Burundi - Education Project

Document of The World Bank Mh'R IIFCDIICAL USE ONPLY Report No. P-1983-BU REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE REPUBLIC OF BURUNDI FOR AN EDUCATION PROJECT January 27, 1977 hs dmmemel3 a Ffr< dbS5@23 au& maoy I used by ue teopem3o Dy bzOm Q ie iromraonce of| e! osele3D ufta. 11@ coa3eemba mmny sea cAezbe be (giDscomd3f3$ WO&O oBDi 1oh3 amaorafilom1.  Currency Equivalents Unit - Franc burundi (FBu) US$1 = FBu 900 FBu 100 = US$1.11 Fiscal Year January 1 - December 31  FOR OFFICIAL USE ONLY INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE REPUBLIC OF BURUNDI FOR AN EDUCATION PROJECT 1. I submit the following report and recommendation on a proposed development credit to the Republic of Burundi for the equivalent of US$10.0 million on standard IDA terms to help finance an Education Project. PART I - THE ECONOMY 2. The last economic report on Burundi (504a-BU) was distributed to the Executive Directors on January 14, 1975. This was followed by an economic memorandum (885a-BU) distributed on October 24, 1975. Country data are provided in Annex I. Burundi is one of the 25 least developed countries as defined by the United Nations. 3. On November 1, 1976, the Army dismissed the regime that had been in power since 1966 and suspended the Constitution. A new Government was appointed, and it has stated that it will pursue policies of sound economic management and national unity in respect of ethnic and regional differences. Aid donors active in Burundi, including the Association, have been continuing their activities without interruption. 4. Burundi remains one of the poorest of the least developed countries, with a per capita income estimated at US$100 in 1975. Over the past five years GDP grew by no more than 2 percent annually in real terms. Of a popula- tion of 3.7 million only 115,000 are in wage employment; the remainder depends mainly on subsistence agriculture. The agricultural labor force is largely untrained, and the level of enrollment in formal education is one of the lowest in Africa. 5. The economy is dominated by the agricultural sector. Food crops account for over half of GDP; other crops, of which coffee remains by far the most important, account for a further 10 percent. In the 1974/75 coffee season, production reached a record of about 28,000 tons, 35 percent higher than the preceding year. The large harvest combined with a markedly higher producer price resulted in a 62 percent increase in farmer incomes derived from coffee with consequent multiplier effects in both industry and services. Production in 1975/76 then fell sharply to 17,000 tons and adversely affected rural incomes. The forecast for the current harvest indicates a strong re- covery. 6. Burundi has become increasingly dependent on coffee for foreign exchange earnings; its share in total exports rose from 79 percent in 1965 to 87 percent in 1975. The marked increase in coffee prices during 1976 has greatly strengthened Burundi's balance of payments. By October 1976, reserves 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.  - 2 - stood at a level equivalent to about six months of merchandise imports. Rising import prices, combined with increased internal demand, caused a record 23 percent jump in the cost of living index for low income urban families during the year ended March 1975, but since then price increases have been moderate. 7. The level of investment has remained consistently low, averaging only 8 percent of GDP between 1970 and 1975. Domestic savings have amounted to only 5 percent of GDP over the same period, approximately equal to net capital inflows. Close to half of total gross capital formation was financed by external aid. 8. Due to high coffee prices, government revenues in 1974 were 14 percent above the level attained in 1973, while current expenditures grew at only 9 percent. Thus, the Government's budgetary savings as a percentage of total Government investment increased from 13 percent in 1973 to 28 percent in 1974. In 1975, expenditures increased 10 percent whereas revenues remained static, giving rise to a small current budget deficit. 9. Burundi faces a formidable set of disavantages, including excessive dependence on a single export (coffee) for foreign exchange, long and ineffi- cient transport links for external trade, rudimentary infrastructure, and a largely untrained labor force. In the past, civil strife has disrupted development and diverted resources. There are, however, some encouraging indications. Internal order has been restored and a new planning organisation created. Improvements are being made in financial administration, and a number of promising agricultural projects are under preparation. Substantial nickel deposits have been found and may be brought into production over the next ten years. 