Nepal - Primary Education Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4785-NEP NEPAL STAFF APPRAISAL REPORT PRIMARY EDUCATION PROJECT March 27, 1984 FILE COP South Asia Projects Departmett Education and Human Resources Division This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents mnay not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS N.Rupee 14.9 = US$1 FISCAL YEAR 1984/85 SCHOOL YEAR Jan - Dec PRINCIPAL ABBREVIATIONS AND ACRONYMS USED ADB - Asian Development Bank CTSDC - Curriculum, Textbook, Supervision Development Center DEC - District Education Committee DEO - District Education Officer FC - Field Coordinator HMG - His Majesty's Government IDA - International Development Association JTA - Junior Technical Assistant JEMC - Janek Educational Materials Center MOEC - Ministry of Education & Culture NPC - National Planning Commission OCE - Office of the Controller of Examinations PIU - Project Implementation Unit PMU - Primary Materials Unit PSTU - Primary Supervision & Training Unit RC - Resource Center RETT - Radio Education Teacher Training RP - Resource Person SBU - School Building Unit SEDEC - Science Education Development Center SLC - School Leaving Certificate SMC - School Management Committee SOE - Statements of Expenditure TA - Technical Assistance UNDP - United Nations Development Programme Unesco - United Nations Educational Scientific and Cultural Organization UNICEF - United Nations Children's Fund USAID - United States Agency for International Development  FOR OFFICIAL USE ONLY NEPAL PRIMARY EDUCATION PROJECT STAFF APPRAISAL REPORT Table of Contents Page No I. SECTOR BACKGROUND ................ .. ................ 1 A. Introduction . . .. . - ..... .. . - 1 B. Assistance to Primary Education ............. 1 C. Bank Strategy and Lending for Education ........ .. 2 D. Education Finance ................. ... ... so 2 II. EDUCATION ISSUES AND POLICIES .................... ... 3 A. Efficiency and Equity in Primary Education ....... 3 B. Quality of Primary Education . .............. 3 C. Education Administration ................ ........ * 6 D. Education Policies ................... 7 III. THE PROJECT ..................... *....@..... 8 A. Project Objectives, Strategy and Scope ........... 8 B. Primary Education Inputs ........ .......... 9 C. Institutional Development and Management Assistance ................................. .-o.......*.-. 13 D. Education Project Studies ......... .............. 16 E. Project Evaluation ...... ........................ 16 F. Technical Assistance ......... .. . . ............... . . 17 IV. PROJECT COST AND FINANCING .......................... 18 A. ProJect Cost ........... 60... ......... 0 18 B. Financing ................ 20 V. PROJECT IMPLEMENTATION, PROCUREMENT,DISBURSEMENTS AND AUDITING .......... ...... 22 A. Project Implementation ...... .... 22 B. Architectural Design and Construction Supervision Services .............. ... 6....... * . 23 C. Procurement ... ....... ........ 24 D. Disbursement and Auditing ........ 25 VI. BENEFITS AND RISKS ............ .. . ............ ...... .. . 27 VII. AGREED ACTIONS TO BE TAKEN BY THE GOVERNMENT ........ 27 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.  -ii-- ANNEXES 1 - Educational Indicators 2 - Criteria for the Selection of Project Schools and School Clusters 3 - Organization of the Ministry of Education and Culture 4 - Organization of the Office of the Controller of Examinations 5 - Project Cost Tables 6 - Project Procurement Plan 7 - Forecast of Expenditures and Disbursement 8 - Implementation Bar Chart 9 - Structure of Project Management 10 - Technical Assistance 11 - List of PIU Staff 12 - List of Working Papers 13 - Map of Nepal  -iii- NEPAL Basic Data 1/ Population Estimated total (1981) 15.0 million Annual growth rate (1970-81) 2.6% Average density 2/ 104 per sq km Literacy rate (1977) 19% Enrollments (1982) 3/ Total Male Female % Female Primary (grades 1-5) 1,475 1,068 407 28 Lower secondary (grades 6-7) 200 157 43 22 Secondary (grades 8-10) 170 137 33 19 Higher (1981) Certificate (grades 11-12) 44.8 36.6 8.2 18 Bachelor Degree (Two-Three Years) 11.0 8.7 2.3 21 Higher Degree 3.5 2.8 0.7 20 (Two years or more) Education Expenditure Regular and Development (1981-82) 4/ 5/ As a percentage of GDP 1.4 As a percentage of total Government expenditure 9.7 Percentage Approximate of Education Cost per Student Budget Rupees US$ Primary education 29.0 112 7.8 Secondary education 15.2 234 16.4 Higher education 35.6 3,412 238.6 Other budgeted expenditures 20.2 100.0 1/ See Annex 1 for comparative education indicators. 2/ Average population densities vary from 24 per sq km to 103 per sq km from the mountains to the hills respectively and 356 per sq km on agricultural land (mostly the Terai and some valleys) 3/ Source: Central Bureau of Statistics. 4/ Source: Ministry of Finance. 3/ N. Rupees 14.9 = US$1.  a S  I. SECTOR BACKGROUND A. Introduction 1.01 Nepal faces one of the worst demographic situations among less developed countries. The present population of about 15.0 million is estiwated to be increasing at over 2.6% per annum and there is no evidence that the fertility rate is likely to decline. High fertility rates and population growth mean an increasingly younger population, resulting in greater pressure to provide schooling. Based on current trends, the popula- tion under 15 years (which comprised nearly 40% of the total population in 1971) will reach 45% by 1990, The concentration of the population in the less accessible hill and mountain regions also makes the provision of education and other social services more difficult and expensive. 1.02 The past decade has been characterized by a rapid quantitative expan- sion in terms of enrollments and schools. In the Fifth Plan (1975-80), primary enrollments (including overage studernts) increased from 43% to over 80% of the age cohort. Nearly 2000 primary schools (16% increase) were estab- lished, mainly with local financing. The number of primary teachers (includ- ing untrained school leavers who were hired as teachers) increased by 40%. Training capacity was inadequate to provide the required number of trained teachers (which has been the sole responsibility of the Institute of Education of Tribhuvan University), trained school supervisors or competent managers for the enlarged education sector, particularly at the primary level. These issues, elaborated below, will become a foca:L point for improvements during the Sixth Plan (para 2.18). B. Assistance to Primary Education 1_03 Apart from limited assistance with school building programs through a number of integrated rural development projects in Nepal, the only major interventions in the primary subsector have been financed by UNICEF and UNDP. UNICEF currently finances the supply of paper, the preparation, printing and distribution of all textbooks for grades I through III. It finances a project for the physical iimprovement and sanitation of primary schools which consists of school reroofing, and provision of water supply and latrines. This project will cost about US$1.8 million over 1982-86. Also being financed by UNICEF is a program to provide greater access for women to the teaching profession, which provides scholarships, the improvement of women's hostels at campuses of the Institute of Education and support for the Women's Education Unit in the ministry. Financial support will amount to about US$1.7 million over 1985-87. 1.04 UNDP and UNICEF have jointly financed an on-going UNESCO primary education project in the Seti zone which aims to support quality improvements in about forty primary schools, to improve adult literacy through an adult education program and provide some basic rural skills training. The current project budget for the 4.5 year project, which started in 1981 is in excess of US$2 million. The Seti project aims to achieve quality improvements in the primary subsector by providing, among other things, teacher training, teaching materials and improvements to school buildings. Its scope and objectives are broader and more ambitious than the proposed primary project to be financed by IDA, and it is being implemented in an area which is less accessible; but it is showing signs of success, although an independent evaluation study has not  -2- yet been carried out. Both projects fit within overall government development policies for the sub-sector. C. Bank Strategy and Lending for Education 1.05 While this is the first IDA intervention in the primary sub-sector, IDA has identified two other general areas of priority where assistance is being introduced--technical and vocational skill training, and agricultural and forestry training. Technical training for manpower development has been assisted in the First Education Project financed by IDA. It became effective on July 13, 1978 and is now approaching completion. The project focuses on quality and quantity improvements in the supply of technical manpower at certificate and diploma levels in an attempt to meet the demand for trained middle and senior level technicians. It is now being implemented success- fully, despite earlier shortages of building materials. A one-year extension of the closing date has been granted to allow successful completion of the project. The Second Education Project financed by IDA, became effective on July 23, 1982 and focuses on increasing the supply and improving the quality of training for craftsmen and technicians in electrical, mechanical and civil engineering. This project is progressing satisfactorily. Forestry skills training is to be provided under Credit 1008-NEP (which became effective on September 18, 1980) for the development of community forestry. This project will finance a new training center in Pokhara to train about 40 foresters (diploma) and soil and water conservation officers per annum as well as 100 technicians; a further 100 technicians will be trained through upgrading a similar training center at Hetauda. The project has suffered initial delays of about 18 months on civil works construction due to slow contractual proce- dures. An Agricultural Manpower Development Project has recently been appraised and will finance the improvement of middle and higher level training in agriculture. The project will: (a) produce about 600 Junior Technical Assistants (JTAs) per annum of which about 70 will be female; (b) improve the quality of the general agricultural degree; and (c) establish a degree program in animal husbandry. D. Education Finance 1.06 The rapid growth in enrollments for all levels of education during the Fifth Plan (1975-80) (around 17.5% per annum) has not been matched by a corresponding annual increase in education expenditure, which averaged about 11% per annum, in real terms, during this period. The greatest contribution to this increase was in 1975/76 (48.8%), when a higher proportion of teachers' salaries was first paid by the central Government (para 2.07). Since then the annual increase, in real terms, has fluctuated down to 6%. The proportion of the national budget allocated to education decreased from a peak of 12.1% in 1975/76 to 9.7% in 1981/82. Within the education budget for 1981/82 the allocation of resources has favored higher education (36%) at the expense of primary education (29%), which has been consistently underfunded. 