Mali - Education Sector Consolidation Project

Document of The World Bank FOR OFFICIAL USE ONLY C,( RoS4-/we/~~4 Report No. P-5010-MLI REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT IN AN AMOUNT EQUIVALENT TO US$26.0 MILLION TO THE REPUBLIC OF MALI FOR AN EDUCATION SECTOR CONSOLIDATION PROJECT MAY 17, 1989 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its co- 4cnts may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit CFA Franc (CFAP) 1/ US$1.00 - CFAF 314 (April 1989) CFAF 1 million - US$3,185 ABBREVIATIONS AND ACRONYMS AfDB African Development Bank/Banque Africaine de Developpement CFEPC Primary School Diploma/Certificat de Fin d'Etudes du Premier Cycle CFP Vocational Training Center/Centre de Formation Professionnelle CIDA Canadian International Development Agency/Agence Canadienne pour le Developpement International DAF Directorate for Administrative and Financial Affairs/Dire2ction des Affaires Administratives et Financieres DEF Basic Education Diploma/Dipleme d'Mnseignement Pondamental DET Technical Studies Division/Division des Etudes Techniques DNEF National Directorate for Basic Education/Direction Nationale de 1'Enseignement Fondamental DNESGTP National Directorate for Secondary General, Technical and Vocational Education/Direction Nationale de l'Enseignement Secondaire GenEral, Technique et Professionnel DNESRS National Directorate for Higher Education and Scientific Research/Direction Nationale des Enseignements Superieurs et de la Recherche Scientifique DNPES National Directorate for Planning and Schcol Equipment/ Direction Nationale de la Planification et de l'Equipement Scolaires DRE Regional Education Directorate/Direction Regionale de l'Education ECICA Central School for Industry, Commerce and Administration/Ecole Centrale pour l'Industrie, le Commerce et l'Administration EF Basic Education/Enseignement Fondamental EHEP School of Business Administration/Ecole des Hautes Etudes Pratiques ERA School of Public Administration/Ecole Nationale d'Administration ENI Engineering School/Ecole Nationale d'Ingenieurs ENMP School of Medicine and Pharmacy/Ecole Nationale de Medecine et de Pharmacie ENSEC Lower Secondary Teacher Training College/Ecole Normale Secondaire ENSUP Upper Secondary Teacher Training College/Ecole Normale Superieure ES Secondary Education/Enseignement Secondaire FAC French Bilateral Aid Agency/Ponds d'Aide et de Cooperation FED European Development Fund/Fonds Europeen de Developpement IEF Basic Education Inspectorate/Inspection de l'Enseignement Fondamental IPEG Pedagogical Institute for General Education (Primary Teacher Training College)/Institut Pedagogique d'Enseignement General IPN National Pedagogical Institute/Institut Pedagogique National IPR Rural Polytechnic Institute/Institut Polytechnique Rural HEN Ministry of Education/Ministere de l'Education Nationale PCU Project Coordinating Unit/Bureau du Projet (Direction des Projets Education) SPA Special Program of Assistaice to low-income, debt distressed Sub-Saharan Africa USAID United States Agency for International Development/Agence des Etats-Unis d'Amerique pour le Ddveloppement International FISCAL YEAR: January 1 - December 31 SCHOOL YEAR: October - June 1/ The CFA Franc is tied to the French Franc (FF) in the ratio of FF 1.0 to CFAF 50.0. The French Franc is currently floating.  FOR OFFICIAL USE ONLY REPUBLIC OF MALI EDUCATION SECTOR CONSOLIDATION PROJECT TABLE OF CONTENTS pase CREDIT SUM4MARY ..i.......................................... PART I. THE ECONOMY ....................................1 ............ A. Background .................................... 1 B. Recent Economic Developments ..................................... 2 C. Medium-Term Prospects and Policies .................................. 3 PART II. THE EDUCATION SECTOR . .................................... 4 A. Educational Structure ..................................... . 4 B. Main Issues in Education ..................................... 4 1. An Unbalanced Education System ................................... S 2. Poor Performance and Limited Relevance ............ ............... 7 3. Inefficient Management of Scarce Resources ..... .................. 10 PART II. THE PROPOSED HYBRID PROJECTs AN INTEGRATED PROGRAM OF REFORMS AND INVESTMENT .......... .................................... 13 A. The Government's Strategy ............................................ 13 B. Rationale, History and Objectives ... . ............................. 14 C. Sectoral Adjustment Program . .................................... 16 1. Measures to Improve Access and Equity ............................ 16 2. Measures to Improve Performance and Relevance at all levels ...... 17 3. Measures to Improve the Management of Sectoral Resources .... ..... 19 D. Investment Element ........................ .......................... 22 1. Increasing the Supply of, and Demand for, Primary Education ...... 22 2. Improving the Performance and Relevance of Primary Education ..... 24 3. Developing and Initiating a Strategy for Restructuring Secondary and Higher Education ................................... 27 4. Strengthening the Education Sector Planning and Management Capacity .......... .................................... 28 E. Costs and Financing, Credit Amount .. ................................ 30 P. Itpact of the Proposed Project .................................... 31 1. Educational Impact ........... ......................... 31 2. Social Impact .................................... 32 3. Financial Impact .......... .......................... 32 G. Implementation .................. .................. 34 1. Implementation Responsibilities, Readiness and Institution Building ............................. 34 2. Procurement, Disbursements, and Special Account ................... 35 3. Monitoring and Tranche Release .......... ......................... 37 4. Accounting, Auditing and Reporting ........ ....................... 38 B. Benefits and Risks ................................................. 38 PART IV. BANK GROUP'OPERATIONS ......................................... 39- PART V. COLLABORATION WITH THE IN? AND OTHER DONORS ......... ........... 40 This document has a restricted distibution 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.  TABLE OF CONTENTS (continued) Page PART VI. RECOMMENDATION ... . . ............. . ..... ..... . ......... .*.. . 41 TEXT TABLES Table 1. Projected Primary Enrollment Ratio by 1994 .. ................ .. 31 Table 2. Ministry of Education's Budget, with and without Adjustment, by Level of Expenditure ........ .......,.... 33 Table 3. Ministry of Education's Budget, with and without Adjustment, by Type of Expenditure ............ .......... 33 ANNEXES Annex I Table 1 - Key Macroeconomic Indicators ................. *... 42 Table 2 - Balance of Payments ...... ................. 43 Table 3 - External Financing Requirements (1987-92) ........ 44 Annex II Basic Data ....................................................... 45 Table 1 - Total and Female Enrollment by Level of Education ... .... .. . ................... .. ......... 46 Table 2 - Urban/Rural Breakdown Data (Cycle I) ............. 46 Table 3 - Structure of the Education Sector .......... ...... 47 Table 4 - Organization Chart of the Ministry of Education .. 48 Annex III Government's Letter of Education Policy ............ ........ 49 Annex IV Policy Matrix and Review Criteria for Implementation of the Adjustment Program and of the Investment Element .... 55 Annex V Investment Element ......................................... 62 Annex VI Education Budget, Unit Costs, and Financing . . 66 Table 1 - MEN's Budget, by Level of Education .............. 66 Table 2 - MEN's Budget, by Type of Expenditure .... ......... 67 Table 3 - MEN's Recurrent Budget, by Level of Education and Type of Expenditure . ..... ......... ..#. ....... 68 Table 4 - Private Financing of Basic Education, 1984-86 .... 69 Table 5 - Unit Costs, by Level of Education, 1985-87 ....... 70 Table 6 - Detailed Breakdown of Unit Costs in Secondary Education ..... ....... *. ...... .............. . 71 Table 7 - Breakdown of Unit Costs in Higher Education ...... 72 Table 8 - Breakdown of Scholarship Budget, 1986-88 ...... 73 Table 9 - Government-Borne Costs Associated With Scholarships Abroad .......... . .............................. . 73 Table 10 - Scholarship Recipients in Higher Education . ..... 74 Table 11 - Financial and Enrollment Implications of the Program ...... *.... ..................... .. 76 Annex VII Educational Internal and External Efficiency ................ 77 Table 1 - Internal Efficiency in Basic and Secondary Education ......... ....................... 77 Table 2 - Graduates from Basic, Secondary and Higher Education ......... ...... ................ 78 Table 3 - Graduate Unemployment .................... 79 Table 4 - Social and Private Returns to Education .......... 80 Table 5 - Sensitivity of Unit Costs/Basic Education Graduate to Increases in Quality Inputs .......... 81 Annex VIII Education Personnel ................... ................ 82 Tab] 1 - Education Personnel ....... ................ 82 Tab._ 2 - Student/Teacher Ratio ............................ 83 Table 3 - Primary Education Personnel ...................... 83  TABLE OF CONTENTS (continued) Pate Table 4 - Structure of Salary Scales by Country ............ 85 Table 5 - Output and Recruitment of Teachers ............... 86 Table 6 - Demand for New Primary School Teachers, 1990-94 .. 86 Table 7 - Balance Between Projected Demand for, and Supply of Primary Teachers (1989-94) ............. 88 Annex IX Project Costs, Recurrent Costs Implications, and Capital Cost Savings ....... . .. .. 89 Table 1 - Project Costs Summary . .. ......91 Table 2 - Cost Savings and Incremental Recurrent Costs Generated by the Project ........................ 92 Table 3 - Summary Table ........ .......... 93 Table 4 - Capital Cost Savings Generated by the Investment Element of the Project. . ...... 93 Annex X Procurement and Disbursement ... ....... .... 95 Table 1 - Amount and Methols of Procurement ................0 00 Table 2 - Disbursement Profile .......... . 101 Table 3 - Allocation and Disbursement of the IDA Credit . 102 Annex XI Implementation .......... . . . .. . 103 Table 1 - Implementation Schedule . .103 Table 2 - Government and Local Contributions .1 0 Table 3 - Summary of Local and Foreign Specialist Services. ..... .. ...... lS...... 4.105 Table 4 - Sumhary of Local and Foreign Training. 19 Table 5 - Summary of Civil Works ..114 Annex XII Supplementary Credit Data sheet .. 117 Annex XIII Status of Bank Group Operations ............................ 121 Annex XIV Selected Documents Available in the Project File ....... 