Rwanda - Education Project

LE COPy DOCUMENT OF INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use Report No. P-1641-RW REPORT AND RECOMMENDATION OF TilE PRESIDENT ON A PROPOSED CREDIT TO THE REPUBLIC OF RWANDA FOR AN EDUCATION PROJECT May 28, 1975 This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.  CURRENCY EQUIVALENT Unit: Rwandese Franc US$1: RwF 90.00 RwF 1: US$ 0.01 RwF 1000: US$ 11.11 RwF 1,000,000: US$ 11,111.11 Fiscal Year January 1 - December 31  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO TIE REPUBLIC OF RWANDA FOR AN EDUCATION PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Republic of Rwanda for the equivalent of US$8.0 million on standard IDA terms to help finance an education project. PART I - THE ECONOMY 2. A report entitled "Recent Economic Development and Prospects of Rwanda" (No. 422a-RW) was distributed to the Executive Directors on July 24, 1974. Country data are attached as Annex I. 3. With a per capita income of about US$60, Rwanda is one of the poorest countries in the world. It is included in the UN list of the 25 least developed countries and has also been designated as a most severely affected country as a result of crop failures and the increased prices of petroleum products. It has a rapidly growing population in a small, landlocked area, where most of the land suitable for agriculture and livestock is already occupied. Several areas are still infested by the tsetse fly. The average size of an agricul- tural holding is only about 1 ha; intensive cultivation and pasturing on hill slopes have caused considerable soil erosion. There is little prospect of alleviating this tremendous pressure on land. The exhaustion of the land, the scarcity of other natural resources, the rapidly growing population, the high transportation costs to the seaboard and, above all, the lack of skilled and trained personnel, make the task of economic development truly formidable. 4. The share of agriculture activities in GDP declined from 76 percent in 1964 to 63 percent in 1973. The economy is overwhelmingly rural, with more than 90 percent of the population engaged in agriculture. About 65 percent of agricultural output is for family consumption. Unfavorable weather and an inadequate distribution system lead to frequent scarcities. Due to bad weather in the spring of 1974, the price of basic foodstuffs (bananas, beans, potatoes) increased substantially and near famine conditions prevailed in the North, which is the most populated part of the country. Coffee is the main cash crop, accounting for about 50 percent of commodity exports and 20 percent of government revenues. The Government has sought to alleviate the dependence on coffee exports by encouraging tea and pyrethrum production. Coffee, tea and pyrethrum, cassiterite and wolfram, account for 95 percent of total exports. Industrial production and construction activities have increased substantially since 1964, but mining has stagnated.  5. The political and social turmoil that accompanied independence in 1962 resulted in a 20-30 percent decline of GDP in the early 60's. Between 1964 and 1970, GDP increased by 60 percent in real terms, but during the same period, the population grew by 22 percent. Between 1970-72 the economy stagnated, but in 1973 the growth resumed at an annual rate of about 4 percent. The present average standard of living is not significantly above the preindependence level. Although few statistics are available, the general impression is that income distribution is fairly even. The level of savings is low. In 1973 gross capital formation amounted to 10 percent of GDP, rising by 9 percent per year between 1969 and 1973. Public sector investment accounted for about half of the total. Some 70 percent of public investment was for basic infrastructure, and 15 percent for agriculture. 6. The first development plan of Rwanda, prepared in 1970, did not succeed in preventing the economic stagnation of the early 1970's. A new plan for 1976-81 is under preparation. The main development constraints to be faced are lack of skilled manpower and natural resources, high transportation costs and the small size of the domestic market. In the near future, manpower is the only constraint which can be eased through a program of technical and management training and, where necessary, by recruiting foreign skilled manpower. In the rural areas much of the effort will be focused on an integrated approach to agriculture, whereby policies aiming at an increase in subsistence production would have to be combined with efforts to increase export production. Only by achieving higher yields for subsistence crops will it be possible to release some of the land and resources for increasing the production of cash crops and livestock. 7. The physical constraints to development are presently being com- pounded by financial difficulties in the balance of payments. In particular, the combined payments for food and petroleum products almost doubled from US$4.7 million in 1973 to US$8.8 million in 1974. Export prices are expected to decline in 1975, while imports would rise substantially as a result in part of increasing public consumption and in part of further rises in import prices As foreign exchange reserves would not be sufficient to meet the deficit, now expected at US$15 million, the Government is considering the introduction of either higher tariffs or controls to limit imports. Rwanda would also have access to US$1.5 million under the IMF oil facility, and has a Fund Quota of about US$24 million. 