1,07 Although present education expenditure of 9.7% of the national budget or about 1.4% of GDP is not as high as in other Asian countries (Annex 1) this expenditure is supplemented by contributions, both capital and recurrent, from local private sources. While no figures are available, these contributions must be significant, since they cover the cost of construction and maintenance of primary and secondary school buildings and a significant proportion of  -3- teachers' salaries at lower and upper secondary levels. Thus, the aggregate figures given above understate the total flow of resources to education and consequently, the burden of education on the community, which is greatest at primary and secondary levels. II. EDUCATION ISSUES AND POLICIES A. Efficiency and Equity in Primary Education 2.01 Primary education suffers from excessive dropout and repeater rates. A school survey, 1/ undertaken in 1982, shows dropout and repeater rates are 12% and 38% respectively in grade 1 and 8% and 18% in grade 2, with the result that only about 35% of entrants complete the three year cycle. Low attendance is also widespread at all levels, especially in primary schools where studies have shown discrepancies between enrollment and attendance in a number of districts. Contributing causes are the lack of properly trained and motivated teachers, poor physical facilities, perceived irrelevance of curricula, the high opportunity cost of child labor and the debilitating effect of poor health among children. Furthermore, the three year primary cycle is inade- quate to achieve permanent literacy and numeracy and serves merely to produce semi-literate school leavers and entrants to lower secondary education, who are poorly prepared for further schooling. In recognition of this problem, the Government has recently decided to extend the primary cycle to five years, but the success of this policy will depend primarily upon the Government's ability to obtain financing to meet capital and recurrent costs, especially teachers' salaries. 2.02 Significant disparities exist in. access to educational opportunities based on sex and region. In 1982, females accounted for only 28% of total primary enrollments and although this figure is low it nevertheless represents progress over the last five years (in 1974/75 female enrollment was only 17.3%). Regionally, the female primary enrollment in 1982 was about 14% in the Far Western Region compared to 32%, 25% and 31%, respectively, in the Western, Central and Eastern Regions. Similar regional disparities are found in gross regional enrollment ratios. Some of these inequities are due to: (i) the traditional prejudice against education for girls, whose place is in the home until early marriage; (ii) the opportunity cost of attendance for children of both sexes particularly among poor rural families; and (iii) caste differences, which tend to inhibit schooling among lower caste groups, par- ticularly in rural areas. B. Quality of Primary Education 2.03 Poorly motivated teachers, inadequate teacher training, the lack of educational materials and satisfactory school buildings are major causes of poor educational quality at primary level. Although 98% Rf the project schools have textbooks, only 70% have teacher's guides, some of which do not 2/ A survey of 650 of the project schools, was conducted in July 1982 by the Institute of Education, Kathmandu, Nepal.  -4- match the textbooks, 67% have some charts or maps or other educational equip- ment. Some chalkboards and writing materials are also lacking and only 40% have any supplementary reading materials. The problems are a result of inade- quate operational budgets, most of which must be provided by local com- munities. Buildings, provided by school committees under the local Panchayat, tend to be of low quality and poor design, consistent with the poverty of the area. 2.04 Teaching. Teacher training has not managed to reform teaching methods and create a significant departure from traditions. The culture emphasises absolute recognition of authority; arguing with superiors and asking them questions is not encouraged. Therefore, teachers find it difficult to encourage students to express their curiosity and child-centered methods of teaching are difficult to introduce. Traditionally, teaching in Nepal involves the transmission of knowledge from teacher to pupil and learning is considered to mean memorization. These ideas are still widespread. Teachers are authorities in the classroom, the students follow their dictates and learn by rote; in over 95% of the schools surveyed. The student, the teacher and the trainer have all been taught by rote, the tradition is difficult to break. It is also a less demanding method of teaching and without reward, recognition or encouragement teachers are unlikely to try different classroom teaching methods. 2.05 There is a clear difference between what is taught during teachers' training and what, in fact, they practice in class. From observations of trained teachers in the classroom, it is concluded that their activities are confined to reading from the textbook, lecturing, explaining, questioning and using the chalkboard. Little use is made of the teacher's guide, or the curriculum. The following activities are too rarely seen: (a) preparation and planning of lessons (which is practiced in 40% of the schools visited); (b) use of instructional materials; (c) class demonstrations; (d) field trips; (e) provision of individual help; (f) multi-grade teaching (which is practiced in only 41% of the schools visited) when very few schools have a teacher for every grade; and (g) involvement in community relations. Teachers complain that these activities involve facilities and help not available in the schools (such as space, time, money and moral support). 2.06 Teacher Training. The teacher training curriculum needs revision; it lacks relevance and an innovative approach; for instance, there is no instruc- tion on how to manage a multigrade class, or how to teach reading and writing at primary level (although 40% of the primary curriculum is devoted to these topics) and there is inadequate emphasis on the kind of knowledge or skill needed at village level. Teacher trainers often have no school teaching experience or understanding of the problems faced by a teacher in a remote village school and there is no task analysis of the responsibilities and functions of the teacher. Books and texts used for teacher training are inadequate and outdated. 2.07 Supervision. Because of difficult communications, responsibility for school supervision necessarily rests predominantly with district authorities. The authorities are: (a) the District Education Officer (DEO), (b) Supervisors, (c) the District Education Committees (DEC) and (d) the Distr:ict Panchayat members or the newly created School Management Committee (SMC). Under a recent policy decision, the SMC will have responsibilities at  --5- ocaBl level for all aspects of running the school, including hiring and pay- ment of teachers against a block grant. 2.08 The supervisor's prime responsibility, to help improve the quality of classroom teaching, is almost impossible to achieve because in most instances supervisors lack teaching experience and appropriate qualifications and have not received any special training in supervision. Thus few supervisors under- stand or can carry out their designated role and few can gain the respect of teachers or headmasters. In addition, primary supervisors are expected to cover far too many schools (40 schools in the Terai, 30 schools elsewhere) when walking is the principal means of travel. Exacerbating the problem is the inability of the supervisor's superior, the District Education Officer (DEO), to provide professional advice, because he is usually an administrator belonging to the general cadre of civil servants and has no experience or professional qualifications in education. Some school teachers are openly critical of the DEO as a result. The impact of the supervision system in the schools is consequently very slight. 2.09 Management. The quality of school management by headmasters is generally poor. They provide no guidance or encouragement to their staff, they do not schedule the teaching, take steps to get substitute teachers, maintain contact with parents or seek help from their SMCs. Virtually none has had anv special training in school management. 2.10 School Management Committees have a wide responsibility, published under amendment 7 of the Education Code, to get involved in all aspects of the school's affairs including educational matters. However, their impact so far has been slight. After providing school buildings from community resources and getting children enrolled thereby qualifying the school for one or more government paid teachers, the SMCs leave the educational aspects of schooling to the teachers. SMCs neither interfere nor act in a supportive fashion. Because of the SMCs' inactivity at this stage, community support declines rapidly once the school is functional. Community effort is not mobilized and lacks a sense of direction on educational issues, although there is plenty of evidence of parental and community interest. 2.11 At district level there is too little professionalism mainly arising from the lack of educational experience of the DEO (para 2.08) and the members of the District Education Committee (DEC), which has broad responsibilities, but is ineffective in fulfilling its obligations. 2.12 Buildings and Building Services. School buildings in Nepal are generally of very poor quality. Most of them have been built with local labor and materials, to local designs. In general, their design and construction is similar to local domestic accommodation; both reflect the level of poverty of their district. Most primary school buildings consist of two or three small classrooms (each about 150 sq. ft.) while the school survey shows grade I enrollments often reach 80 children per class; other data from the survey reveal that: 79% of the schools surveyed have mud floors; 21% have small windows providing inadequate lighting; 33% of the windows are without glass or shutters; 80% have leaking roofs; less than one percent have heating; 69% have no store room; 61% have water, but only 28% have toilets; 84% have land for a  -6- play area or garden; and 20% of the schools are in a state of collapse. Rais- ing these low standards for local school facilities may prove extremely dif- ficult because: (a) the central government cannot afford to erect or upgrade about 11,000 primary schools throughout the country; and (b) most local com- munities possess limited financial resources and no architectural skills to produce more suitable buildings. However, at nearly 86% of the schools visited it was stated that the creation of a conducive environment for teach- ing would be a more important contribution than a pay increase for teachers in making teaching more effective. C. Education Administration 2.13 Effective administration of the education system is constrained by: (a) the strongly hierarchical civil service system resulting in a lack of de:legation in decision making and reduction of individual initiative; (b) imprecise job descriptions resulting in duplication of effort; (c) the lack of trained manpower to meet the needs of the administrative system; (d) rapid staff turnover which inhibits any lasting effects of training; (e) a generalist tradition within the public service which has limited the growth of a more technically oriented specialized administration; 1/ and (f) lack of clearly defined functions especially for regional headquarters and possible overlapping functions with the district offices. 