123  REPUBLIC 0P MALI EDUCATION SECTOR CONSOLIDATION PROJECT CREDIT SUMMARY Borrower s Republic of Mali Beneficiary: Ministry of Education Amount s SDR 20.2 million (US$26.0 million equivalent) Terms Standard Project Description: This project would assist the Government to implement an integrated package of reforms and investments air-4 at reshaping the unbalanced Malian education system, improving its performance and relevance and promoting a more cost-effective use of scarce resources. It would be hybrid in nature, consisting of, first, a quick-disbursing element to be released in three yearly tranches against implementation of a sectoral adiustment program and second, an investment element focusing on primary education and the management of sectoral resources. A. The sectoral adjustment program would ensure the sustained implementation of a comprehensive set of far-reaching policy and institutional reforms required for the achievement of the above objectives by: (1) promoting more effective and equitable resource use through controlling student flows into secondary and higher education in line with projected budgetary resources and trends in labor market demand, actions to expand and improve private education and to increase female participa-ton; (2) enhancing performance and relevance at all levels, through a revision of textbook and teacher training policies and of the primary curricula; and supporting the development of low-cost, efficient options for restructuring secondary general and higher education; (3) improving the effectiveness and efficiency of resource allocation through a budget restructuring in favor of primary education and allocations for materials, a more intensive use of staff and facilities, the mobilization of private resources and a more competitive packaging of procurement (US$12 million, representing the foreign exchange equivalent of a US$20.7 million package of mainly pedagogic goods to be purchased by the Ministry of Education over a three-year period). B. Within this policy and institutional framework, the investment element would, as a first step toward achieving the long-term objectives stated above, aim at: 1. increasing the Supply of, and Demand for, Primary Education in Three Regions of the Country through a major school construction/ rehabilitation/repair program based on matching fund contributions, low-cost participatory techniques, a more efficient use of classrooms and teachers, incentives to the development of private educational services and increased participation from disavantaged groups (rural children and females) (US$ 14.8 million); 2. Imroving the Performance and Relevance of Primary Education Country-wide through the establishment of systematic qualitative monitoring and evaluation (M & E), revision of the teacher training and primary curricula, a major in- service training program for primary education personnel, the strengthening of pedagogic support and control, and provision of textbooks and pedagogic materials (US$ 9.9 million);  ii 3. Developing and Initiatina a Strateav for the Restructurint of Secondary and HRiher Education through a strengthening of the relevant Directorates, including the Scholarship Service, to implement the proposed scholarship reduction, improvements in study conditions in three existing higher education institutions, and assistance to young graduates for the creation of micro- enterprises (USS 4.0 million). 4. Strenathening the Education Sector Plannina and Management Canacitv through reinforcing the Ministry of Education's (MEN) Directorates responsible for planning, budgeting, personnel and physical resources management, decentralized management, project implementation and preparation (US$ 6.7 million). Benefits and Risks: By reversing the recent decline in the primary enrollment ratio and the quality indicators, the proposed operation would begin to alleviate a critical constraint to Mali's long-term growth prospects. The adjustment program would improve the overall efficiency of the Malian education sector, allowing a major reallocation of resources in favor of primary education, to help broaden the base of the education system, and of materials, to improve quality at all levels. A combination of actions from the supply and the demand side would result by 1994 in an increase in the total primary enrollment ratio from 31 to about 362 (compared to a decline in the public enrollment ratio from 28 percent in 1979 to 24 percent in 1987), and in the female total enrollment ratio from about 22 to about 28S. Improvements in the policy and institutional contexts would heighten the productivity of the proposed and future investments, facilitating the mobilization of additional resources for the sector. The positive impact on quality of more relevant programs, adequate supplies of textbooks, and more motivated, better trained teachers, following more active pedagogic approaches would translate into better student achievements (savings of up to 362 on the unit cost per primary education graduate through a reduction of repeater and drop-out rates) not only in primary education, but eventually in the other levels as well; graduates entering the labor force would be more adaptable and more productive. Overall, the project would initiate a gradual shift toward an education system that would be more equitable, more cost-effective and better adapted to Mali's projected fiscal constraints and job market opportunities. Finally, support to a critical social sector would alleviate the effects of the on-going structural adjustment process. The main risks concern: (i) the Government's ability to implement the more politically s,.nsitive elements of the adjustment program (scholarships reductions and tighter personnel management) if faced with strong resistance from vocal, vepted interest groups; (ii) the fact that demand constraints on the enrollment ratio are more difficult to address than supply constraints; and (iii) MEN's capacity to absorb change. The first risk is mitigated, first, by the Government's recognition of a crisis in the education sector and its commitment to the program; and second, by the flexibility built into the adjustment program to achieve specific objectives through various combinations of measured. The other two risks would be reduced through the introduction of school promotional activities, systematic monitoring from the beneficiaries viewpoint, careful phasing of project activities, and yearly in-depth reviews. On balance, these risks are manageable and well worth taking, given Government's determination to improve the linkage between education and employmer.t, and the deepening of our policy dialogue.  iii Summary of Project Cost Estimatest Local Foreign Total ---- (US$ million) --- A. SectorUA Adjustment Program (qu.,ck-disbursing element) 8.7 12.0 20.7 a) B. Investment element 1. Increasing the Supply of, and Demand for, Primary 5.4 6.2 11.6 Education 2. Improving the Performance and Relevance of Primary 1.7 6.5 8.2 Education 3. Developing and Initiating a Strategy for Restructuring 1.6 1.9 3.5 Secondary and Higher Education 4. Strengthening Education Sector Planning and Management 0.9 4.7 5.6 Capacity Total B (investment element) 9.6 19.3 28.9 Total Project Base Costs (A+B) 18.3 31.3 49.6 Physical Contingencies bI 0.7 1.6 2.3 Price Contingencies b/ 1.8 2.5 4.3 Sub-total 2.5 4.1 6.6 TOTAL PROJECT COSTS 20.8 35.4 56.2 zss n_ a/ Net of taxes and duties on imported goods. b/ For the investment element only.  iv Financina Plan: Local Foreign Total ------- (U8Smillion) ----- - Quick-disbursing element 0.0 3.0 3.0 - Investment elemnt 6.7 16.2 22.9 USAID - Quick-disbursing element (SPA) a/ 0.0 4.3 4.3 - Investment elem,et 1.8 1.5 3.3 FAC - Quick-disbursing element (SPA) 0.0 1.0 1.0 - Investment element 0.1 2.6 2.7 Notway - Quick-disbursing element (SPA) 0.0 3.0 3.0 CIDA - Quick-disbursing element (SPA) 0.0 0.8 0.8 UNDP - Investment element 0.0 0.5 0.5 Government 10.0 bI 0.2 10.2 Local coamunities 2.2 2.3 4.5 TOTAL 20 8 35.4 56.2 Estimated Disbursements of ------------------- IDA Fiscal Years --------- the IDA Creditt 1990 1991 1992 1993 1994 1995 _-_______------ (USSaillion) ------------------ A. Ouick-diubursina Element Annual 1.0 1.0 1.0 - _ _ Cumulative 1.0 2.0 3.0 - - - D. Investment Element Annual 3.6 6.4 6.8 4.3 1.5 0.4 Cumulative 3.6 10.0 16.8 21.1 22.6 22.9 Total A + I Annual 4.6 7.4 7.8 4.3 1.5 0.4 Cumulative 4.6 12.0 19.8 24.1 25.6 26.0 Economic Rate of Returns Not applicable Staff Appraisal Regorts This is a combined Staff Appraisal and President's Report. aJ Special Program of Assistance to low-income, debt-distressed countries in Sub-Saharan Africa. bI Of thlis amount, US$8.7 million represent the local cost equivalent of sectoral purchases of goods, totalling US$20.7 million over a 3-year period, which Government would pre-finance. b:coverpr.wp (NaliB) 'a.  INTERNATIISAAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE REPUBLIC OF MALI FOR AN EDUCATION SECTOR CONSOLIDATION PROJECT 1. I submit the following report and recommendation on a proposed Development Credit for SDR 20.2 million (US$26.0 million equivalent) on standard IDA terms with a maturity of 40 years to the Republic of Mali. The credit would help the Government of Mali to sustain the momentum of far-reaching educational policy reforms and to implement a core package of critically needed related investment. This integrated program of reforms and investment aims at reshaping Mali's unbalanced education system, improving its performance and relevance and promoting a more cost-effective use of scarce sectoral resources. The proposed project would be a hybrid consisting oft (i) a sectoral adiustment program supported by a quick-disbursing element of about US$12 million equivalent (IDAt US$3.0 million; cofinancing from the United States Agency for International Development (USAID), the Kingdom of Norway, the French Fonds d 'Aide et de Cooperation (FAC) and the Canadian International Development Agency (CIDA) under the Special Program of Assistance to low-income debt distressed Sub-saharan Africa (SPA) totalling US$9.0 miliion) and Government contribution (US$8.7 million); and (ii) an investment element, focusing on primary education and improved management of sectoral resources, whose total costs are estimated at US$35.5 million equivalent (net of taxes and duties) with a foreign exchange component of US$23.4 million. The Government would contribute US$1.3 million; Parents Associations (APEs) would contribute in kind (labor and materials) or in cash the equivalent of US$4.5 mil1ion; USAID, FAC and lJNDP would contribute as grants a total of US$6.5 million; and the remaining US$22.9 million would be financed by IDA. 2. The proposed project would be IDA's fourth contribution to the development of education in Mali; it would introduce, at the sectoral level, important elements of the Adjustment Programs supported by IDA and the IMF, while creating the initial conditions for renewed, sustainable growth in education. The policy measures supported by the project were developed through a sectoral dialogue conducted with the Malian authorities during 1987-88. PART I. THE ECONOMY A. Background 3. Mali is a vast, landlocked, and resource-poor country located in the Sahelian zone of western Africa. Only about a quarter of its 1.2 million square kilometers is arable. Nearly 90 percent of the population, estimated at 7.8 million in mid-1987, is dependent on the agricultural sector which accounts for roughly 50 percent of GDP. Per capita income was estimated at US$200 in 1987 and social indicators, such as life expectancy and school enrollment rates, are among the lowest in the world. Population growth is an estimated 2.7 percent per annum. About 44 percent of the population is under age 15. Key macroeconomic data are provided in Annex I.  - 2 - 4. Structural problems. Mali's economic performance is constrained by a narrow resource base and legacy of inappropriate past policies, including inefficient public resource management and distortions in the structure of economic incentives. 5. Weak resource base. Mali's potential for long-term growth is limited by harsh resource constraints. Infrastructure is sparse, and growth in the agricultural sector is constrained by low rainfall, fragile soils, and low-productivity traditional technologies. In addition, the weak human resource base represents a serious obstacle to future growth. Primary education enrollment rates are among the lowest in the world and basic health services are not widely available. These problems are compounded by population growth which puts severe pressure on both the limited natural resource base and the financial resources available for the provision of basic public services. 6. Public resource management. The state-dominated development strategy pursued until the early 19808 led to serious inefficiencies with regard to both resource mobilization and allocation. High levels of personnel expenditure and subsidies left inadequate funds for non-salary operation and maintenance expenditure. Public investment decisions gave insufficient attention to financial and economic selection criteria, including debt service and recurrent cost implications. The fiscal system became overly complex, severely distorted resource allocation signals, and gave little attention tc cost recovery for public services. In addition, non-market credit allocation procedures led to rapid credit growth, particularly to the public sector. The performance of the public enterprise (PE) sector constituted a particularly acute manifestation of poor public resource management. 7. Incentives framework. In addition to the public resource management inefficiencies mentioned above, an appreciating real effective exchange rate, price controls, a restrictive trade regime, and excessive economic regulation have distorted incentives, skewed resource allocation, and thus impeded growth throughout the economy. B. Recent Economic Developments 8. Macroeconomic Performance. Mali's structural problems combined with a highly variable climate have resulted in erratic economic performance. Although real GDP growth averaged 2.7 percent per annum during 1981-88, output fell in t ree years of the period. GDP is estimated to have fallen slightly in 1988 as a rtsult of poor weather conditions in the 1987/88 crop year. Real growth of approximately 9 percent is projected for 1989 as a result of improved weather conditions and policy reforms implemented in previous years. 