10. At present, the Government lacks a coherent overall development strategy. This is in part due to the low priority accorded to planning in the past. As a first step in addressing this problem, the Government has transferred responsibility for national planning to a new Ministry of Planning. To make the new planning organization more effective, IDA is assisting in strengthening its staff. A strong planning capability would enable the Government to take the lead in initiating new projects and to coordinate external aid within the context of a well defined development plan. 11. The short term prospects for the economy are favorable, as coffee prices are expected to remain at substantially higher levels than before 1976 owing mainly to frost damage to Brazil's coffee trees. In the longer term, if the Government focuses on development and strengthens its administra- tion, it may achieve steady, albeit slow, improvement in per capita incomes. If nickel mining proves feasible the prospects over the next ten years would be much better. However, although such a development appears technically possible, the commercial viability of nickel mining has yet to be proved. 12. Disbursements of official loans and grants have averaged US$16.7 million p.a. during 1974/75, the main contributions coming from Belgium, the UN agencies, IDA and the European Development Fund. Technical assistance  - 3 - has accounted for about half this aid. In the 1971/75 period, total net for- eign capital inflows amounted to about US$70 million, of which US$57 million were in official grants. On December 31, 1975, Burundi's external medium and long-term debt amounted to about US$14.6 million excluding undisbursed amounts. Of this the Bank and IDA together hold 30 percent. Debt service averaged 4.0 percent of export earnings during 1972/75, with the Bank Group receiving 26 percent of service payments. Due to the large grant element of overall external assistance, by 1980, the Bank Group will probably continue to hold a high proportion of Burundi's debt as well as be the recipient of a large share of its debt service. Notwithstanding the low debt service ratio, however, the country is not able to finance any borrowing on commer- cial terms, in part because its absolute capacity to service external debt is limited by the size and fluctuations of its export earnings due to its dependence on coffee. External aid should finance a high proportion of total project costs, including local expenditure, and it should be on grant or near grant terms. PART II - BANK GROUP OPERATIONS IN BURUNDI 13. In 1957, the Bank lent US$4.8 million to the Belgian Trust Territory of Rwanda-Urundi for the improvement of the Bujumbura-Muramvya road and the expansion of the lake port of Bujumbura. The loan, guaranteed by Belgium, was fully disbursed at independence in 1962 and is being repaid by Burundi with Belgiam assistance. The last payment is due in 1977. 14. Since independence, seven credits have been made to Burundi, totaling US$20.7 million. The first credit for US$1.1 million, was made in March 1966 for the rehabilitation and extension of Bujumbura's water supply system. A credit of US$1.8 million was made in April, 1969 for the improvement of coffee production by smallholders, followed by a second credit of US$5.2 million approved in November 1975. This project is cofinanced by a $1.2 million loan from the Kuwait Fund for Arab Economic Development, while Belgium assists in the carying out of a coffee research component (about US$600,000 equivalent). A credit of US$380,000, made in June 1970, helped finance the detailed engineering of the Bujumbura-Nyanza Lac Road and a highway mainte- nance study. This study led to a credit of US$5 million for a highway mainte- nance project signed in March 1974. A Technical Assistance Credit of US$1.5 million was made in March 1976 to help strengthen planning, statistical services and project preparation. A US$6.0 million credit for a Fisheries Development Project, which was made in June 1976, should increase fish production in Lake Tanganyika as well as the preparation of rural development projects and the initiation of pilot development activities along the coastal region of Burundi. The project is cofinanced by a $1.2 million loan from the Abu Dhabi Fund for Arab Economic Development. No Bank loans have been made since independence. 15. Project execution is satisfactory. Annex II contains a summary statement of IDA credits as of November 30, 1976 and notes on the execution of ongoing projects.  