2.14 The planning and budgeting systems are not adequate to the task of predicting and allocating resources to meet ministry objectives. While some of this is caused by deficiencies in the overall government planning and budgeting system, much improvement is needed in the MOEC process of defining needs and resource requirements, allocating resources and evaluating results. The ministry lacks a coordinated system of data collection and analysis appropriate to the needs of planning and national development. Data collected are often inaccurate and inappropriately chosen. Data collection activities are poorly supervised. The Examination System 2.15 Complexity. The Office of the Controller of Examinations (OCE) has the responsibility of administering annually a nationwide Secondary School Leaving Certificate (SLC) examination for about 85,000 candidates at 109 examination centers. The examination covers the major subjects English, Nepali, mathematics, science and social science as well as a number of voca- tional subiects (such as poultry keeping, agriculture etc.) which are provided for students of the 125 vocational schools. Because of recent curricula changes, the examination papers are still being prepared for both the new and old curricula. Because of the limited size of some of the examination centers separate papers are prepared annually in most subjects so that three separate sittings in the same centers can be held. In addition, because some remote areas are snow-bound in January when the examinations are normally taken, further sittings for most subjects are provided for remote area students in I/ There is a small education cadre of civil servants in the MOEC, who can be retained in the ministry; other general civil servants normally receive promotion across ministry boundaries.  -7- April. Thus annually about 500 papers are prepared in more than 40 subjects covering old and new curricula and providing for a number of different sit- tings. The burden upon the OCE staff is therefore considerable. 2.16 Efficiency. The OCE is housed in rented and unsuitable accommodation. The accommodation lacks the space, equipment and layout to permit an effi- cient, secure and flawless handling of the distribution of both examination papers and answer scripts. The organizational problem is exacerbated by difficulties of distribution of examination papers and the collection of scripts in a country with few roads and very difficult mountainous terrain. In consequence, examination papers are not always delivered at the appointed place on time, leakages and cheating can more easily occur, answer scripts get lost and it takes between 6 and 7 months before the results are announced. Every year several hundred candidates have their examination results withheld due to missing marks or scripts. The candidates which suffer this misfortune find themselves unable to apply for university entry at the appointed time. Thus there is hardship and justified complaint. 2.17 Quality. Under the severe constraints listed above, the pressures of organizational and administrative issues have tended to preoccupy all the staff of the OCE. Designated professionals in the OCE are thus engaged totally in administrative tasks. In addition, the OCE is understaffed with professionals, no research staff exist and few staff have had appropriate training. The professional input to the SLC examination comes entirely from externally appointed item writers and moderators who work as individuals with little consultation with each other. Consequently, the level of difficulty of the papers varies from year to year and from subject to subject. Further- more, the questions set in most subjects place heavy emphasis on the recall of material and relatively little on the application of knowledge to new situa- tions, or on the use of thinking skills. D. Education Policies 2.18 The government's Sixth Plan (1981-86) attaches considerable importance to the development of the education sector as part of its strategy to meet the minimum basic needs of the population, and to support developments in other sectors. Greatest priority is attached to primary education, work oriented adult education, and vocational and skills training. More specifically, the government will concentrate on: (a) improving educational quality and reduc- ing wastage; (b) imparting relevant skills and scientific knowledge; (c) curricula and textbook revision to make them more relevant to existing conditions of life, as well as national and social values; and (d) increasing education opportunities in backward areas and to disadvantaged groups, such as females. 2.19 The government's strategy to achieve these objectives will be to: (a) within reasonable expansion targets, contain enrollments at primary, secondary and particularly tertiary levels , so as to permit greater emphasis on quality; (b) give priority to new physical facilities for primary educa- tion, non-formal work oriented education, and vocational and technical educa- tion; and (c) encourage community involvement for the expansion of general education, and continue the policy that all physical facilities (buildings and furniture), excluding technical schools, shall be provided by the local com- munity.  -8- 2.20 Specific plans involve: (a) the opening of 620 reading centers with a view to maintaining literacy; (b) the revision of curricula for primary and secondary schools; (c) the introduction of reforms in the administration and supervision of adult and primary education; and (d) the provision of free education for girls up to secondary level in remote districts and the provi- sion of special hostels at model schools. 2.21 With known manpower and budget constraints, the government's Sixth Plan may not be fully realized without considerable foreign support in the form of technical assistance and financing. For this reason, early in the Sixth Plan period, the government (a) is seeking donor support for the estab- lishment of all new technical schools as well as for the improvement of exist- ing technical schools; (b) is seeking support from donors and IDA for the primary education subsector, in order to address identified issues (paras 2.01-2.12); and (c) intends to conduct feasibility studies on secondary educa- tion and non-formal education to identify issues more clearly. III. THE PROJECT 3.01 The proposed project was identified and defined in outline by an IDA identification mission, which visited Nepal during November 1981. The project request was prepared on behalf of the government in March 1982 by Unesco under the cooperative program. An extensive survey of schools in the six project districts, agreed at the time of identification, was financed under an IDA TA credit and conducted by the Institute of Education during June and July 1982. The project was pre-appraised by an IDA mission in November 1982 and appraised in July-August 1983. A. Project Objectives, Strategy and Scope 3.02 The proposed project is designed to: (a) achieve a low-cost qualitative improvement in primary education; (b) strengthen the administrative and technical capacity of the sector. 3.03 In pursuit of quality improvement in primary education the project would focus closely upon the intermediate objective of improved teacher effec- tiveness, which would be achieved through (a) increased teacher knowledge and motivation, and (b) external support in the form of better management, instructional materials and physical facilities. 3.04 Teachers' knowledge would be improved through the provision of: (a) an integrated in-service teacher training and supportive supervision program; and (b) teacher's guides, teaching guidelines and other supportive reading materials. Teacher motivation would be aided by: (a) improved school management; (b) greater community interest and support; and (c) the develop- ment of peer group support within the profession.  -9- 3.05 Strengthening the administrative and technical capacity of the sector would aim principally to provide the necessary: (a) administrative and techni- cal support services for improving primary and secondary education; (b) sup- port for the government's policy to decentralize administrative and technical responsibility to district and community levels; and would also include: (c) extensive support for the Office of the Controller of Examinations (OCE) with the prime objective of improving the efficiency and effectiveness of secondary school leaving examinations. This latter component would help to i provide better qualified entrants to higher education and better qualified manpower for development. 3.06 The project would aim, in the short-term, to find low-cost ways of effectively addressing primary educational quality issues in the sub-sector and initiate a gradual strengthening of sector administration, which would then be capable of absorbing the benefits of subsequent interventions in the system. The objectives and scope of the proposed projent are necessarily limited, so as to increase the probability of successful implementation under existing national constraints namely: (a) a weak economy; (b) poor communica- tions; and (c) an inadequate public service system. Its design would incor- porate an evaluation and monitoring system, which would aim to provide valu- able insights into the potential for further low-cost development of primary education and would lead to firm proposals for the next stage of development of the sub-sector. 3.07 In a country with a largely rural population, long-term development depends, among other things, upon: (a) raising farmer productivity; (b) con- taining the population growth; (c) improving health services; and (d) expand- ing and improving the base of the educational pyramid, which feeds secondary and higher educational institutions. In this project the focus on primary education and the examination system would, in the long-term, contribute to meeting such needs. 