedregions to further improve learning outcomes. 72. For vocational education and training: Key plannedactions are to: introducemodularized competency-based education and training (CBET), upgrade instructor qualifications, re-equiptraining centers, and revise trade tests inline with the requirementsof CBET. 73. For tertiary education and training: Keyactions include expanding science, mathematics, English, and ICT pre-entryprograms to raise studentreadiness at entry and foundation courses to sustain - academic support for students who needit. Academic staff development programs will be systematized and expanded to raise the quality of teaching and research. A quality assurancesystem will be strengthenedto better monitor student and staffperformance. 74. Prior actions for DPL1: DPLl supports arange ofpolicy and institutional actions to improve education quality at all levels of the system. The first prior action i s the approval o f a policy to introduce standardized diagnostic tests at grade 5 and 8. These tests are critical for early and close monitoring o f the impact of proposed education quality reforms on student learning. Measurable outcomes for this prior action are better qualitative monitoring of student learning and a 10percentagepoint increase inthe proportion of learners who complete lower primary having mastered core skills and competencies. The secondprior action i s the MoE's adoption o f a planto enable a 5 percentagepoint increase inthe annual budgetallocation for primary and secondary school books and instructionalmaterials. Increasedsupply of books and instructionalmaterials i s basal for the improvement o f student learning. The thirdaction i s the approval of a sector policy on ICTs. This i s crucial for laying a foundation for the: integration o f ICTs in school curricula and co-curricula activities, use of ICTs for effective teaching and learning, education informationand knowledge management, and effective sector management. 75. Triggers for DPL2: The revisedlower primary curriculum will beunder implementation inall schools, all schools will be assignedindividual performance targets, and a textbook policy will be approved. 15  PolicyArea # 3: Eradicatinginequalitiesinthe distributionof resourceinputs 76. A key achievement ofpost-independencereforms was dismantling the 11racially and ethnically segregatededucation systems and integratingthem into one national education and training system. Broad policies were also adopted to improve equity ineducation and training. Substantial effort was made to equalize the provision of classrooms, qualified teachers, books and instructional materials and other inputs known to facilitate teaching and learning. 77. Mainchallenges: Despitebroadpolicies and gallant efforts, education resource inputsremain highlyinequitable among regions and disfavorthe historicallydisadvantaged north, where schoolshave lessphysical, human, and financial resources.Inequalitymanifests itselfintwo ways-the lack of physicalaccess to schools by some children and the lack of access to quality instructionby students already inschool. Lack of physical access applies mainly to pre-primary education (20 percent of the age group covered) and secondary education (53 percent of children 14 - 18 years). 78. Input and outcome inequalities have persistedbecause of the lack o f specific policies and resource allocation instrumentsrequiredto advance equity. Over the years the input-based system of allocating financial resourcesdiscriminatedagainst under-resourced schools. Schools with better qualified teachers, low student-to-teacher ratios, and adequate infrastructure receive more fundingper learner than poorly resourced schools, exacerbating the inequalities of inputs.Moreover, public spending on education i s pro- rich, especially at the tertiary level. Recent incidence benefitanalysis showed that the richest 20 percent o f the populationreceives nearly 60 percent of public spendingon tertiary education and training. 79. Inequalities inthe distribution of learningoutcomes mirror the disparities inresource inputs.With the exception ofthe recent performance improvement inthe Oshikoto region, secondary school examinations results are still lower inthe northernregions than inthe rest o f the country. On average, each additional year of senior secondary education delivers 28 percent more inprivate returns and each year of post-secondary education delivers 34 percent. Because educational attainment i s a significant determinant of earnings and because educational outcomes determine attainment, current inequalities in outcomes make the education and training systema weak instrumentfor facilitating social equity. ,80. Government actions:The overallpolicy outlook ofETSPl is pro-poor. Specific actions to eradicate persistinginequalities include apro-poor expansion o f access to pre-primary education witha view to have universalaccess by 2020. Inputnorms for all schools andVTCs will be established and a pro-poor sequence will be followed inenabling schools to meetthe norms. A normativeper capita financing for general education will be introducedas well as conditional grants for schools that cannot meet input norms based only on per capita financing. The first six magnet schools will be established in the poorest northernregions and their entrancecriteria will mainly be basedon aptitude andnot only achievement. Inaddition, a quota systemwill be institutedto enable children from disadvantaged areas to gain entry to grade 11. Conditional grants will be introduced for schools that ensure successful participation and graduation o f OVCs. School pastoral counseling and school-health programs will be revitalized / established starting with rural and disadvantaged schools to provide more support for OVCs. Equally, adult education, training, and LifelongLearning (LLL)programs will be expanded / introduced incurrentlyneglected areas. 81. Prior actionsfor DPL1.DPLl will support the MoEefforts to introduce apolicy onper capita fundingfor primary schools, secondary schools, andVTCs. This will enableunder-resourced schools and VTCs to acquire education quality-enhancing inputsrequiredto meet their performance standards.DPL1 will also support preparatory work toward establishing inputn o m that all schools andVTCs should meet by 2020. 16  82. Triggers for DPLZ:A school register o fneeds will be established as a base for developing input norms and standards and for evidence-based monitoring o f equity inthe distribution o f education inputs. The Cabinet will approve a plan for a phased withdrawal o f subsidies to private profit-making schools. PolicyArea # 4: Improvingefficiency inresourcemobilization andutilization 83. The GRNinvests heavily inits education and training system. Between 1997 and 2003, the proportion o fthe GDP allocated to the sector averaged 8.95 percent, with a peak o f 9.7 percent in 2001/02. Inline with the GRN's commitment to curb public spending while improving its efficiency, the allocationhas been declining and i s projected to reach 6.7 percent by 2008. The share o f government spending on the sector i s also expected to decline from 24 percent in2003 to 22 percent by 2008. Even with the projecteddeclines, investment levels will still rank among the highest inthe world. 84. Challenges: The sector has beeninefficient inusingresources (Figure 6). Namibia realizes relatively lower education coverage and quality than other SADC middle-income countries that invest less intheir education and training systems. The sector has Figure 6: Total education efficiency to also been ineffective inmobilizing non-government financing. effectiveness plotted against cost The GRNhas virtually been an exclusive financier o f sector developments, with marginal contributions from DPs, private providers, the private sector, and households. 85. One source o f resource wastage i s low internal system efficiency, resultingmainly from poor quality and effectiveness (see Policy Area # 2). Average repetitionrates are 16 percent, 15 percent, and 2 percent for primary, junior secondary and senior secondary education respectively. 0 2 4 6 8 10 Dropout rates are 4 percent and 16percent for primary and Public Expendimreon Educationas a PercentageofCDP secondary education respectively. Secondary school dropout rates are exaggeratedby a 47 percent `push-out' rate between junior secondary and senior secondary education due to a combination of failure rates and inadequate grade 11places. 86. A second source i s unmanagedteacher salaries, whichhave runwell above the inflationrate over the past three years. In2004 the GRNapproved an unprecedented increase inteacher entry salary scale, which had to be reversed in2005 after 400 teachers hadbenefited. Due mainly to teachers' salaries, the sector has been runninga growing budget deficit, projectedto reachUS$305.6 million by 2010/11(see Table 1). teacher ratio (LTR) was 2 8 5 in2005 - 32: 1and 25: 1for primary and secondary schools respectively. 87. A third source o finefficiency is the underutilizationo fteachers. The national average learner to Beyond sector-specific factors, the GRN's procurement practice o f applying price preferences infavor o f historically disadvantaged entities within a context o fnational competitive biddingi s likely to inflate the cost o f service delivery within the sector. 88. Government actions: Quality improvementmeasures outlinedunder Policy Area # 2 are expected to improve internal efficiency and resource efficiency. An automatic promotion policy allows learners to repeat only once within a school phase. The GRNhas also undertaken to reduce the grade 10push-out rate from 47 percent in2005 to 5 percent by 2011through measures outlined inPolicy Areas # 1and #2. 17  89. Other actions include an increase inthe learner teacher ratio from a 2005 average o f 2 8 5 for both primary and secondary schools to 40: 1for primary schools and 35: 1for secondary schools by 2008. Physicalresources will be more efficiently used. Teacher salary increments will be de-linked from non- required and irrelevant qualifications. Inaddition, teachers' salaries will be restructured to slow the pace o f increments. All institutions will implement staffing norms. It is estimated that the combined effects o f these efficiency measures will reduce the deficit to US$51million (ref. Table 1). Table 1: Sector budgetand cost estimates (US$-million) Year 2006/07 2007/08 2008/09 2009/10 2010/11 Total Actual budget allocation' 451.9 469.9 492.9 521.2 567.7 2,503.6 Projectedsector expenditure without efficiency gains' 473.8 496.5 559.2 610.7 669.0 2,809.2 Shortfall -21.8 -26.6 -66.3 -89.5 -101.3 -305.6 Projectedsector expenditure with efficiency gains 461.5 472.0 511.9 540.1 569.2 2,554.7 Shortfall -9.6 -2.1 -19.0 -18.9 -1.5 -5 1.o *Converted to US$at 6.725. * Thisallocationis according to original MTEF ceiling priorto GRNadditionalcontributionfor ETSIPl. Projectedexpendituresare basedon the World BankTeam's simulationmodel. improve internal efficiency and better manage teachers' salaries will result insignificant savings - a 90. The World Bank's simulations o foptimum efficiency gains show that the outlined measures to cumulative total o f US$179 million between 2006 and 2010, at an estimated inflation rate o f 4 percent. As a proportion o f expenditures, these savings increase to 12 percent by 2010. This level o f savings would be sufficient to increase the number o f learners inthe senior secondary phase from a projected 32,402 without savings to a projected 40,122 with savings (Figure 7). Between 2006 and 2010 the savings would enable an increase injunior secondary and senior secondary school gross enrolment rates from 84 percent to 91 percent and from 34 percent to 40 percent respectively. While the increase insecondary school learners (once efficiency savings have been realized) looks somewhat small innet terms, the reduction in the repetitionrate means that a substantial number o f extra students would be admitted into the system at relatively little extra cost. 18  Figure 7: Projected primary and secondaryenrolment with and without efficiency savings Primary Junior Secondary B Senior Secondary 453000 132000 50000 -1 400000 128000 40000 350000 124000 U 1120000 E 30000 3b 20000 200000 116000 10000 150000 112000 & & 0 ?p&Q -With EfficiencyGalns -Baseline 131. The GRNstrategy also entails more effective resource mobilization for the sector. A payroll levy ?asbeen established to improve private sector funding and guidance for vocational education and training :VET). The GRNhas successfully broadenednational and international partnerships for sector jevelopment, generatingUS$338.8 million to be used between 2006 and 2011. Inaddition, the Cabinet mdorsed the decision to use ETSIPl as a pilot for a more resource-efficient procurement practice, which mtails not applying price preferences within National Competitive Bidding(NCB). This is expected to -educecosts through more competitive bidding and awarding bids to the lowest evaluated bidders. Efficiency gains from this pilot (the amount not yet known) will be tracked duringprogram mplementation. 32. Prior actions for DPL1: The prior action is an operational plan for reducing: (i) averagethe repetition rate for basic education (grade 1 to 10) from 15.5 percent to 14percent; -(ii) grade 1repetition from 19.6 percent to 16 percent; (iii) grade 5 repetition from 22.1 percent to 19 percent; (iv) grade 8 repetition rate from 23.1 percent to 20 percent; (v) grade 10push-out rate from 47 percent to 40 percent; as well as increasing primary LTR from 31:1to 32:1and secondary LTR from 25: 1to 26:1. 93. Triggers for DPLZ: Increments to teachers' salaries will be delinked from irrelevant and non- required qualifications and linkedto performance. Policy Area # 5: Strengthening delivery capacity andthe responseto HIV/AIDS 94. In2004 the Ministry o fBasic Education, Sport and Culture (MBECS) andthe MinistryofHigher Education, Training and Employment Creation (MHETC) were merged into one M o Eto pool resources and coordinate sector development. The organizational structure o f the new M o Ewas approved inAugust 2006. At a national level, the Office o f the Prime Minister introduced an integrated performance management system, and the M o E volunteered to be among the pilot ministries. Inaddition, the MoE, withjoint support from SIDA and the EC, has established an institutional strengthening and capacity building facility. The facility has funded TA to strengthen the capacity o f the MoE. It has also funded school management training for school principals and school boards. Regional inspectors were also trained on national standards for schools - developed with support from the facility. Recently the M o E assessed its capacity to implement ETSIPl, to plan procurement and manage procurement processes, and to carry out the detailed budgeting required for the Integrated Financial Management System (IFMIS) recently introduced by the Ministry of Finance (MoF). 95. Challenges: While the MoE's capacity gaps are well known, most o fthe assessmentsconcentrated on the headquarters level. There is therefore a knowledge gap on capacity limitations at the regional, circuit, and school level. At the center, effective delivery has beenhampered by the lack o f clear policies 19  to guide service delivery, the lack o f legal frameworks and instruments to enact policies, and lack o f institutionsthat should take responsibility for service delivery. These limitations have been particularly acute inemerging areashues like HIV/AIDS and ICTs ineducation, but also insome fairly traditional sub-sectors like VET andhigher education. For example, the GRNhas a generic policy to eradicate inequalities ineducation opportunities. However, policy instruments to equitably distribute education resource inputsand outcomes are at best blunt and at worst non-existent. 