16. The future lending program aims in particular at increasing agricul- tural productivity to improve the nutrition and living standards of the impoverished rural population. In September 1976, a mission visited Burundi to discuss a possible rural development project including the establishment of agricultural development centers in several parts of the country. The project will be prepared by the Government of Burundi with assistance of our Resident Mission in Eastern Africa. In addition, we plan to assist Burundi in promoting and developing small-scale industry to help diversify its economy and increase its potential to earn foreign exchange; to this end, we appraised a Development Bank project in October 1976. We will also continue assistance for expanding and improving the road network, a prerequisite for rural development and expect to appraise a road project in February 1977. Finally, we will continue our assistance to Burundi in improving planning, project preparation and project implementation, and expect to provide funds for project management and technical assistance in our lending operations. PART III - THE EDUCATION SECTOR 17. Formal education was introduced to Burundi early this century by Christian missionaries who in 1925 were entrusted by the colonial administra- tion with organizing primary education throughout the country. Institutions of secondary education were established much later, and higher education has been an achievement mainly of the days since Independence (1962). Although the Government's standard curricula have been introduced at the primary and secondary levels, missionary groups remain the legal owners of the majority of educational institutions at these levels, and the Government has found it difficult to introduce new curricula which give more emphasis to the social and physical realities of Burundi. 18. Until 1973, the recommended language of instruction throughout the system was French, although the use of that language was never very successful at the primary level because most primary teachers did not themselves have a thorough knowledge of the language. The primary curriculum emphasized French and mathematics and was principally a preparation for secondary school, although only about 5% of primary-school leavers could hope to find a place in secondary school. The primary curriculum thus succeeded only in alienating the remaining 95% from their rural environment, although they could not expect to find jobs except in agriculture. Similar problems existed at the secondary and higher levels. 19. The growth of education since Independence has been severely limited by financial constraints. The Government itself allocates 22% of its total recurrent budget to education, and over one half of the education budget is for primary education; these percentages cannot realistically be increased a great deal. For this reason, foreign assistance has been financing a large part of the cost of education. In 1974, over half of the total recurrent expenditures on education and training were contributed by bilateral and multilateral aid agencies. Yet education has never reached a very large percentage of the population. Even in the school year 1975-1976, enrollments at the primary level were estimated to comprise only about 21% of the notional age group; at the secondary and higher levels, they comprised only 2.5% and  - 5 - 0.5%, respectively. Burundi's education system thus suffers from serious deficiencies in both qualitative and quantitative terms. 20. To improve Burundi's education system, the Government began in 1969, with UNESCO help, the elaboration of a major reform. In 1973, with UNICEF financing and UNESCO technical assistance, a draft reform was presented and, after minor changes, accepted by the Government for immediate implementation. The reform's main elements are (i) the "ruralization" of primary education, in view of the fact that more than 90% of all primary-school leavers will have to make a living in agriculture. The primary-school curriculum is being given greater agricultural content and orientation, to reflect better the social and physical environment of Burundi. New importance is being given to school gardens, and in the higher grades (5 and 6), agricultural subjects will be complemented with elementary skill training related to agriculture (e.g. tool repair- ing, basket making, and rudimentary home economics); (ii) the "Kirundization" of primary education, with Kirundi, the national language, replacing French as the official medium of instruction; (iii) the gradual transformation of primary schools into com- munity schools with facilities and opportunities for adult education and civic activities; (iv) the shortening of the primary course from seven to six years and its gradual transformation into a self-contained, terminal course; (v) the reorganization and reorientation of secondary educa- tion in order to make it more relevant to the needs and realities of Burundi; and (vi) the consolidation of the National University of Burundi in order to avoid duplication and competition among the three higher-level institutions formerly existing. The central part of the reform is related to primary education, to which the proposed project is directed. 21. In educational terms, the reform to date has been successful. Re- sults have shown that children learn faster and more effectively when taught in their native language; teaching is easier as well. The ruralization is visible in the well-maintained school gardens which exist throughout the country. These gardens have become important outdoor classrooms where rela- tions between theory and the physical environment of the region can easily be established. Curriculum development is well advanced, and several grades have received their first supply of textbooks and other learning aids. Teachers likewise have received the first edition of teaching aids.  - 6 - 22. Yet, several critical constraints have become apparent which threaten to hinder the continued progress of the reform. Given the present low level of enrollments and the rapid growth of population, even if the primary intake were increased by 5% per year, it would be possible to reach an enrollment ratio of only about 60% by the end of this century. Financial projections indicate that the Government would be able to absorb the growth in recurrent costs related to such an expansion but that it would be dif- ficult to find the resources to build the corresponding number of pupil places with even the most austere standards. The Government is aware of these limitations and is determined to hold down both capital and recurrent costs as much as possible. In particular, in order to maximize the quantitative impact of investment in education, the Government has agreed to (i) use local construction materials to the extent possible and (ii) study the desirability and feasibility of introducing two measures to increase the efficiency of the primary educational process, namely automatic promotion and double-shifts. Automatic promotion would reduce the drop-out and repeater rates and the resulting wastage. Double-shifts, if possible, would maximize the use of educational facilities and thereby reduce the burden of education expansion on the capital budget. A thorough study of these measures is required because their implementation would call, inter alia, for changes in curricula, teacher training and administrative practices. In any case unless economic conditions improve drastically, Burundi will have to be content with the level of educa- tional development it can afford and must take a pragmatic stand vis-a-vis the generally accepted higher UNESCO targets for educational development on the African continent, which call for attaining universal primary education well before the year 2000. 23. In addition to the lack of primary places, facilities for the teaching of the practical subjects foreseen by the reform do not yet exist. Rural practical subjects will have to be taught in temporary facilities or even in the open air when first introduced, but such precarious arrangements are not feasible on a permanent basis, nor are they suitable for adult-educa- tion activities. Likewise, primary-teacher training does not include training in the teaching of rural practical subjects and in the organization of adult classes and community activities, nor does a specialized facility for the training of teachers in the teaching of practical subjects yet exist. 24. The implementation of the primary reform and the supervision of the primary system has been entrusted to the Rural Education Bureau (Bureau d'Education Rurale), a semi-autonomous department within the Directorate for Primary Education and Teacher Training of the Ministry of National Education. Its main task is to reshape the primary curriculum and to prepare teachers for the effective application of the new curriculum. In spite of a serious lack of qualified personnel, curriculum development is progressing according to plan, but limited printing and distribution capacity is hampering the timely introduction of the reform throughout the country. In an attempt to make up for delays, most learning aids are distributed prior to adequate testing in pilot classes. 25. Another complication stems from the existing pattern of primary- school placement. Historically, primary schools have been opened first with- in and subsequently near mission stations. This has led to an unbalanced distribution which has not permitted equal access to primary schooling through-  -7- out the country and has created a wide range in the quality of instruction. As a rule, central schools (within missions) have better facilities, equip- ment, and teachers than the branch schools which were set up through self-help arrangements in more remote areas. Over time, these distributional short- comings can be overcome through the proper location of additional schools. PART IV - THE PROJECT Project Objectives 26. The proposed project was identified by a Bank mission which visited Burundi in July 1975 and prepared by the Government with the assistance of a UNESCO team in November/December 1975. The project was appraised by a Bank mission in February/March 1976. Negotiations were held in Washington from November 29 through December 3, 1976. The delegation from Burundi was led by Mr. Atale Ntahobari, Counselor to the Minister of National Education and director-designate of the Project Unit which has been established for the proposed project. 