9. Despite erratic growth, both consumption and investment have been sustained by inflows of official development assistance which, in real terms, increased more than sixfold between 1970 and 1985. Roughly half of this assistance has been in the form of loans and by end-1987 total public debt outstanding and disbursed reached 106 percent of GDP. Although most of Mali's external debt is contracted on concessional terms, debt service obligations rose by more than 50 percent between 1983-85 and 1986-88. Current debt service obligations reached 30 percent of exports and 31 percent of Government revenue in 1988. External arrears at end-1987 represented an additional 34 percent of 1988 export earnings and 35 percent of Government revenues. Mali sought debt relief from its Paris Club creditors in October 1988 and rescheduled US$72 million in 1988 obligations and arrears. In addition, it rescheduled US$5 million with non-Paris Club creditors.  10. The current account deficit is estimated to have fallen to 17 percent of CDP in 1988 (5 percent including grants) from a peak of 31 percent in 1985, largely because of price and volume increases for cotton exports and a fall in the value of food and petroleum imports. The consolidated current budget excluding grants moved froe a deficit of 3.9 percent of GDP in 1981 to overall balance in 1988 (commitment basis). 11. Adiustment efforts. Confronted with unsustainable fiscal and external deficits, the Government launched a stabilization program in 1982, supported by Fund resources, under which a number of measures were introduced to reduce budgetary deficits, PE operating losses, and public sector arrears. In addition, initial reforms -- including market liberalization and improved price incentives -- were introduced to increase the efficiency of resource allocation. 12. The pace of reform slowed noticeably in late 1986 and early 1987, however, when the Government failed to implement a number of policy measures agreed upon in the context of Bank sector adjustment discussions and the third IMP Standby. The public sector accumulated substantial arrears in 1987, and the banking system was seriously threatened by the illiquidity of a state-owned bank, the Banque de D4veloppement du Mali (BDM) and the postal checking system (CCP). 13. The Government has demonstrated a renewed commitment to reform since late 1987 when it made a number of long-delayed decisions regarding its adjustment program and took steps to implement them rapidly. This culminated in approval of: (a) a Policy Framework Paper (PFP) for 1988-90; (b) an IDA adjustment credit in support of the Government's PE Sector Adjustment Program (PESAP); (c) an IMF Standby and Structural Adjustment Facility (SAF) program for 1988/89; and (d) Mali's eligibility for SPA. 14. The Government's policy reforms have led to a number cf significant accomplishments. Civil service recruitment has been tightly controlled and higher education graduates are no longer guaranteed public sector employment. Major reforms have been introduced in the cotton sector, which adjusted rapidly to the fall in export prices in 1985/86. Cereals markets have been liberalized and price controls, which had covered virtually all products, now cover only a small number of essential products. Numerous public tariffs, including those for water, electricity, railroad, and postal services, have been substantially increased to be more in line with costs. In addition, all export monopolies and most import monopolies have been abolished. 15. Impler.ntation of the reform program in 1988 was mixed. The structural measures envisioned under the PESAP and SAP were implemented largely as scheduled and the first tranche of the PESAP was released in September 1988. Nonetheless, poor tax administration and increased fraud led to a major shortfall in Government revenues which was offset by higher levels of external financing than originally projected. As a result, the macroeconomic objectives of the program were attained. C. Medium-Term Prospects and Policies 16. Policy Framework Paper (PFP). Mali's medium-term PFP aims at achieving a sustainable rate of growth consonant with domestic and externei. financial stability. The three key objectives of the program for 1988-90 ares (a) to attain an average annual growth rate of real GDP of about 4.5 percent in 1989-90; (b) to reduce the annual rate of inflation, as measured by the GDP deflator, to about 3.5 percent in 1990; and (c) to reach a viable and sustainable external sector position by the early 1990s.  - 4 - 17. The PFP focuses on reform in five key areas t agricultural policy, economic incentives, efficiency of public resource management, public enterprise reform, and sound financial policies. In addition, the PESAP aims to improve the performance of the PE sector and to reduce its burden on public finances. These objectives are to be achieved by: budget reform, price liberalization, financial sector reforms (including reduction of government shareholding in BDM to 20 percent), institutional and legal reforms redefining relations between government and public enterprises, and rationalization of the sector through restructuring and divestiture. 18. The authorities have reiterated their commitment to the objectives, strategy and policy measures outlined in the PFP. In light of the economic and financial results for 1988 they have proposed to strengthen certin elements of the program. In particular, they propose to: (a) introduce measures to reduce the poor revenue performance in 1988; (b) speed up efforts to restructure the BDM; tc) adopt a cotton sector adjustment program before the next marketing season; (d) accelerate the timetable for price liberalization and trade reform; (e) strengthen public enterprise divestiture efforts; and (f) introduce an improved mechanism for interministerial monitoring and coordination of the adjustment program. Effective implementation of the modified adjustment program would permit attainment of the PFP objectives as originally scheduled. PART II. THE EDUCATION SECTOR A. Educational Structure 19. The education system consists oft (a) basic education, comprising a six year primary "Cycle I and a three year Cycle II; (b) three years of secondary schooling; and (c) higher education in seven 3Grandes Ecolesn (GEs) located, with only one exception, in Bamako, the capital, complemented by an extensive program of overseas study. Teachers are trained, for basic education, in ten teacher training colleges recruiting at the post-basic level (maltres du Premier Cycle, or MPCs, and maltres du Second Cycle, or MSCs); and for secondary education (professeurs de l'enseignement secondaire), in a University level program at Ecole Normale Superieure (or ENSUP, one of the seven GEs). Koranic schools are found in most villages but only teach the Quran by rote; medersas -- private muslim schools which use Arabic as the language of instruction and teach traditional academic subjects along with religion -- have experienced rapid growth in urban areas in recent years. There is also a small, subsidized catholic sector. Responsibility lies with the Ministry of National Education (Ministbre de l'Education Nationale - MEN) for all levels of formal education, including accredited medersas and catholic schools, and for adult literacy programs; in addition, the technical ministries run their own small-scale training programs. Administrative authority for primary and secondary education is decentralized to Regional Directorates (seven plus Bamako). Since the sixties, APEs have assumed a major role in financing primary education investment (four times the total MEN investment budget), but this has not been matched by a commensurate sharing of decision-making. Annex II shows basic data on the sector, the structure of the education system and the organization chart of MEN. B. Main Issues in Education 20. Mali should be credited for having pioneered original educational approaches such as the use of national languages in the early years of instruction, cost recovery, and a stated policy of tailoring the output of graduates to match the needs of the economy. Nevertheless, however good the initial intentions, the system has been allowed  - 5 - to develop in an unbalanced and uncontrolled fashion. Today, it is faced with a demand problem at the primary level, and a paradoxical and unique combination of declining enrollmerts and excess supply of graduates at the higher levels, all three phenomena being linked to deteriorating quality and relevance. While the contraction of the system in secondary and higher education contributes to reshaping the distorted education pyramid, at Mali's low level of human capital formation this is an undesirable trend which should be reversed. However, it does offer Government a respite to tackle the issues in a rational and systematic manner. 1. An Unbalanced Education System 21. Low and declining primary enrollment ratio. Mali features one of th- world's lowest adult literacy rates -- 15 percent in 1987 -- and primary enrollmen ratios -- 24 percent (public schools), down from a peak of 28 percent in 1979, due to a stagnation of enrollments for the past eight years. These statistics obscure wide differences by sex and between regions. For instance, girls in Cycle I represent only about 37 percent of total enrollment, and regional enrollment ratios range from 11 to 58 percent. In urban areas, enrollment growth is limited by school capacity constraints, resulting in overcrowded classes particularly in the lower grades (60 students/teacher on average) and restrictions on admissions each year, a situation exacerbated by rural to urban migration since the 1984 drought. Part of this demand has been met through a -.st expansion, under Arab financing, of the medersas (about 15 percent p.a. over 1983184 - 1986/87), which bring the total enrollment ratio to about 31 percent and the urban ratio to about 80 percent. In rural areas, enrollment growth is constrained by a combination of supply and demand factors: due to low population density, the provision of schools is costly (with average class size at about 30 students), and the large catchment radius means long walking distances, with special problems for girls, school feeding, etc. The issue has been partly addressed through multigrade teaching and bi- annual admission of students. Factors constraining demand include: low perceived benefits from education in the context of limited wage-earning employment, notably since 1983, when the practice of guaranteed civil service employment for secondaryjhigher education graduates was discontinued; the coercive methods used to collect parents' contributions in the rural areas as a tax, the revenues from which are occasionally diverted to competing priorities; the high opportunity costs of keeping the children in schools, especially in the wake of the drought which increased male adult migration; an unfavorable school environment; and the reluctance of conservative Muslim families to send their children to non-religious schools. If left unattended, this deteriorating trend would seriously jeopardize the country's already limited prospects for long-term growth, as schooling has been shown to have a positive impact on productivity, health, nutrition and fertility as well as on social, political and individual development. 22. Weak modern sector demand for secondary and hisher education graduates. Although Mali is the only country in the Sahel where enrollments at those levels have declined in recent years, the output of graduates continues to exceed the present absorptive capacity of the modern sector labor market. Student numbers have fallen by almost 20 percent in Cycle II of basic education (1980-88), 31 percent in secondary education (1982-88), about 60 percent in teacher training (1982-88) and 35 percent in the GEs (1985-88); the only exceptions to this downtrend have been vocational education, with stable enrollments, and higher education students abroad, with an increase of 48 percent over 1985-88. Today, the higher education student body consists of about 4,700 students in Mali, and 2,400 abroad. Higher education experienced rapid growth in the early eighties due to an 'open door" enrollment policy and generous subsidies to students continuing to the next level (para. 34) so as to staff Government services. However,  - 6 - the number of graduates rose sharply at a time when the civil service became saturated, prompting Government courageous decision (1981) to practically freeze new recruitment and to make it subject to a competitive examination in 1983. 