96. Other causes o f limited delivery capacity are the weak technical know-how to effectively plan for implementation or service delivery. Other general weaknesses identifiedby the capacity assessment exercise were limited experience inplanningfor and executingprocurement functions o fthe MoE, and in the meticulousbudgetingrequiredfor the recentlyintroducedIntegratedFinancialManagement Information System (IFMIS). 97. Government actions: The SP-ETSIP lists delivery capacity and management as one o f its key policy objectives. At the same time, the M o E appreciates that capacity has to be strengthenedthrough use, or as implementation progresses. The M o E has thus adopted a dual-pronged strategy o f front-loading the strengthening o f critical capacities required for the effective implementation o f ETSIPl while programming the systemic capacity development over time. For the immediate to medium-term actions, the M o E has identifiedthe need to articulate policies, legal and institutional frameworks to underpin the implementation o freforms. It also identified the needto rationalize the division of labor inthe sector and to re-align its new M o E structure. Leadership and management capacities will be strengthened through training and skills transfer. The M o E contracted TA to facilitate the setting up o f HAMU,RACESand their programs. These structures are expected to increase the proportion o f learners taking life skills education (LSE) from 60 percent in2007 to 95 percent in2011.The number o f OVCs receiving nutritional support will increase from 120,000 in2007 to 160,000 by 2011. Those receiving psychosocial support will increase from 16,000 to 25,000 within the same period. Other identifiedneeds are strengthening the resource mobilization, procurement and budgeting functions o f the M o E through direct and on-the-job training. 98. Prior actions for DPLl:This operation will support a comprehensive assessment o fcapacity, institutions vital for implementing the ETSIPl.Prior actions that relate to the strengthening o f including the lower levels o f sector service delivery. It will also support the establishment o f critical institutional capacities for specific sub-sectors are as follows: 99. Pre-primary education: The Cabinet will approve the transfer o fpre-primary education from the MinistryofGender Equalityand ChildWelfare (MGECW) to the MoE. Placingthis sub-sector inthe Ministrywiththebesttechnical capacity is critical for future development ofgoodquality pre-primary education. 100. VET: The Cabinet will approve a new VET Bill to allow for the establishment o f the Namibia Training Authority (NTA), with employers as the majority o f boardmembers. This action i s expected to reorient the training system to employer requirements and improve accountability and performance. 101. Tertiary education and training: Legislation will be adopted for the establishment o f the National Council for Higher Education (NCHE) and a competent secretariat. These institutions are critical to spearhead the development o f tertiary education and training and to advise the Minister of Education. 102. HIV/AIDS in education: The Cabinet will approve a sector policy on HIV/AIDS. This will enable the creation o fthe HIVIAIDS Management Unitand Regional AIDS Committees for Education. These 20  structures are critical for strengthening the sector's response to HIV/AIDS.They will also provide M o E directorates appropriate technical support to mainstream HIV/AIDS inall sub-programs. 103. ICTs in education: The Cabinet will approve a sector ICTspolicy. This will enable the establishment o f ICT units at the M o E headquarters, at NIED, and inregional offices to design and oversee the implementationo f ICT programs. The tmits will also support the integration o f ICTs in teaching, learning, and sector management. PrincipalBenefits the first year - 2007/08 o f ETSIP1. The Bank's technical assistance associated with DPLl has 104. DPLl provides nearly 14percent o f the external fundingrequired to close the financing gap during - strengthened government leadership, ownership, and technical capacity to design and implement sector reforms. It has also provided support required to pursue policy, legal, and institutional reforms that will enable hture sector developments. Inaddition to government efforts, the Bank TA leveraged the US$323.8 million external fundingrequiredto finance the GFWs sector reformprogram. The Bank's TA ensured the credibility and development relevance o f proposed sector reforms. Itprovided a vehicle for strengthening development partner coordination and harmonization, culminating ina successful joint appraisal o f ETSIPl inOctober 2006. 105. Specific to Namibia's core development goals, improved education quality and effectiveness will ensure a steady supply o f skilled labor required for higher value-added productivity growth. The improved supply of skills will also help Namibia reduce unemployment, especially for youth - theprime beneficiaries o f the education and training system. Improved education equity will help Namibia realize the redistributive effects o f education and training - and the consequent reduction inpoverty, income inequalities, and broader social inequalities. Expanded and sustained access to education has also proven to be the most effective social vaccine to HIV/AIDS and can help Namibia realize its core goal o f curbing the spread o f HIV/AIDS. 106. Effective implementation o f sector reforms will help Namibia realizebenefits associated with quality and equitable education, training, and skills development system. The benefits include improved absorptive capacity for other social services, including health and education itself. Other benefits are low fertility rates; higher use o f contraceptives; gender parity; better social participation and participatory democracy; good governance and effective participation ina knowledge-based economy. Sector improvements will also facilitate progress toward education MDGsand goals for EducationFor All (EFA) and the AAP. VI. IMPLEMENTATIONOFDPLl POVERTYAND SOCIAL IMPACT 107. Poverty impact: Ingeneral, DPLl supports policy, legal, and institutional reforms that increase the sector's contribution to accelerated and equitable growth. The operation capitalizes on the redistributive effects o f education and training, which should significantly reduce poverty and broad social inequalities. Specific policies supported by DPLl are pro-poor, and policy actions follow a pro-poor sequence. The first key policy focuses on equity in distributingeducation resource inputs and outcomes. Related pro- poor actions include: (i) adopting a policy on per-capita financing; (ii) developing standards to be met by all schools; (iii) institutingconditional grants for,schoolsthat will not meet set standards basedonly on 21  per capita funding; (iv) establishing magnet schools indisadvantagedregionsand creating admission criteria that are pro-poor; and (v) establishing conditional grants for OVCs. 108. The secondpolicy measure i s the pro-poor expansion of opportunities for good quality post-basic education and training. Expandingaccess to good quality education andtraining will broadenthe base of Namibians who realize the benefitsof education and training. Those benefits include broader employment opportunities, better income, reduced fertility, enhancedsocial participation, enhancedabsorptive capacity for social services including education itself, genderparity, and overall poverty reduction and social equity. Greater access to quality education i s therefore one o f the critical redistributive policies that Namibia will use to facilitate the sharing of growth. Inaddition, the enhancedsystem capacity to respond to HIVIAIDSwill helpcurb the spread of HIV/AIDSand stemthe expansion ofAIDS-related orphans. Duringimplementation, close attention willbepaidto monitoringDPLl benefits for the poor andthe marginalized. 109. Beneflts to indigenouspeople: Insupporting the GRNto strengthen policies that promote equal education opportunities, DPLl will benefit indigenous segments o f the population. DPLl supports setting performance standards that all schools should keep and establishing conditional grants to enable under- resourced schools to meet set standards.Following a pro-poor sequencing, the currently under-resourced schools that cater to indigenous people will beprimebeneficiaries. These schools include satellite schools that respondto seasonalmovements of indigenous people, including multi-grade schools for the children o f farm workers and mobile schools for cattle herders. Annex 9 provides a more detailed account o f poverty and social aspects. PARTICIPATORYASPECTS 110. Namibia adopted an impressive participatoryapproach inconductingthe analytical work, the long- term sector strategy, and the medium-termsector programthat provide a base for this operation. Three national consultative forums, two fundraising round table meetings, and several rounds ofregional and district level consultations were undertakenbetween2003 and 2006. Participants includedthe former and current State Presidents, the former and current Prime Minister,a large number of Cabinet Ministers, Regional Governors, educators at all levels, and representatives of regional education forums. They also includedthe private sector, parastatals, civil society, community leaders, faith-based organizations, teachers' unions, research groups, government think tanks, students, and parents. And they included NGOs and Community BasedOrganizations (CBOs) with experience inworking withmarginalized communities, such as Nyae Nyae Development Foundation, RossingFoundation, Omba Arts Trust, and the Working Group of Indigenous Minorities of Southern Africa (WTMSA). At each criticaljuncture, the decision to move to the next step of programpreparation was endorsed by the Cabinet. The design also includedthe participationof internationalexperts from more than 15 countries and o f 13 international development partners. 111. Despite a very successful process, concernshave beenraisedabout the participationofpeople with special needs, district educators and teachers, and marginalizedcommunities. While direct contact posesa hugechallenge for a country the size ofNamibia, arrangementsare inplace to sustain andfurther broaden participation duringimplementation. The MoE has engaged a company to support the design and execution of an advocacy campaign for ETSIPl. IMPLEMENTATION, MONITORING, EVALUATION AND 112. The MoE will take overall responsibility for the implementationo f DPLl and final accountability for the attainment of policy outcomes supported by DPLl .TheMinister of Educationwill apprise the 22  Cabinet of progress toward the policy outcomes o f this operation. The MoE will be supported by the MinistryofGenderEquality andChildWelfare, responsible for the early childhooddevelopment aspects of the operation; the Ministry of Information and Broadcasting, which supports the ICT aspects of the operation; the National Training Authority, responsible for developingthe VET aspects; the National Council for Higher Education(NCHE) for spearheadingthe development of tertiary education and training, and for advising the Minister; the Ministryo fFinance, accountable for adequately financing the overall program; and the National Planning Commission, responsible for retainingthe alignment o f programobjectives to the overall strategic outlook o f Vision 2030 and the specific development objectives of the National Development Plan (NDP3). 113. The GRNand its development partners have agreedto abroad framework for monitoringprogress toward attaining keypolicy outcome indicators (Annex 2). Inaddition, development partners that provide direct budget support have agreed to a common operation policymatrix (Annex 4) as a base for monitoringpolicy output and outcome indicators. The common matrix i s articulated with the DPL policy matrix. This collaborative monitoring framework provides for supporting, monitoring, and evaluating implementation. Within the MoE, the directorate of planningwill take overall responsibility for the monitoring and evaluation (M&E) functions o f ETSIPl and areas supported by DPL1. It will be supported by sub-sector directorates that will focus on their specific sub-programs. For development partners,joint supervisions will be the main monitoringmechanism. They will be undertaken twice a year within the establishedpartnership framework (Annex 7) and harmonized monitoringprocedures, thus reducingtransaction costs for the GRN's team. Agreed procedures include quarterly progress reports, joint semi-annual and annual reviewsofprogress toward meetingagreedpolicy outputs and outcomes. 114. The reviewprocesseswill also provide opportunities for programadjustments inresponseto changing contexts, basedon the performance of the operation and on feedback from stakeholder consultations. Specific policy outcomes to be monitoredunder DPLl (Annex 3) are basedon the ETSIPl outcome indicators and targets (Annex 2). Joint supervisions will also monitor overall progress toward meetingcommonprior actions for tranche release and triggers for moving to subsequent DPLs. In assessingprogress thejoint supervision team will also consider outcomes outside the control o f the MoE that relate to core national development goals that the DPL series is meant to support-employment creation, productivity growth, economic growth, fewer new HIV/AIDS infections, and social equity trends. The team will also take into account factors outside the GRN's control that may pose risks to the intendeddevelopment outcomes, and timely adjustments will be made to the overall program. FIDUCIARY ASPECTS 115. Because of the Bank's minimal engagement inNamibia, regular Bank fiduciary assessments like the Country Financial Accountability Assessment (CFAA), Country Procurement Assessment Review (CPAR), and Public ExpenditureReviews(PERs) have not been undertaken. Programpreparationwas therefore accompanied by intense Bank effort to understand the fiduciary environment and dialogue with the GRNon areas of concern. Weak points inthe GRNsystemwere identifiedand agreementsreached on how to address them (see par. 123-125). The execution of these agreementsi s on track and, overall, recent Bank assessmentsconcluded that the fiduciary environment was conducive for direct budget support. 116. The Bank's knowledge was basedon its own assessments and on assessmentscarried out by other development partners. An assessment ofNamibia's public financial management systems, usingthe Public Expenditure and Financial Accountability (PEFA) performance indicators, commissioned bythe European Union was completed inNovember 2004. This reviewconcluded that Namibia's public finance management (PFM) systemwas basedon a sound legislative foundation with modern standards and procedures. Basic budget and accountability structures were inplace and appearedto be adequate. 