3.08 Because of the experimental nature of the proposed primary project component and the risks associated with the constraints listed above (para 3.05), the project would be limited to about 700 schools in six districts located in three regions. The choice of districts and regions, agreed at the time of identification of the project, was based predominately upon acces- sibility criteria (Annex 2). B. Primary Education Inputs 3.09 To achieve the project objectives for the primary education component an integrated set of project inpujts was designed to provide a mutually rein- forcing effect. Central to the design is the concept of primary school clustering into groups of 8-12 schools with a Resource Center (RC) 1/ school 1/ The Resource Center concept is already in use in the Seti project, a UNICEF/UNDP/UNESCO project in one district in the Fifth Development Region (para 1.04). After an experimental period in the Seti Zone and the six project districts, the RC concept will be considered for adoption in the remaining districts.  -10- centrally located to provide on-going teacher training and supportive supervi- sion. The Resource Center would constitute the main delivery venue for teacher training under the project and for the supply of education materials to the cluster schools. Cluster schools and the Resource Center have been chosen according to criteria given in Annex 2. Each Resource Center school would have its physical plant augmented by one room which would serve both as a classroom (of larger size than usual) and as a location for RC activities. RC staff would be augmented by the addition of one person, who would receive special training to act as a resource person (RP). 3.10 The staff of the RC would: (a) provide in-service training to all cluster school teachers on a number of special topics; (b) bring the supervi- sion system close to schools through regular classroom visits of RPs; (c) assist teachers in making simple instructional materials; and (d) build community support for schools through work with School Management Committees (SMCs) and parents. 3.11 To assist RC staff in their work, a special RC management committee with representation from the SMCs for each of the schools in the proposed cluster would be established prior to, and as a condition for, the estab- lishment and adoption of that cluster within the project. At negotiations, the government provided assurances that, such committees would be so estab- lished and assigned such powers, functions, responsibilities and repre- sentation to enable them to manage their respective RCs. 3.12 To provide a link between RCs and District Education Officers (DEOs), who are responsible for primary schools, selected primary school supervisors in the DEO's office would be designated as Field Coordinators (FCs) and given special training. Each FC would supervise up to six clusters. 3.13 School buildings and other school facilities would be improved employ- ing mostly local labor and materials; they would be built to new standards and designs supplied by the ministry's School Building Unit (SBU). School con- struction would be supervised by overseers and/or tradesmen employed in the DEO's offices. Limited supplies of school building materials would be financed centrally under the project, such as roofing materials and waterpipe. Only materials that are not available locally would be supplied under the project, thus preserving community responsibility for the provision and main- tenance of schools. Training 3.14 An integrated training program to involve primary teachers, super- visory staff, headmasters, DEOs, school managers, the community and parents would be introduced so as to: (a) instill greater teaching and management skills in the primary subsector; and (b) bring about major changes of attitude among the whole range of persons who can, and do, influence the success of primary education. Thereby, the project would begin to: (a) increase the knowledge and skills of classroom teachers by teaching new content and techniques, and supervising the practice of these in the classroom;  -1 1- (b) increase the effective use of teaching materials in the classroom through teacher training and supervision, and the availability of textbooks, teachers guides, guidelines, supplementary reading materials and teaching kits, which would be financed by the project; (c) improve the motivation of teachers to perform well by: (i) increasing their knowledge and skills; (ii) enhancing the leadership skills of headmasters and other supervisory personnel; (iii) improving peer-group relations and professionalism among teachers; and (iv) building community support for improved education for children; (d) improve the capacity of school managers to support improved teaching practices and to maintain effective school facilities; (e) increase the interest of the community its schools and its willingness to support the effective functioning of schools by community action programs to encourage direct contributions to the improvement of facilities and increase parental demands for high quality education for their children; and (f) increase the management capacity of administrators at the district and central levels. 3.15 The constant presence of trained and active RPs and FCs operating from every Resource Center and District Education Office respectively would ensure that all teachers in the project schools would receive in-service training and related in-class supervision on a continuing basis. Throughout the school year, Resource Centers would conduct: (a) information meetings, 2 to 3 hours in length, held regularly (at least once a month), attended by representatives of all satellite schools; (b) follow-up support visits by Resource Persons to teachers in their classrooms; and (c) short residential courses held at Resource Centers. In addition, RPs would provide support to teachers enrolled in Radio Education Teacher Training (RETT), 1/ through classroom visits. 3.16 To avoid the dilution effect which is characteristic of "cascade" training systems 2/ where large numbers of teachers have to be trained, the project would appoint additional staff (para 3.18) at the Curriculum, Textbook Supervision Development Center (CTSDC). CTSDC staff would be instrumental in conducting direct-contact training at both central level and in the six project districts in a phased sequence. They would provide: (a) orientation training for all administrators and others whose support is necessary to make the RC concept function, from MOEC officials, regional and district officials, to SMC members and parents; and (b) training for field people (Field Coor- dinators and Resource Persons) who would work directly with teachers. Where possible, the training program would use materials and techniques developed by the Seti project (para 1.04). 1/ RETT is currently being financed by USAID. 2/ Where trainers train trainers, who train trainers etc.  -12- 3.17 The project would finance additional staff salaries (including central trainers, FCs, RPs and teachers), all training costs (e.g. travel), the production of all teaching and training material, and teaching and training equipment. Ways to facilitate prompt and effective implementation, including the establishment of a small revolving fund at each RC, would be explored and if practicable the Government would make provision to set up these funds at each Resource Center prior to its establishment. Training Responsibilities 3.18 The ultimate responsibility for all training at district and RC level (except building construction) and materials development would rest with the CTSDC. To assist the CTSDC in taking on these responsibilities, educational advisory services including technical assistance would be provided by UNICEF throughout the project. But, because of its experience of primary education projects in Nepal, UNICEF would be able to provide more than technical assis- tance and advisory services. Through its local office it would provide a broad based institutional strength in support of project implementation and adapt its role to meet whatever special needs may arise during the life of the project. In particular, before the project becomes effective, field inves- tigations and consultations with field personnel to identify training needs and develop appropriate strategies for different audiences would be organized and supervised collaboratively by UNICEF and CTSDC staff, employing locally hired personnel. Based upon the results of this study the proposed project would train CTSDC staff (paras 3.15 and 3.19) during a three-month course in Kathmandu conducted by UNICEF, employing expatriate trainers in collaboration with local Nepali consultants recruited for this purpose by UNICEF (para 3.39). 3.19 To enable CTSDC to undertake its additional responsibilities in the primary subsector with the minimum disruption of its existing work, the addi- tional staff would be appointed to two new primary education units, which would be established within CTSDC: (a) the Primary Supervision and Training Unit (PSTU) in the Supervision and Training Section of CTSDC; and (b) the Primary Materials Unit (PMU) in the Curriculum and Textbook Section. The PSTU would consist of ten staff, one of whom would serve as unit chief, specially recruited for the project, and nine others, some of whom would be drawn from the Supervision and Training Section. The PMU would be made up of one cur- riculum specialist for each major subject taught in primary schools (five people) with a sixth serving as unit chief. While the PMU would be concerned primarily with providing materials for use in primary classrooms; both units would collaborate in the training program at school level. During nego- tiations the government provided assurances that, where possible, it would select suitably qualified staff for such positions and subsequent training from the educational cadre of MOEC. 3.20 Towards the end of their training, the staff of the newly established CTSDC units, with UNICEF assistance would undertake the detailed design of subsequent training activities at central and district level, including con- sideration of training content for different audiences, scheduling and logis- tics (para 3.16) and begin the preparation of the required materials. Within six months of completing their training course, the CTSDC staff would have planned and prepared materials for two of the three major training activities namely, workshops for field coordinators and for resource persons, and would  -13- have conducted orientation sessions for Ministry officials (Annex 8). There- after, training would be closely coordinated with the establishment of Resource Centers, which would occur in two or more phases. In phase 1, approximately 24 centers would be opened, in phase 2 (and possibly subsequent phases) approximately 46 centers would be opened. In the six months prior to opening a Center, orientation courses for district and school officials, for staffs of satellite schools, and for SMC members and parents would be con- ducted and in-depth training would be given to field coordinators, resource persons, and headmasters of satellite schools. After the opening of the Centers, refresher courses would be conducted regularly by CTSDC for field coordinators, resource persons and headmasters. Informational meetings to be held with Ministry officials and SMC members and parents would also continue on a regular basis. Educational Materials 3.21 Beyond textbooks, which are distributed free to all students in Grades 1 through 3, Nepali primary schools have few teaching materials. The project would contribute to alleviating this shortage by: (a) supporting the design and field trial of prototypes of simple materials by the Curriculum Section of CTSDC; (b) including in the activities of the Resource Centers, special workshops for teachers on making and using materials; (c) providing for each prolect school an equipment kit for use in preparation of materials; and (d) providing about 70 library sets, consisting of about 10 dissimilar school libraries, which can be rotated among the schools in each cluster. 