8. Over the course of the next 5 years, even with increased effort, Rwanda's gross domestic product is unlikely to increase by more than 5 per- cent annually. Nevertheless the growth of GDP will permit some expansion of the tax base, which should enable an increasing share of current expenditure to be met by government revenues. Although the marginal savings rate over the 1975-80 period could be close to 10 percent, as compared to an average rate in 1973 of about 5 percedat, domestic resources would still only finance 40 percent of investment in 1980, and external capital inflows would be required to finance the balance.  -3 - 9. According to Government estimates, external assistance financed about 80 percent of the public investment in 1968-72. In addition to its contribution to financing investment, external assistance also financed a substantial part of current public expenditure. Rwanda has also benefitted from substantial foreign technical assistance estimated at about $10 million a year between 1969 and 1972, including scholarships. Total commitments of external assistance increased from $15.5 million in 1969 to $25 million in 1972. All of the 540 technical assistance personnel working in Rwanda in 1972 were financed by grants from bilateral sources or international organizations. The education sector alone absorbed nearly half of all technical assistance, followed by agriculture (20 percent) and health. 10. At the end of 1973, Rwanda's external debt (disbursed and out- standing) amounted to about $8.3 million, of which IDA accounted for $3.7 million or 45 percent. Most of the assistance to Rwanda has been in the form of grants. Since 1973, in addition to a $6.3 million IDA credit, the Govern- ment contracted about $6.5 million in loans at very concessionary rates, mainly from Arab countries. Debt service ratio is low (under 2 percent in 1974) but in view of the country's poverty, limited export potential and vul- nerability to price fluctuations, external assistance would have to continue in grant form or on concessionary terms. Furthermore, because of lack of development capital, foreign assistance should continue to finance a very substantial part of the total cost of projects including a considerable por- tion of local costs. PART II - BANK GROUP OPERATIONS IN RWANDA 11. Bank Group assistance, which started in 1970, has so far focused primarily on the improvement of the road sector on which the country is almost entirely dependent for the movement of its domestic and foreign trade. Three IDA credits, totaling $18.6 million, have been made for that purpose. In addition, a credit of $3.8 million was extended in 1973 for an agricultural development project. There have been no Bank loans or IFC investments. Annex II contains a summary statement of IDA credits as of April 30, 1975 and notes on the execution of ongoing projects. 12. As described in Annex II, all four projects are facing difficulties in their e'xecution. The situation is particularly serious with respect to the First Highway Project which provides for the construction of a road from Kigali, the country's capital, to Gatuna at the border of Uganda, and for which a credit of $9.3 million was made in June 1970. This project has been co-financed by Belgium. For various reasons described in more detail in Annex II, substantial cost overruns have occurred and the Government has requested the Association to make additional financing available. Since the other two highway projects are also experiencing difficulties, we are presently making a reappraisal of all three projects. Consultations are also taking place with the UNDP, Belgium and Germany to achieve closer coordination with respect to technical assistance in the nighway sector. Attempts to obtain additional financing from other sources have so far been unsuccessful, but discussions  -4- in this respect are continuing, particularly with Germany. The execution of the agricultural development project in the Mutara region is also being affected by cost increases, mainly due to the delay in starting the project resulting from difficulties in selecting a suitable consulting firm. A review of the project will be carried out in the near future, taking into account, among other things, proposed plans to execute drairtage and irrigation works in the project area thlat may necessitate changes in some of the project's components. 13. In the future, we intend to continue in the first place to pay very close attention to the execution of ongoing projects. Because of the lack of skilled manpower and expertise in Rwanda, this will require substan- tial input of Bank Group staff and foreign experts. As technical assistance is being provided by various sources, we also intend to pursue our efforts to improve cooperation and coordination among the aid agencies active in Rwanda. With respect to new operations, we intend to place primary emphasis on agricul- ture while continuing our support to the highway and education sectors. Two agricultural projects are currently being appraised. The first one would assist the Government in developing cinchona plantations which should help Rwanda diversify its exports. The project would also provide for a strength- ening of extension services for coffee growers and a modest soil conservation program. The project would aim at improving the standard of living of nearly 50,000 families. The second project would consist of a rural development program based on the improvement of livestock and foodcrop production and aim at the settlement of about 11,000 families in the south-east of Rwanda. This project would also provide for the eradication of the tsetse fly in that area. All future projects are expected to include substantial components of technical assistance. PART III - EDUCATION AND TRAINING IN RWANDA 14. Present education in Rwanda has basically a