23. The public and parapublic sectors, traditionally the main source of modern employment (estimated by ILO at 94 percent of a total of 86,000 modern wage earnir., positions in 1987), are contracting, whereas the private sector (about 5,000 employees) is not yet dynamic enough to be an engine of growth. The number of new civil servants recruited (gross) each year declined from 2,426 to 530 between 1984 and 1988, and will be frozen at 250 under the IMF program in 1988-89. In the parastatal sector, the adjustment process has resulted in a 7 percent annual reduction in staff numbers in 1983-1987, and in the private sector, demand for wage-earning personnel with the type of skills acquired in the GEs is likely to remain limited. For instance, in 1986, the GEs alone graduated some 1,265 students; of this total, only about 300 found salaried jobs -- 160 (13 percent) in the civil service (A level positions), the rest in the modern private sector. A 1987 Government-financed consultant study projects a maximum modern sector (public and private) demand for 625 post secondary graduates per annum for the next five years, i.e., less than 20 percent of the annual labor market entrants. As a result, ILO estimates that some 8,000 to 10,000 secondary and higher education graduates (including about 2,600 from the GEs and abroad) are unemployed while some 3,500 enter the labor market each year. Graduate unemployment is concentrated in Bamako (about 7,500). The stagnation of recruitment is aggravated by the fact that replacement needs are minimal, given the young age structure of the labor force (attrition rate of the order of 1.3 percent in the education sector). The next few years will be especially critical, as the output of graduates reflects the peak intake of the mid- eighties, while labor market recruitment is at an all-time low. This is a growing concern for the Government and the donors, who in recent months have begun working in a coordinated fashion to help alleviate the situation (ILO/UNDP Unit in the Ministry of Labor to assist graduate aspiring entrepreneurs; USAID's early departure program for Government employees; European Development Fund line of credit for the creation of small and medium etterprises). However, the effect of these initiatives will be negated unless they are coupled with efforts to control and orient the output of graduates in line with trends in labor market demand. 24. Skill mismatch. Although not enough is known in this area, it is clear that the match between the output of the education/training system and the labor market should be improved not only quantitatively (para. 22) but also qualitatively (levels and types of training), as oversupply in some areas is juxtaposed with shortages of critical technical and managerial skills. By levels of training, the structure of the modern sector labor force shows a high proportion of both post-secondary graduates (ranging from 10 to 20 percent depending on the type of economic activity) and unskilled employees (range of 70 to 30 percent), but a low percentage of middle-level cadres, technicians, and skilled workers (25 percent on average, with a peak of 50 percent in Government services). The latter face a stronger demand, as shown by the placement record of such schools as ECICA (Ecole Centrale pour l'Industrie, le Commerce et l'Administration) and EHEP (Ecole des Hautes Etudes Pratiques). This has not been lost on the students, and the proportion of those opting for professional streams has increased from 28 percent of secondary level enrollments in 1980 to 39 percent in 1988; this is high for Sub-Saharan Africa, and has led to a proliferation of private vocational training institutions. Globally, however, the output of these levels of the system continues to be about 1/3 senior managers, (longer-stream, higher education graduates), 1/3 middle level managers and technicians (longer-stream, technical education), and 1/3 skilled workers and technicians (shorter-streams, technical  - 7 - education). By types of training (disciplines and approaches), the system has not responded adequately to evolving needs. The most blatant examples are provided in higher education by ENA (Ecole Natioi le d'Administration) and ENSUP (Ecole Normale SupGrieure), which in 1987 graduated respectively 292 and 519 students, although the demand for civil servants and for secondary teachers (except for small numbers of math and science teachers) is practically saturated for the next decade. By contrast, in 1988, 21 of the 450 positions opened in the civil service could not be filled through the competitive exam system for lack of qualified candidates. Even in agriculture, where some employment prospects exist, the instruction provided is theoretical (90 percent of the timetables), rather than practical. This has led some private employers, in this as in other sectors, to resort to recruiting foreigners despite the high level of unemployment. 25. Several conclusions can be drawn from the above analysiss (i) given its critically low enrollment ratio, primary education should be the highest priority for development, because it determines the overall educational level of the population and affects living standards and productivity; (ii) given Mali's extreme resource constraints and the limited employment prospects for the types of graduates trained at the GE., the allocation of public funds for secondary and higher education should increasingly be subject to stringent economic and financial criteria; (iii) external efficiency in secondary and higher education should be improved through a combination oft increased student selectivity; curriculum reorientation in consultation with employers so as to promote more entrepreneurial and adaptable behaviors as well as the acquisition of more practical skills and to prepare graduates for employment in the private modern, and informal sectors, including self-employment; more effective information on the labor market; and increased orientation of students towards shorter, more flexible training programs. Details are in Annex VII. 2. Poor Performance and Limited Relevance 26. A 1986 study estimated that about 2/3 of MEN's total expenditures were spent on students who either were repeating or would leave school prior to completing successfully the cycle. The issues underlying this inefficient use of resources are discussed below, in greater detail for primary education, which is the focus of the investment element of the proposed project, than for the other levels. 27. In primary education, internal efficiency indicators are among the lowest on the continent and deteriorating. In 1988, one out of every twenty young Malians is likely to complete primary education, versus one out of fifteen ten years ago. Taking into account repeater and dropout rates (averaging respectively 30 and 10 percent), it costs the Government 24 pupil/years of instruction for every Cycie I graduate instead of a theoretical six; in 1979, the cost was l7p/y. Apart from being costly, many primary drop-outs relapse into illiteracy, while repetition increases costs and limits access for non-enrolled children. This poor performance stems from several factors: (a) lack of teaching and learning materials: due to an ill-conceived cost-recovery policy and weak book development capacity, school children do not have access to the minimum reading material required for efficient learning. The resources allocated by Government to instructional materials are insufficient (para. 29) and responsibility for purchasing textbooks lies with the parents, whose meager resources are solicited by many competing priority uses. Even when books have been provided free to MEN (e.g., about 500,000 books donated by France in 1987/88), they have been priced out of the reach of most families (600 CFAP/book  - 8 - or about US$2). As a result, there is a dearth of textbooks (one third of classrooms without any textbooks prior to the French grant). Teachers guides and the most basic teaching materials are equally scarce. This leads to teaching methods which rely heavily on copying and rote learning, stifling the intellectual autonomy of children. Locally developed textbooks, although still weak in content and organization, could be improved and present an attractive alternative. Because books have been shown to be a critical determinant of student achievement, designing and implementing a more appropriate policy for the development and distribution of reading materials which are both affordable and instructionally sound, should be a high priority; (b) poorly trained teachers: pre- and in-service training do not adequately prepare teachers for real classroom situations. Too much emphasis is put on lengthy and expensive initial training, and not enough on continuous skills upgrading, which is known to have a stronger positive effect on pupil learning. In 1986, the Government decided to double the duration of training in the priary teacher training colleges (Institutes pedagogiques d'enseignement g4n4ral, or IPEGs) to four years at the upper secondary level, in the belief that this would allow an improvement in teachers' mastery of basic disciplines, especially French; it also decided to make admission into IPEGs subject to a rigorous competitive exam to adjust the intake to civil service recruitment, and to recruit the new graduates at a higher grade (maitres du second cycle, or MSC, instead of mattre du premier cycle, or MPC). Such a decision would be costly, raising the cost of training + salary by about 30 percent, if the system were growing fast, which is not the case. More importantly for the short term, the revised programs were hastily prepared, and continue to be heavily biased towards general education (68 percent) at the expense of professional disciplines (27 percent) and classroom practice (5 percent). Objectives and means have not been clearly defined, teaching methods fail to encourage experimentation and initiative, instruction in the various disciplines remains compartmentalized, and student evaluation is limited to academic achievement. In-service training courses -- held during the summer to reduce the need for substitute teachers -- have had to be suspended for lack of recurrent funding. These conditions are not conducive to the production of imaginative teachers, capable of compensating for the lack of materials and poor facilities, or of adapting to new techniques such as double-shift or multigrade; (c) insufficient pedagogic support and control: each of the 31 primary inspectors supervise, with the assistance of two pedagogic advisors, a range of 20-80 schools (300-600 teachers), a high ratio further complicated by the large distances involved. They cannot properly discharge their functions because they have not received any specialized training (in pedagogic support as well as management techniques) and are often too close to retirement to catch up with state-of-the-art educational developments; in addition, they do not have the vehicles, fuel, spare parts for maintenance needed for mobility so that some schools have only been visited once in two or three years. Finally, much of their time is spent on repetitive and unnecessary administrative chores. This, combined with the lack of instructional materials, insufficient teacher in- service training and delays in salary payments, generates a feeling of helplessness and abandonment among teachers, especially those who are young and inexperienced;  - 9 - (d) cluttered curriculums the primary education curriculum is ill-adapted in two major ways. First, the work load has been increased over the years to 32.5 hours/week. This figure, to be compared to 27 hours in France or 24 in the US, exceeds the absorptive capacity of young children. Second, in 1982 the Government introduced "ruralization' in the nine grades of basic education. The goal was to rehabilitate manual labor through gardening, carpentry, etc. However, these activities have been introduced hastily, without proper attention being paid to objectives, content, input requirements and linkages with other disciplines (science, math). Additionally, they have tended to divert time away from the learning of basic literacy and numeracy skills (the 3 Rs), primary school's main purpose. As a result the experiment, despite a few successes, is often quest'oned by teachers; it is resisted by urban parents who fail to perceive its usefulness, and by rural parents who resent the loss of child labor and question the ability of teachers to teach manual skills. It is also costly. Similarly, the experimental use of natural languages in the early years of instruction has experienced some difficulties, so that evaluation and consolidation are required before extension could be envisaged. There is a need to reduce the weekly number of classhours, to increase effective instructional time in the 3Rs, and to scale down non-essential other activities. 