Malawi - Second Education Sector Credit Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 7734-MAI CI? P2C6 3-/*44I STAFF APPRIASAL REPORT REPUBLIC OF MALAWI SECOND EDUCATION SECTOR CREDIT NOVEMBER 13, 1989 Population and Human Resources Operations Division Southern Africa Department This document has a restilted dIstibution and may be used by redpients only in the perfonnance of their oichl duties Its contents may not otherwise be disclosed wihbout World Bank auorization.  CUEC EQVTS September, 1989 Currency Unit - Kwacha (MK) MK 1.00 - US$0.38 US$1.00 - MK 2.65 SDR1.00 - US$1.25 Republic of Malawi Fiscal Year: April 1 - March 31 ABBREVIATIONS AND ACRONYMS AfDB - African Development Bank CER - Center for Education Research DEO - District Education Office Devpol - Statement of Development Policies DPMT - Department of Personnel Management and Training EFTS - Equivalent Full Time Student EP&D - Economic Planning and Development ESR - Education Services Review GDP - Gross Domes#ic Product ICB - International Competitive Bidding IDA - International Development Association IEC - International Extension College IMF - International Monetary Fund JC - Junior Certificate JCE - Junior Certificate Examination LCB - Local Competitive Bidding MANEB - Malawi National Examination Board MBS - Malawi Book Service MCA - Malawi College of Accountancy MCDE - Maluwi College of Distance Education MCE - Malawi Certificate of Education MIE - Malawi Institute of Education MOEC - Ministry of Education and Culture NGO - Non-Governmental Organization ODA - Overseas Development Agency (UK) OPC - Office of President and Cabinet PIU - Project Implementation Unit PSIP - Public Sector Investment Program PSLC - Primary School Leaving Certificate PTTC - Primary Teacher Training College REO - Regional Education Office SEDOM - Small Enterprise Development Organization of Malawi UNDP - United Nations Development Program UNESCO - United Nations Educational and Scientific Organization UNICEF - United Nations Children and Education Fund USAID - United States Agency for International Development  FOR OMCIAL USE ONLY SECONID EDCAIOl 8ETO CREDIT Tble of Contents Page No. Basic Data ............ ... ............... i Credit and Project Sumary ............ ......................... E.timated Costs and Financing Plan ............................. iv I. TNTROIDUCTION ..*** .............*...* 1 A. The Economic and Policy Environment .................. 2 B. Government Strategy In Education .................... 3 II. THE EDUCATION AND TRAINING SECTOR ........................ 5 A. Basic Characteristics of the Sector .................. 6 B. Financing Issues ................................ .... 8 c. quality Issues ................. 13 D. Access and Equity Issues .......................... 18 E. Efficiency Issues ......... .0. ........ ....... ..... 19 F. Mangement, Planning, Research, Evaluation, Institutional and Organizational Issues ........... 20 G. Bank Group Experience and Lessons Learned .......... 21 B. Role of Other International Agencies and Non-Government Organizations ...................... 23 III. THE GOVERNMENT'S STRATEGY AND ACTION PLAN ................ 24 A. Key Features of the Reform Program and Updated Updated Public Expenditure Plan .................... 24 B. Financing .........e*o9ee**e*o ................ .. ... 25 C. Quality ............................................ 32 D. Access to Educational Opportunities ......es*.......... 33 go Efficiency ................................. 35 F. Management, Planning and Research ............ 35 H. Impacts and Viability/Sustainability of the Program 36 IV. THE PROPOSED PROJECT *........., ............... ........... 40 A. Objectives, Rationale and Suumary Description ........ 40 B. Detailed Description .... .... .......... ....... . 44 C. Project Cost .............*... ..................... 47 D. Financing Plan ................................................ 50 This report is based on the findings of two missions which visited Malav in October 1988 and March 1989. The missions were comprised of Ms. Nwanganga G. Shields (Mission Leader) and Ms. Joy de Beyer (Consultant) AF6PH, Ms. W. Gordon (UNESCO), Messrs. J. Bynoe (UNESCO Consultant), J. Graves (AFTTF), P. Murphy, T. Tilson, M. Giuseppi (Consultants), and D. Blackie (ODA Consultant). Secretarial support was provided by NM. Merced Swan and Ms. Anna Patricia Samuel. This document has a festricted distributon and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Beak authorization.  Page No. H. Procurement ........................... 51 P. Disbursement ... o .............. 53 G. Implementation ..................... 54 H. Reporting aad Monitoring ............. 55 V. Benefits and Risks........................... 56 VIo Assurances and Agreemetst ....... 58 ANNEXESICHARTS Annex A - Letter of Education Development Policy 60 Attachment 1 - Policy Action Program 66 Annex B - A Proposed Special Pri$ary Teachers' Training Programme for Malawi ...... .......... 76 Annex C - Plans for Curriculum Revision ................ 91 Annex D - Ministry of Education and Cultute (MOEC), Management Issues 104 Annex E - Introduction of the Shift System in Six Malawian Urban Secondary Schools ........... 110 Annex F - Furniture for Primary Schools ................ 118 Annex G - Roofing for Primary Schools................... 