western European struc- ture. Primary education is of six years duration, starting from age seven, followed by 6-7 years of secondary education which includes technical-vocational courses at both lower and upper secondary level, and by 3-7 year courses at post-secondary and university levels. The system is marked by wide contrasts between the primary and secondary levels. Primary education generally takes place in inadequate facilities where basic materials, such as textbooks and furniture, are often lacking. On the other hand, largely because of the interest shown by missionaries and external aid agencies, facilities for secondary schools are of a reasonable standard. The classroom loading of primary schools and their student-teacher ratio (51 to 1), are high, whereas secondary schools are underutilized with an uneconomical student-teacher ratio of less than 13 students per teacher.  -5- 15. Primary education is both compulsory and free. Enrollments in primary schools increased by 69 percent between 1961-62 and 1972-73 and reached 400,000 pupils or 52 percent of the 7-12 age group in 1972-73. However, drop-out and repetition rates, although decreasing in recent years, are still high. Numerous small schools have only one or two classrooms. Although efforts have been made to improve primary teacher qualifications, only 40 percent of the teachers are presently fully qualified by the Govern- ment's own standards. Teaching aids are lacking, and student textbooks do not exist, except for a limited number of new textbooks printed in the national language, Kinyarwanda, for the first three grades. Workshops for the newly introduced practical subjects are non-existent. These weaknesses have arisen in part because the Government is not itself involved in school construction, leaving 'primary school building to the initiative of local groups who, often, have inadequate resources and expertise to construct and equip simple but functional schools. Primary education, which is terminal for nearly all children, should provide courses designed to prepare school leavers for a productive life; yet, emphasis is still on preparation for entry into secondary schools where only 2 percent of the relevant age group are enrolled, and these are mainly prepared for employment in the modern sector. 16. Some measures have been taken to meet the needs of those who have no access to secondary education. A number of small schools for girls have been created, providing practical training for about 5,000 in 3-year post- primary courses. A similar form of practical training for boys has been initiated with the establishment of Centres d'Education Rurale et Artisanale; in 1972/73 there were ten with an enrollment of about 600. These post-primary programs, although they provide a useful training, have to compete with the primary system for scarce funds which will limit their future growth. 17. The secondary educational system offers a multitude of programs of varying lengths at varying levels. Like the higher educational system, it has suffered from a lack of coordination and cohesion in the programs resulting from the wide diversity of the sources of foreign aid, over which the Govern- ment exercises little control. Enrollments in general secondary education have grown slowly (about 24 percent over seven years) while enrollments in teacher training institutions have been virtually unchanged. Total enrollments amounted to 10,500 in 1973/74, or about 2 percent of the age group. With a pupil-teacher ratio of about 13:1, enrollments could be in- creased without increasing the number of teaching staff. Curricula, which are too much related to a western European environment do not meet Rwanda's development needs. 18. Higher education is given at the National University (humanities, science, economics, medicine, nursing and law), the National Pedagogical Institute (training of secondary education teachers) and the "Grand Seminaire" (priesthood). At the University, agricultural courses are lacking. Medicine is the most developed field with enrollments reaching 43 percent of the total number of university students.  -6- 19. An important part of the Government's budget is spent on education. In 1974, recurrent expenditures for education amounted to about 29 percent of total government recurrent expenditures. More than 65 percent of the edu- cation budget was spent on primary education, almost all to meet teachers' salaries. In addition, the building of primary schools is generally carried out by local groups and municipalities (communes). Furthermore, foreign aid to education is almost as high as the budget of the Ministry of Education (although figures for external assistance to education are artificially inflated by the high cost of expatriate teachers). In fact, some twenty mul- tilateral and bilateral aid agencies are involved in the development of Rwanda's educational system and finance a substantial part of the capital and recurrent expenditures for secondary, technical and higher education. However, since foreign aid schemes are uncoordinated and no government plan had so far been available to set priorities in the framework of national objectives, developments have escaped effective Government control and are often unneces- sarily expensive and not always geared to the country's needs. More effective government control of the secondary and higher educational system to improve planning and coordination of all external assistance is now urgently needed and through rationalization of important cost savings could be achieved. 