3.22 To support this effort, the Primary Materials Unit (PMU), would be trained in the development of special materials: (a) to program teaching so as to improve teachers' classroom behavior; and (b) to suit early primary grades. The PMU training program would be planned and conducted by UNICEF (para 3.18) together with four locally contracted Nepali experts. Training Schedule 3.23 On completion of training for the CTSDC staff, UNICEF and its consult- ants would collaborate with the PSTU in planning the training course for Resource Persons (para 3.20). Members of the PMU would also participate in training sessions, contributing both general background information about working with young children and specific techniques for making one or two learning aids. Thereafter the group would experiment more widely with prototype materials, using Resource Centers for field testing the type of instruction needed to help teachers to make and use them effectively. The PMU would draw on the experience of the Seti project and other CTSDC efforts to stimulate teachers to make and use materials (para 1.04). 3.24 The project would finance the production of all training materials, textbooks, supplementary reading materials, teaching equipment, teachers guides, additional staff salaries, training and travel costs, some equipment and additional recurrent costs for the CTSDC. C. Institutional Development and Management Assistance 3.25 To achieve the second project objective (para 3.02), the effective management of educational systems of HMG would require additional skilled  -14- staff and technical assistance. The ministry would need a staff training capability and assistance in the redefinition and reorganization of its administrative system (Annex 3). These changes would aim to: (a) refocus staff effort on priority tasks; (b) remove unnecessary duplication; (c) eliminate unnecessary complexity; and (d) improve general operational efficiency. Particular functions such as data collection, planning, manage- ment, budgeting and evaluation would be strengthened. Agencies of the Ministry of Education and Culture (MOEC) 3.26 Specific management sub-components to be provided under the proposed project would: (a) strengthen the research capacity of the MOEC and its NEC to provide well analysed policy alternatives to this policy-making body of the ministry. Funds would be available under the project to finance spe- cial studies, and procure some office equipment, which is urgently needed; (b) provide capacity within the Office of the Secretary of Education by staffing a Project Implementation Unit, which would assist the Secretary in organizing and administering all special education projects (paras 5.01 and 5.02); (c) strengthen the ministry in the development of a more effective plan- ning, budgeting and human resource management system by providing technical assistance to assist the ministry in developing: i) a rolling three-year administrative plan which would detail expected outcomes of the ministry programs, resource requirements, and which would serve as a coordinating mechanism for ministry programs at all levels; ii) a data collection system that would support policy planning and opera- tional decisions; and iii) capacity to provide short courses in special subjects appropriate to the needs of ministry staff, without duplica- tion of available training elsewhere (e.g. the National Administrative Staff College or the Institute of Management); and (d) strengthen the capacity of the CTSDC to provide support for the primary education system. This would be initiated by a UNICEF study to analyse the organizational structure and the use of staff resources within the center; a building, furniture and limited equipment would be financed under the project for CTSDC, to enable its staff to undertake its new responsibilities under this and other projects with adequate well lit space, library, workshops and laboratories. Regional and District Offices 3.27 Most district offices and some regional offices are using rented accommodation which is inadequate. Also, because of rising rents, these offices are frequently being relocated. To provide stable district and regional support services for both the project and non-project activities (e.g. training), IDA would finance new buildings for four out of the six project districts offices (which are presently in rented accommodation) and for two of the five regional offices (Pokhara and Dhankuta). Regional and  -15- district offices would be given assistance in the revision of their organiza- tion structures so as to accommodate their new responsibilities under tne government's decentralization policy especially in regard to primary education (para 3.37). The Office of the Controller of Examinations (OCE) 3.28 More specific support, in pursuit of the second project objective, would be provided for the OCE in order to address issues of efficiency and quality in the examination system especially at secondary level (paras 2.16 and 2.17. The specific objectives of this project component would be to: (a) simplify the examination system over the long-term by seeking to reduce the number of separate sittings and the number of separate examination centers; (b) improve the efficiency of the organization so as to reduce: (i) the time taken to publish examination results; and (ii) the number of missing scripts and/or subject marks; and (c) improve the quality of examining, professional input and research, (thereby increasing the relevance of examination questions, which would test such skills as the ability to reason and apply knowledge to new situations) and raising the standard of moderating. 3.29 To address the issue of complexity will require a constant effort to improve the size, location and coverage of examination centers. These must be chosen to take account of such things as: (a) ease of distribution of papers and collection of scripts; (b) size of examination centers in relation to catchment area and travelling distance; (c) security, e.g., availability of police services; (d) availability of postal services; (e) proximity to secon- dary schools for invigilators etc. Over the long term: (i) the number of examination centers would be reduced and their size increased thereby reducing the transportation problems and the number of sittings; (ii) security would be improved during transportation; and (iii) examination supervision would be tighter. As a result, the problems in distribution and transportation of papers and scripts would be minimized and, ultimately only one sitting nation- wide would be necessary for each subject. 3.30 To achieve these objectives the project would finance surveys to be conducted of facilities in every district, including police and postal serv- ices and buildings for examination centers. The surveyors would assess the success of the distribution and delivery system during the past year and analyse the causes of problems which come to light. Every year improvements based upon the survey would be made. 3.31 To address the efficiency problem the project would finance a spe- cially designed building with necessary furnishings and equipment for the specialized needs of the OCE including a library, secure storage areas for up to 3 million scripts, secret data processing and printing rooms, training space, hostels, cafeteria etc. The building would have three principal areas for: (a) the public; (b) administrative and professional offices for its staff (Annex 4); and (c) a secure, entry-controlled area for examination scripts and papers.  -16- 3.32 To address the quality issue; (a) the number of professional staff in the OCE would be increased to include moderators and research staff; (b) an archives library and a research library would be established; (c) foreign consultants on two month assignments would be employed to advise on specific issues; and (d) overseas visits would be financed for OCE staff to receive training at examination centers in other countries. D. Education Project Studies 3.33 Under the project, financing for project studies would be provided, to permit the preparation of possible future education projects and for the eva:Luation of the project. Under the first category, provision would be made for a survey of primary schools in another twenty districts during the first three years of project implementation. The results of this survey would be needed in the preparation of a possible second primary education project. Concurrently, under the second category, evaluation field studies of the proposed project would be conducted from the outset of project implementation employing a locally contracted agency. These studies would continue through the full period of project implementation (paras 3.35 and 3.36). 3.34 A study on teacher education at primary and secondary levels would alsD be undertaken to provide recommendations on the consolidation, improve- ment and tailoring of current teaching programs of the Institute of Education so as to meet future demands for teachers. Financing for the preparation of othier possible education projects would also be provided under a general project preparation category. E. Project Evaluation 3.35 Because of the experimental nature of the primary school component of the project, flexibility has been built into the project design, so that evolutionary change can be made during implementation. These changes would be based upon continuous monitoring of field activities, which would produce an accummulation of acquired insights. Similarly, an adequate final evalua- tion, which draws upon all implementation experiences would be undertaken towards the end of the project. 