122 Annex H - First Education Sector Credit 1767-MAI, Action Plan - Update Mid-term Review ............. 123 Annex I - Implementation Timetable ..................... 138 Annex J - List of Documents in the Project File ........ 140 Annex K - Plan for Strengthening Primary School Education through the use of Radio Programs. 141 Annex Table 1 - Social Rates of Return to Incremental Levels of Schooling in Malawi (X p.a.) ..... 148 Annex Table 2 - Secondary School Curriculum ......... e.*.*.** 149 Annex Table 3 - Malawi Education Unit Costs and Enrollments, 1981182 - 1988189 ... . ........... .. 150 Annex Table 4 - Projected Recurrent Costs, Given Planned Investmnents . .... 151 Annex Table 5 - Comparison of Net Enrollment Ratios With and Without Reform ................... 155 Annex Table 6 - Comparison of Two Cohort Analyses With/Without Reform ..... o .................. 156 Annex Table 7 - Indicators of School Quality ................. 160 Annex Table 8 - Summary of Technical Assistance 161 Annex Table 9 - Summary Account by Project Component .... .... 162 Annex Table 10 - Summary Accounts by Year ....... 163 Annex Table 11 - Project Components by Year 164 Annex Table 12 - Breakdown of Summary Accounts 105 Annex Table 13 - Implementation Schedule ............... .... 160 Annex Table 14 - Schedule of Disbursement ..................... 167 Chart 1 - Structure of the Education System ............ 168 Chart 2 - Organization of the Ministry of Education and Culture 169 Chart 3 - Total Enrollment Growth 1985-1995/Net Enrollment Ratios .............. . 170  Pate No. Chart 4 - Comparison of Repeater Rates, Period 1995 ..... 171 Chart 5 - Comparison of Dropout Rates, Period 1991, 1995 172 TABLES Table 2.1 - Total Government Expenditure Shares, 1982183-1988189 ............... 8 2.2 - Annual Changes (Z) in Real Total Expenditure (1982183-1988189) ........................ 9 2.3 - Education Budget and Budgetary Shares ........ 11 2.4 - Female Participants as a Percentage of Enrollment ..................i Table 3.1 - Malawi Education Development Budget Estimates 26 3.2 - Public Recurrent Expenditures 1988/89 and 1994195 .......29 3.3 - The Impact of Recurrent Budget Growth on Primary Education Growth ................... 30 3.4 - Impact of Proposed Policy Changes on Enrollment at the Primary Level 37 3.5 - Projected Net Recurrent Education Expenditure.. 38 3.6 - Education Recurrent Budget Allocation by Level, Actual 1980181-1987/88, Budgeted 1988189, Plan Target 1994/95 ......................... 39 Table 4.1 - Education Investment Financing Plan ........... 41 4.2 - Conditions for Release of Funds and Cther Key Actions ................................ 42 4.3 - Stmmary of Project Costs by Project Component.. 47 4.4 - Project Costs by Category of Expenditure ...... 48 4.5 - Financing Plan ..... 50 4.6 - Procurement Methods and Disbursements 51 MAP IBRD No. 21607  I~~~~~~~~~~~NLV SECOND EDUCATION SECTOR CREDIT STAPF APPRAISAL REPORT BASIC DATA Country Data Per Capita GDP (1988) US$160 Total Population (1988) 8.273 million Population Growth (1977-1987) 3.5S p.a. Education 1986187 Female Eniollment Level Total Enrollment Gross Enrollment as X of Total Rate Primary 1,022,765 55 44 Secondary 26,183 4 33 MCDE 23,104 NA NA University 2,177 NA 23 Primary T. Training 1,802 NA 34 VoclTech Training 900 NA NA Public Expenditure on Education 1988189 Education share as (X) of total Government budget 11.1 Education share as (X) of GDP 2.8 Education share as (X) of Government Development budget 10.2 Education share as (Z) of Government Recurrent budget 11.4  - Li - MALAWI SECOND EDUCATION SECTOR CREDIT Credit and Project Summarv Borrower: Republic of Malawi Beneficiaries: Ministry of Education and Culture Amount: SDR 29.5 million (US$ 36.9 million) Terms: Standard, with 40 years maturity Prolect Objectives: The proposed Credit has four main objectives: (a) to improve the quality of education at all levels; (b) to expand access to primary and secondary education; (c) to strengthen sector management, budgeting and planning; and (d) to improve resource mobilization and allocation policies by reversing the decline in the sector's budget share in accordance with stated Government policy Project Description: The Credit would help the Government complete its funding requirements for the Second phase of its Ten-Year Education Investment Plan (1986-1995) which has been agreed with IDA. The Credit will support the following: (1) quality improvement through (a) curriculum reform and development, (b) improvements in the preparation, production, and distrioution of textbooks and other instructional materials, (c) development and introduction of new methods for more effective use of radio in primary schools, (d) improvement of the distance education system used at the secondary level; (e) development and introduction of low cost approaches for improving science instruction and the library system at the secondary level; (f) improvement of teacher training; (g) expansion of the number of qualified primary teachers, (h) reforms in the examination system, and (i) strengthening the school inspection system; (2) access improvements through (a) facilitating community self-help upgrading of school facilities by providing roofing sheets antD limited amounts of school furniture, and (b) planning and implementing reforms in grade promotion criteria, and more intensive utilization of facilities (double-shifts at secondary; and admission of day students at the university) and (c) expansion of the university's capacity to produce accountants - a skill in extremely short supply; (3) strengthening management, budgeting, and planning through (a) various institutional and capacity building measures in the Ministry of Education and the Malawi Institute of Education, and (b) a decentralization program for the Ministry; and (4) improved resource mobilization and allocation through (a) reforms in fee  - {it- I structures at all levels, (b) changes in reporting requirements for recurrent and investment expenditure plans, and (c) increares in the share of the national budget allocated to Education. Benefits and Risks: The Credit will continue and further IDA support for policy re"orm in education and will finance innovative programs to improve quality, access, cost effectiveness, internal and external efficiency and equity at all levels. Quality: the Credit will support the introduction of more relevant curricula, more effective examination systems and better learning materials in primary and secondary schools. The frequency and quality of school supervision will improve. Access and Equitys the Credit will promote greater access at (a) the primary level directly benefitting rural children who have dropped out of school because of pove=ty; and (b) secondary level through introduction of double shift system and provision of additional MCDE centers. Efficiency: in the medium and long term, the Credit will improve internal efficiency by reducing repetition and dropouts, thus lowering the cost per graduate. Management: the planning, budgeting and management capabilities of the Ministry will be strengthened. The main risk is that Government would allocate insufficient funds to the education sector over the next five years, leading to delays in implementation of the reform program, the investment plan, and the project. This risk has been minimized by requiring that a commitment to adequate funding, supported uy Treasury and approval by EP&D of budget projections, is in place before the project implementation begins and that this be reaffirmed at regular prescribed intervals during project implementation. A second risk is that the limited managerial and administrative capability of the MOEC to implement and effectively monitor the policy changes might be overstretched by the project. The project is addressing this risk by including measures to reinforce the planning function with more local staff positions, support and technical assistance, and fellowships. A third risk is that the large number of trainee teachers to be recruited into the new three year in-service training program will not all perform satisfactorily in the training program. This risk is being addressed through a condition of credit effectiveness that requires MOEC to develop criteria against which to evaluate their academic and practical performance and to release from service those who are unsatisfactory.  - lv - MALAWI SECOND EDUCATION SECTOR CREDIT ESTIMATED COSTS AND FINANCING PLAN Estimated Costs Local Foreign Total ---------(US$ million)------- Sub-Proiect A 10.2 8.9 19.1 1. Curriculum and Textbook Development 0.1 1.0 1.1 2. Strengthening Schools Radio 1.3 2.4 3.7 3. Special Teacher Training 6.1 1.2 7.3 4. Strengthening Exams 0.1 0.6 0.7 5. Strengthening Inspectorate 1.0 0.0 1.0 6. Strengthening Planning and Management 0.2 0.2 0.4 7. Strengthening the PIU 1.4 1.0 2.4 8. Faculty of Commerce 0.0 2.5 2.5 Sub-Proiect B 3.7 4.8 8.4 1. Primary School Facilities 2.9 4.1 7.0 2. Secondary Level 0.4 0.6 1.0 3. Management Study Implementation 0.4 0.0 0.4 Sub-Project C 2.4 5.1 7.6 1. MCDE Centers 0.6 1.1 1.- 2. Institutional Development - MIE 0.1 0.2 0.3 3. Teacher Training Expansion 1.4 2.8 4.2 4. Implementing ESR 0.2 0.7 0.9 5. Support for CER 0.1 0.3 0.4 TOTAL BASE COSTS 16.3 18.8 35.1 Physical Contingencies 0.5 0.8 1.3 Price Contingencies 3.5 1.1 4.6 GRAND TOTAL PROJECT COSTS 20.3 20.7 41.0 Financing Plan a/ Local Foreign Total -----(US$ million)------- Government 3.7 0.4 4.1 IDA 12.0 18.0 36.9 Total 20.3 20.7 41.0 a/ Excludes taxes and duties of US$ 1.35 million.  STAFF APPRAISAL REPORT SECOND EDUCATION SECTOR CREDIT REPUBLIC OF MALAWI I. INTRODUCTION 1.01 In 1985, the Government of Malawi (GOM), recognizing the crises it faced in the education sector and in the macroeconomic situation, embarked on a bold program of education reform and improvement, within the context of the economic adjustment and recovery effort already underway. Through its "Statement of Development Policies" (Devpol) for 1987-1996, together with the Second Education Plan (1985/86-1994195) and associated ten year investment program, and with IDA assistance under the First Education Sector Credit (effective June 15, 1987), the GOM articulated and committed itself to a comprehensive strategy for a decade of educational change, aware that it would require a decade or more to complete. 1.02 The proposed Second Education Sector Credit would assist the GOM to proceed with the second phase of this long-term plan, building upon and extending the encouraging progress achieved in the first phase, while also strengthening and intensifying the reform process where needed. 