20. In order to improve efficiency and thereby reduce, in the long run, the cost of education to the economy, the Ministry of Education in 1974 proposed a fundamental reform of primary education. Under the proposal, primary education would provide a four-year basic course of general education for all children, given in the local language, Kinyarwanda. After a selection based on aptitudes, 90 percent-of the children would receive a two-year terminal course with half the time being devoted to practical subjects related to agriculture to prepare them for immediate employment after school. The remaining 10 percent would have a two-year pre-secondary course emphasiz- ing French, the medium of instruction of secondary schools. The primary school entrance age would be 9 or 10 years so that upon graduation at 15 or 16 the children can directly join the labor force. Secondary and higher education would be more related to the manpower requirements of the economy and entry into the secondary would be based on competitive examinations. At the university level, the same principles would prevail. The proposed reform has been discussed by an Education Commission, but some of its measures, in particular the proposal to raise the age of entry into primary schools to 9 or 10 years, have met with opposition. The age of entry into primary school is however being raised to eight in the school year 1975-76 and more impor- tantly, the Commission agreed that practical subjects should be introduced into primary education and a beginning with this was made for the year 1974- 75. The Government has requested the UNDP for technical assistance to review the reform proposals and the needed improvements and to help prepare syllabi and long-term planning for education. The UNDP is expected to commence this assistance in the course of 19g5 and to formulate a detailed program by 1977- 78.  -7- 21. Any comprehensive investment program should await the final de- cision on the reform proposals, but this should not delay a start on urgently needed improvements. In particular, the existing primary school facilities are inadequate for instruction in practical subjects, and textbooks are lacking. Investments in secondary and higher level education should be made only after manpower needs have been defined and the existing system rationalized. A phased approach is thus required, with the first phase concentrating on im- provements in primary education, which will be of high priority whatever long- term educational strategy is adopted. The improvements of the first stage would include the development of more relevant and productive primary school programs, particularly for rurally oriented practical subjects, the promotion of the use of Kinyarwanda as the medium of instruction, and the reorientation of studies to fit local traditions and needs. PART IV - THE PROJECT 22. The proposed project reflects the gradual approach outlined in paragraph 21 and would help the Rwandese Government in improving the quality and efficiency of primary education. The project has been prepared by the Ministry of Education with assistance from UNESCO and the Association. It was appraised in September 1974, and a post appraisal mission visited Rwanda in November 1974. A credit and project summary is given in Annex III. The appraisal report (Appraisal of an Education Project in Rwanda, Report No.759-RW) is being circulated separately to the Executive Directors. Negotiations for the proposed credit were held in Kigali in April, 1975. The Rwandese delega- tion was led by H. E. Thaddee Bagaragaza, Minister of National Education. 23. The project would consist of: (a) construction, furnishing and equipping of approximately 150 workshops for teaching practical subjects with about 6,000 student places; (b) construction, furnishing and equipping of a print shop and the provision of paper for the production and distribution of about 2.7 million textbooks and 1.6 million student guides; (c) construction and equipping of an office building for a School Financing and Construction Unit (SFCU).; and (d) technical assistance for project implementation (44 man-years) and for evaluation of construction methods, financing mechanisms and selection/examination procedures for secondary education (4 man-years).  - 8 - 24. Each of the 150 workshops to be provided would have facilities to teach 40 students in agriculture-related woodwork, metalwork and home economics which are relevant to the students' rural environment. The workshops, which would be adjacent to primary schools, would also be used for training adults after school hours and during vacations. The 6,000 student places to be provided in the workshops would allow about one fourth of all primary school students to receive instruction in practical subjects. Some teachers have prepared to give instruction in practical subjects and the Government has made satisfactory arrangements for in-service training of practicing primary school teachers in the new programs of studies. Should the schools to which workshops would be attached not be of adequate standard, they would be improved with the technical assistance of the SFCU. The workshops would be built to a standard pattern. Appropriate local materials would be used in construction to the greatest extent possible and the communes would be actively engaged in the works. It is essential that the workshops provide simple but adequate facilities at minimum cost. The proposed construction methods should help establish a program of economical and efficient school building in Rwanda and form a possible basis for further Bank Group assistance at a later stage. 