23  Responsibility and accountability for public hnds were delegated to individuals through the system, with clear and well-documented roles and responsibilities for all stakeholders. There were clear statements o f the powers and duties for the Treasury and for the Auditor-General, while appropriate oversight was exercised by the legislature. 117. Inthe absence o fthe IMFsafeguards assessmento fthe Bank o fNamibia(BoN), the World Bank carried out a review o f the latest available audited financial statements o f BoN, for the year ended December 31,2005. After reviewing internal control, internal audit, accounting, financial reporting, and external audit arrangements, the Bankwas satisfied that the control environment inthe B o Ni s adequate. The audited financial statements were unqualified, prepared, and submitted to Parliament within the set timetable. N o major internal control issues that would negatively affect the proposedoperation were identified. The B o Nroutinely provides banking services to the GRNinlocal and foreign currencies. It confirmed its ability andreadiness to provide services as noted below inthe section on Disbursement and Auditing. 118. Going forward, the government, the Bank, and other development partners needto better understand the PFMcapacity development needs o fNamibia through a deeper PFMdiagnostic. For this purpose, the government agreed to carry out a comprehensive CountryIntegratedFiduciary Assessment (CIFA).The proposed CIFA integrates the diagnostic processes o fthe CFAA, CPAR, and PERand would provide a comprehensive and integrated assessment o fNamibia's key fiduciary risks inthe areas o f public financial management and procurement at both central and local government level. DISBURSEMENT ANDAUDITING 119. Disbursement:The proposed loanwill follow the World Bank's disbursement procedures for DPLs. The loanproceeds will be disbursed against satisfactory implementation o fthe development policy programand not tied to any specific purchases or be subject to procurement requirements. Once the World Bank's Boardapproves the loan and at the request o f the Borrower, the World Bank will disburse the proceeds o f the loan ina single tranche o fUS$7.5 million into an account designatedby the Borrower that i s part o f the country's foreign exchange reserves account at BoN. The Borrower shall ensure that upon the deposit o f the Loan into the said account, an equivalent amount i s creditedinthe Borrower's budget management system, ina manner acceptable to the World Bank. The Borrower will report to the World Bank on the amounts deposited inthe foreign currency account and credited inlocal currency to the budget management system. Ifthe proceeds o f the loan are used for ineligible purposes (say, to finance goods or services on the standardnegative list), as defined inthe Loan Agreement, upon notice from the World Bank the Borrower will be required to promptly refund an amount equal to the amount o f said payment. 120. Auditing: The GRNwill prepare financial statements o f the deposit account, which will be audited by the Auditor General o fNamibia.gThe Auditor-General carries out the audit basedon INTOSAI standards, which i s acceptable to the World Bank. The audit report o f the deposit account will be submitted to the World Bank and the participating development partners within six months from the end o f each financial year. The Auditor General will also audit the financial statements o f the M o E and submit these to Parliament within nine months from the end o f each financial year. The Auditor General will team for D P L l. senda copy to the World Bank for review and as an inputto the World Bank implementation support Inline with the Constitutionand StateFinance Act, the Auditor-General isresponsible for auditing funds; parastatals; central government ministries, offices, and agencies; and regional, municipal, and village councils. 24  ENVIRONMENTAL ASPECTS 121. Consistent with OP8.60, the MoE has conducted backgroundstudies to assess potential environmental and social impacts as aresult o fprogramactivities. The summary o f the environmental assessment can be found inAnnex 10. To this end, an environmental and social management report concluded that DPLl and the parent program(ETSP1) are not likely to have significant negative environmental and social impacts, while supporting a variety o fpositive impacts such as an increasein educational opportunities for the most marginalizedgroups, improved quality o f education, and poverty reduction. Although highlyunlikely,potentialnegative impacts may arise from the construction ofnew schools, Vocational Training Centers (VTCs), and the extension o f existing physical facilities and associatedsanitary facilities. Giventhe availability of land, the locationof new schools should easily avoid ecologically and socially sensitive sites. Students and communitieswill be involved inthe implementation o f activities to address environmental and social concerns, usingthe advocacy services for ETSIPl. School curricula already include environmental education. Namibia also has solid policy, legal, and institutional frameworks that guide land acquisition. The Ministries of Agriculture, Water, and Forestry and the RoadAuthority have solid experience inapplying these instruments. Inthe rare event that it may benecessary, the MoE may tap on these experiencesto minimize any negative impacts. In addition, the backgroundwork undertaken by the MoE has prepared it to respond appropriately. RISKS AND RISKMITIGATION 122. This operationcouldbeprone to the following risks: 123. Vulnerability to external shocks (Low): Although Namibia's critical sectors of the economy - mining, fisheries, tourism, and agriculture are vulnerable to external shocks, the country has a good - track record of macroeconomic stability since independence in 1990. The riskthat fluctuations inthe contributions of these sectors may underminemacroeconomic stability and the GRN's ability to sustain its budget allocations to the sector i s therefore low. All the same, the GRNhasput a lot o f effort toward raising grant financing required for up-front capital investment inthe sector. Inaddition, efficiency measures instituted under ETSIPl should contribute to the sustainability of recurrent cost implications of externally fundedcapital investment. Further,the MoE has developed base, medium, and highcask scenarios for scaling ETSIP1activities up or down over the years, ifcompellingreasons arise. 124. Fiduciary risk (Low): Initial assessments of the GRN'sprocurement system identified the following key risks: (i)inadequate MoE capacity to manageprocurement processes, which may leadto delayed implementation; (ii) the low threshold for prior review by the tender board, which may delay program implementation; and (iii) the applicationof price preferences withinnational competitive bidding infavor of historically disadvantaged local companies, which can leadto inefficient use ofresources allocated for ETSIP1. 125. These risks have beenaddressedthrough ongoing GRNprocurement reforms and through reforms agreedwith the DPLl team. The MoE has agreedto strengthen its capacity. Key elements include the establishment o f a dedicatedprocurement unito f the MoE; direct procurement training o f MoE staff; and skills transfer through on-the-job training and coaching. The implementationo f these actions i s advanced. The GRN's ongoingreforms ofthe Tender BoardAct allows for case-specific increasesofthe threshold for prior review as implementationcapacity improves. This operation frontloads capacity development actions to ensure that the MoE can progressively qualify for increasedthreshold basedon good implementationtrack record. The progress so far by MoE toward addressingprior actions for DPLl demonstratesthat the MoE's applicationfor increased prior-review threshold shouldnot encounter 25  problems. The Cabinet has also cleared a proposal to use ETSIPI as apilot for procurement practices that will improvethe efficiency and transparency o fresource useand, it warranted, to take the pilotto scale after a 2-year monitoring of its impact. To strengthen knowledge from the pilot, the GRNhas further committed to support the World Bank and other development partners' joint undertaking o f a CIFA. Relevant recommendations of the CIFA will be usedto further strengthen ongoing fiduciary reforms. 126. Financial management (Low): Identifiedfinancial management risks are: (i) the MoE's weak budgetingcapacity and (ii) MoF's weak support and quality control of the audit function ofthe MoE the and other ministries.The first i s beingaddressedthrough substantial technical support to the MoE to ensure the level of accuracy inbudgetingrequired under the GRN's integrated financial management information system. 127. Recent Bank assessmentsconcluded that the GRNprocurement and financial management systems are adequatefor the delivery o f direct budget support. Fiduciary risks are rated low. Nonetheless, the proposed CIFA would provide a comprehensive and integrated assessment o fNamibia's key fiduciary risks inpublic expenditure management and procurement. 128. Interest-based resistance toproposed policy reforms (Moderate): Some of the policy measures supported by DPLl might encounter resistance from powerful interest groups, such as the teachers' unions, wealthy parents, and civil servants. This i s particularly so for policies to improve the efficiency of resource use and educators' accountability for student learning, delinkingteacher salary increasesfrom irrelevant and not requiredqualifications, phasing out subsidies to profit-making private schools, and placing all managerson time-bound performance contracts. The overall riski s rated as moderate. To mitigate this risk, the GRNhas maintainedan inclusive consultative process with all key stakeholders. Thishas engenderedbetter appreciation ofproposedpolicy reforms, as well asbroader support and ownership. The GRNand the MoE have recently showndetermination to overcome pressuresfrom interest groups with the recentreversal of the decision to hiketeacher entry salaries to unsustainable levels and the MoE's signingof performance contracts with headquarters-basedsector managers. 129. Implementation delays due to consultations and consensus building (Low): A key cost of inclusive consultations is delay inmalung critical decisions andthe resultant delay inprogramimplementation.But the advantagesof inclusive consultation (ownership and broad-based support for the reforms) far outweigh the disadvantages. Inaddition, the GRNhas substantially reducedthis riskby giving adequate leadtime for consultations, starting inAugust 2004. Ithas also sustainedthe advocacy campaign for the broader program ETSIP1 since 2004, helping to buildconsensusaround strategic policy reforms that could have been controversial. The risk of implementation delays due to consensusbuildingi s low. ETSIPI already enjoys a highlevel ofnational ownership and support. 130. Inadequate implementation capacity (Moderate): Mitigationmeasuresto improve implementation capacity pertainto: (i) creating a policy, legal, and institutional environment that will facilitate program implementation; (ii) assessingprogramimplementation capacity and articulating a capacity development sub-program; (iii) frontloading capacity development actions; (iv) carefully sequencing activities to start with those that arereadily implementable and that prepare for easier implementation downstream; (v) articulating implementationarrangements and implementationplans; (vi) very detailed implementation planning, procurement planning and disbursementplanningby the MoE; and (vii) clear system performance monitoring and evaluation. 131. Potential discontinuity offinancial support by one of the 13 developmentpartners (Moderate to high): The large number of development partners that will finance ETSIPI poses ariskthat some pledged support couldbe discontinued duringthe five years ofprogramimplementation.This risk is rated 26  moderate, but couldbe highifthe withdrawing partner shouldbe a significant financier. To reduce this risk, the GFWhasdeveloped mediumandlowcase scenariosfor scaling downETSIPl,inthe event of a financial shortfall. 132. Adverse effects of HlV/MDSon sector performance (Moderate): Mitigationmeasures include: (i) introducing substitute teachers usingthe national youth service and volunteers; (ii) curricula more mainstreaming of HIV/AIDS; (iii) introducing conditional cash grants for OVCs; and (iv) strengthening the HIV/AIDSmanagement unit (HAMU)of the Ministryandregional A I D S committees (RACE). 27  ANNEX 1: LETTER OFDEVELOPMENTPOLICY REPUBLICOF NAMIBIA - c-.-c---.-L---.c -e. MINISTRYOF FiNANCE .- c-- `Tek t264 81 2099111 Private Bag 13295 Fa! ~26461227702 Mr PaulWoHowltz President The Warld Bank 1618H Street, N.W. Weshlngtan,D.C. 20433 Dear Mr.Wolfowltz, LETTER OF DEVELOPMENT POLICY: EDUCATION AND TRAINING SECTOR IMPROVEMENTPROGRAAllME(ETSIP) t ern wrfting this loner in connection with the Government of the Republic of Namibia's request to the WoiJd Bank for a Loan of US$15 million for the of Education hes lndtcated Itsdesire for these funds to be available in 2007108 to Education end Training Sector Jmprovament Programme (ETSIP) The Minlstry 2009110, We shall thus be appreciatlvs ff we could reach an agreemsnt on the terns of the fundlng. Yours slncerelv._ . ..". .... 28  ETSIP in the Context of National Development Agenda Vision 2030 Namibia's Vision 2030, developed at the turn o f the Century, foresees Namibia becoming a knowledge-based economy, achieving highincome levels, and greater social equity, through the further development o fits humanandnatural resources. Such accelerated economic growth implies improved productivity, which certainly requires an alleviation o f the current shortage o f skilled workers and managers. ETSIP is the roadmap o f the education and training sector to achieve the goals o f Vision 2030 and i s closely aligned with the National Development Plans andthe medium term expenditure framework (MTEF). Development of ETSIP Considering the demands o f Vision 2030, the Government o f the Republic o fNamibiaturned its attention to the education and training system. Despite heavy investments (about 25% of government spending) since independence in 1990, this sector is not yet delivering the expected results. In 2002 the World Bank was therefore invited to undertake a critical analysis o f the sector and to advise the government how to best improve the sector and transform it into a better tool for supporting national development. Confirming and deepening the findings o f other investigations, including the Presidential Commission on Education, Culture and Training o f 1999, the World Bank study found that Namibia's education system would indeed not deliver on the expectations o f Vision 2030, particularly in terms o f quality, equity, relevance, and responsiveness to HIV and AIDS. The findings and analysis inthe report, "Human Capital and Knowledge Developmentfor Economic Growth with Equity" (2004) were used as starting point for the development o f a fifteen year strategic framework. An intensive planning process then ensued with the technical support World Bank, resulting, in February 2005, inthe adoption by Cabinet o f the fifteen-year Strategic Plan for ETSIP, Planning for a Learning Nation. The Strategic Planwas endorsed by Namibia's development partners and stakeholders ineducation and training duringthe Round Table meeting held inMarch2005. Itwas decided that ETSIP would be implemented inthree five-year phases. The first, from 2006 -2011,coincideswiththeThirdNationalDevelopmentPlan(NDP3). Itwasfurtherdecidedthat the programme would be divided into sub-programmes and work commenced on the development o f detailed 5-year implementation plans. The strategic plans and first drafts o f the 5-year plans were discussed with various stakeholders, including regional offices o f education, teachers, members o f school managements, the teachers' unions, members o f regional governance and educational for in all 13 regions to ensure ownership and collaboration. Comments were incorporatedas far as possible. 