28. Internal efficiency in the other levels of education is also low by African standards. In Cycle II, the proportion of repeaters and drop-outs are about 34 and 20 percent on average, and pass rates at the basic graduation exam (DiplOme d'enseignement fondamental, or DEF) vary widely (13.9 percent in 1987, 34.8 percent in 1988). In secondary education, similarly, the proportion of repeaters vary broadly, ranging from 7.6 percent in 1981 to 37.5 percent in 1987 in general streams, and slightly better in technical secondary, without any clear pattern. While the flow of basic education graduates has been steady over the decade at about 6,000, the output of secondary graduates (baccalaureate holders) has declined by half, from about 2,845 in 1983 to about 1,420 in 1988 despite increasing pass-rates (from about 48 to 65 percent over the same period). Given the slowdown in enrollment growth in basic education, this decline will continue in the medium-term and should be used as an opportunity to consolidate the system as a whole. The situation in Cycle 1I is largely attributable to the same factors as for primary education (para. 27). As for secondary education, it is better endowed than basic education in terms of materials and teachers (ratio of about 8 studentslteacher). It suffers from other difficulties, such as the low level of entrants; unclear and ambitious objectives; the theoretical bias of the curriculum and passive teaching methods, which are especially ill-adapted to the scientific and technical streams; and an examination system where tests are not related to well-defined skills expectations by grade. 29. In hiaher education, internal efficiency, as measured by graduation rates, would appear to be well above the regional average (50 to 70 percent, versus 25 to 40 percent in francophone Africa) despite the low level of material expenditures (less than 1 percent); individual results are also puzzling, as the more selective schools (such as ENI, the national engineering school) also have the lowest graduation rate (50 percent) whereas the more open schools (ENSUP, IPR or agronomic institute) have much higher rates (80 percent). Obvious constraints to raising quality ares insufficient selectivity, resulting in student numbers well in excess of GE capacity (about 4,700 versus 3,'00), and thinly spread resources for pedagogic material and equipment. Libraries have few recent books and no subscriptions; computer science is taught without computers; there is a shortage of microscopes and fresh supplies in laboratories; facilities and equipment are not maintained. As a result, students are not prepared for practical  - 10 - problem-solving, and it is difficult to perform research and experiments and to develop the technical, scientific and managerial leadership which the country needs to harness worldwide technological advances for its development. 3. Inefficient Management of Scarce Resources 30. Weak managerial and planning capacities. MEN employs about 30 percent of the civil service and manages about 25 percent of the Government budget, but is not equipped to use these resources efficiently. The organization chart of the Ministry is simple and clear, with seven National Directorates, a National Pedagogic Institute (IPN) and eight Regional Directorates. However, roles and functions tend to duplicate, and efficiency suffers from the fact that MEN's staff consists largely of educators who have not been trained in strategic thinking, policy analysis, investment planning and programming, modern budget preparation and control, or personnel management techniques. Internal communications and coordination with the Central Ministries have not been effective, the sharing of experiences with the rest of the world has been limited, and the creation of Regional Directorates has not been accompanied by sufficient delegation of authority. As a result in recent years, MEN often has not been able to anticipate problems until a crisis has emerged. Therefore there is an eagerness to develop a more global vision of the sector and its linkages with the labor market and the economy, and to acquire a better understanding and control of cost and financing issues, staffing needs, physical and pedagogic developments in the sector, as a basis for more rational decision-making. 31. Severe budgetarv constraints. In 1987, the share of education in the total Government recurrent budget was about 25.2 percent, down from 29.4 percent in 1983. Although this is above the average for Francophone Africa (21.7 percent in 1983), the small size of the total budget means that the sector is underfinanced. The share of GDP allocated to the sector was only 3 percent in 1987 (down from 3.7 percent in 1983) vs 5 percent for francophone Africa in 1983. At the same time, given the country's economic constraints, the many competing claims on Government's meager resources, and the slackening of demand for education, it is unlikely that either the sectoral share of the budget or the amounts involved will increase significantly in the near future. These concerns are aggravated by the fact that, under proposals made at a national seminar held in Gao (March 1987), revenues from the APE and other taxes would be merged into a single "Development Tax", revenues from which would be retained at the regional level in a Development Fund, for priority uses to be determined by Development Committees. Sector work has documented MEN's fear that implementation of these proposals would entail a risk of decline in the level of sectoral expenditures. Since these constrained resources will have to cater to the needs of a fast growing population (2.7 percent p.a., and more for the 7-12 year old population), and personnel expenditures will increase as teachers progress on the salary scale, even partial solution of the issues described above will require at least maintaining the share of the sectoral budget, _ncreasing the mobilization of private and external resources for education, and improving allocative efficiency. 32. Skewed spending pattern. The budgetary constraints are aggravated by an inequitable and inefficient spending pattern. By level of education, Cycle I, representing 81 percent of enrollments, receives less than 35 percent of the sectoral recurrent budget, versus 38 percent for Cycle II + secondary (including teacher training), totalling 17 percent of enrollments, and 19 percent for higher education (2 percent of enrollments); the rest is spent on administration (4 percent), and subsidies to private education (4 percent). Investment is mostly financed by external sources,  - 11 - and has received only 1 percent of MEN's total budget. Corresponding budget shares for francophone Africa are substantially higher for primary, much lower for secondary education, and similar for higher education. This pattern is inequitable because primary school is the only exposure to education that most children will ever have, and inefficient because it has encouraged students (mainly from urban elites) to continue their studies beyond what can be justified on the basis of social returns to public investments. By type of expenditures, the structure of the budget is similar to the regional average. The share of personnel has risen to 74 percent (98 percent in primary education). This is not because salaries are too high (they have fallen by 10 percent in real terms since the beginning of the decade) but because of the large proportion of teachers not actually teaching in Cycle T, and because of overstaffing in Cycle II and secondary education. Scholarships have declined from 23 to 17.6 percent of total educational expenditure over the 1985-1988 period, due to the decline in student numbers and tighter controls (para. 34). Materials allocations were also reduced, from 3.9 percent in 1985 to 3.4 percent in 1988, or 2.4 percent once the share of central administration is taken out. Basic education was especially hard hit by these cuts, crippling the productivity of even the best teachers. Computer simulations of alternative financing policies have shown that continuation of present trends (with a 3 percent real growth rate) would result in a decline of the (total) primary enrollment ratio from about 31 percent to about 27 percent in 2003 and in further quality deterioration. Details are in Annex VI. 33. Rising unit costs. Unit costs per student (i) are close to the regional average for primary education (about 26 percent of p.c. GDP); (ii) since 1985, have risen considerably in secondary general education (to reach 370 percent of p.c. GDP) and in teacher training (to 785 percent), where there is considerable scope for savings; and (iii) in higher education, have also increased (to 441 percent of p.c. GDP) but remain substantially below the average for francophone Africa (18 times the unit cost per primary student, vs 50 to 80 times). The increase in unit costs at the secondary and higher education levels is due the exceptionally low and falling students/teacher ratios -- 14/1 in Cycle II, 7.5/1 in secondary, 3/1 at IPEGs, 10 to 8/1 in the GEs -- resulting from the decline in student numbers, combined with conservative regulations concerning the assignment of teachers, their degree of specialization and the number of hours they teach. This has meant that the teacher training colleges, IPEGs for Cycle I teachers and ENSECs for Cycle 1I teachers, are seriously underutilized. In higher education, scholarships have been the other largest cost element (para. 34). These two items (teacher salaries + scholarships) have absorbed practically all the budget, and the remaining element of unit costs (materials) is too low to allow the attainment of satisfactory quality standards, especially in the more technical disciplines. Given the poor efficiency indicators, unit costs per graduate are high, and the pre-requisite for reducing them, at least in primary education, is an increase in the unit cost per student, in the form of an injection of quality inputs (pedagogic material and support, teacher in-service training). Details are in Annex VI. 34. High student subsidies. Student subsidies have declined but continue to absorb an excessive share of resources. The decreasing share of scholarships in the educational budget (from about 40 percent in 1980 to about 17.6 percent in 1988) results from a combination of deliberate policies (closing of secondary boarding schools, transferring part of the cost of foreign scholarships to host Governments, stricter controls of student numbers) and mechanistic effects (the decline in enrollments in secondary and higher education). The real share is actually 50 percent lower, as the budget nomenclature still classifies as "scholarships to secondary education" allocations for materials which are directly paid to the schools. Nevertheless, student  - 12 - subsidies still represent no less than 63 percent of the higher education budget and fail to serve as a tool for improving internal and external efficiency and for promoting equity. Practically all students in higher education are entitled to a scholarship. As a result, the GEs operate beyond capacity, the resources remaining for pedagogic and operating inputs are inadequate (0.3 percent of the sub-sectoral budget) reinforcing the theoretical bias of instruction. Additionally, about 44 percent of the higher education scholarship budget still goes to pay travel and complementary allowances for students