1.03 Through extensive consultations, reviews, and analysis undertaken to guide its design and preparation, the project has taken into account that: - the economic environment and adjfistment program framework, while still demanding strict austerity, is favorable for continuing the education reform effort (Sec. A of Chapter I, - the Government objectives for the sector are sound, providing a reasonable perspective as to where the sector should be heading in the long run and an appropriate basis for setting priorities for the short and medium run (Sec. B of Chapter I) - the main issues the GOM must address in the next ten years in education pose difficult challenges requiring urgent and broad- ranging measures responding to needs for adjustment, revitalization, and eventual expansion (Chapter II) - the Government strategy and action plan for addressing these issues through an updated ten-year investment and policy reform program offer a sensible, sustainable and suitably comprehensive framework for leading the sector into the 1990s (Chapter III) - the proposed credit, through supporting a time slice of the investment plan and facilitating the next steps in the policy reform process, would assist in fulfilling the program goals (Chapter IV)  - the berefits of the project would be substantial; the risks, while not insignificant, would be minimized by provisions included in the design of the project (Chapter V) - the agreements reached between the Government and IDA for this proposed Credit encompass a wide range of issues, consistent with the policy content and coverage of a time-slice of a ten-year investment program (Chapter VI, and the Sector Policy Letter and Matrix in Annex A). The rest of this Introduction, focusing on the economic and policy environment, and on Government strategy in education, outlines the context for the more detailed look at the sector in subsequent chapters. A. The Economic and Policy Environment 1.04 During the past decade, Malawi has had to contend with a series of external shocks: falling world prices for exports; rapid escalation in import prices, particularly fuel and intermediate and capital goods; an escalation in regional political tensions which has disrupted external transport routes and led to large rises in transport costs and caused a large and continuing flow of Mozambican refugees to Malawi; poor weather and an infestation of the cassava crop which have undermined food security. Severe foreign exchange shortages have led to a build up of arrears on import payments, stringent rationing of foreign exchange and import bottlenecks. The balance of payments has come under severe strain, the Government budget deficit rose to unsustainable levels and inflationary pressures have been strong. 1.05 The Government has responded with adjustment measures aimed at restoring macro-economic stability and growth. These include: price adjustments and decontrol; improved public sector resource management and strict control of Government expenditures; exchange rate adjustments; export promotion and diversification programs; strengthening of public sector policy and planning capacity; and parastatal reform. Since 1981 these efforts have been supported by three Structural Adjustment Loans, successive IMF stand-by operations, an IMF extended facility and in 1988, a large Industrial and Trade Policy Adjustment Credit and an IMF enhanced structural adjustment facility. Despite periodic setbacks, Malawi has made good progress in implementing the Government's adjustment program. Real GDP contracted by 6 percent in 1980- 1981, recovered to grow at an annual average rate of 3.1 percent through 1986, but deciined by about 1.5 percent in 1987. Growth in 1988 at 3.6 percent exceeded expectations, and growth is projected to accelerate to between 4 and 5 percent in the short-term making possible a gradual recovery in real per capita incomes. 1.06 Macroeconomic adjustment exerts its most direct impact on the education sector through Government budgetary allocations. The large and increasing external debt burden has been crowding out public expenditure and restraining the growth in budgetary allocations for new investments and iecurrent expenditures. Interest payments have claimed an average of more  -3 - than 17 percent of total Government expenditures each year from 1982 to 1988. 1/ Interest payments are projected to remain at their 1988/89 level (in Kwacha terms) through 1991/92, implying that they will claim a deezeasing share of total expenditure, leaving room for some recovery in sectoral expenditure shares. 1.07 The education sector has a major role to play in achieving the three key economic and social objectives outlined in Devpol: (i) the reduction of poverty, ignorance and disea4e by achieving rapid and sustained economic growth; (ii) an improvement in income distribution; and (iii) stabilization of economic growth. Devpol explicitly states that "education is seen as the most fundamental long-term investment in economic progress and social as well as political cohesion". Government's ability to achieve the quality improvements and expansion in access to education required to fulfill its objectives will be greatly affected by the availability of external financing and of domestic resources. B. Government Strate&v in Education 1.08 Since independence in 1964, the development of education has been an integral part of a wider national policy. The broad policy objective for the sector as contained ia Devpol is to develop an efficient and high quality system of education of a type and size appropriate to available resources and to the political, social and economic aspirations of the nation. Three central concerns are : (a) ensuring access to educational opportunities; (b) proper balance in the allocation of resources to the different subsectors of the system; and (c) improving the quality and efficiency of the system. 