29  A detailed planning process resulted in 2-year implementation plans and procurement plans and the ETSIP Programme Document (2006 - 20011). The plans for first phase o f ETSIP were subjected to a joint development partner pre-appraisal in March 2006 and a successful joint appraisal inOctober 2006. The development process was spearheaded by the ETSIP Task Team which consisted o f representatives o f all the line ministries in the education and training sector, the Ministry o f Finance and the National Planning Commission. This team was replaced by the ETSIP Programme Coordinating Committee, under the chairmanship o f the Permanent Secretary o f the Ministryo f Education, inJuly 2006 after limited implementation o f the programme commenced utilisinggovernment funding. Strategic Objectives Inthe development o fthe 15-year strategic plan, five main strategic objectiveswere identified: 0 Quality/effectiveness 0 Equityand Access 0 Development relevance and Responsiveness 0 Delivery Capacity andManagement 0 Efficiency o f resource mobilisation and utilisation. The set o f strategic objectives is common across the sub-programmes, but each sub-programme has determined its own order o fpriority. In addition to these objectives, a set of strategic objectives for the first phase of ETSIP were determined. These are as follows: 0 strengthening the supply o fmiddle to highlevel skilled labour 0 improving the quality, efficiency and effectiveness of general education systematising knowledge andinnovation Improving the effectiveness andrelevance o fthe tertiary education system, and strengthening the policy and legal framework for access to lifelong learning. These strategic objectives are pursued through nine Sub-programmes, for Early Childhood Development and Pre-Primary Education, General Education, Vocational Education and Training, Tertiary Education and Training, Knowledge Creation and Innovation, Information Adult and Lifelong Learning, HIV and AIDS, ICTs, and Capacity Development. While the first six sub-programmes are focused on specific areas in the education and.training sector, the last three cover cross-cutting issues. This makes o f ETSIP a truly sector-wide approach. Decisions on Policy and Institutional Strengthening A number o f policy decisions have been made by Cabinet concerning ETSIP implementation, including the following: adoption o f a national policy on HIV and AIDS for the education sector approval o f the policy on ICT inthe Education Sector 30  transfer o f pre-primary education from the Ministry o f Gender Equality and Child Welfare to the Ministry o f Education approval o f the Vocational Education and Training Bill the establishment o f the NCHE (National Council for Higher Education) the establishment o fthe NTA (Namibia Training Authority), and the establishment o f ACTET (Advisory Council for Teacher Education and Training. First Steps in Implementing ETSIP InJune 2006 the GRNdecided to commence with the implementation of ETSIP, usingits own resources, ahead o f the pledged contributions o f development partners becoming available. During the period o f final development o f ETSIP and the first year o f implementation, the following priority policy andinstitutional strengthening actions have been implemented: Cabinet has approved a National Policy on HIV and AIDS for the education and training sector and a unit has been established inthe Ministryo f Education to manage and coordinate HIV and AIDS related activities. Regional AIDS Committees for Education have been set up in all thirteen regions. Cabinet also approved the Policy on ICT in the Education Sector. A division for ICTs has been established inthe Ministryo f Education and a comprehensive initiative and implementation plan for the introduction of ICTs in education, Tech ma!, (www.tech.na) has been launched by the Rt Hon Prime Minster, bringing together some fifty partners in a national drive. The ICTs in Education Steering Committee guides the work inthe sub-programme. The policy to institute standardized achievement tests in grades 5 and 8 has also been approved by Cabinet. The standards on core skills and competencies to be acquired during the lower primaryphase (grades 1- 4) have beencompleted. The Ministryo f Education has agreed to introduce per capita financing o f formal education with effect from the 2007/8 financial year. The process has begun with the production o f a working document which outlines the choices to be made and steps to be taken. A plan was developed for establishing conditional grants for OVCs to ensure their successfbl completion o f general education. The process o f negotiations with the Office o f the Prime Minister and the teachers unions on policy, targets and plans to increase the learner teacher ratio has started. The government i s also preparingfor negotiations with the teachers union to increase class sizes, as the personnel budget cannot sustain current levels. National Standards for Schools have been established, and all schools have carried out a self- evaluation interms o f these standards, resulting in a school-level development plan. Inaddition, 31  the Ministry o f Education has agreed to adopt a policy to introduce conditional grants for schools that do not achieve determined levels in terms o f the national standards and performance indicators. An evaluation team i s currently collecting data which will be used inthe allocation o f conditional grants. An operational plan for allocating theses grants to schools has been developed. National Standards for the Teaching Profession have been agreed, published and launched as a prelude to the re-planning o f teacher education and the introduction o f teacher licensing. First steps have been taken for the introduction o f a Performance Management System for staff members. The Office o f the Prime Minister has agreed that the Ministry o f Education would be one o f the first ministries for roll-out o f the system. Thebroad curriculum for schools has been reviewed anda consultative documentprepared. Additional space has been built (and i s being built) to increase the intake into senior secondary education in 2007. Additional text books have been purchased for grade 10 in2007. . A plano f action for the pro-poor expansion o f enrolment in high quality senior secondary schools was developed together with an operational planfor the establishment o f six `comprehensive' schools inthe most disadvantaged regions. The Vocational Training Billis about to be tabled inthe National Assembly. This will officially establish a National Training Authority, which already exists as a project, and has brought about considerable reform towards a competency-based vocational education system supported by a training levy. The standards, curricula andmaterials for several trades have been developed. A National Council for Higher Education has been established to coordinate higher education and especially its funding and quality. Preparations have been made to appoint a dedicated Secretariat o f the Council. Permission has been granted by the Public Service Commission to advertise and fill the positions for the Secretariat on contract. The Advisory Council for Teacher Education and Training has been established and has appointed a task force to drive teacher education reform. Cabinet has approved the transfer o fpre-primaryeducation from the Ministry o f Gender Equality and Child Welfare to the Ministry o f Education. A unit has been established in the National Institute for Education Development to commence with the preparation o f a curriculum, materials andtraining for pre-primary education. This unit started its work early inJanuary 2007. Much attention has recently been given to improved procurement. The education and training sector has established a Procurement Unit for ETSIP. Three training sessions were held to prepare administrative and professional staff for the task ahead. The procurement plans were finalised and aligned with the implementation plans and ETSIP Programme Document. Agreement has also been reached on the carrying out o f a CIFA. A new relationship has been established with the private sector. The first result o f this is a management development project inthe remote Kunene region to improve the performance o f a 32  cluster o f schools with a lacklustre record. Other public-private partnerships are in the pipeline for diverse projects like improved performance in mathematics and rentable rural teacher housing. A public-private partnership to provide free exercise books to all learners in Namibia started inJanuary 2007 and 1millionjotters have already been distributed to all regions. With regard to improving education equity, quality and efficiency, a plan has been agreed for a phased increase o f the budget share for books and teaching and learning materials relative to salaries. Upfront actions to improve efficiency include an agreed plan for improving key internal efficiency indicators -repetition, dropouts, learner teacher ratio and the use ofphysical space. Conclusion IhopethatthiswillindicatetoyoutherealitythatETSIPhasbecomeahighprofilenational cause to which the government and many partners are fully committed as a matter o f urgency. ETSIP has become the flagship programme o f the Government o f the Republic of Namibia and there is strong national ownership and support for its implementation which will improve the education and training system and result in higher economic growth, employment creation and poverty alleviation andhelp Namibia to leap frog into a knowledge based economy. Finally, Ishould like to inform you that the high regard in which ETSIP is currently held is in large measure due to the untiringefforts o f Dr MmantsetsaMarope and her team. We therefore look forward to a continuing relationship with the World Bank. 33     6 3 tt      N a  M w  x % t   2: 3 I 2: 3 x 3 x E '3  3 3 4 W4 - al r c L2 c m c- p  w w - G "i 3 n 8 W'i m c R x  x x c R 2  x I I I I I I  3 xF, v1 9 c' v1 vi d v) ul w 3 in v3 P* VI a ilf; 4.1  e 3 m 3 c F c, or C 2gc % c @ E  v) c   x CI   s cc P e..  oE4s  E    ANNEX 5: ETSIPl IMPLEMENTATIONARRANGEMENTS Consistent with principles o f direct budget support, E T S P1will be implementedthrough regular GRN structures. The capacity o f core implementing structures (MoE headquarters) was assessedand key weaknesses that pose implementationrisks were identified. The results o f the assessment were used to develop a capacity development sub-program o f ETSIPl.In addition, GRN structures have been articulated and roles and responsibilities better definedto support effective programimplementation and higher accountability for policy outcomes. The overall implementation structure i s summarised through the organogram inthe figure below. Specific roles and responsibilities for program implementation are as follows: The Cabinetwill maintainthe overall oversight andmonitoringo fthe contribution o fthe education and training sector to the actualisation o f the aspirations o f Vision 2030 and for the contribution o f the sector to the attainment o f the strategic goals o fNational DevelopmentPlans (NDPs). The Cabinet will play this role through the National Planning Commission. Inturn, the Director General o fthe NPC will meet this role through the Ministero f Education. The Ministerof Educationwill be ultimatelyresponsible for the successful, timely, and effective development and implementation o f EfSIP. Working closely with the Minister of the MoFand the Director General of the NPC, she will also be responsible for: the oversight o f the entire program and ensuring the success o f its implementation and the attainment o f strategic objectives. S/He will be accountable to the Cabinet for the success o f the sector improvement program and will periodically briefthe Cabinet on progress made; strengthening national and international partnerships for the development o f the sector and implementing ETSIP; raising funds to ensure adequate financing o f the improvement program, inclose consultation with the Minister o f Finance; constantly appraising the Director General o f the NPC on progress towardprogram implementation and attainment o f strategic goals and objectives; and holding hisher staff accountable for the effective delivery o f education services within the context o f ETSIP. The Ministerof Financewill: inclose consultation withthe Minister o fEducationraise funds to ensure adequate financing o f the improvement program; and monitor, advise, and assist inthe procurement and disbursement o f funds. The DirectorGeneralofthe NationalPlanningCommissionwill beresponsible for: ensuring that the strategic objectives o f ETSIP remain inline with the strategic outlook o f Vision 2030 and the strategic objectives o fNational DevelopmentPlans; monitoring the adequacy o f the contribution o fthe sector to the attainment o f the strategic goals and objectives o f rollingNDPs; and liaising constantly with the Minister o f Educationto ensure synergy o f strategies, goals, and outputs. 62  ................................................ . . ., 1.. ... i m j w j j . A j ~ j f * I  5. The PermanentSecretary andDeputyPermanent Secretary will provide organisation and leadership and maintain overall supervision o f all directors o fthe M o E to ensure that they effectively implement the ETSIP components withintheir directorates according to the implementationplan. 