abroad, who represent only 34 percent of enrollments, and whose expenses are supposedly paid by the host governments. Given, on one hand, the limited employment prospects for higher education graduates and on the other hand, the need to free up resources to restore the GEs to academic excellence and expand primary education, continuing to carefully reduce scholarships would send a consistent, rational economic signal to the student population while allowing MEN to progress towards its global objectives. Details are in Annex VI. 35. Deteriorating capital stock and hilh amortization costs. The lack of maintenance of the existing school buildings results in unnecessary capital losses and a dilapidated physical environment, while low construction standards lead to high amortization costs (due to replacements, repairs, etc.). About 60 percent of the 7,250 existing primary classrooms have been built by Government or foreign donors. The remainder have been built by APEs, in line with Government policy of transferring to them full responsibility for primary school construction since the 1960s. Classrooms financed by Government or donors using imported building materials and sturdy construction techniques, are valued at the high capital cost of US$19,600 (US$417 per pupil-place). Due to a number of constraints -- a decline in disposable income in the wake of the drought, insufficient technical skills and lack of guidance or support from Government services, uncertainties as to their future and competing priorities -- in recent years the APEs have been unable to expand and maintain the stock of schools, which is rapidly deteriorating. On the other hand, classrooms built by the APEs, which cost about US$5,800 (US$125 per pupil/place) require frequent replacement because of poor construction standards (technical specifications, designs and construction methods) and, again, lack of maintenance. The annual amortization cost for the two types of schools (financed by Government and by APEs) taking into account maintenance cost and life- cycle cost over a 25-year period, are quite similar (about $32-36 per pupil/year). Preparation studies indicate that the use of simple, low cost/low maintenance construction techniques, based on local materials, would enable local comnunities to build more durable schools for less than US$12,800 per classroom, provided those communities receive support from trained technicians and complementary financing aid. While this is about twice the investment costs for classrooms built by APEs, the annual amortization cost would be reduced to about US$14/pupil year. This clearly shows that there is an urgent need to: (i) reduce unit capital costs through a more intensive use of facilities -- in basic education, this should begin with the introduction of double- shift techniques in urban areas and the development of multigrade teaching in rural areas; (ii) preserve the existing investment through rehabilitation and maintenance; and (iii) base any new school construction on low cost/low maintenance construction techniques.  - 13 - PART III. THE PROPOSED HYBRID PROJECTs AN INTEGRATED PROGRAM OP REFORMS AND INVESTMENT A. The Government's Strategy 36. Outside MEN, the Ministry's priorities, the quality of the service it provides, and the usefulness of its product for employers have often been questioned. Until recently the seriousness of the primary education and graduate unemployment crisis, and the decline in secondary and higher education enrollments were not fully realized; therefore, top priority was given to an expansion of higher education (para. 39). During the past two years, a more pragmatic, realistic approach has developed, and a more balanced strategy has emerged with two main objectives: (i) to restore the balance of the education systebi, principally by expanding access to primary education (Cycle I), but also by developing viable options for general secondary and higher education and returning the GEs to their initial function, which was to train limited numbers of highly qualified professionals and scholars in line with the trends in the labor market and projected resource constraints; and (ii) to improve quality and relevance at all levels of the education system. In order to meet these two objectives, Government also proposes to promote a more efficient use of budgetary. human and physical resources for education, to broaden the resource base for the sector by mobilizing increased support from all the parties concerned, and to decentralize the management of the system to the regions and the parents. 37. This strategy represents a major improvement and an impressive agenda. Implementing it will require, on the part of the Government, a sustained adjustment effort and political determination; and on the part of donors, increasing, well- coordinated action to support the reform process and the required investments. The reforms would focus on the control and orientation of student flows, the introduction of more objective tools to monitor quality, and the efficiency of resource allocation and use. On the investment side, immediate external assistance is critically needed, in particular for primary education where the needs are greatest, have been clearly identified, and have not received sufficient donor attention (para. 115). The key elements of the approach retained by Government, and supported by this project, are (i) to expand access: increased resource allocations for Cycle I, a partnership with the APEs for school construction, incentives to the development of private education, a more intensive utilization of teachers and facilities; and (ii) to improve performance and relevance: a new emphasis on *basics", i.e., the 3Rs, teacher retraining, textbooks, more pedagogic support. This includes an agreement to use objective testing and M & E to guide experiments, such as ruralization and the use of national languages, where the record needs to be more firmly established. 38. For secondary education, Government proposes to: (i) continue to orient an increasing proportion of students towards technical and vocational streams, developed and managed with active private sector involvement and located in the regions; these training programs could be accommodated partly through the merging and/or the rehabilitation of existing, underused facilities (IPEGs, ENSECs); (ii) on the basis of an evaluation, redirect the content and delivery of existing programs and strengthening, in particular, the teaching of math and science; and (iii) review the linkage (exams, orientation and admission mechanism) between Cycle II/secondary, and between secondary/higher education. Such a strategy could be supported by the donors and will be refined under the proposed project.  - 14 - 39. For higher education, Government's proposal has been to create a decentralized, vocationalized University consisting of six regional campuses (comprising three "facultes8 and five technical "instituts") to cater to social demand for higher edacation, stimulate the economic development of the regions and decongest Bamako. The University would operate as a junior college, largely self-financed; graduates would be admitted by competitive examination into the GEs which would be returned to their original mission, i.e., to train a limited number of highly skilled professionals. Government has requested the assistance of the African Development Bank (AfDB) and IDA. In close coordination, both institutions are working with MEN to develop a policy and institutional framework that includes an assessment of the feasibility of Government's proposals. 40. While there is agreement with Government on the strateg, for primary and secondary education, initial IDA studies have found that for educational, financial and logistical reasons, decentralization of higher education is not a viable option for Mali in the years ahead; any move towards regionalization should be modest, cautiously phased, and experimental. On the other hand, emphasizing the vocational orientation and the regionalization of education, as prcposed by the Government, would be highly appropriate at the secondary level. In all cases, quality, employment prospects and cost should be priority concerns. An alternative approach under discussion could therefore involve: (i) establishing the University of Mali in existing, underutilized facilities (the Bamako ENSEC, following renovation, would be a good candidate); (ii) transforming ENA and ENSUP, whose missions need to be reviewed anyway, respectively into a Law/Economics and a Humanities Faculty offering first and second university cycle degrees; (iii) following a feasibility study, testing decentralization on a limited scale by transforming onc of the regional IPEGs or ENSECs into a science Faculty offering first university cycle degrees leading to admission into: ENMP, the school of medicine and pharmacy; ENSUP for higher scientific degrees; EtI, the engineering school and IPR, the agronomic institute; (iv) reorganizing those GEs requiring reorientation to give them a more practical approach, (IPR, located some 60 kms from the capital, ENSUP, and ENA); (v) reinforcing those GEs that remain relevant (EHEP, ENI, discussed in paras. 21 and 26; ENMP, and ENPT, the school for Posts and Telecommunications) through increased resource allocations and selectivity; (vi) strengthening research and gradually develop, in closed coordination with agricultural sector projects, a regional network for the dissemination of its findings; and (vii) bringing greater transparency and efficiency in the management of resources. Given the limited number of students, the creation of competing nfacultis" and Oinstitutse should be avoided. Further review and discussion of these, and other options which will be proposed under the AfDB- financed study, are planned, in a donor-coordinated framework, to develop a full proposal. In the meantime, several of the policy elements underlying the above approach (students orientation, budgetary targets, scholarship reductions) would be put in place under the proposed project; the program of studies required (inventory of existing facilities, tracer studies, program evaluation, 0 & M diagnosis) has already begun under IDA and AfDB financing. B. Rationale, History, and Obiectives 41. Rationale. The proposed project would assist the Government in further articulating and in implementing its education strategy. It wauld be hybrid in nature, i.e, an integrated package of far-reaching policy measures and critically needed investments designed to help reshape Mali's unbalanced education system and improve its performance and relevance, taking into account the needs and resource constraints of the Malian economy. The hybrid format was retained because it is well adapted to the Malian  - 15 - situation, whcze the ne64 for sustained, difficult adjustment and immediate budgetary support coexists with the need to maintain an acceptable level of well-targeted investment (in primary education, in rehabilitation, and in software). The request for budgetary support was triggered by the Minister of Education's concern for solidifying support for the reforms by showing quick and visible improvements in key areas where the impact of resource constraints had been felt most, such as insufficient materials allocations. The prospect of quick disbursements (three equal tranches over three years, each roughly equivalent to the savings that would be achieved through the program) facilitated agreement and upfront action on a broader and deeper set of reforms than had been thought feasible in the early phases of identification and preparation. These reforms extend beyond primary education, the focus of the investment element, and beyond what could have been achived through regular project lending. They concern, in particular, ceiling, on new enrollments into secondary general and higher education (para. 45); a modification of the 1985 decision on primary teacher training (para. 27(b) and a rationalization of the teacher training apparatus (para. 48); the development of a framework to restructure secondary and higher education, which will modify the composition of investment and recurrent expenditures in favor of primary education and of quality inputs more rapidly than would have been the case without the sectoral adjustment program (para. 50); reductions in higher education scholarships, beyond the nominal freeze included in the program agreed with the IMP in June 1988 (para. 51) and a more efficient management of MEN's procurement procedures (para. 56). Thus, the quick-disbursement element would both ease and accelerate the reform process, the investment element would strengthen institutional capacities, while the combined package would ensure that adequate investment and operating resources are channelled to this key sector and that they are efficiently used. 42. History. Most of the policy issues were identified as early as the 1986 Public Expenditure Review. Because of limited initial policy agreement, preparation, done by the UNESCO/Bank Group Cooperative Program, centered on primary education anti on the hard-core policy conditionality which was a sine qua non for IDA's involvement in the project. By the pre-appraisal stage, the deepening of the sectoral dialogue and the adoption of a structural adjustment program allowed IDA to respond positively to Government's request for assistance in developing a full adjustment program. 