25. Textbooks are needed to make learning in primary schools more effective. At present, only a few textbooks for teaching Kinyarwanda in the three first grades are available and have been introduced successfully in some schools. For the other main subjects of primary education (mathematics, environmental studies, practical subjects, and French as a foreign language) textbooks and student guides are still to be prepared. Manuscripts for mathematics books have been prepared while syllabi for environmental studies and practical subjects are being finalized and will be revised as experience is gained. Since the textbooks and student guides are to be printed in the local language, the Government proposed that this be done in Rwanda. As the existing printing facilities in Rwanda are insufficient to meet these needs, the project would provide for the construction and equipment of a printing center including two offset machines, a paper-sorting machine, two typesetting machines, furniture and paper. 26. The project would provide for 48 man-years of specialists, including field staff to assist in general project administration and implementation. The field staff would supervise and provide technical advice to local crafts- men at the various construction sites. Counterparts to the technical assist- ance personnel would be appointed for training by,and later replacement of, expatriates. Evaluation of the performance with respect to construction methods and implementation would also take place during project implementation. Four man-years of consultants' services would be provided under the project for this purpose. In addition, various aid agencies are expected to provide technical assistance to help the Ministry of Planning carry out a manpower survey of the modern sector, aad to help the Ministry of Education establish equitable methods for selection/examination of students for secondary education and analyze the present secondary and higher education system with a view to making it more effective and economical.  -9- Project Implementation 27. To facilitate the execution of the project and as a means toward improved planning in school design and construction methods, a School Financing and Construction Unit (SFCU) has been established within the Ministry of Edu- cation which would have the overall responsibility for project implementation including liaison with the other Ministries and local authorities. The senior staff of the Unit, consisting of a director, an architect (a civil engineer), a procurement officer and an accountant would be appointed after consultation with the Association on their qualifications, terms of reference and conditions of employment. The director, a Rwandese national, has been appointed. The accountant will likewise be Rwandese but due to the lack of local experienced specialists, it is likely that the architect and the procurement officer will have to be recruited internationally. The project would provide for the con- struction and equipment of the offices of the SFCU including 10 vehicles to facilitate transportation throughout Rwanda. 28. Special procedures for design, management and supervision of work- shop construction have been developed by the SFCU to encourage community participation and promote low cost construction. While responsibility for construction would be at the local level (communes), the SFCU would assist these local efforts with administrative and technical advice and the provision of some material. One of the main criteria in the selection of workshop sites would be the readiness of the local authority to provide self-help for site preparation and construction work. Standard designs developed by the SFCU may be modified by the communes to take account of local conditions. At the individual sites, construction would be carried out either by separate contracts or direct management of field teams. Supervision of construction would be undertaken by the bourgmaster himself, in his capacity of legal representative of the commune, with the assistance of the provincial inspector and the district inspector as well as the field staff of the SFCU. Before final acceptance of the works, the SFCU field staff would inspect each work- shop. 29. To facilitate the payment procedure, a revolving fund will be established with the National Bank in the name of the SFCU (Section 3.01 of the Draft Development Credit Agreement). The SFCU would, out of the fund, advance the necessary funds to the communes to meet mobilization expenditures, and as the construction gets underway the communes would be reimbursed on a monthly basis for expenditures incurred. Materials and equipment procured in bulk by SFCU would likewise be. paid out of the fund. The revolving fund was created in early May, but a few administrative formalities for its establish- ment remain to be completed. These as well as the payment into the fund of an initial contribution equivalent to $100,000 by the Government have been set as conditions of credit effectiveness (Section 6.01 of the Draft Develop- ment Credit Agreement.) The Government has agreed to replenish the fund periodically to at least that amount throughout the execution period of the project. All disbursements by IDA, except when payments are made directly to suppliers, would be made into the fund.  - 10 - 30. Because of our general experience with other Bank Group financed projects in Rwanda, the period of execution of the project has been conser- vatively estimated at 6-1/2 years from the date of effectiveness. However, since the Government is determined to implement the reform of its educational system as soon as possible, a more rapid performance may be achieved. Project Costs and Financing 31. The total cost of the project, including taxes and duties of about US$200,000, is estimated at US$9.0 million equivalent with a foreign exchange component of US$6.2 million, or 70 percent of total net project costs. The proposed IDA credit of US$8.0 million would finance 90 percent of total net project costs, covering US$6.2 million foreign exchange cost and US$1.8 million of local expenditures. The Government of Rwanda would finance the remaining costs. The allocation of costs is as follows: US$ millions 1. Civil works 1.63 2. Furniture and instructional equipment 0.75 3. Printing equipment and paper 1.30 4. Technical assistance 0.96 5. Project administration and consultant services 0.60 6. Physical contingencies and expected price increases 3.76 Total 9.00 The recurrent expenditures resulting from the project are expected to re- present about 5.7 percent of the recurrent expenditures (exclusive of those financed by foreign aid) anticipated by the Ministry of Education for 1981 and could be met from the Ministry's ordinary budget. 32. As stated in paragraph 19 above, a number of aid agencies are providing assistance in the education sector and some may be prepared to finance certain items presently included in t?he project (printing equip- ment, paper, technical assistance). Should this occur, corresponding savings under the proposed credit would be used for the construction and equipment of additional workshops or the upgrading of primary schools.  Procurement 33. Neither foreign nor local contractors are likely to be interested in bidding for the construction of the small, simple and often remotely located workshops. Procurement procedures have therefore been designed to tailor civil works for the construction of these workshops to local condi- tions which would facilitate the execution of the 1project and achieve economies. The communes would be responsible for procuring most of the materials (e.g., bricks) and for providing skilled and unskilled labor. Self-help would be employed to prepare the sites. Building materials avail- able locally and suitable for purchases in bulk (e.g., cement) would be procured by the SFCU following local competitive bidding or the solicitation of competitive offers from local suppliers. Building materials not available locally, as well as instructional equipment, furniture and vehicles (represent- ing about $1.6 million) would be procured after advertisement in the local press and in adjacent countries. Civil works for the SFCU offices and the print shop would be advertised locally. Printing equipment and paper (about $1.3 million) would be procured after international competitive bidding in accordance with the Bank Group guidelines. The above procedures are acceptable to the Association. Disbursements 34. Disbursements would be on the basis of: (a) 100 percent of foreign expenditures for all goods procured outside Rwanda; (b) 75 percent of total expenditures for locally procured furniture, instructional equipment and vehicles and 85 percent for locally procured construction materials, labor and civil works by contractors; and (c) 100 percent of foreign expenditures and 85 percent of local expenditures for technical assistance services and 90 percent of total expenditures for local salaries and operating costs of SFCU. Retroactive financing for an amount not exceeding US$30,000 is proposed to cover expenses incurred since March 30, 1975 for preparatory work. Any funds remaining in the credit at completion of the project would be used for the construction of additional workshops or primary schools. Benefits and Justification 35. Increasing agricultural productivity in Rwanda is an urgent necessity in view of the growing population and the scarcity of land. In this effort, the education system can play an important role by providing the required skills. At present, it is ill-equipped to meet this objective. The proposed project would help improve the quality of primary education and the productivity  - 12 - of new entrants into rural life through appropriate training. The workshops would allow one fourth of the primary student body to receive appropriate instruction in rurally oriented subjects. The methods of construction proposed would help increase the skills of local craftsmen through on the job training, and the proposed financial mechanisms would facilitate the channeling of funds from the central Government to local authorities. The SFCU is expected to become a permanent institution, which would eventually be responsible for all expansion of educational facilities in Rwanda, and would give the Government greater control of educational planning and development. PART V - LEGAL INSTRUMENTS AND AUTHORITY 36. The draft Development Credit Agreement between the Republic of Rwanda and the Association, the Recommendation of the Committee provided for under Article V, Section I (d) of the Articles of Agreement and the text of a resolution approving the proposed Credit are being distributed to the Executive Directors separately. 37. Features of the draft Development Credit Agreement of special interest dealing with the establishment of the School Financing and Construc- tion Unit and the appointment of its senior staff are referred to in paragraph 27 of this report. As described in paragraph 29, the com- pletion of the administrative formalities for the establishment of the revolving fund and the payment into it of an initial contribution of US$100,000 equivalent by the Government, have been set as an additional condition of credit effectiveness (Section 6.01 of the draft Development Credit Agreement). 38. I am satisfied that the proposed Development Credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 39. I recommend that the Executive Directors approve the proposed Development Credit. Robert S. McNamara President Attachment May 28, 1975  ANNEX I ,p 1 of 3 POPe was= MA - MazAU 2TIL38 kml 3.