3.36 During negotiations, the government agreed to establish a project data collection system, acceptable to the Association, by January 1, 1985. The system would provide for field studies to be undertaken employing a locally contracted agency and would aim to record and collect field data needed in the monitoring and evaluation of the primary project component. Both designed project interventions and other coincidental changes in the process would be studied to assess their effects upon both intermediate and final project objectives, no matter whether the outcome is positive or negative. Also during negotiations the government agreed to produce, by July 1, each year, an evaluation report which would analyse the data collected and make recommenda- tions for incremental design changes or experimental interventions to be introduced in the primary education component in subsequent years. This report would be discussed and decisions taken on suitable adaptive process changes at an annual tripartite review, when the government, UNICEF and IDA would be represented. During negotiations the government provided assurances  -17- that by July 1, 1987, based upon accumulated evaluation results of previous years, the MOEC would draft a comprehensive plan for the Improvement of Primary Education and its Administration in Nepal. This document would con- stitute the basis of a subsequent government proposal for possible IDA assis- tance to primary education in the future. 3.37 Also, with the assistance of consultants and UNICEF, MOEC would evaluate the adequacy of regional and district office organizational struc- tures, staffing and budgets to provide cost effective implementation of the ministry's policy to decentralize its education system. During negotiations the government provided assurances that: (a) by July 1, 1987, the MOEC would, with the assistance of the PIU consultants, furnish to the Association, the results and recommendations of such evaluation including plans to establish more appropriate organizational structures, staffing and budgets for the regional and district offices to accommodate their new responsibilities espe- cially in the primary sub-sector, and (b) thereafter the MOEC would implement these plans. F. Technical Assistance 3.38 UNICEF has agreed in principle to finance the cost of all the educa- tional services for the primary component of the project and to provide any other necessary educational and logistic services for the project through its Kathmandu office, with the help of the UNESCO regional advisor in Bangkok. By maintaining a continuing relationship with MOEC and the CTSDC, UNICEF would assist and strengthen the CTSDC so as to achieve a major reform in the quality of primary education throughout the project districts. UNICEF would also assist the PIU in establishing an effective system of project management. The government would sign a Project Agreement with UNICEF for educational services amounting to about US$1.7 million and as a condition of effectiveness, the government would fulfill all the effectiveness conditions of the UNICEF Project Agreement. 3039 Under the proposed project, UNICEF would provide eight staff-years of assistance to CTSDC and the PIU (Annex 10). UNICEF would assist the CTSDC by providing (a) a long-term adviser to the PSTU; (b) short-term consultants for the initial training program (para 3.18) and thereafter throughout the life of the project. In addition, it would be responsible for the selection and sub-contracting of ten staff-years of local consultant assistance to CTSDC (para 3.18) and organizing 6 staff-years of short-term overseas training and 1.5 years of overseas study visits. These resources would be used to provide 36 staff-years of training in Resource Centers, and 300 staff-years of train- ing in cluster schools. The government provided assurances during nego- tiations that it would retain in post all CTSDC and PIU staff trained by the project, at adequate salary levels, until the completion of the project. 3.40 In addition, there would be one half staff-year of foreign consultancy services for the OCE, about 122 staff-years of local consultancy services and 10 staff-years of overseas short-term training financed by IDA. These staff-years would be used at the discretion of the PIU, according to Bank Guidelines, and would help to strengthen the administrative service at central and district level.  -18- 3.41 Because of the need to contain the expansion in civil service appoint- menLs under the severe economic constraints which are being experienced in Nepal, local employees would be appointed on short-term contract for the life of the project pending the successful outcome of the project. These appoint- ments would include: 60 staff-years for the appointment of local building supervisors, 2-3 in each district; 9.5 staff-years or equivalent financial resources for one or two additional local staff and for local research con- tracts of relevance to the NEC's policy making function; two staff-years of local specialist services for strengthening the central ministry, and 50 staff-years would be used for the appointment of PIU staff. Tables 1 and 2 (Annex 10) show the distribution of all technical assistance services which would be provided by the proposed project. At negotiations, the government provided assurances that, where possible, regular government positions would be provided at adequate levels of seniority for fixed-term staff listed in this paragraph, upon successful completion of the project. IV. PROJECT COST AND FINANCING A. Project Cost Total Project Costs 4.03. The total cost of the project is estimated at Rupee 248.39 million or US$16.67 million equivalent (NR 14.9 = US$1.0). Detailed project costs by component and time are given in Annex 5. Cost breakdown by project component into local and foreign cost components is summarized in Table 4.1: Base Costs 4.02 Cost estimates excluding contingencies refer to January 1984 prices, and were calculated on the followings basis: (a) Construction and Furniture - for office facilities of a similar nature recently completed in Nepal. The average unit cost was estimated at about US$200 per sq meter (excluding site development and contingen- cies) based upon costs of similar buildings over the previous six months. Cost estimates for building materials (to be purchase by ICB) include delivery to Kathmandu. (b) Equipment, Books and Journals - on preliminary lists prepared during appraisal. (c) Consumable Materials - mainly training materials on appropriate cost per book or other training aid when produced in Nepal. (d) Architectural Design and Supervision Services - the estimated base cost of about US$100,000 for architectural services is based on the national fee scale of 7% of estimated construction cost (3-4% for design and 3% for construction supervision). (e) Specialist Services - Local and foreign technical advisory services, which will be provided by individual specialists, are estimated to require about 140 staff-years at a total cost of about US$2.0 million,  -19- including those provided by UNICEF. The average staff-month cost of long-term foreign specialists (based on the individuals' fees, inter- national travel and local allowances) is expected to be about US$8,500 and for local consultants to be in the range of US$150 - US$1000 depending upon their role. The total estimated cost also includes provision for the cost of vehicles, local travel and some other minor items. (f) Operating Costs - on detailed breakdown of maintenance and other relevant operating costs in similar institutio*s in Nepal. (g) Salaries - on agreed scales plus allowance laid down-by the Public Service Commission (range NR 800 to NR 2,000 per month). Table 4.1: Summary of Costs by Project Components (Ru2ee Million) (US$ Million) Local Foreign Total Local Foreign Total A. PRIMARY SCHOOLS AND RESOURCE CENTERS 16.69 28.64 45.33 1.12 1.92 3.04 B. FIELD ADMINISTRATIVE OFFICES 1. REGIONAL EDUCATION OFFICES Eastern Regional Office 3.00 2.62 5.63 0.20 0.18 0.38 Western Regional Office 1.70 1.73 3.43 0.11 0.12 0.23 Sub-Total 4.70 4.35 9.06 0.32 0,29 0.61 (Regional Education Offices) 2. DISTRICT EDUCATION OFFICES 8.36 5.13 13.49 0.56 0.34 0.91 (Four similarly costed) Sub-Total 13.07 9.48 22.55 0.88 0.64 1.51 (Field Admin. Offices) C. CENTRAL ADMINISTRATIVE OFFICES 1. Ministry of Education 9.51 10.83 20.34 0.64 0.73 1.36 & Culture 2. Curriculum Textbook 23.22 30.46 53.69 1.56 2.04 3.60 Supervision Development Center 3. Office of the Controller of Examinations 20.35 16.05 36.39 1.37 1.08 2.44 Sub-Total 53.08 57.34 110.42 3.56 3.85 7.41 (Central Admin Offices) D. STUDIES 7.42 0.83 8.25 0.50 0.06 0.55 Total BASELINE COSTS 90.25 96.28 186.54 6.06 6.46 12.52 Physical Contingencies 9.03 9.63 18.65 0.61 0.65 1.25 Price Contingencies 22.03 21.19 43.21 1.48 1.42 2.90 Total PROJECT COSTS 121.30 127.10 248.40 8.14 8.53 16.67  -20- Custom Duties and Taxes 4.03 Goods not specifically imported for the project would be subject to customs duties and taxes. Instructional equipment, consumable training materials and building materials imported specifically under the project would be subject to about 1% tax. The total estimated duties and taxes amount to US$0.77 million. During negotiations the government provided assurances that it would take the necessary steps to ensure efficient customs clearance, including payment of such taxes. Contingency Allowances 4.04 Estimated project costs include physical contingencies (US$1.25 mil- lion), estimated at 10% of base cost for unforeseen factors, and price contin- gencies (US$2.90 million), calculated using price contingencies by years as listed below in Table 4.2. Table 4.2: Price Escalation Estimates 84/85 85/86 86/87 88/89 89/90 Local Price Contingency 8% 7% 6% 6% 6% Foreign Price Contingency 7.25% 6.5% 6% 6% 6% Foreign Exchange Component 4.05 Based on detailed analysis of expenditures in similar projects in Nepal, the foreign exchange component has been estimated as follows: (a) civil works 40%; (b) furniture 50%; (c) equipment 85%; (d) books 85%; (e) professional services 10%; (f) overseas training 85%; (g) local experts 10%; (h) foreign experts 85%; (i) salaries and allowances 0%; (j) educational materials 70%. The foreign exchange component, including contingencies is estimated at US$8.53 million, or about 51% of the total project cost. B. Financing Financing Plan 4.06 The total project cost of US$16.67 million equivalent would be financed as follows: (a) a proposed IDA credit of US$12.78 million equivalent would cover about 80% of total project costs, net of taxes and duties (100% of the balance of foreign exchange costs after deduction of UNICEF's con- tribution and 58% of net local costs). (b) UNICEF would finance a major part of the technical assistance program (fellowships and specialists' services) (paras 3.38 and 3.39) estimated at US$1.70 million including contingencies;  -21- (c) the Government would finance the remaining net costs of US$1.42 mil- lion (about 9% of total net project costs), and all customs duties and taxes. 