6. The ProgramManager. Duringprogrampreparation, the ProgramManager will report directly to the Permanent SecretaryDeputy Permanent Secretary, who will provide technical quality guidance and control for program development. Duringprogramimplementation, the ProgramManagerwill reportto the Chairpersono fthe ETSIP Program Coordinating Committee (EPCC), who will be the Permanent SecretaryDeputy Permanent Secretary. The ProgramManager will be responsible for: daily management, leadership, oversight, and overall coordinationo f program implementation; ensuring effective implementationo f the program; co-ordinatingthe overall implementation o f ETSIP within the different directorates o fthe M o E and across all concerned Ministries/Offices/Agencies; liaising between concerned Ministries/Offices/Agencies and the M o E as well as the development partners and other funders; ensuring that all program implementation activities are carried out ina coordinated and articulated manner; ensuring that all program implementation activities are consistent with program objectives and strategies; ensuring that operational plans and manuals, annual work plans and budgets, procurement plans, financial management plans, and disbursement plans are drawn up, implemented, adhered to, and revisedwhen necessary, ina coordinated manner, across the Education Sector Ministries and Directorates and non-governmental entities that will implement ETSIP components andactivities; acting as Secretariat for the Program Steering Committee; implementing recommendations o f the Program Steering Committee andmaintaining communication channels within; and compiling periodic and annual reports on ETSIP activities. The ETSIPProgram CoordinatingCommitteewill periodicallyreview progress in implementing ETSIP and advise on issues as they arise. The Program CoordinatingCommittee will consist of: A Permanent SecretaryDeputy Permanent Secretary, M o E (Chairperson); A ProgramManager (Secretary); The Team Leaders o f the Sub-programs; A. Director, PlanningandDevelopmentDirectorate (PAD); The Representativeso f the Ministryo f Finance and the National Planning Commission (NPC); An Administrator o fthe Facility; The Representatives o f the Development Partners; and Other members at the invitation o fthe Permanent Secretary, MoE. Under Secretaries,Ministryof Education:will be responsible for: overseeing and co-ordinatingthe implementation o f the sub-programs; ensuring the attainment o fprogram objectives; 64  ensuring that the periodic monitoring and evaluation o f the attainment o f program objectives are undertaken; and ensuring that impact assessmentsare undertaken to ensure that the program delivers on its goals. 9. The Directors of the Ministryof Education: Will be responsible for ensuring effective implementation o fthe ETSIP components that fall within their directorates. They will report directly to the relevant Undersecretary who, inturn, reports to the Permanent SecretaryiDeputy Permanent Secretary. The Director PAD, especially, will be responsible for: monitoring and evaluating the attainment o fprogram objectives; undertakingperiodic monitoring and evaluation o f the attainment o fprogram objectives; and undertakingimpact assessmentsto ensure that the program delivers on its goals strategic plan as necessary. 10. The Directors of other EducationSector Ministries:will be responsible for ensuring effective implementation of the ETSIP components that fall within their directorates. 65  EX 6: ~ R COST AKD ~ ~ G OF ETSfPi BY SOURCE ~ ~ ~ E dges madeat the ~ ~ u ~ d 66  67  ANNEX7 DISCUSSIONDRAFTMEMORANDUM OFUNDERSTANDING Between THE GOVERNMENT OF THE REPUBICOF NAMIBIA MINISTRY OFEDUCATION (GRN) And INTERNATIONAL DEVELOPMENTPARTNERS@Ps) (Hereinafterjointly referred to as "theParticipants'7 Insupport ofthe EDUCATION AND TRAINING SECTOR IMPROVEMENT PROGRAMME(ETSIP) Version of March7,2007 March2007 Windhoek, Namibia PREAMBLE 68  The Government ofthe Republic ofNamibiaand the Development Partners("the Participants") Desiring to effectively coordinate their efforts in implementing ETSIP Recognising that the Education and Training Sector ImprovementProgramme i s a long-term strategic planwhich sets out how education can contribute to the achievement of Namibia's Vision 2030, which foreseesNamibia becoming a highincome country providing for the needs o f all its citizens. Accepting that inthe first phase of ETSIP implementation (2006 -2011)the emphasis i s on increasing the supply of middleand highlevel skills, improving the quality of general education, makingtertiary education more relevant, systematizing knowledge and innovation, and laying the foundation for a systemof lifelong learning. Emphasising that ETSIP i s a flagship programme of the Namibian government which has sought by all meansto attract internationalpartnerships for the financing thereof. Considering that more than a dozen agencies and countries, have come forward to support ETSIP and it is nowtherefore essentialthat common, harmonised ways ofinteractionbetweenDevelopment Partners and the Government are agreedupon so as to limit transaction costs. have reached thefollowing understanding(s): ACRONYMS DPs Development Partners ETSIP Educationand Training Sector Improvement Programme GFW Government of the Republic ofNamibia LA Lead agency LCA Leadco-ordinatingagency LTA Leadtechnical agency MoE MinistryofEducation MoF MinistryofFinance M o U Memorandum of Understanding MTEF MediumTermExpenditure Framework NPC National PlanningCommission OPM Office of the Prime Minister DEFINITIONOF SELECTEDTERMS Annualimplementationand disbursementplans (AIDP) are annually prepared documents that detail programme activities that are planned to be undertaken within a financial year. The details o f the plans include:activity costs, scheduling, organizational responsibilities, indicators, reporting and accountability arrangements. C 69  Programmerefers to ETSIP as encapsulated inthejointly appraisedprogramdocument and all implementationsupport documents-results framework, procurementplans, implementation plans, and disbursement plans. Governmentmeans the Government o fRepublic o fNamibia (GRN). DevelopmentPartnersmeans all international organisations, bodies, entities or participants to this Memorandumo f Understanding, who will provide, or plan to provide technical andfinancial support to ETSJP and who are or will be signatories to this MoU. LeadAgency (LA) means the MoEo fthe GRNresponsible for the implementation ofETSJP. Itwill be supported inthis role by the National Planning Commission, which is responsible for GRN's relationships with DPs on all aspects o f international cooperation and partnership indevelopment, and the Ministryo f Finance, which i s responsible for financial arrangements. LeadCo-ordinatingAgency (LCA) means the designatedrepresentative(s) o fthe Development Partners that will communicate with Government on behalf o f all Development Partners and will organise an EducationDevelopment Partners Group (EDPAG). LeadTechnicalAgency (LTA) means the agencyjointly designatedby GRNandthe DPsto advise the GRNand the DPs on the implementation and development o f ETSIP and to lead implementation support missions. ImplementationSupport Missionmeans a group o frepresentativeso fDPs who will meet andwork with the GRNcounterparts for at least two weeks prior to areview meeting, to review substantive, developmental, administrative, and financial progressreports on ETSIP and compile recommendations for consideration o f the April and September review meetings. Education,trainingandskills developmentsector Review Meetingsmeans the semi-annual meetings that GRNand DPswilljointly organize inApril and September o f every year o fthe 5-year implementationperiod as elaborated elsewhere inthis MoU. 70  Section 1: Purpose 1.1 The Participants to this M o Uhereby seek to establish an understanding between themselves for the joint and co-ordinated implementationo f ETSIP to achieve Namibia's development objectives as captured inthe ETSIP Programme Document and to spell out the roles, duties and commitments o f the participants to this Memorandum o f Understanding. Section2: Participants 2.1 The participants to this Memorandumo f Understandingare: 2.2.1 The Government of the RepublicofNamibia 2.2.2 All InternationalDevelopmentPartnerswho are signatoriesto this Memorandumofunderstanding. 2.2.3 The Commission o f the European Unionwill be the LCA to ensure continuity o f the programme. 2.2.4 The World Bank will be the LTA during the first phase o f ETSIP. 2.2.5 The DPs are deemed to be an entity for the purpose o f this MoU. Section3: Principles 3.1 Inthe spiritofthe commitments statedinthe March2005 ParisDeclarationonaid effectiveness, ownership, harmonisation, alignment, results and mutual accountability, the GRNand DPs commit themselves to the following principles 3.1.1 .OWNERSHIP:Namibia will exercise effective leadership over its development policy inthe education andtraining sector andwill co-ordinate development actions. 3.1.2.ALIGNMENT: DevelopmentPartners will base their support inthe education and training sector on ETSIP strategies, institutions andprocedures. 3.1.3 .HARMONISATION: Development Partners' actions will be harmonised, transparent and collectively carried out. 3.1.4.MANAGING FORRESULTS: Namibia andher Development Partners willjointly manage and implement development assistance ina way that focuses on the desired results and uses information to improve decision-making. 3.1S.MUTUAL ACCOUNTABILITY: Namibia will reinforce a participatory approach to assess the progress inimplementing ETSIP and the Development Partners will commit to provide timely, transparent and comprehensive information on the flow o f their support. Section4: SpecificElements 4.1 Inlinewiththe ParisDeclarationonaideffectivenessprinciples for the implementationof ETSIP, the Participants agree on the following specific elements: 4.1.1.recognize Namibian leadership and ownership, and model all development support on that premise. 4.1.2.improve thepredictability of theflow of externalfunding, to ensure timely procurement o f goods, works, services and related disbursement o fresources, and work together to strengthen budget execution and financial management. 71  4.1.3.strengthen monitoring and evaluationfor ETSIP. 4.1.4.foster balanced sector development. 4.1.5 .foster coordinatedand harmonized sector development. 4.1.6.work together to increase the sustainability and impact of institutional capacity development. 4.1.7.maximize complementary and shared resources among DPs to increase effectiveness and reduce transaction costs on the MoE and other GRNentities. 4.1.8.develop and strengthen mutual accountability. 4.1.9.contribute to increased community, civil society andprivate sector participation inthe implementationof ETSIP. Section5: GeneralCommitmentsofthe Participants 5.1. Ownership 5.1.1.The GRNwill: 5.1.1.1. Through Cabinet take responsibility for overall oversight and monitoring of the contribution of the education and training sector to the actualisation o fVision 2030, and for the attainment of the strategic goals o fNational DevelopmentPlans. 5.1.1.2. Intensify efforts to mobilize adequate domestic resourcesfor ETSIPincluding the creation of an enabling environment for public, private sector, and community partnership. 5.1.1.3. Lead atransparent and consultative processto update ETSIP and provide an operational, results-oriented framework with clear policy commitments, improved costing and strategic prioritization of sub-programmes to support the achievement of the objectives of ETSIP. 5.1.1.4. When a development partner or other agency offers support for the education and training sector, propose the utilisation of such support through the extension or earlier implementationof activities already within the programme; should this not bepossible, the GRNwill table at areviewmeetingaproposalfor an amendment to the programme to includethe new assistance, provided that such amendment will be within the agreed strategic objectives of ETSIP, feasible, and in accordance with 5.4 of this MoU. 5.1.1.5. Informthe DPs of any conditions or other factors that may put the successful implementationof ETSIP at risk. 5.1.2.The DPs will: 5.1.2.1. Preparejoint responsesto GRN, showing how their support will be alignedto ETSIPobjectives. 5.1.2.2. Increasealignment o ftheir support with in-country policy planning and review processes. 5.2 Predictabilityof the Flow of ExternalFunds The GRNwill: 72  5.2.1 Coordinate MoF, NPC and M o E to ensure that all externally-funded activities supporting ETSIP are captured inthe GRNbudget and accountingsystems, and strengthen the linkbetween ETSIP and annual budget processes. 5.2.2 The DPs will: 5.2.2.1 Provide transparent and comprehensive information on timingo f disbursements and other inputs of DPs' fundinginputs. 5.3 Monitoring and Evaluation 5.3.1.The GRNwill: 5.3.1.1. Continue to strengthen: the EducationManagement Information System (EMIS) inMoE, monitoringandevaluation, andimpactassessmentcapacity, inorder to produce robust, timely and transparent indicatorso f implementation progress, outputs, outcomes, accountability for results and accountability for development impact. 5.3.1.2. Share with the DPs its quarterly management progress reports, including budget execution reports inline with the MTEF. 5.3.1 -3. Share quarterly procurement monitoring reports to review progress inthe implementation o f the procurement plan and identify any contracts that were not includedinthe plan adopted the preceding year as well as any material modifications o f the terms and conditions o f such contracts after their award. 5.3.1.4. Present the findings o fthe annual procurement audit together with a proposed plan o f action to correct anomalies and errors inprocurement at the September review as per paragraph 8. 5.3.2.The LTA will carry out an indepth analysis o fthe quarterly report provided by the GRN. Onthe basis o fthis technical analysis the LCAmayrequest a special meeting between GRNrepresentatives andrepresentatives o f the DPs ifthere are issues identified by the LTA or another agency or at the request o f GRN. 5.3.3.The DPs may, instead of the annual procurement audit, request special procurement audits or send additional procurement missions for further post reviews or investigations. 5.3.4.The Participants will, effective from April 2007, carry outjoint review meetings as per Section 8. 5.4. Balanced Sector Development 5.4.1.The Participants will ensure a balanced development o f the educationand training sector basedon the followingprinciples: 5.4.1.1. ajustified, prioritised and strategic allocation ofresourcesto each sub- programme o f the sector. 5.4.1.2. balanced expansion o f access, improvement o f quality, and improvement o f the relevance o f each sub-sector. 5.4.1.3. the balance i s anchored inthe humanresources requirements o f the economy and equitable social development, as determined at a particular time. 73  5.5. Coordination, Integration and Harmonized Sector Development 5.5.1.The GRNwill: 5.5.1.1. Take the lead incoordinating sector planning and reviewso f the budgetprocess to ensure a more comprehensive planningprocess. 5.5.1.2. Provide stronger coordination frameworks to promote wider stakeholder participation inthe implementationo f ETSIP. 5.5.2.The DPs will: 5.5.2.1. Provide their technical and financial support to the education andtraining sector only within the framework o f ETSIP, which i s the national programme for the education and training sector. 5.5.2.2. Ensure that their technical and financial contributions to ETSIP are for sub- programmes.and components of ETSIP and the attainment o f ETSIPobjectives. 5.5.2.3. Work towards ensuring that all DP reviews concerning sectoral and budget support are synchronized with GRNbudget and policy cycles. Sector support should aim at strengtheningand usingGRNsystems to channel and account for funds, andto monitor outputs. 5.5.2.4. Undertake to usejoint missions and harmonizearrangements for new programmes to align themwith existing GRNprogrammes. 5.5.3.The Participants will: 5.5.3.1. Based on agreedjoint reviews of ongoing and future projects (outside the State RevenueFund), restructure ongoingprojectsto fully integrate theminto the ETSIP framework andprogrammed activities. 5.5.3.2. Ensurethat the extent of the integration o f current and future projects into ETSIP will be discussedinbilateral negotiations concerning agreementsbetweenthe GRNandrespective DPs. The latter will make every effort to facilitate the fullest extent of the integrationinline with overall principle 3.4. 5.6. Capacity Development 5.6.1.The GRNwill: 5.6.1.1. Effectively implementthe capacity development sub-programme through the Institutional Strengthening and Capacity Development Facility. 