27. The proposed project would assist the Government in continuing and consolidating the reform of primary education as well as in increasing the Government's control over the primary system. The project is designed to address the problems outlined in paras. 22-23, so that its impact would be both qualitative and quantitative. A Staff Project Report entitled "Education Project in Burundi" (No. 1262-BU) dated January 21, 1977 is being circulated separately. A Credit and Project Summary is provided as Annex III of this report. 28. The project would: (i) substantially expand the number of places in primary education as well as improve equity in access to educational oppor- tunities; (ii) provide important technical and material assistance to the Rural Education Bureau as the main institutional force behind the reform; (iii) assist in enlarging the production and distribution capacity of the Rural Education Bureau's textbook-printing unit; and (iv) enable the Govern- ment to undertake the training of teachers in practical subjects related to agriculture. More specifically, the project would include: (a) the construction and equipping of 100 multipurpose learning centers (Centres de Formation Polyvalente); (b) the expansion of the printing capacity of the Rural Education Bureau's textbook-production unit; the provision of equipment, vehicles, and 250 tons of paper for the unit; and the provision of simple storage facilities (lockers) for about 400 existing primary schools; (c) the construction and equipping of facilities for the training of teachers in the teaching of practical subjects; (d) technical assistance, including (i) specialists' services for the Rural Education Bureau (15 man-years); (ii) specialists' services for project implementation (8  - 8 - man-years); and (iii) fellowships for staff develop- ment at the Rural Education Bureau (7.5 man-years); and (e) operating expenses for project administration. Detailed Features 29. The 100 Multipurpose Learning Centers would provide 27,000 new pupil places representing an increase of 21% over the primary capacity existing in 1974-75. Additional Government investment in primary education as well as self-help schemes organized by Burundi's political party, UPRONA (Unite et Progres National - Unity and National Progress) and by the various missions will continue to add further capacity at a more moderate rate. The new Centers would be located in accordance with criteria which would favor those areas which at present are least well provided in terms of educational oppor- tunities (Section 3.06(a) of the draft Development Credit Agreement). The choice of locations has already begun, according to a two-step process. Under the first step, the Government and the Association have already agreed on the allocation of 89 of the 100 Centers among 17 of Burundi's 18 districts (all except Bujumbura, the district containing the capital). This allocation was made on the basis of three different goals which the Centers are intended to achieve, namely, to provide a demonstration effect, to reach the most popula- ted areas, and to favor the educationally least well provided districts. The remaining 11 Centers will be allocated within a year from the signing of the Credit Agreement on the basis of the latest statistics and the need for schools for agricultural or rural development projects. Under the second step of the location process, the Centers allocated to each district will be located in areas within that district which do not as yet have primary schools, but which have school-age populations of sufficient size and density to fill a primary school. The Government has already chosen 41 such locations in five districts, and has agreed to select the remaining 59 locations by December 31, 1977 (Section 3.06(b) of the draft Development Credit Agreement). 30. The Centers would provide 4,500 places for the teaching of agricul- tural and related rural practical skills, which now are taught in only a few mission schools and without a satisfactorily systematic approach. The teach- ing of practical subjects is intended to complement the ruralization of primary education. These facilities, once established, would require only limited capital outlays (sets of simple tools, cooking implements, etc.), and recurrent expenditures (for wood, leather, etc.) could be kept to a minimum. In order to assure an optimal utilization of these facilities, neighboring schools would be invited to share them, and adult education programs would be organized during free periods and school vacations. 31. High teacher turnover at remote schools is a major cause of the poor quality of teaching at many such schools. Since most of the new Centers would be built in remote rural areas, the project would provide an average of two staff houses per school in order to attract and retain qualified teachers and to ensure the presence at the school at all times of at least one teacher to  - 9 - serve as custodian of the facilities and at least one teacher to serve as coordinator of adult education activities. 