4.07 The financing plan and IDA credit allocations by category of expendi- ture is presented in Table 4.3. Table 4.3: Project Financing Plan US$ million Government of Nepal IDA UNICEF Total 1. Civil Works 0.55 3.13 - 3.68 2. Building materials and 0.17 2.28 - 2.45 furniture 3. Equipment, books and journals 0.09 2.01 - 2.10 4. Professional services and - 0.80 - 0.80 project studies 5. Technical assistance local - 1.69 1.70 3.39 consultants and misc. costs 6. Educational and other consumable 0.14 0.56 - 0.70 materials 7. Staff salaries, allowances, 1.01 1.03 - 2.04 training and operating costs 8. Unallocated 0.24 1.28 - 1.51 Total Project Cost a/ 2.19 12.78 1.70 16.67 Less taxes and duties 0.77 0.77 Total Net Project Cost b/ 1.42 12.78 c/ 1.70 d/ 15.91 a/ Totals do not add due to rounding b/ Excluding taxes and land costs c/ The Credit of US$12.78 million represents 90% of costs net of taxes and UNICEF's contribution d/ UNICEF estimate including contingencies  -22-- Recurrent Expenditures 4.M08 To assist the government in setting up and operating the project institutions, IDA would finance recurrent incremental expenditures on a declining basis to cover: (a) salaries of additional professional and support staff for the MOECp CTSDC, OCE and the project districts; (b) project training and travel costs; and (c) operating costs during the project period from the estimated date of Credit effectiveness (July 1, 1984) to June 1989. Recurrent Cost Implications 4.09 The incremental recurrent costs (mainly salaries and allowances of additional staff and maintenance of physical facilities) generated by this project when fully operational would amount to N. Rupees 10 million per annum in 2.983 prices which is equivalent to less than 2% of the total estimated pub:Lic se^tor expenditures for education in fiscal year 1982/83. These addi- tional expenditures could be accommodated without undue financial difficulty to the Government. Retroactive Financing 4.10 To assist the government with early implementation of the project, prof-essional fees, site development, technical assistance and salary costs for incremental staff incurred between January 1, 1984 and the date of Credit effectiveness, amounting to US$350,000, would be financed retroactively. Local Budget Requirements 4.11 Budget allocations would be made available to the project on an annual basis, in accordance with the Forecast of Expenditures and Disbursements shown in Annex 7. During negotiations, the government provided assurances that it would make the necessary funds available so as to ensure prompt project implementation during the life of the project and proper operation and main- tenance of the physical facilities. V. PROJECT IMPLEMENTATION, PROCUREMENT, DISBURSEMENTS AND AUDITING A. Project Implementation Project Management 5.01 The project would be implemented over a period of 5 years. To ensure effective implementation, a small Project Implementation Unit (PIU) has been established and a Project Director has been appointed. During negotiations the government gave assurances that the PIU would thereafter be maintained in the MOEC and that other senior staff would be appointed as a condition of Credit effectiveness (Annex 11). Because of the high priority and importance given by HMG to this comprehensive intervention in primary education, the PIU would operate under the immediate direction of the Secretary of Education and Culture (Annex 9). The PIU has been designed to be the future administrative unit for all education projects. A Project Implementation Board (PIB) would  -23- be established as a condition of Credit effectiveness ard thereafter be main- tained; it would have representation from the Ministry of Finance and the National Planning Commission (NPC). One of it's main functions would be to help expedite matters (such as civil works contracting) requiring the clearance of other ministries and to approve the Administrative Plan (para 5,02). 5.02 The PIU, working with the Director of the CTSDC, would prepare an Administrative Project Plan for IDA clearance, by January 1, 1985. The Plan would detail all project activities and their schedule. Once the budget, manpower, and major activities of this plan have been accepted by the Secretary and the Implementation Board it could be changed only by that Board. B. Architectural Design and Construction Supervision Services 5.03 The architectural design, construction and supervision of school facilities (including modification, improvements and extensions) would be handled by an "in-house" departmental technical unit within the Ministry. The present Engineering Unit would be strengthened and upgraded to become a School Building Unit (SBU) which would handle: (a) variations of the available stand- ard Unesco primary school design drawings and construction guidelines; (b) the design of DEO and Regional Directorate facilities and the modifications of central ministry premises; and (c) the supervision of related construction operations. The emphasis would be on the supervision of field operations with distribution and explanation of plans and guidelines, and the provision of assistance to local communities in constructing adequate and structurally sound premises. 504 In addition to any SBU staff required for other projects financed from other sources, staffing requirements for this project are estimated as fol- lows: (a) one director (acting also as the project architect para 5.01); (b) one other qualified architect or structural engineer, (c) two draftsmen; and (d) about twelve site overseers, to be stationed at district education offices. The SBU could not provide architectural services and building super- visory services for occasional major buildings. Therefore, a private architec- tural firm would be selected to design and supervise the construction of the CTSDC and OCE facilities. In a manner and substance satisfactory to the Association, the government agreed to: (i) revise preliminary drawings of the CTSDC and OCE facilities; and (ii) prepare, as a condition of Credit effec- tiveness, full working drawings and bidding documents for the CTSDC and OCE buildings. IDA Review and Approval 5.05 IDA would review and approve all master equipment and furniture lists, equipment specifications, fellowship programs, terms of reference of experts, site layout plans and preliminary designs for civil works, draft tender and contract documents, packaging of civil works equipment contracts, and all related cost estimates. Site Selection 5.06 The CTSDC and OCE buildings are to be constructed on an area of about 10 acres at Sano Thimi near Kathmandu. The site is already owned by the  -24- M-inl-stry (MOEC). It is the location for the main campus of the Institute of h5Juca.eion and the location for the Janek Educational Materials Center (JEMC) -zhi(h is a parastatal organization. Also to be built on this site will be the OSience Education Development Center (SEDEC) to be financed by ADB. 6e-ause of the need to develop the site in an orderly fashion, the government pas -reoared, a Master Plan for the Sano Thimi site. At negotiations, the o)7:ernment provided assurances that it would carry out all future developments ofi the Sano Thimi campus to conform to the master plan. Sites have been ac-iired for both regional offices and some of the district offices; evidence f acuisition of all major sites has been submitted to the Assoication. C. Procurement The project procurement plan, outlined below is summarized in tabular fra Annex 6). LYocal Competitive Bidding (LCB) (US$3.69 million) 1/ >0X7 Civil Works and Furniture (US$2.90 million). Past experience in Nepal ,a -own that contracts for civil works (below US$800,000) and furniture (elow US$250,000) do not attract foreign bidders if they cannot be con- solidated into large packages. Therefore, contracts for regional and district oIffees, and all furniture would be awarded on the basis of competitive b:Ld- d.ing ad-vertised locally, following procedures which are satisfactory to the Association and do not exclude foreign bidders. Construction would be carried ;ulInder one integrated contract per building by private contractors. Only p-ec.uail ried contractors would be allowed to bid for civil works contracts in exaeoS of US$200,000 under this project. 90l Building Materials, Equipment and Vehicles (US$0.30 million). Because e large variety of small items of building materials and equipment will be oieedel for school construction and teaching purposes and because there will be an immediate need for start-up vehicles, which cannot be met through ICB, the gcovernment will procure some equipment locally. Contracts which cannot be Srouped into packages for bulk procurement of at least US$50,000 and not exceeding in aggregate US$300,000 (equivalent to about 13% of the estimated total cost of building materials, equipment and vehicles) would be procured by competitive bidding advertised locally, following procedures which are satisfactory to the Association. 5.O0 Educational Materials and other Consumable Materials (US$0.49 million). Since timely production of educational materials and delivery of consumable materials for laboratories, workshops and offices is critical, such ;laterials would be procured locally on a regular basis following competitive bidding procedures advertised locally, following procedures which are satis- factory to the Association. I/ This and subsequent statements are estimates including contingencies.  -25- International Competitive Bidding_(ICB) (US$4.85 million) 5.10 Civil Works, Building Materials and Equipment. Contracts exceeding US$800,000 equivalent for civil works, and US$50,000 for building materials, vehicles and equipment would be awarded on the basis of international competi- tive bidding in accordance with Bank Group guidelines. Local manufacturers or contractors would receive a margin of preference in bid evaluation of 15% of the c.i.f. price of competing imports or the actual customs duty, whichever is lower for building materials, vehicles and equipment and a margin of preference of 7.5% in bid evaluation against competing foreign contractors for civil works construction. Other Procurement Methods including Direct Purchase and Off-the-Shelf Shopping (Local and International) (US$5.89 million). 5.11 Off-the-shelf items of building materials, furniture, equipment (excluding books and journals), and educational consumable materials, not exceeding US$30,000 equivalent for each contract and aggregating to a maximum of US$550,000 (equivalent to about 11% of the estimated total cost of building materials, furniture, equipment and educational materials) would be purchased on the basis of a minimum of three competitive price quotations. Books and instructional printed matter (US$0.71 million) would be purchased directly from publishers or authorized distributors at the lowest possible prices on the basis of at least three competitive price quotations, if applicable. 