43. Objectives. Both elements of the proposed project would complement and mirror each other. The sectoral adiustment prozram (paras. 44-59), which would be supported by a quick-disbursing element, would establish the global policy and institutional framework for improving, at all levels of the system, (i) access and equity, (ii) performance and relevance, and (iii) the cost-effective management of human, financial and physical resources. Within this framework, the investment element (paras. 60-83) would represent the core package of a long-term investment program which other donors will be invited to support. It would focus on primary education (Cycle I), where the needs are greatest, to (a) increase enrollments from the supply and the demand side, in three of Mali's seven regions; and (b) improve the performance and relevance of primary education countrywide. It would also: (c) help develop and implement a strategy for restructuring secondary and higher education; and (d) at the sectoral level, strengthen MEN's institutional capabilities. The proposed project is justified as an important element of IDA's strategy of assistance to Mali both at the macro (para. 59) and sectoral (paras. 36-40) levels and as the main source of investment in education. The process thus initiated should gradually consolidate the Malian education system, making it more equitable by broadening its base, primary education, and more efficient by adapting its output and management to the requirements of the labor market and resource availability.  - 16 - C. Sectoral Adiustment Program 44. The Government has already taken a number of measures tot (i) improve the linkage with employment -- introduction of a competitive examination for recruitment into the civil service (1983) and for admission into the teacher training colleges (1986), orientation of an increasing proportion of students away from secondary general and higher education, toward shorter, technical and vocational streams (cince 1985) and establishment of a USAID early departure program under which about 340 teachers have left the civil service since 1987; (ii) increase the efficiency of resource use with major scholarship reductions since 1985, the closing of all secondary boarding schools (1984), enactment of legislation to promote the development of a private educational sector (1986) and the testing of a new mechanism to leverage parents contributions to primary school construction (1988); the closing down of three out of six primary teacher training colleges (1989); and (iii) improve the relevance of education through beneficiary assessments of existing programs and tracer studies (1988). The eleven points in the sectoral adjustment program supported by the proposed project would further and deepen thei reform process. The policy measures and their implementation schedule are incorporated in the Letter of Education Policy, dated April 28, 1989 and signed by the Minister of Labor and Civil Service, on behalf of the Minister of Education (Annex III). Conditionality, including monitorable targets, is listed in Annex XII. Supporting actions to be taken and the review criteria are in Anuex IV. Implementation and monitoring arrangements are described in paras. 93 and 105. 1. Measures to Improve Access and Equity: 45. Measure #1. The Government plans to better control the number of new entrants Into (upper) secondary general isnd higher education, while continuing to orient more students towards technical and vocational streams. Based on a three-year rolling average of historic and projected cohorts, the ceiling would fall during school years 1989-92, within & range of 2,200-2,500 for secondary general education and of 1,100- 1,500 (GEs + students abroad) for higher education. These numbers are to be compared to peaks of 2,650 for the former (in 1986) and 3,040 for the latter (in 1984). Without excessively contriving an already thinning flow of students (1 higher education graduate per 3,000 population), this measure would: (i) free up resources to expand primary education, thus favoring the poorer, rural segments of the population who will never go beyond that level of education; (ii) ensure that resources for higher education are not spread too thin over too many students; (iii) reduce graduate unemployment by encouraging students to enter streams whose graduates are in higher demand; and (iv) preveut a lowering of examination atandards. Assurances were given at negotiations that the number of new entrants into secondary general and higher education would not exceed the agreed ceiling of 2,500 p.a. for the former and a total of 4,500 over 3 years (1,500 p.a. on average) for the latter during school years 1989-90 through 1991-92. The targets would be reviewed in 1992. 46. Measure #2. In line with Government's philosophy of promoting private sector activities, MEN already subsidizes catholic schools, provides accredited medersas with pedagogic control and support and in 1986 enacted legislation authorizing the establishment of small non-denominational, self-financing schools. To broaden access to quality primary education without further straining the Government budget, MEN proposes to offer: (i) matching funds and incentives such as teacher training and learning materials to existing private schools for physical and pedagogic improvements; and (ii) start-up subsidies-cum-training to unemployed trained teachers supported by  - 17 - potential APEs for the creation of about 30 district schools (ecoles de base) in urban areas and about 30 village schools (4coles de village) in rural areas. The former would charge fees, while for the latter the village association would support the teacher. Progress would be monitored each year. Although t)he potential for the two new approaches proposed is .learer for the district than for the village schools, the savings achieved on public resources could be reallocated towards the poorer, rural parts of the country. At negotiations, Government gave assurances that by November 1989, it would: (i) issue norms and regulations (pedagogic, financial, safety) applicable to the new proposed types of schools; and (ii) submit to IDA proposals for additional incentives to the private provision of education such as tax reductions, and management or licensing arrangements. 47. Measure 13. Enrollment of Rirls, which in Mali are low even by African standards (37 percent of total enrollments in Cycle I, 32 percent in Cycle II, 25 percent in secondary, and 13 percent in higher education), are a source of concern for the Government. Commonly invoked reasons include the early age of marriage and the fear of traditional parents that an educated woman will not be a good wife and mother. A 1988 UNICEF study on "Children and women in Mali" pointed to a general deterioration of women's lot as producers, procreators and providers. On the other hand, when girls continue into the higher levels of education, they perform very well (23 percent of the students in the medical school are girls). On the labor market, women well trained in clerical and commercial skills are in high demand; at a higher level., a few women have established themselves as strong Directors and Cabinet members. In the education sector, a fairly low 21 percent of primary teachers are females. There are no legal impediments to their recruitment in the profession, and they have earned a good reputation as pedagogues. Previous Government attempts at introducing affirmative action in favor of women have been perceived as coercive and counterproductive, so that sensitivity to the cultural context is essential in addressing these issues. At the policy level, Government has agreed (i) for the short-term, to include in the revised curriculum outlined in para. 49 basic principles in health, nutrition, and child care so as to overcome parents' initial reluctance; and (ii) for the medium term, to conduct, with punctual assistance from a women-in-development specialist fully familiar with the Sahelian cultural context, a study identifying the influence of factors such as the family environment, school characteristics, community characteristics and proposing realistic, concrete solutions; these solutions (legal measures such as lowering the admission age for girls, incentives, media campaign, etc.) could, as far as primary education is concerned, be supported through the investment part of the project; for secondary and higher education, the proposed solutions would be explicitly taken into account and translated into actionable proposals in the Master Plan discussed in para. 50. Draft T.O.R.s for the study are in the Implementation Book (I.B.) for the Project, Annex 3-2. Assurances were given at negotiations that the study would be submitted to IDA for joint review by March 31, 1990, and that the agreed-upon recommendations would be implemented along an agreed schedule. At the operational level, complementary actions are discussed in para. 66. 2. Measures to Improve Performance and Relevance at all Levels: 48. Measure 14. In an effort to improve the effectiveness of teachers and to reduce the cost of their training, Government, in a reversal of its 1985 decision, proposes to revise the recruitment level and the curriculum in the primary teacher training colleges (IPEGs) and has taken steps to rationalize the use of their facilities (IPEGs and ENSECs). As of 1990-91, student teachers would be recruited among upper, instead of lower secondary education graduates (Baccalaureate, instead of DEF holders), and would  - is - be trained for two years instead of four, reducing the cost/graduate by about one-third. This new policy would offer Government more flezibility in training rapidly (2 years) new primary teachers, should the accelerated expansion of the system require it; conversely, young IPEG graduates, having previously completed their secondary studies, could more easily adapt to employment opportunities other than teaching if the planned expansion did not materialize. In addition, MEN has begun merging its six teacher- training colleges: all student teachers are being relocated into three colleges while one of tht. IPEGs (Bamako) would be transfo%rmed, under the proposed project, into a Center for Continuous Upgrading to reflect the greater emphasis put on in-service training (para. 71). Similarly, students from the four lower secondary teacher training colleges (ENSECs) would be regrouped on the basis of a complementary Utilization Plan under preparation. Thus, up to five teacher training colleges out of 10 would be assigned to other uses (mostly in-service training) until the preparatory studies for the restructuring strategy for secondary education (para. 50) identify a more economically justified use for them. Teachers released will be encouraged to apply for voluntary departure severance benefits (the on-going USAID program which will be extended, with education personnel as a specific target, in support of the proposed project) or to create private schools, with incentives provided under the investment element of the proposed project (para. 65); however, they may remain on the Government payroll for some time and they have not been included in the savings. The savings achieved by the time the mergers are completed (1991) could reach 300 million CFAF p.a.,or 36 percent of the 1988 budget for Cycle I and II teacher training. Second Tranche release would be conditional upon: ti) issuance of a legal text modifying Decision No. 0346 (dated March 23, 1986), and Arrete No. 5728 (dated June 6, 1986) to specify the new recruitment level (Bac) and the new duration of training (two years); (ii) agreement on the Utilization plan for ENSECs and (iii) introduction of the new IPEG curriculum, as agreed with IDA. 49. Measure t5. As a first step towards increasing the relevance of the education system, the Cycle I curricula would be adapted so as to reinforce pupils learning achievements in basic disciplines (the 3 Rs). This would be done by reducing the total weekly work load (from 32.5 hours to international practices of about 25-27 hours), allocating more instructional time (about 3/4 of the total) to these key disciplines, defining the pedagogic objectives to be achieved for each subject and each grade, adapting the content of the program to the cultural context of Mali, and improving the linkage between practical activities (ruralizat' )n) and said pedagogic objectives. This return to, and increased emphasis on basics, ,s expected to produce more literate and numerate graduates, capable of being more productive and adaptable to the demands of an evolving labor market or successfully continuing into the higher levels. The availability of learning material (para. 73) would encourage individual study, and therefore more independent thinking and greater self-reliance. Agreement on the work program for the Task Force in charge of this revision, taking into account the findings of evaluations of ruralization and national language experiments discussed with IDA would be a condition of third Tranche release. 