5.6.1.2. Strengthen the fiduciary system that will support the implementation of ETSIP. To that effect, GRNwill carry out a Country Integrated Fiduciary Assessment (CIFA), with the technical and financial support of the DPs. 5.6.2.The DPs will: 5.6.2.1. Ensurethat technical assistanceto the GRNi s givenwithin the framework of the above-referred capacity development plans that are inor intrinsically linked to ETSIP. 5.6.2.2. Ensurethe qualitative, quantitative, and dispositional appropriatenesso f their permanent staff and temporary technical experts that are fielded to provide technical back-stopping for the MoE and other GRNMinistries that collaborate with the MoE. 74  5.7. Complementarity andResourceSharing 5.7.1.The GRNwill: 5.7.1.1. Reduce the burdenthat DPs place on the sectors' deliveryhmplementation capacity interms o f missions, meetings and reportingthrough: 5.7.1.1.1. Shared implementationarrangements. 5.7.1.1.2. Joint implementation support missions. 5.7.1.1.3. Ensuringtransparent and efficient dissemination o finformation. 5.7.2.The DPs will move towards the sharing o fresources and analyses by: 5-7.2.1. Reducing fragmentation o f their financial and technical support. 5.7.2.2. Operating solely within the agreed structures when it comes to missions and reviews. 5-7.2.3. Wherever feasible, working towards greater devolution o f authority to their staff intheirrepresentativeoffices inNamibia. 5.7.2.4. Simplification o fprocedures (e.g. reportingrequirements). 5.7.3 The DPs that provide direct budget support will: 5.7.3.1 Strive to reachthe highest degree o f alignment with the budgetary and accountability systems and legislation o fthe Republic o fNamibia. 5.7.3.2 Harmonize procedures and adopt common approaches (e.g., disbursements, procurement, financial management, reporting, accounting, etc.) to the extent practicable. 5.8. Joint Responsibility 5.8.1 .The Participants will: 5.8.1.1. Work to develop a programme o f review meetings o f ETSIP implementation progress, mutual performance effectiveness, attainment o f results and transparent use o f funds. 5.8.1.2. Observe the provisions and intentions o f this MoU. Section6: ETSIP anditsAnnualImplementation,ProcurementandDisbursementPlans 6.1. The GRNwill: 6.1.1 .Prepare implementation, procurement and disbursement plans for the first five-year ETSIP period. 6.1.2.Present detailed annual implementationplans at the September Review Meeting. 6.1.3 .By31January o f each year provide for review (and concurrence by 28 February o f each year) a draft two-year procurement plan. 6.2. The DPs will, ifthey provide direct budget support, at the recommendation o f the lead technical agency, release their tranches against the achievement o f the prior actions as accepted inthe previous Review Meeting. The approved prior actions for the first year are attached to this MoU. 75  6.3. The Participants will: 6.3.1.Discuss, amend as requiredand decide on the implementation andprocurement plans. 6.3.2.Monitor progress on the prior actions to be achieved by April the following year. 6.3.3.Decide on the actions to be achieved during the following financial year. 7. Section: FinancialContributions by the Participants 7.1. Inthe framework of the MTEF,the GRNwill: 7.1.1.Provide specific budget commitments adequate to cover its share of the implementation and disbursementplans. 7.2. The DPs will: 7.2.l.Contribute to ETSIP inone of the following ways: 7.2.1.1. CategoryA: "Pooled" funds transferred to the State Revenue Fundand included inthe ETSIPrelatedvotes intheMTEF. 7.2.1-2.Category B: "Unpooled" fhds and technical resources, outside the State RevenueFund, aligned to sub-programmes and components of ETSIP. 7.2.2.Commit their financial contribution to the ETSIPfive-year programmeperiod, with specific annual commitments, as part of their total contribution, to be disbursedeach year ensuringadequate fundingof the agreedannual implementation anddisbursement plans. Section8: ETSIPReview bythe Participants 8.1. The Participants will: 8.1.1. Jointly organize two implementationsupport missions, for at least two weeks in MarcWApriland inAugust/September of every year of the first phase o f ETSIP implementation, starting inMarcWApril2007. 8.1.2.Ensure as far as possible that implementationsupport missions will consist of a constant core team that will remain stable for the duration o fthe first 5-year phase o f the programme. The LTA, inagreementwith MoE, will beresponsible for the organisation, the drafting of ToRs, the identification and allocation of the staff required for these missions, other DPs signatories to this M o Uwill be able to propose their representative(s) who will participate inthe missions, inline with the ToRs. 8.1.3. Jointly organise review meetings for April and September eachyear, startingin2007. 8.1.4.The April review meetingwill mainly assess the extent to which prior actions set for the preceding fiscal year have been achieved. GRNwill present the achievements o fthe sector, including programme implementationprogress and progress on meetingprior actions. Based on the outcomes of the implementationsupport mission, the deliberations and assessmentsof the review meeting, the LTA may recommend the release of funds, as plannedand as far as the achievements relatedto the ETSIP programme implementation are concerned, to the DPs that provide direct budget support. The review meetingwill also agree on the actions to be achieved inthe current fiscal year, and the firm triggers for the subsequentyear. 76  8.1.5.The September review meetingwill provide a forum for more substantial discussions on the progress made inprogramme planning and implementation, including review o f the results framework and diagnosis o f impediments and remedial actions to achieve the actions set inthe April Review Meeting. The technical backgroundmaterial for these discussions will be providedby GRNwith technical support o f the LTA. This review meeting will not consider amendments o f the actions for the current fiscal year. The DPsthat provide direct budget support will indicatethe amount they are planningto disburse inthe next fiscal year. 8.1.6.During the 2007/08 fiscal year, the GRNwill develop a detailed actionplanor Government Programme Policy Matrix, including the associated indicators and targets, with technical support from the DPs. This document will be revisedover the implementationperiod o f the programme. It will clearly indicate the contribution of the prior actions, firm and indicative trigger to the results o f the ETSIP programme. 8.2. The GRNwill: 8.2.1.Prepare administrative, financial and technical progress reports on ETSIP implementation inpreparation for the implementation support missions. 8.2.2.Send the reports in8.2.1 to the LTA two weeks before the start o f the implementation support mission (point 8.1.1). It i s inthis context that DPs may request additional and/or specific information on ETSIP implementation and overall education sector development. 8.2.3 .Be responsible for convening meetings, preparing agendas, and handling all meeting logistics for joint review meetings that follow the implementation support missions. 8.2.4.Ensure sufficient financial resources to be available to support the work o f advisory services o fthe LTA insupport o f ETSIP upstream and downstream analytical and technical work. An amount not exceeding N $ l 5 million will be made available for this work over the first phase o f the programme. 8.3. The DPs will: 8.3.1 .Through LTA organise and mobilise the implementation support missions and provide GRNand other DPs the necessary backgroundanalyticalelements supporting the review. 8.3.2.DPs, other than the LTA, will cover the costs o ftheir own representativesparticipating inthe implementationsupport missions andreview meetings. Section 9: Amendment 9.1 This Memorandum may be amended at any review meetingby the mutual written consent o f the Participants, provided that a notice o f at least 30 days prior to the review meeting of such proposed changes is given to the Participants. Section 10: Termination 10.1 This Memorandummaybe terminated by either Participant givingtwelve months written notice. The Participants will consult to determine how any outstanding matters should be dealt with. Termination will not affect the validity o f any contract made under this Memorandum. 77  Section 11: Dispute resolution 11.1 Any dispute regardingthe interpretationor implementationo f this M o Uwill beresolved by negotiations or consultations betweenthe Participants or by referring the matter to a review meetingand will notbereferredto the nationalor internationaltribunal or thirdparty for settlement. Section 12: Duration and effective date 12.1.ThisM o Uwill come into effect on the date it i s signedby GRNand at least two DPs. Additional DPs may sign the M o Uupon an understandingwith the GRN, or upon an amendment of this M o Uthat is approved by the GRNand the signatory DPs. 12.2.The foregoingrepresents the understandingreachedbetween or among the Participants on the mattersreferredto inthis Memorandum. 78  Signed [induplicate] at on inthe EnglishLanguage. For the Government of the Republic of Namibia Date For the European Commission For the World Bank Date: For the UNEducation Partners Date: (UNESCO, UNICEF, UNDPAND UNFPA) For the Millennium Challenge Corporation Date: For the.. . Date: 79  ANNEX 8: ANALYTICAL WORK THAT INF'ORMED THE DESIGNOF THE DPL SERIES Study Specific recommendations that were taken into account Presidential Commission e implement the national ECD policy on education, training, and e as an interim measure, establish a k s t fund for ECD to cater to the most needy culture (1999) e as a long term measure, provide universal pre-school education e register ECD centers and expand training for ECDproviders e improve parental involvement inthe provision o f ECD e establish complete primaryschools within easy reach o f learners introduce competency tests at grades 5 and 7 e place school managers on time-bound performance contracts OPM should finalize staffing norms for schools establish cost sharing mechanisms for post-basic education and training e establish a comprehensive school for each region with emphasis on mathematics, science, and vocational subject (modified to establish magnet schools and Vices) e recruit expert teachers tojump start comprehensive schools e rationalize general education curricula to attain effciency and quality e improve teaching standards inVices e establish a National Council on Higher Education and its subcommittees for science and technical education and for teacher education e establish a fundingformula for tertiary education and training e establish community colleges especially inthe northernregions e consider giving autonomy to colleges o f education e increase the supplyo f arts teachers through the college o f arts e define competencies for mathematics and science teachers (modified to apply to all teachers) e Improve the standard o f teachers especially for mathematics, English, and science. e a plan for teacher supply should be responsive to HIV/AIDS e establish a Council for Researchand Industrial Innovation and a National Commission on Research Science and Technology, and a Council on Social and - Economic Research strengthen provision for adult education and life-long-learning Namibia Prospects for improve the supply o f skilled labor Growth and Employment stimulate higher value-added production through the interactiono fknowledge and Generation (2003) technology in key growth sectors Improvingthe Contribution improve institutional capacity for strategic planning, management and delivery o f o f Tertiary Education and tertiary education and training Training to Namibia's improve quality through the strengthening o f foundation courses, expansion o f pre- Knowledge-Driven entrycourses, staff development program, and appropriate quality assurance Development: What Would mechanisms improve equity through a quota system for the admission o f students, encouraging It Take? (2003) women to enroll incertain fields o f study, and expanding student loan scheme improve efficiency o fresource utilization and internal efficiency through reduced dropouts and repetition D Improve cost effectiveness through better cost-sharing schemes, less duplication of courses, selective reduction o f unit costs, and improved internal efficiency D improve research and development through better staff training, better guidance on VET and Skills -enhance national strategic researchneeds, and better financing o fresearch and development D the role o f the private sector inshaping training programs and in financing Development in Namibia them (2003) D prioritize organizational reforms, such as the establishment o f the NTA and devolution o f authority to Vices D reform financing o f skills development by diversifying sources o f financing, including the establishment o f a payroll levy and allocating financial resources according to performance and outputs D expand the best training institutions and improve the rest D rationalize pre-vocational subjects inthe general secondary education curriculum 80  Adapting the General Improve: Education System to Better student learning outcomes through improved learning readiness at entry, better Support Namibia's teachers, better examinations, better system evaluation, more and better Transition to a Knowledge- instructionalmaterials, and effective pedagogy Based Economy (2003) educator accountability for student learning by setting performance targets for schools internal efficiency through reduced repetition and dropouts, multi-grade schools where possible, double shifts where possible, higher student to teacher ratio, and class size equity through normative financing and a quota system for admittingdisadvantaged students into senior secondary schools and Vices resource efficiency through cost-sharing measures at senior secondary level, improved internal efficiency, better management o f educator salaries, and phased withdrawal o f subsidies to private profit-making schools Cost and financing o f increase the contribution o f non-government entities-communities, civil society, education and training households, and the private sector-to the financing o f education and training (2003) increase budget allocation to secondary education, VET, and teacher education and to education quality-enhancing inputs other thanteachers' salaries Evaluation o f Teacher improve the effectiveness and flow o f statistical informationfor planning teacher Training, Development, education programs and Professional Support address teacher shortages (2004) provide more CPD opportunities and create an environment inwhich advantage will be taken o f them improve the system's throughput o f science and mathematics graduates improve and raise the status o f arts education develop strategies and support structures for IT in education Public expenditure tracking strengthen financial management at decentralized levels-regions and schools and quantitative service improve textbook delivery and verification delivery survey: The introduce per capita financing for school facilities and basic services education sector (2004) provide additional funds for schools which have a low fund raising base systematize records on school facilities and teachindlearning materials NamibiaHuman Capital improve the quality and effectiveness as manifest inlearning outcomes and the and Knowledge supply o f skilled labor Development for Economic improve the internal efficiency o f the education and training Growth with Equity (2005) improve efficiency o f resource mobilizationand utilization reduce persisting inequalities inthe distribution o f education inputs and outcomes improve economic relevance o f the education and training system strengthen capacity for knowledge creation and application strengthen capacity for delivery o f education and training services diversify sources o f fundingfor the education and training system improve HIV/AIDS prevention and mitigation strategies Preliminary assessment o f raise the threshold for prior review by the central tender board procurement system increase resource efficiency and transparency o fprocurement system (2005/2006) strengthen the Moe capacity for procurement planningand management Preliminary assessment o f strengthen internal audit functions o f the Ministry o f Finance (Move) and line financial management ministries, including the Moe system (2005/2006) ensure timeliness inthe reconciliation o f accounts ensure quality and timeliness o f dissemination o f audited financial statements strengthen budgetingcapacity o f Moe strengthen the oversight andquality control by Move 81  ANNEX 9: POVERTYAND SOCIALIMPACT 1. The Grin'spolicy and legal frameworks recognize the needfor equitable accessto good quality education and training. InDecember 2001, Parliament passedan Act that provides for accessible, equitable, qualitative, and democratic national education service. The Act provides for the establishment ofvarious educational boards and advisory councils as well as education funds. Further,it specifies learner admission andrules ofconduct; identifies coursesof study, examinations, and certificates; establishes cultural institutions; supports pre-primary education; and addresses adult literacy. 