1.09 During the First Education Plan period (originally 1973-1980 and then extended to 1984), there was considerable expansion at all levels. The primary level gross enrollment target of 50 percent was substantially exceeded. This was a consequence of greater demand for primary education (and, hence enrollment) than anticipated, and was not matched by increases in inputs such as trained teachers, instructional materials, textbooks and physical facilities. As a result, there was considerable deterioration in quality. The secondary gross enrollment rate rose from 3 to 5 percent - much below the original target of 15 percent, but commensurate with the manpower needs of the modern economy. 1.10 Government has explicitly considered the manpower needs of the economy in deciding on the pace and pattern of post-primary expansion. The high rates of unemployment and underemployment of secondary school and University graduates typical of many other African countries have been avoided, although this problem is beginning to emerge. Taking account of present economic conditions and prospects, particularly the expected slow growth in wage employment, the Government sees a need to shift the emphasis towards preparing students for self-employment and entrepreneurship rather than for conventional employment. 1/ All data are taken from the Malawi Public Expenditure Review, IBRD, Report No. 7281-MAI, 1989.  1.11 The Government's Second Educational Plan (1985/86 - 1994/95) is more comprehensive and detailed than the first. 2/ Progress has been made during the first three years of the Second Education Plan in initiating curricula reform at the primary level, in provision of textbooks and teach<'s guides, and in expanding access and in teacher education. Total enrollment at the primary level increased from 899,459 in 1984185 to 1,022,765 in 1986/87 (a growth rate of 4.4 percent per annum). Secondary school enrollment increased from 24,343 in 1984/85 to 26,183 in 1986/87 (2.5 percent per year). Enrollment at the university has increased slightly from 1964 to 2177 (3.5 percent per year), and technical/vocational college enrollment increased from 500 to 717 (15.8 percent per year). Primary teacher training enrollment fell from 1,920 to 1,802 as a result of unusually high dropouts, no-shows and late selection. t/ See World Bank Staff Appraisal Report No. 6428-MAI (February 24, 1987) Education Sector Credit 1767, pp.13-17, for a summary of the Second Ten-Year Education Plan.  - 5 - II. THE EDUCATION AND TRAINING SEfTOR 2.01 The main issues currently facing the education system, and the principal features of the system, are described in this chapter under the following headings, which reflect to some extent the nature and scope of the issuess A. Basic Characteristics of the Sector B. Financing Issues 1. The Need to Increase Public Expenditure on Education 2. Resource Allocation Within the Education Budget: Priorities for the 1990s 3. Consistency Between Planned Investment and the Recurrent Budget 4. Cost Recovery Through Fees: The Next Phase 5. Resource Mobilization Through Comiunity Self-help and Other Non-Governmental Sources: Opportunities and Challenges 6. Financial Management and Planning: Inadequate Capabilities and Procedures C. Quality Issues 1. Curriculum Reform: Vitally Needed and a Difficult, Long- term Undertaking 2. Instructional Materials (Textbooks, etc.): Too Few and Outdated 3. Teachers: Deficiencies in their Numbers and Training 4. Examinations: Moving in the Right Direction but Slowly 5. School Supervision/Inspection and Management: A Long Way to Go 6. Distance Education: Quality is Improving but More Can and Should be Done 7. The Learning Environment: School Buildings, Furniture and Equipment are Grossly Inadequate D. Access and Equitv Issues 1. Enrollment Levels: Low and Prevented from Expanding Faster -- Due to the Severe Constraints in Resources (Classrooms, Teachers, Etc.) 2. Female Participation: Improving but More Progress Needed 3. Distributional Disparities: Some Groups and Districts Still Better Serviced Than Others E. Efficiency (Internal and External) Issues 1. Primary Repetition and Dropout Rates are Too High 2. Pupil/teacher Ratios: Too High in Primary and Too Low in Secondary and Post-secondary  -6- 3. Teacher Under-utilization in Secondary and Post-secondary 4. Unit Costs Need to be Contained Through Efficiency Improvements 5. Access to University is Low; University Reforms have Responded to Labor Market Needs F. Management, Planning, Research, Evaluation, Institutiotnal and Organizational Issues 1. The Ministry of Education: Decentralization Would Improve MOEC Management 2. Planning