32. The proposed project would provide vital assistance to the textbook- production unit of the Rural Education Bureau. The annual requirements for first-grade textbooks are, at present, on the order of 40,000 copies. Some 170,000 textbooks per annum are required for all primary grades, and teachers now require about 2,200 teacher guides per annum. These quantities will increase over the coming years; therefore, an additional offset press, other equipment for the finishing of textbooks, and a modest expansion of the printing unit's existing building are essential. An initial supply of 250 tons of paper would ensure the production of necessary textbooks for a five- year period. In addition, about 400 of the least well equipped primary schools (of the 570 existing schools) would receive simple but solid lockers for storage of the new textbooks, teacher guides, and other teaching aids. Six additional vehicles for the Rural Education Bureau would ensure the timely and general distribution of all materials produced as well as regular super- vision and in-service training of teachers. Since the present budget of the Rural Education Bureau has no allocation for the operating costs of these new vehicles, the Government has agreed that beginning in 1977 the Rural Education Bureau's budget will be increased to reach at least FBu 15 million per annum (Section 4.02(b) of the draft Development Credit Agreement), the minimum necessary for its efficient operation. 33. The center for the training of teachers in the teaching of practical subjects within the Higher Teacher-Training School for Boys at Gitega would be used in the beginning for the in-service training of teacher trainers and for the training of a first group of teachers in the teaching of the new rural practical subjects. Later, the center would be used for the retraining of all teachers in the teaching of these subjects. Following curriculum changes in the teacher-training course, it is expected that all teacher-training institu- tions will provide preparation for the teaching of practical subjects, and the Government has provided the Association with a program for such training. 34. Burundi lacks the highly specialized manpower needed to implement the reform. For this reason, the proposed project includes substantial technical assistance to the Rural Education Bureau, including curriculum, production, and evaluation specialists (15 man-years) needed to expedite the implementation of the reform, and 7.5 man-years of fellowships for in-service training of local staff of the Rural Education Bureau in African countries where reforms similar to those in Burundi are being implemented. The project would also include financial assistance to hire an accountant (5 man-years) and a procurement specialist (3 man-years), both to be recruited interna- tionally. The Government has agreed that all technical-assistance specialists would be selected and appointed on the basis of terms and conditions satis- factory to the Association (Section 3.05 of the draft Development Credit Agreement). Project Cost and Financing 35. The total cost of the project is estimated at US$11.7 million equivalent, net of taxes and duties estimated at about US$0.8 million. The  - 10 - foreign-exchange component is estimated at US$8.75 million equivalent, or 75% of the total project cost net of taxes. The proposed Credit of US$10.0 million would meet 85% of the total project cost net of taxes and duties, including $1.25 million equivalent of local cost. As explained in Part I, local cost financing is justified by Burundi's poverty. Project costs and the financial plan are summarized below: (US$ Millions) Government IDA of Burundi Credit Total 1. Civil Works 0.83 4.73 5.56 2. Furniture and Instruc- tional Equipment 0.10 0.84 0.94 3. Printing Equipment, Paper, Vehicles - 0.52 0.52 4. Technical Assistance 0.06 1.32 1.38 5. Project Administration (excluding Technical Assistance) 0.06 0.18 0.24 6. Contingencies 1.46 2.41 3.87 Total 2.51 10.00 12.51 of which Taxes 0.75 - 0.75 The Government has provided satisfactory financial projections showing how it will meet its share of the capital expenditures for the proposed project. As to the capacity of the Government to provide the recurrent costs for the proposed expansion of the sector promoted by the project, projections up to 1985 show that on the basis of an expected GDP growth rate of about 3.5 percent p.a. the recurrent cost of education would not exceed 25 percent of the government's budget. This proportion is similar to that prevailing in other African countries at the same level of development. 