2. 'TheEducationAct ofOctober 2002complements theDecember2001Actwithregardsto school boards, school funds, and learner conduct. The Act also addressedhostels at state schools, established culture service points, and addressedstandards inprivate schools. 3. The former Ministry ofBasic Education, Sport, and Culture developedaNationalPolicy Options for Educationally MarginalizedChildren (2000). This policy furtherrecognizes the need for equitable access to quality education. The policy identified 11groups, listedbelow, as being marginalized. Some identified factors of disadvantage include: poverty and consequently, unaffordable education services; parents' disempowerment to effectively support their children's schooling; and physical inaccessibilityof education services due to distance from school. 4. Other than policy and legal instruments, the overall national development outlook emphasizes the needto redressNamibia's acute social and income inequalities. Inthis regard, the redistributive effects of education and training are highlyrecognizedas the core of the social equity strategy. This i s expressedinVision 2030, National DevelopmentPlans, and the National Poverty Action Plan, among others. 5. Some analyses identify constraints to the realization of social equity through education and training opportunities. InJanuary 2003, the former Ministry of Basic Education, Sport, and Culture, with support from UNICEF, commissioned a study on marginalized children titled "Educationally Marginalized ChildreninNamibia: An inventory o f Programs, Interventions, and Data." Findingso f this study were to guide the preparation o f action plans for addressing educational needs of marginalizedchildren as well as to provide data to monitor improvements. In2005, theWorldBankpublishedareportthat recommendedsubstantialreductionof inequalities ineducation inputsand outcomes as a necessary step toward poverty reduction and social equity. 6. Against this background, DPLl supports GRNpolicies that promote equity inthe distribution of education inputsand outcomes. This i s to be attained through cluster of policy measures on per-capita financing, quota systemfor admission to senior secondary school, setting performance standards and inputnorms for schools, providing disadvantaged schools conditional grants to meet inputnorms and performance standards, providingconditional grants to enable effective participation o f Voss, and establishing highquality schools indisadvantaged areas. An underlying premise of the entire ETSIP program i s to expand equal opportunities for education and training. The programis pro-poor inits overall orientationand its sequencing of critical actions. 7. Indigenous Peoples and Vulnerable Groups: Ina country still findingits way after apartheid, there i s hesitance withinthe Moe to separate groups along ethnic lines. Insteadthe Moe views all citizens as Namibians. Within this context, however, the Moe recognizes there are uniqueneeds among vulnerable groups. To this end, the Moe identified 11groups as being marginalized. These includechildren of farm workers, Sanchildren, Ovahimba children, street children and working 82  children, children in squatter areas and resettlement camps, mentally and physically impaired childredchildren with special educational needs, over-aged children accordingto existing policies, teenage school learners as workers, young offenders, refugee children, and orphans and abandonedchildren. 8. O fthese groups, San are considered indigenous by World Bank standards. The Sanpeople have historically been exploited by other ethnic groups. The Government has taken a number of measuresto endthis societal discrimination against the San, including seeking their advice about proposed legislation on communally heldlands and increasing their access to primary education. By law all indigenous groups are able to participate equally indecisions affectingtheir land, cultures, traditions, and allocation of naturalresources.Nevertheless, the San and other marginalizedNamibianshave been unable to exercise these rights fully as a result of historically minimal access to education and economic opportunities, coupled with their relative isolation in remote areas. 9. Wanting to recognize all citizens equally as Namibians, the MoE does acknowledge that marginalizedgroups need assistanceat the initial stages o f learninginorder to perform at an equal level with more advantaged groups. As a result, the MoE provided assistanceto selected students from marginalizedgroups to attend secondary schools. This includedproviding added learning support so that the students could successfully complete grade 10.Many o f these studentsthen completed grade 12 and returned to their home communities to serve as teachersto lower primary students. A negative aspect o f this, however, is that these teacherswere not properly certified and thus their upwardcareer mobility and associatedbenefits are limited. 10. TheMoEhas already taken steps towards addressingthe unique educational needsof disadvantaged groups. These include establishing a variety o fnon-traditional learning opportunities such as satellite schools basedon the seasonalmovements o f indigenous peoples and mobile schools for cattle-herders, which enable the movement associatedwith grazing without interrupting children's schooling. To address the circumstances o f farm workers' children the MoE createdsmaller schools. The MoEnowrecognizes orphansare anew group of disadvantaged children withunique needsand challenges that will need to be addressedinthe immediate future.To this effect ETSIPl includedactions that are targeted to OVCs such as the establishment of conditional grants for their effective participation and successful completion o f their education. 11. The MoE also takes prideinhavingsupportedthe creation ofan orthography for one ofthe San language groups, which has allowed the MoE to create instructionalmaterials for lower primary students who can thenbe taught intheir mother-tongue. This orthography, however, covers only one o f the San ethnic groups, which leavesa largemajority of San children without access to primary education intheir mother-tongue. 12. Finally, Namibia is the first country in Southern Africa to provide national radio broadcasts in San languages. To date, a minimal amount o f education opportunities have tapped radio broadcastsas a learningtool. However, due to the positive feedback from San o fhearingtheir mother-tongue broadcast has encouragedthe MoE to develop an EducationalRadio Project. It i s hopedthat this will further expose and promote the value o f formal learning opportunities. To support this initiative, various organizations have furnished solar-powered radios to San communities. 13. Construction of learningcenters inareas that have a large Sanpopulation will allow students to attend schools located closer to their homes andprovide themwith a better learning support 83  system. Currently, many San studentsmustlive on school campuseslocatedfar from their homes and fame many hardships-nominal exposure to their cultural heritage, minimal or no social support structure, isolation, and sometimes, inappropriate treatment from their peers as well as staff. 14. Although faced with abject poverty, constrained access to education opportunities, minimal social support, and low literacy rates, parents-including Sanparents-have a strong desire to sendtheir childrento school inthe hopesthat their children will have the opportunities that are open to those with an educational degree. Several constraints, such as language, income, and school locations, prevent many San childrenfrom successfdly participating ineducation. To identify ways inwhich marginalizedgroups canparticipateand benefit from thisprogram, the ministryprepared an Indigenous PeoplesandVulnerable Groups DevelopmentReport. 15. Educationally Marginalized Children in Namibia: An inventory o f Programs, Interventions, and Data and the Indigenous Peoplesand Vulnerable Groups Report along with the National Policy Options for Educationally MarginalizedChildren, prepared by the Ministry of Basic Education, Sport, and Culture in2000, provide a foundationby which the MoE can provide supportive interventions and increase inclusionof previouslyneglected groups such as inviting representatives of marginalizedgroups to participate insteering committees within the MoE. 16. Land Acquisition: It is possible that land will needto be acquired for the construction of schools, VTCs, and learning centers. Theoretically, this acquisition may negatively impactpeople currently occupying or usingthe land. It is expected, however, that land can be identified which would not have significant negative impact on individuals or communities. 17. The Constitution ofNamibiaprovides for administrationof landinNamibia to beby Statutory Law, generally applied to urban areas, and Customary Law, usually appliedto rural and communal lands. Three relevant Namibian policies with regards to land include: 0 National Resettlement Policy (2001) aims primarily to improve the living standards of all Namibians. The policy stipulates that resettlement is voluntary and does not address issues of program-induced resettlement. 0 National Lands Policy (1998) promotes the sustainable use of land as a naturalresource. 0 Land-use Planning: Towards Sustainable Development (1994) addresses issuesrelatedto land tenure. The objective i s to encourage the rational and integrated planning of land use basedon sound ecologicalprinciples inrural areas and establish suitable participatory structures to enable communitiesto participate indecision making and take responsibility for the management of resources on the landthey occupy. 18. To mitigate the negative impacts which may result from land acquisition due to construction, MoE prepared a Resettlement Framework (RF). The RFprovides guidance and standards to follow incases where programactivities result inlandacquisition, impacts assets, and/or negatively impacts livelihood. The fi-amework indicates actions that would identify stakeholders, guide valuation procedures, and identifycompensation measures as well as grievance mechanisms for those impactedby program activities. 19. Gender: Assessments by the MoEindicatethat gender does not play a major factor inschool participation. Insome cases, it has been notedthat boys are less likely to attend school than girls; therefore the program focuses on all childrenwithin identifiedvulnerable groups regardless of gender. 84  20. Participation: Consultations occurred inthe course o fpreparingthe Environment and Resettlement Frameworksand the Indigenous Peoples and Vulnerable Groups Report which included stakeholders, representative Non-Government Organizations (NGOs) and Community- based Organizations (CBOs), relevant ministries and government agencies. Due to the fact that site locations were unknown duringthe preparation o f the program, site specific consultations could not occur. Once potential site locations are identified, environmental and social impacts will be identified and stakeholders directly impactedby programactivities will be consulted as well as provided an opportunity to participate inprogram activities. 21. Namibian laws and World Bank standards and best practice recommendthat all activities impacting the public include consultation with stakeholders prior to, and during, program implementation. It i s also expected that capacity buildingefforts built into program design will increase participation inthe education process such as increasedparticipation inschool boards which includes community members, parents, and students. 85  ANNEX 10: ENVIRONMENTASPECTSAND REQUIREMENTS 1. The GRNhas enactedan EnvironmentalAssessment Policy (1994-95). The policy supports GRN's goal of sustainable development andpromotingeconomic growth while also protectingits fragile environment. It states that the principleof achieving and maintaining sustainable development must underpinall policies, programs, and projects undertaken withinNamibia. To this end,the GRNwill adopt policiesaimed at the maintenance ofecosystems, essential ecologicalprocessand biological diversity of Namibia and utilization of livingnaturalresources on a sustainablebasis for the benefit of all Namibians, bothpresent and future. 2. The programwill involve the rehabilitation and construction of schools, VTCs, andlearning centers. Due to these activities, the MoE preparedbothan Environmental and Social Management Framework (ESMF) and Resettlement Framework (RF) which compared national laws with World Bank policies. The ESMF and RF identifiedpotential environment and social impacts, provided mitigation measures for potential negative impacts, and discussedways inwhich to engage stakeholders. As many program activities will occur inregionsknown to include San among the targeted groups, an Indigenous Peoples and Vulnerable Groups DevelopmentReport was also prepared. 3. It i s expected that program activities involving rehabilitation and/or constructionwill be small insize and number, be locatedinpreviously neglectedremote areas inthe northernportion of the country, and have minor negative impacts, all of which can be mitigated. Significant efforts will bemade inthe design and screening stages ofprogramactivities to avoid negative impacts on people, property, and livelihood. A number of positive impacts will result from the program suchas increasedaccess to education, higherquality ofteaching standards, anda decrease in poverty. 