Systems Need Strengthening 3. Steps Have Been Taken to Improve Research and Evaluation G. Bank Group Experience and Lessons Learned H. Role of other International Agencies and Non-Government Organizations 2.02 The information, observations, and conclusions presented in this chapter are based on (a) review and analysis of the extensive assessments and other literature that exist now on education in Malawi, (b) new data collection and evaluation undertaken for this project, and (c) thorough consultations between Government and IDA staff. The literature includes staff appraisal reports, project completion reports and other documentation of the preceding six IDA investments in the sector, and sector reviews (see Annex J). Working from this knowledge base, the project preparation effort arrived at the list of issues discussed here after first reviewing a larger list of potential problem areas, covering every aspect of education from primary through post-second_,.ry and, in somewhat less detail, the formal and informal training system. The issues discussed in Sections B through F below, after the background description of the Section A, are recognized by the Government as the principal areas where it needs to concentrate its efforts in the next ten years. A. Basic Characteristics of the Sector 2.03 The Ministry of Education and Culture (MOEC) is responsible for all formal education and training in Malawi. This includes primary, secondary, technical and post-secondary institutions such as the Primary Teacher Training Colleges and the Malawi College of Accountancy (MCA). It is also responsible for the non-formal system of secondary education (Malawi College of Distance Education, MCDE). In addition, MOEC has formal responsibility for the University of Malawi, Malawi Institute of Education (MIE), and the Malawi National Examination Board (MANEB), although in practice this responsibility is exercised through its membership in the Management Boards of such bodies. 2.04 The education system is divided into four major levels: primary (standards 1-8) with a final Primary School Leaving Certificate (PSLC) examination at the end of the eight years; junior secondary (Forms I-II) leading to a Junior Certificate (JC); senior secondary (Forms III-IV) at the end of which the students sit the Malawi Certificate of Education examination  - 7 - (MCE); and tertiary including 4-5 years of university education and two years of teacher training (Chart 1). At the primary level, local communities are largely responsible for the physical facilities, while at the secondary level, church-affiliated NGOs play an important role. Schooling is not compulsory nor is there an age attendance limit. Private schooling accounts for about 6 percent of primary school enrollment and 16 percent of secondary school enrollment. In 1987 MCDE enrolled about 17,000 students in its 105 study centers, about 2000 in its 17 night secondary schools and a further 5000 studying at home. The Government has a functional literacy program supported by LriICEF aimed at making 2 million adults literate by 1995. 2.05 The MOEC is divided into four administrative units under the general supervision of the Principal Secretary assisted by a Deputy Secretary. These are: Planning, the Education Inspectorate, Education Administration, and the Accounts and Personnel Department (Chart 2). The Inspectorate is responsible for secondary school inspection while Education Administration is responsible for inspecting and administering primary schools, primary teacher training, technical schools and distance education. Partial decentralization has resulted in the creation of three "Regional Education Offices (REO) and 28 District Education Offices (DEO). Field supervision of primary schools is carried out by regional and district level staff using guidelines provided by headquarters. Secondary school administration and field level supervision, primary teacher training, technical/vocational training and distance education are all centralized at headquarters. The responsibility of the planning department includes identification, preparation, supervision and evaluation of education projects, policy studies and preparation of education statistics. 2.06 The MOEC also provides technical and vocational education through the technical colleges and Polytechnic Board of Governors courses. These courses are administered jointly with the Ministry of Labor which is primarily responsible for meeting private sector formal training needs. At present all major ministries have training units. Most operating ministries provide vocational training for their own skilled workers -- notably, agricultural and veterinarian assistants in the Ministry of Agriculture and health and nursing assistants in the Ministry of Health. Public administration courses are provided by institutions under the Department of Personnel Management and Training (DPMT). 