36. Construction cost estimates are based on simple standards with maxi- mum use of local materials. Space allocations in the Centers and the staff houses would be the minimum acceptable for accomplishing the educati nal ob- jectives. The unit construction cost for the Centers is about $80/m equiva- lent, which compares favorably with the median value of unit casts for similar schools in other Bank Group-financed projects which was $138/m equivalent in 1974-1975. Appropriate maintenance procedures for all buildings to be built under the project would be developped (paragraph 3(i) of Schedule 4 to the draft Development Credit Agreement). Project Implementation 37. The project should be implemented in about six years with a proposed Closing Date of March 31, 1983. A Project Unit, which has been established in the Ministry of National Education, would be responsible for the implementation and financial and administrative control of the project  - 11 - and for liaison with the Association (Section 3.02(a) of the draft Development Credit Agreement). The Unit would comprise a director, an assistant director (architect), a procurement officer, an accountant, and adequate supporting staff, including two construction supervisors. The director and assistant director have been nominated and must be formally appointed as a condition of Credit effectiveness (Section 6.01(b) of the draft Development Credit Agree- ment). The director is a senior official of the Ministry of National Educa- tion; the assistant director (architect) will be provided and financed by the Kingdom of Belgium under its bilateral assistance program to Burundi. The Government has agreed that the procurement officer and accountant will be appointed not later than June 30, 1977 (Section 3.02(b) of the draft Develop- ment Credit Agreement). The director, assistant director, procurement officer, and accountant would all be appointed on a full-time basis and on the basis of terms and conditions satisfactory to the Association (Sections 3.02, 3.04 and 3.05 and Schedule 4 to the draft Development Credit Agreement). Within three months of the Closing Date of the project, the Project Unit would prepare and send to the Association a report with a preliminary assessment of the project's operational results and benefits, and of the lessons learned during implementa- tion (Section 4.04 of the draft Development Credit Agreement). Procurement 38. It is unlikely that private building firms would be interested in undertaking the construction of many of the Centers due to their small size and dispersed locations. In those parts of the country where the mission stations are equipped to undertake an additional construction program, the most economic and efficient method of construction would be by negotiated contract with these stations, which continue to construct the majority of schools, churches, and dispensaries in the interior. The mission stations would be supervised in this work by the Project Unit. Contracts acceptable to the Association would be negotiated between the Government and the mis- sions to build the Centers in those parts of the country where the missions are willing and able to undertake construction. Small local construction firms would build the remaining Centers as well as the teacher-training facilities and the extension to the textbook-printing unit. 39. Contracts would be awarded as follows: (i) The 100 Centers (US$5.6 million equivalent) would be constructed either on the basis of negotiated contracts between the Government and parties acceptable to the Association, or on the basis of competitive bidding advertised locally and in accordance with local procedures satisfactory to the Association; (ii) contracts for the extensions to the Teacher-Training School (US$75,000 equivalent) and to the textbook-production unit (US$65,000 equivalent), as well as contracts for furniture, equipment, and vehicles costing less than US$50,000 equivalent each would be awarded on the basis of competitive bidding advertised locally and in accordance with local procedures satisfactory to the Association; and (iii) contracts for furniture, equipment and vehicles costing more than US$50,000 equivalent each would be awarded on the basis of international competitive bidding in accordance with the Bank Group's guidelines for procurement.  - 12 - 40. Standardized sketch designs, draft tender documents, and master lists of furniture, equipment, vehicles, and paper, indicating proposed grouping for tender, would be reviewed by the Association. Items would be grouped to the extent practicable to encourage competitive bidding and to permit bulk procurement. Review of tender evaluation documents by the Asso- ciation prior to award would be required only for contracts above US$50,000 equivalent for equipment, furniture, vehicles, and paper. Domestic manufac- turers of furniture and equipment would be allowed a preference of 15% or the existing rate of import duties, whichever is lower, over the c.i.f. price of competing foreign suppliers. Disbursements 41. Disbursements would be on the basis of (a) 85% of total expenditures for civil works; (b) 100% of foreign expenditures for imported construction materials, furniture, instructional equipment, printing equipment, paper, and vehicles; or 85% of local expenditures, if procured locally; (c) 100% of foreign expenditures and 80% of local expenditures for technical assistance; and (d) 75% of