4. Main Features of the ESMF. The ESMF consists of a set of mitigation measures, monitoring indicators, and institutionalarrangements to be taken duringconstruction, rehabilitation, and implementationofprogramactivities inorder to eliminate adverse environmentaland social impacts, or reduce and mitigate impacts where negative impacts are unavoidable, and increase positive impacts. Ifit is determined that land acquisitionwill involve relocation o fpeople or impact their livelihood then land acquisition will commence following the guidelines set out in the resettlement framework. It i s not expected that program activities will have significant negative environmental or social impacts. 5. Once construction sites are identified, an Environmental Impact Assessment and Environmental Management Plan (EMP) will be prepared inaccordance with Namibian law and following the guidance of World Bankpolicy. The EMP will provide a specific description of institutional arrangements- who i s responsible for carrying out the mitigation and monitoring measures.Additionally, the EMP will include an estimate of the costs of these measuresand activities recommended so that the program can budget the necessaryfunds. 6. Monitoring: Environmental and social monitoring will be conducted duringconstruction, rehabilitation, and operation inorder to measure the success of the mitigation measures. Monitoring results for all environmentaland social issues will be includedas a part of the programreporting procedures. 7. IndigenousPeoples:An initial assessment was conducted duringpreparation to determine support for ETSIP among indigenous peoples. Indigenous peoples andrepresentative NGOswere contacted, all of whom expressedpositive attitudes towards increased educational opportunities 86  for marginalizedgroups. Discussions identified factors that contribute to increasedhardships with regards to education: language constraints, marginalization, discrimination from other students and staff, financial difficulties, and distance students must travel from their homes, which leads to an absence o f an effective support system. An increasednumber o f educational facilities in previously neglected areas were seen as a positive step towards addressing some o f these constraints. 8. The Government o fNamibia, through the Ministryo fEducation, conducted andprepared an Indigenous Peoples and Vulnerable Groups Development Report that examined boththe positive and negative impacts from program activities. The report recommends measures to prevent, minimize and mitigate any adverse impact as well as identified ways to increase participation o f and benefits to indigenous peoples and vulnerable groups. Duringpreparation, indigenous peoples and members from vulnerable, marginalized, and disadvantaged groups were consulted to ensure these groups supported the program goals and activities that had a direct and indirect impact on them. The report also recommendedways that marginalizedpeoples can become more active inthe programprocess as well as inthe educational process o fNamibia. Byutilizing this report the Ministryplans to integrate recommendations to further develop positive ETSIP outcomes. 9. Land Acquisition:The Government o fNamibia, through the Ministryo f Education, wants to minimize negative social impacts with regards to the buildingof school facilities. To this end, the Ministryprepareda framework to be followed incaseswhere landwas neededfor construction. The framework established standards and procedures to be followed, where land acquisition was required or assets would be impacted, before any civil works activities can begin. 10. These background studies, reports, and frameworks indicate the Ministry'spreparedness to address and reduce negative environmental and social impacts and work towards increasing positive outcomes within ETSIP activities and have provided a strong foundation from which to move forward. 87  ANNEX 11:IMFPUBLICINFORMATIONNOTICE ONTHE 2006 ARTICLE I V CONSULTATIONWITH NAMIBIA EXTERNAL RELATIONS Public Information Notice DEPARTMENT Public Information Notice (PIN) No. 07/4 International Monetary Fund FOR IMMEDIATERELEASE 700 19* Street, NW January 11,2007 Washington, D.C. 20431USA IMFExecutiveBoardConcludes2006ArticleI V Consultationwith Namibia On January 5, 2007 the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation withNamibia." Background Growth i s expected to increase to 4% percent in 2006, after 4% percent in 2005, due in part to a recovery in diamond production. Rising oil prices and interest rates have not yet noticeably affected activity. Though rising, inflation i s expected to remainmoderate. The external current account surplus i s expected to double to close to 14 percent of GDP in 2006, thanks to record diamond exports and a surge in customs union (SACU) receipts. However, continued outflows of capital to South African financial markets have kept internationalreserves relatively low. Consistent with the peg to the rand, the Bank of Namibia has matched recent interest rate increasesby the South African Reserve Bank, liftingratesby 2 percentagepoints in2006. The fiscal deficit fell by close to 7 percentagepoints duringthe last two fiscal years, to %percent of GDP in 2005/06. While windfall revenues are expected to lead to a small budget surplus in2006/07, the underlyingfiscal position is set to weaken. Namibia will receive a 5 percent of GDP windfall in SACU revenues in 2006/07, the largest portion of which will be directed towards increased expenditures. As a result of the recent fiscal consolidation, Namibia's public debt ratio is projectedto " UnderArticle IVofthe IMF'sArticles ofAgreement, the IMFholds bilateral discussions with members,usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters,the staffprepares a report, which forms the basis for discussionby the Executive Board. At the conclusion of the discussion, the ManagingDirector, as Chairmanof the Board, summarizes the views of Executive Directors, and this summary i s transmitted to the country's authorities. 88  come close to the authorities' fiscal rule target o f 25 percent o f GDP by 2007/08.Nonetheless, public debt i s poised to rise again over the medium term in light o f an expected decline in SACU receipts and an increase in spending to address Namibia's development needs, unless reforms are undertaken to shore uprevenues and reduce non-priority spending. Namibia faces a number o f economic and social challenges over the medium term. Economic growth remains volatile and depends on mining, and Namibia also has highrates o f poverty, unemployment, and HIV/AIDSinfection. ExecutiveBoard Assessment Directors commended the authorities for following prudent macroeconomic policies that had contributed to robust growth, moderate inflation, and large external surpluses. At the same time, economic and social challenges remain, and focus needs to be placed on broadening the economic base and raising Namibia's long-term growth potential. Directors welcomed the progress made in implementing reforms to reduce poverty, unemployment, and high rates o f HIV/AIDS infection. A reform o f the education system has been launched, a sound HIV/AIDS strategy i s in place, and an Anti-Corruption Commission has been established to promote governance and private sector development. However, additional efforts are needed to ensure an efficient and more flexible labor market and to further support the business environment. Directors stressed the importance o f prudent fiscal policies and increases in international reserves to preserve macroeconomic stability, and welcomed the fiscal consolidation efforts o f the past two years. In this context, they recalled the authorities' commendable efforts to reduce public debt. However, noting the loosening o f the underlying fiscal stance in 2006107, several Directors considered that a larger part o f expected revenue windfalls could have been devoted to reducing public debt, especially given the projected medium-term decline in Southern African Customs Union revenues and the future plans to increase development and pro-poor spending. Directors underlined that a poverty reduction program, if established, should be targeted and not compromise hard-won fiscal sustainability. Directors welcomed the progress made in boosting VAT and income tax receipts through private sector-led audits, but considered that fwther efforts to raise revenues are needed. To sustain tax collections, VAT administration and the audit capacity o f the Inland Revenue Department should be strengthened, and a large taxpayers' office established. Directors encouraged the authorities to limit the growth o f public wage expenditures and develop a strategy to determine the appropriate structure, quality, and remuneration level for the civil service. They welcomed the authorities' commitment to reform state-owned enterprises (SOEs), and urged them to take the necessary steps to make the new SOE Governance Act effective. Directors agreed that the Namibia dollar's peg to the South African rand remains appropriate. To 89  strengthen foreign reserves and help keep domestic savings in the country inthe long term, Directors recommended developing domestic investment opportunities and market-based strategies-such as asset securitization and open market purchases o f foreign exchange. Most Directors counseled against regulatory measures to stem capital outflows, although a few others considered that such measures could be useful on a short-term and temporary basis. Directors commended the authorities for implementing recommendations o f the 2005 Financial Sector Assessment Program and the progress made toward complying with the Base1 Core Principles on banking system supervision. They called for a fiu-ther strengthening o f the financial sector's regulatory and supervisory framework, especially for nonbank financial institutions, and for continuedwork to extend financial services to rural areas and the poor. Public InformationNotices(PINs) form part o fthe IMF'sefforts to promote transparency o fthe IMF'sviews and analysis o f economic developments andpolicies. With the consent ofthe country (or countries) concerned, PINs are issued after ExecutiveBoard discussions o f Article IV consultations with member countries, o fits surveillance o fdevelopments at the regional level, o fpost-program monitoring, and o f ex post assessmentso f member countries with longer-termprogram engagements. PINs are also issued after Executive Board discussions o f general policy matters, unless otherwise decided by the Executive Board ina particular case. Namibia:Selected EconomicIndicators 2003 2004 2005 2006Est (Percent) Change in real GDP 3.5 6.6 4.2 4.6 Change in CPI (end of period) 2.6 4.3 3.5 5.7 (Percent of GDP) Overallfiscal deficit' -7.5 -3.4 -0.7 0.1 Public debt ' 29.7 34.2 31.7 28.7 (Endof period;percentchange) Broad money 9.6 16.2 9.7 20.0 Creditto the prwate sector 12.4 19.4 20.1 18.0 (Percentof GDP, unless stated otherwise) Currentaccount balance 5.1 9.5 7.2 13.9 Internatbonalreserves(monthsof imports) 2.0 1.? I.4 1.6 ExchangeWe (Namibiadollar1U.S. dollar,end of period) 6.6 5.6 6.3 ... Sources:Namibianauthorities;and IMFstaffestimates. 'Figuresareforfiscal year, which beginsApril 1. 90  ANNEX 12: COUNTRY AT A GLANCE I Sub- Lower- POVERTY and SOCIAL Saharan middle- Namibia Africa Income Development diamond' 2003 Population, mid-year (millions) 2.0 703 2,855 Lifeexpectancy GNIper capita (Atlas method, US$) 1870 490 1480 GNI(Atlasmethod, US$ billions) 3.8 347 3,934 Average annual growth, 1997-03 Population (%) 2.5 2.3 0.9 Laborforce (%) 2.6 2A 12 Gross M o s t recent estlmate (latest year avaliable, 1997.03) capita Poverty (%of populationbelownationalPOvertyline) Urban population (%of totalpopulation) 32 36 50 Lifeexpectancyat birth(years) 42 46 69 Infant mortality (per /OOO livebirths) 55 $33 32 Childmalnutrition (%of childrenunder5) n Access to improvedwater source Access to an improvedwatersource(%ofpopulation) 77 58 81 Illiteracy(%ofpopulation age rS+) I7 35 D Gross primaryenrollrnent (%of school-age population) D6 87 1Q -Namibia Male D6 94 10 Lowr-middle-income group Female 0 6 80 in KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1983 1993 2002 2003 Economic ratios' GDP (US$ billions) 19 2.8 2.9 4.7 Gross domestic investmentlGDP S A 8.5 24.1 23.7 Exports of goods andserviceslGDP 53.9 519 48.3 44.3 Trade Gross domestic savingslGDP 2.3 117 23.5 0.8 Gross national savingslGDP T 222 26.0 36.9 23.6 Current account balancelGDP 9.3 3.9 2.1 0.8 Domestic InterestpaymentslGDP savings Investment Total debtlGDP Total debt servicelexports 1 Present value of debt/GDP Present value of debtkxports indebtedness 1983.93 1993-03 2002 2003 2003-07 (average annualgrowth) GDP 3.0 3.5 2.7 3.7 4 2 -Namibia GDP percapita -0.9 0.9 0.6 2.2 3.7 Lowr-middle-incomegroup STRUCTURE of the ECONOMY 1983 1993 2002 2003 Growth of Investment and GDP (Oh) (%of GDP) Agriculture D.5 9.5 D.6 D.o T industry 42.1 29.0 311 30.9 Manufacturing a 2 14.1 D.9 I].8 Services 47.4 615 58.3 59.1 Private consumption 68.8 58.7 48.3 58.5 Generalgovernment consumption 29.0 316 28.2 27.8 Imports of goods and services 710 56.7 48.9 54.3 -GD -GDP 1983-93 1993-03 2002 2003 (average annualgrowth) Growth o f exports and Imports (X) Agriculture 4.O 15 -3.7 -4.2 Industry 2.4 3.2 5.5 7.8 Manufacturing 4 2 3.1 8.1 -6.6 Services 4.0 3.7 3.0 3.3 Private consumption 0.3 5.7 8.7 0.7 Generalgovernment consumption 3.9 3.1 19 P.2 Gross domestic investment 5.5 6.5 -0.0 3.7 Imports of goods and services 2.4 5.6 15.4 D.8 91  Namibia PRICES and GOVERNMENT FINANCE 1983 1993 2002 2003 Domestic prlces lnflatlon (%) I (%change) Consumer prices P.8 8.5 113 9.5 ImplicitGDP deflator 117 17.3 9.4 no Government finance (%of GDP,includes currentgrants) Current revenue 23.0 311 32.0 315 88 89 00 01 02 Current budgetbalance -113 0.0 19 3.1 I O 4 ~ Overallsurpiusldeficit -8.3 -5.6 -4.4 -3.3 -GDPdeflator -CpI TRADE 1983 1993 2002 2003 (US$ millions) Export and Import levels (US$ mill.) Total exports (fob) 9 P 1293 1205 1360 Diamonds 235 454 559 831 ! J ~T Ail mineralsexcept diamonds 431 271 8 6 221 Manufactures 8 9 256 271 305 Total imports (cif) 983 1335 1368 1559 Food 286 293 334 Fuelandenergy 79 81 92 Capital goods 443 454 517 Exportprice index(P)95=W0) 87 88 88 00 01 02 03 Import price index(P)95=WO) Exports 0 Inports Terms of trade (?395=WO) BALANCE o f PAYMENTS 1983 1993 2002 2003 (US$ millions) Current account balance t o GDP (%) Exports of goods andservices 1009 146 1363 1503 Imports of goods andservices 120 1714 16Q 1788 S T Resourcebalance -204 -299 -250 -284 Net income -95 56 28 32 Net current transfers 351 280 280 Currentaccount balance 180 in 62 28 Financingitems (net) -B -B $9 Changesinnet reserves -91 -45 -45 I 87 88 98 00 01 02 03 Memo: Reserves includinggold (US$ millions) 0 4 298 454 Conversion rate (DEC, /oca!fUS$) 11 3.3 n.5 7.5 EXTERNAL DEBT and RESOURCE FLOWS 1983 1993 2002 2003 (US$ millions) Total debt outstanding anddisbursed IBRD IDA Total debt service IBRD IDA Compositionof net resource flows Official grants Official creditors Privatecreditors Foreign direct investment Portfolio equity World Bank program Commitments Disbursements Principal repayments 92  IBRD 35334 NAMIBIA EDUCATION AND TRAINING SECTOR IMPROVEMENT PROGRAM PROJECT SCHOOLS* SELECTED CITIES AND TOWNS TRUNK ROADS HUMAN POVERTY INDEX**: REGION CAPITALS REGION BOUNDARIES LESS THAN 17.10000 17.10001