2.07 Enrollment in the five secondary and post-secondary vocational and technical education institutions increased from 500 to 777 between 1984/85 and 1986/87. Enrollment levels are determined by the Ministry of Labour on the basis of perceived market demand, and have been limited to far below capacity because of very slow industrial growth. Even so, some trainees have difficulty finding jobs after graduation. The planned transfer of the Board of Governors technician training program from the Polytechnic to the technical schools should improve utilization levels. Trainees acquire some practical experience during the in-plant segment of the program. However, inadequate supervision in some work places makes it important for colleges to provide hands-on experience as well. Inadequate supplies of materials prevents this. 2.08 The education system has made enormous progress since independence in educating and training Malawians to fill posts in the civil service and to provide the skilled and educated labor force needed by the growing modern economy. Replacement of expatriates has been considerable, and most of those  - 8 - who remain have skills and expertise that would be expensive or difficult to provide in-country. The present capacity of the training system is adequate for the present and projected future demand for educated and skilled manpower, except in some specialized fields where shortages persist -- notably accountants and physicians. B. Financing Issues 2.09 The Need to Increase Public Expenditure on Education. Government spending on education is exceptionally low, even in comparison with other African countries. Total Government expenditure on education is around 3 percent of national income in Malawi, compared to over 5 percent in Kenya and Zambia, nearly 7 percent in Zimbabwe, and more than 8 percent in Botswana. Real per capita spending on education has fallen steadily from K14 in 1983/84 to K10 in 1988/89 (in 1987 constant prices). Rapid population growth (3.5 percent between 1977 and 1987) has created enormous pressure on educational facilities, and considerable additional resources will be necessary to maintain preseat (low) enrollment levels, let alone to satisfy some of the unmet demand for education. The school age population has been growing at 4.8 percent each year during the past decade, and will continue to grow at least at this rate for the neat decade. Table 2.1 TOTAL GOVERNMENT EXPENDITURE SHARES, 1982/83 - 1988/89 (AS X OF TOTAL EXPENDITURE) 1/ 1982/83 1983/84 1984/85 1985/86 1986/87 1987/88 1988/89 Interest 14.9 12.9 21.0 15.3 19.1 19.9 18.0 Education 12.8 12.9 11.6 10.4 10.1 10.4 11.1 Other Social Sectors 6.3 7.8 8.7 7.3 8.6 8.8 9.4 General Services 21.0 22.0 20.1 23.5 19.7 20.3 20.0 Agriculture & N.R. 13.8 15.5 11.7 10.4 12.4 11.5 11.2 Other Sectors 28.2 24.4 23.0 25.0 21.4 20.8 30.3 Notess "Other Social Sectors' are health and community and social development. General Services are general administration, defense and justice. "N.R." is Natural Resources. "Other Sectors' comprise transport, power, Government buildings, housing, water and sanitation, finance, ^ommerce and industry, and a small "other" category. Source: Malawi: Public Expenditure Review, Table 8, Report No. 7281-MAI, February 10, 1989. 1/ Includes extrabudgetary items, excludes debt principal repayments.  - 9 - 2.10 The education share of Government expenditure is below 12 percent, much less than most sub-Saharan countries (the median African country allocated 18.5 percent of its budget to education in 1980, and 15.3 percent in 1983). 2/ Table 2.1 shows that the education share of total Government expenditure fell steadily from 12.9 percent in 1983 to 10.1 percent in 1986, and recovered only some of the loss to reach 10.4 percent in 1987 and 11.1 percent in 1988. Planned investments in the sector have been repeatedly delayed and recurrent expenditures have been chronically and seriously underfunded. The underfunding of education recurrent expenditures has worsened in real terms: despite expansion of the sector, the recurrent budget allocation to education rose by an average of less than 1 percent per year between 1982/83 and 1985/86, and the substantial rise in 1986/87 was reversed in subsequent years. 2.11 The Government development policy historically has given the directly productive sectors priority over the social sectors. During the difficult fiscal time since 1982, education has fared worse than other sectors in terms of real expenditure. Table 2.2 shows the annual change in real Government expenditure allocated to education compared with other selected sectors. Between 1982 and 1986, the education allocation grew less, or fell more in real terms than that of the other social sectors (health and community services). The same is true comparing education with the other (economic) sectors and agriculture in particular, except in certain of the earlier years. In 1987/88 the education real budgetary allocation fell slightly less than that of the other sectors, barring agriculture. Table 2.2 ANNUAL CHANGES (%) IN REAL TOTAL EXPENDITURE, 1982/83 - 1988/89 1982/3 1983/4 1984/5 1985/6 1936/7 1987/8 -83/84 -84/85 -85/86 -86/87 -87/88 -88/89 Education -2.8 -7.1 1.6 2.5 -10.8 0.0 Other Social Sectors 4.4 1.5 -3.7 14.8 -11.4 0.0 Other Sectors -16.2 -3.4 17.4 -4.4 -16.5 3.8 Agriculture 1.1 -22.2 -0.0 33.5 -0.2 -0.1 General Services 1.1 -5.7 25.2 -5.9 -11.3 -7.6 Interest -16.2 67.0 -21.9 40.1 -13.9 -11.4 Total Budget -3.3 3.0 2.9 10.0 -13.0 -1.2 Source: Tabls 7 of Malawi: Public Expenditure Review, op cit. 2/ Education in Sub-Saharan Africa. Policies for Adjustment, Revitalization and Expansion, IBRD 1988, p 16.  - 10 - 2.12 However, the policy framework for the coming decade as set out in Devpol affirms the Government commitment to giving more priority to education, and gradually increasing education budget share to 15 percent. To reverse the decline of the recent past and increase education expenditure to at least a minimally adequate level to meet the basic needs of a rapidly growing population is of vital importance to (i) Malawi's economic development generally; (ii) to consolidating the gains of the past in quality and enrollments; and (iii) financing other essential improvement measures. Furthermore, the other improvement measures that need to be undertaken will come to little, disabled by lack of resources. 2.13 There is strong economic and social justification for increasing the resources devoted to education. Estimated social rates of return to educational outlays (using 1981 data) are 14 percent for primary, 15-20 percent for secondary, and 11 percent for the University (Annex Table 1). Other things being equal, more educated women tend to have better nourished and better educated children and lower fertility levels. This effect is compounded by the positive relationship between education and earnings. A large body of research in developing and developed countries consistently shows a strong relationship between education and worker productivity. The more educated farmers in Malawi have been found to have higher maize yields (in large part because they have much more contact with the extansion service) and to grow a greater diversity of crops, suggesting that education has a positive impact on agricultural development. 3/ A more educated, literate population is easier and cheaper to reach through mass media and other public information campaigns, tend to adopt improved practices in health and agriculture (for example) more readily and are better able to learn new skills and to take advantage of new opportunities for generating income. 2.14 Resource Allocation Within the Education Budtet: Priorities for the 1990s. Even if the educatioai share of total Government expenditures rises as envisaged in Devpol, resource availability will remain very highly constrained. This increases the importance of careful allocative decisions, both across and within different levels of the education system. The allocation of the recurrent budget to different levels reflects the increasing priority being placed on primary education, whose 1988189 share (47.5 percent) is higher than ever before. The University share has been reduced from nearly one-quarter of the budget, to 18.5 percent. The allocation to the secondary level has fallen from around 17 percent to between 15 and 16 percent over the past ten years, and within the secondary level there has been a small (but inadequate) growth in allocations to MCDE. 2.15 Budgetary allocations should take account of the relative cost- effectiveness in terms of educational outcome of various expenditures. For example, evidence from Africa and other developing countries suggests that the impact on learning per dollar spent on textbooks is higher than on most other inputs. There may be strong interdependencies among expenditure categories. For example, large outlays on teacher training and wages may fail to have the expected impact on educational quality if there are inadequate teaching 3/ Perraton, Jamison, . akins, Orivel and Wolff, 1983, Basic Education and Agricultural Extension, Costs. Effects and Alternatives, IBRD Staff Working Paper No. 564, ppl87-195.  - 11 - materials and textbooks. Realistic and careful planning and forward budgeting could prevent such non-wage items being squeezed out between rising wage bills and constrained budgetary growth. 2.16 Consistency between Planned Investment and the Recurrent Budget. The Government budgetary restraint has had a greater impact on the development budget than on the recurrent budget (see Table 2.3). In real terms, the recurrent budget increased by a very small 3 percent overall from 1,82/83 to 1984185, rose 13 percent in 1986J87 and then fell back by 1988189 to the 1982/83 - 1985/86 real level. The real value of the development budget fell a massive 24 percent between 1982/83 and 1984/85, increased by a small 2 percent in the following year, and fell by 27 and 18 percent in the subsequent two years. The allocation for 1988/89 restores the real level by 18 percent, but this is little more than half the real level in 1982/83. These trends have resulted in a more sustainable balance between recurrent and development expenditures. However, this adjustment was less deliberate than it was a reflection of the much greater ease of postponing investments than of cutting recurrent expenditures. Table 2.3 (Miliens of Iwacha) 1982/63 1983164 1964165 1965/86 1986187 1967188 1988/69 Decvlop.cnt Budget -. ; current prices 19.7 20.1 18.3 20.7 18.7 19.2 21.3-1 1967 price 40.1 37.5 30.1 30.1 23.4 19.2 22.7 Recurrent Budget current pricg 31.6 35.5 40.0 46.4 61.4 70.1 79.9 1987 prla 65.7 66.0 66.0 66.0 76.8 70.1 66.6 Total current prices 51.3 55.6 56.4 67.1 60.1 $9.3 107.2 1987 prices 106.6 103.5 96.1 96.1 100.2 69.3 89.3 Total Govt !tpediture b 400.3 432.0 503.2 643.2 797.0 u85.7 967.5 In 1987 prie 632.2 604.5 628.9 936.7 996.3 U8.7 604.3 of Stich voted $83.1 464.1 622.1 651.3 719.8 616.3 601.4 eduatilo se of total el vted W*. {