total expenditures for salaries and operating costs of the Project Unit. All disbursements would be fully documented except those for project administration. Disbursements for project administration would be made against a certificate of expenditure, documentation of which would not be submitted for review but would be retained by the Borrower and would be available for inspection by the Association in the course of project supervi- sion. Auditing would be required on an annual basis for expenditures incurred by the Project Unit for project administration. Any funds remaining upon completion of the project would be used for project-related items subject to agreement between the Government and the Association. Retroactive financing in an amount not exceeding US$200,000 equivalent is recommended for expendi- tures incurred by the Project Unit after August 1, 1976, for project preparation. 42. A revolving fund would be established within the Project Unit, with an initial contribution of US$100,000 equivalent from the Government, from which the Project Unit will procure those materials, services, and mobilization advances which would not be disbursed by the Association directly. The Government would seek reimbursement from the Association for expenditures incurred, following normal procedures, with the Government maintaining the fund at about US$100,000 equivalent throughout the project implementation period. The establishment of the revolving fund is a condition of effectiveness of the Credit Agreement (Sections 3.03 and 6.01(a) of the draft Development Credit Agreement). Benefits and Risks 43. Productivity at the level of individual small-holdings should increase significantly if a larger proportion of Burundi's population achieves basic literacy and numeracy and learns improved agricultural techniques. In recognition of this fact, the Government has introduced an education reform of major proportions. The proposed project would provide critical material and technical assistance to this reform, thus helping to improve the quality of primary education and increasing its relevance to the country's development needs, as well as providing a substantial quantitative increase in the number of primary places and helping to augment the Government's control over the  - 13 - sector. In addition, the proposed project would aid institution building within the Ministry of National Education in the areas of curriculum develop- ment, teacher upgrading, evaluation, textbook production and school design. All primary-school children in the country would benefit from the project through the provision of textbooks; moreover, as a result of the proposed project's siting procedures, the expansion of the capacity of primary education by about 20% would benefit particularly the educationally least favored of Burundi's children, namely, those who live in rural areas where per capita incomes are estimated to be only about US$40 equivalent. 44. The principal risks are those of implementation. Arrangements made to reduce these risks include (a) a tight supervision schedule; (b) a conser- vative six-year implementation period; (c) the use of the already existing apparatus of the missionaries for a large part of the construction in the rural areas; and (d) technical assistance. Another risk is whether or not the Rural Education Bureau will be able effectively to continue its work in the expansion and generalization of the reform of primary education; should the Rural Education Bureau not be able to carry out its functions, the effect of the Centers would be merely quantitative (limited to the provision of primary-school places). The substantial material and technical assistance to the Rural Education Bureau is designed to minimize this risk. PART V - LEGAL INSTRUMENTS AND AUTHORITY 45. The draft Development Credit Agreement between the Republic of Burundi and the Association, the Recommendation of the Committee provided for in Article V, Section 1 (d) of the Articles of Agreement of the Associa- tion, and the text of a draft Resolution approving the proposed Development Credit are being distributed to the Executive Directors separately. 46. Features of the draft Agreement of special interest are referred to in paragraphs 22, 29, 32, 34, 36, 37 and 42 and are listed in Section III of Annex IV of this report. Special conditions of effectiveness of the draft Development Credit Agreement (Section 6.01), are (i) the establishment of a US$100,000 equivalent revolving fund for the Project Unit and (ii) the formal appointment of the Project Unit's director and assistant director. 47. I am satisfied that the proposed Development Credit would comply with the Articles of Agreement of the Association. PART V - RECOMMENDATIONS 48. I recommend that the Executive Directors of the Association approve the proposed credit. Robert S. McNamara President Attachments January 27, 1977   PageI of 4 pagea TABLE 3A BURUNDI - SOCIAL INDICATORS DATA SHEET LAND AREA (THOU KM21 ---------------