5.12 Professional services and other consultancy services (US$0.88 million) and, technical assistance (US$2.03 million) would be obtained in accordance with Bank Group guidelines; in addition UNICEF would finance about US$1.7 million towards the cost of technical assistance; for these services, UNICEF procedures would be followed. There would be only 6 staff-months of foreign consultants under IDA financing, for which direct hire by the government would be practiced. UNICEF would act as an agent in handling overseas training for the primary education component. IDA Review and Approval of Procurement Decisions 5.13 Prior approval of the Association would be required for the award of any civil works contract exceeding US$200,000 equivalent and for contracts for the purchase of any equipment, books, furniture, building materials, and consumable training materials exceeding US$50,000 equivalent resulting in a coverage of about 85% of building materials and works contracts, and 75% of other goods contracts. The PIU would be advised to forward bid evaluations and recommendations for contract awards, allowing sufficient time (at least one month) for the Association's review and approval. In addition, bid validity dates would be established to allow the PIU or the evaluating body involved, sufficient time to process bids received, prepare an evaluation and reach agreement on award recommendations. D. Disbursements and Auditing Disbursements 5.14 The proposed Credit of US$12.78 million would finance 90% of total project costs after deduction of US$1.7 contributed by UNICEF, net of customs  -26- duties and taxes. The disbursement profile (Annex 7) is based upon the average profile of education projects Bank wide but adjusted to allow for early implementation, already underway, including civil works, which reached the preliminary design stage by the date of negotiations. The proceeds of the proposed IDA Credit would finance the various categories in the following mann.er. (a) Civil works 100% of foreign expenditures, 80% of local expenditures, (b) Building materials, furniture, equipment, vehicles, books and journals 100% of foreign expenditures, 80% of local expenditures (ex-factory), 65% of other local expenditures (off-the-shelf purchases); (c) Expert services for technical assistance; professional services for architectural design and supervision; overseas training and studies 100% of total expenditures; (d) Educational and other consumable materials 80% of local expenditures (ex-factory), 65% of other expenditures (off-the-shelf purchases); and (e) Incremental staff salaries, training costs, allowances, and operating costs On a declining basis by years (FY 84/85 - 100%; FY 85/86 - 100%; FY 86/87 - 85%; FY 87/88 - 20%; FY 88/89 - 0%). Documentation of Expenditures 5.15 With the exception of item (e) (para 5.14), all withdrawal applica- tions for contracts equal to, or in excess of US$10,000 will be supported by full documentation. Withdrawals against item (e) and for local currency contracts below US$10,000 in value would be made against statements of expen- diture (SOE) certified by the Project Director. Documentation in support of SOEs would not be submitted to the Association but would be retained by the PIU for review by IDA's supervision missions. In addition, this documentation would be subject to an independent auditor's report which would be submitted no later than nine-months after the end of the Borrower's fiscal year in which the expenditures covered by the SOEs were paid. To the extent practicable, withdrawal applications would be aggregated in amounts equivalent to US$50,000 or more (and not less than US$20,000), prior to submission to IDA for reimbur- sement.  -27- Project Accounts and Audits 5.16 Project accounts would be recorded in accordance with sound accounting practices. During negotiations, the government provided assurances that: (a) accounts and financial statements for each fiscal year would be prepared and audited by independent auditors acceptable to the Association; (b) certified copies of the audited accounts and financial statements, for each fiscal year, together with the auditor's report would be furnished to the Association as soon as available, but not later than nine months after the end of each fiscal year. VI. BENEFITS AND RISKS 6.01 Because the project objectives and scope are narrowly focused, the project's probability of success is increased and evaluation of its direct short-term benefits is also simplified. Successful evaluation of the project would indicate ways of achieving more cost-effective project designs for the future. The possible benefits of this first project in the primary sub-sector, therefore, must be viewed over the long-term when a second or even third project is nearing its completion. Over the long-term, through improved teacher performance, improved school management, improved technical backup support, and improved administration at the ministry level a gradual quality improvement would be achieved at relatively low cost. This in turn would raise literacy levels, which would facilitate agricultural extension work and improve farm productivity. Similarly improved primary education would con- tribute to improvements in health and hygiene, all of which are necessary for long-term national development. In addition, the project, and subsequent primary projects, would accelerate the government's decentralization policy in education by creating a greater awareness and self-dependence at district and village level and by strengthening district and regional office respon- sibilities. An equally important long-term benefit would be to create an adequate educational base at primary level, to supply secondary schools with adequately qualified entrants and this quality improvement would filter upward to higher education. A reform of the examination system would serve to rein- force this benefit particularly at secondary level, thereby enabling qualified manpower to be trained in sufficient numbers to meet the demands of a develop- ing society. 6.02 The project is spread over six districts with poor communications, the absorptive capacity of the ministry is limited and a weak civil service administrative system exists throughout Nepal. While the most accessible districts have been selected for the project and to strengthen the ministry is one of the project objectives, the risks due to these limitations cannot be entirely removed. They will be reduced by: (a) a simplified delivery system for inservice teacher training and supervision (para 3.10); (b) employ- ing UNICEF to provide, (i) technical and management advice, (ii) guidance especially in the early stages of implementation, and (iii) institutional support (para 3.17); (c) introducing project management procedures which-will institutionalize change in key divisions of the ministry (paras 3.26, 3.28 and 3.37); (d) the appointment of well qualified and motivated project staff.  -28- VII. AGREED ACTIONS TO BE TAKEN BY THE GOVERNMENT 7.G1 As conditions of Credit effectiveness the government agreed to take the following actions, in a manner and substance satisfactory to the Associa- tion: 1) fulfill all the conditions of effectiveness of the UNICEF Project Agreement (para 3.38); 2) establish and thereafter maintain the Project Implementation Board (para 5.01); 3) maintain a PIU within MOEC and appoint to it a project architect, an examination specialist from OCE and an education officer from CTSDC (para 5.01); 4) prepare working drawings and bidding documents for the CTSDC and OCE buildings, (para 5.04); 7702 During negotiations the government provided assurances that it would: 1) prepare by July 1, 1987 a draft comprehensive plan for the Improvement of Primary Education and its Adminstration in Nepal and thereafter seek to implement such plan in a suitable manner(para 3.36); 2) by July 1, 1987, with the assistance of consultants and UNICEF: (a) evaluate the adequacy of the organizational structures of regional and district offices, staffing and budgets to provide cost effective implementation of the ministry's policy to decentalize its education system; (b) furnish to the Association, for its review and comments, the results and recommendations of such evaluation; and (c) there- after, taking into account the Association's comments, implement such recommendations (para 3.37); 3) prior to the establishment of a particular school cluster establish and thereafter maintain a Resource Center Management Committee which would be assigned such powers, functions, responsibilities and repre- sentation to enable it to manage the Resource Center concerned (para 3.11) 4) (a) select suitably qualified candidates from the education cadre of MOEC for training under the project (para 3.19); (b) retain in post at adequate salary levels until completion of the project all CTSDC and PIU staff who have been trained under the project (para 3.39); and (c) upon successful completion of the project, endeavor to provide regular government positions at adequate levels of seniority for all staff on temporary appointments (para 3.41); 5) take necessary steps to ensure efficient customs clearance, including payment of customs duty and taxes on all equipment and materials for the project (para 4.03);  -29- 6) make necessary funds available so as to ensure prompt project implementation during the life of the project and proper operations and maintenance of physical facilities (para 4.11); 7) carry out future development of the Sano Thimi Campus to conform to the approved master plan (para 5.06). 8) have accounts and financial statements audited by independent auditors acceptable to the Association; furnish certified accounts and finan- cial statements and the auditor's report within nine months after the end of each fiscal year (para 5.16); 7.03 During negotiations understandings were reached with the government that it would: 1) establish a project data collection system by January 1, 1985 (para 3.36); 2) based upon the project data collected, provide annual evaluation reports by July 1 each year (para 3.36). 3) prepare an Administrative Plan for IDA clearance by January 1, 1985 (para 5.02); 7.05 Subject to the above conditions, the proposed project constitutes a suitable basis for an IDA credit of US$12.78 million to His Majesty's Govern- ment of Nepal for a term of 50 years including a 10 year grace period.  -30- Annex 1 COMPARATIVE EDUCATION INDICATORS URge I of 2 FEBRUARY 16, 1984 CENTRAL T GOVERNMENT EXPENIDITURE EDUCATION COMPLETION RECURRENT ON EDUCATION REcuRRENT ADULT RATE POR UNIT COST PRO0RESSION INP PER AS PERCENT EXPENDITURES LITERACY PRIMARY PRIMARY PRIMARY PRIMARY RATE FROM SECONDARY SECONPARY SIGHER BASE POP. CAPITA PERCENT GNP TOTAL CENTRAL ALLOCATED TO: RATE ENROLL. SCHOOL STUDENTS EDUCATION PRIMARY TO ENROLL. STUDENTS ENROLL. YEAR MILLS. (US$) DEVOTED TO GOVERNMENT PRI SEC NI (2) RATIO CYCLE PER AS PERCENT SECONDARY RATIO PER RATIO (1979) (1979) EDUCATION EXPENDITURE (1) (Iq76) (Z) (1) TEACRER CNP/CAPITA (0) (2) TEAC49R f ) (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) DEVELOPED COUNTRIES AUSTRALIA 80 14.6b 89,70 6.3* 14.6 --- --- --- --- 103X 100 21 --- 99 73 13 20.90 CANADA 81 23.7b 9,650b 7.7a 18.54Y 30a? 34a7 23at ggb 106* 100 21 19.9*? 100 92x 18 22.60x GERMANY F.R. 79 61.2 12,200 4.6 99