50. Measure 16. The Government, with assistance from IDA and the AfDB, is exploring the policy and investment options for a rational long-term development of secondary and higher education. Agreement would be reached, as a condition of second Tranche release, on a Master Plan to restructure secondary general, technical and vocational, and higher education, in line with the other parameters of the program, trends in labor market requirements and resource constraints. The points to be covered would include:(i) desirable enrollment targets (in Mali and abroad); (ii) priority streams, given national, regional and international employment opportunities; (iii) locations and  - 19 - organizational structures to reconcile the need for academic excellence, social demand and cross fertilization between the education system and the private sector; this would include appropriate incentives to the development of private educational services (especially for technical/vocational training) and to employer participation in the design, delivery and financing of secondary and higher education programs; (iv) investment requirements (hardware vs software, rehabilitation vs new structures on the basis of an inventory of the existing stock); (v) recurrent costs requirements, with a view to achieving an efficient balance between salary, non-salary (scholarships) and operating expenditures, with in the agreed budgetary framework (para. 51); (vi) a viable plan for both investment and recurrent financing, including the scope for cost-recovery; <vii) proposals to improve student information/orientation/selectiont admission and the examination system (fairness, cost) while ensuring more equal access for less privileged social groups; (viii) norms and standards in the areas of staffing, pedagogy, construction, planning, budgeting; and (ix) a realistic, phased implementation plan. Satisfactory progress towards implementation of the Master Plan would be a condition for third Tranche release. Assurances were given at negotiations that any new sectoral investment in excess of CFAP 300 million would be reviewed and agreed upon with IDA on the basis of a financial and economic study. 3. Measures to Improve the Management of Resources: 51. Measure #7. During 1989-1994, MEN's recurrent budRet would be restructured so as to increase the resources available to expand primary education (Cycle I) and enhance quality at all levels. First, the Ministry's share in the Government's recurrent budget would be maintained at least at 25 percent, and MEN would retain, for internal reallocations in favor of primary education and materials, the cost reductions achieved through efficiency gains at the other levels or on other budget items. Second, within MEN's budget, by level of education, the share of primary education would be gradually increased from 35 percent to 45 percent through reallocation from savings at the other levels. This would be achieved mainly by freezing in nominal terms, and if possible reducing, the budgets for Cycle II (CFAF 3.1 billion), secondary general education (CFAF 1.7 billion) and teacher training (CFAF 0.83 billion). A ceiling would be placed on the share of higher education at its present level (19 percent). By type of expenditure, higher education scholarships (in Mali and abroad) would be further reduced by 10 percent p.a. (current terms) in 1989, 1990, and by 5 percent p.a. in 1991 and 1992 and would thus decline from about CFAP 2.4 (of which CFAF 900 million for travel) to 1.76 billion; the share of materials in total education expenditures would be increased from 4 percent to about 12 percent (including a reclassification of secondary scholarships as materials, which they already are). These reallocations represent a significant departure from previous practice, which favored the higher levels of the education system and salary/social expenditures at the expense of non salary operating costs. Para. 91 compares MEN's budget under the adjustment and the non-adjustment scenarios. The criteria for reducing the scholarships would be as indicated in Annex VI. Effectiveness would be conditional upon a modification of MEN's budget nomenclature to separate Cycle I from Cycle II budgets and to reclassify as such the "materials, element of scholarships. Second and third Tranche release would be conditional, for the first three years of the program, upon: (i) the allocation of at least 25Z of the Government recurrent budget to MEN; (ii) implementation of the above scholarship reductions on schedule; (iii) satisfactory increases in the primary (Cycle I) budget to 40 (second Tranche) and 42 percent (third Tranche) and in the materials budget to 8 (second Tranche) and 9 percent (third Tranche) of MEN's recurrent budget; and (iv) maintaining the share of higher education below 192 of MEN's recurrent budget.  - 20 - 52. Measure #8. A number of steps would also be taken to control the growth of the wane element of unit costs beyond the freeze of the salary bill (current terms) included in the IMF program through 1989. Government proposes to increase the students/teacher ratios from 38:1 to 42sl in Cycle I, from 14sl to 25:1 in Cycle II, and from 8sl to 15sl in secondary education by 1994. A staffing plan would be agreed each year between Government and IDA. For Cycle I, about 10 percent of replacement teachers and teachers exempted from classroom duties (totalling respectively about 700 and 923 at the Cycle I level) would be redeployed annually towards the classroom. Double-shift teaching would be introduced, on an experimental basis, in at least 5 urban classrooms per annum and per region of project concentration (totals 150 by 1994). Multigrade teaching techniques would be extended to at least 250 (50 per annum) existing rural schools with students/teacher ratios below 20:1. For Cycle II and secondary education, the staffing plan would include redeployment to Cycle I, early retirements under the USAID funded program, and practically limiting new recruitment to math and science teachers. All redeployed teachers would be eligible for special in-service training. The core measures would make it possible to expand primary enrollments by about 9 percent p.a. within the present recruitment ceilings, saving resources for increases in materials budgetary allocations. 53. As a condition for second Tranche release, (i) the students/teacher ratio should have increased from 38:1 in 1988 to at least 39:1 in Cycle I, from 14sl to at least 18:1 for Cycle II, and from 8sl to at least 10:1 for secondary education; and (ii) a major personnel study (T.O.R.s available in the Implementation Book, Annex 2-6) covering staffing ratios, recruitment/promotion/compensation policies, career prospects and training needs, proposals to further rationalize the students/teacher ratios in Cycle II and secondary education, and recommendations on appropriate entry levels into the civil service for IPEG and ENSEC graduates should have been discussed with IDA. The release of the third Tranche would be conditional upon attainment of at least a 40:1 students/teacher ratio in Cycle I, 20:1 in Cycle II and 12:1 in secondary education and implementation of the recommendations of the personnel study along an agreed schedule. 54. Measure #9. Government's long-standing policy of cost-recovery in basic education needs to be made more effective. In order to mobilize additional resources for the expansion and improvement of primary education, MEN is already testing a new financial mechanism, the Basic Education Support Fund (Fonds d'appui a l'enseignement fondamental or FAEF). Under the project, the FAEF would be funded by donors (initially IDA and USAID) to match contributions from APEs, leveraged by the resources of NGOs and Development Committees. The matching ratio, initially 50:50, could vary depending on the type of activity supported or the region of intervention, providing a flexible tool to compensate for economic disparities. Details on the operation of FAEF, which would involve technical guidance to Parents' Associations for school construction, are in para. 62. Its legal establishment would be a first Tranche release/effectiveness condition. Additiorally, assurances were received at negotiations that, to counter the decline in sectoral resources likely to result from introduction of the Development Tax (as described in para. 31), Government would ensure, starting January 1, 1990, that at least 30Z of the yield from said Tax would be earmarked to the financing of educational activities. 55. Measure #10. To ensure consistency between the proposed strategy and public resource allocation, each year from 1989 through 1994 the Government and IDA would agree on a three-year rolling investment program reflecting the priority to be given to (i) expanding and improving primary education; (ii) rehabilitation over new construction; and (iii) software over hardware. This agreement would also result in more coherent  - 21 - donor interventions (Annex V). The 1989-1991 investment program was agreed at negotiations. 56. Measure #11. In order to achieve savings on its purchases, the MEN would use existing procurement procedures in a different manner so as to increase competition between bidders through better planning and packaging. At present, about 25 percent (value terms) of MEN's purchases are procured under local competitive bidding (excluding firms not incorporated in Mali) and 75 percent under direct contracting. As a matter of policy, MEN has decided to increase the share of its procurement by competitive bidding. In the future, the Ministry will base its purchases on: (il international competitive bidding for at least 25 percent in value terms; (ii) local competitive bidding for at least 50 percent; and (iii) direct purchases for no more than 25 percent. In the Malian context, this means that imported goods estimated at more than US$100,000 equivalent would be procured through competitive bidding advertised locally and internationally - - in at least one newspaper of wide circulation abroad. Foreign firms would not be precluded from participation and would not be required to be incorporated in Mali. For specialized equipment and textbooks, prequalification could also be utilized to deal with a limited number of registered local and foreign suppliers. These arrangements would be specified in an internal administrative text of MEN. 57. Contribution of the guick-disbursements to external caPital requirements. The Government has prepared a medium-term financing plan which is consistent with the macroeconomic framework and available financial resources. On the basis of these needs, gross external financing requirements are estimated to be US$546 million in 1989, US$443 million in 1990, and US$421 million in 1991. 58. Disbursements from existing loan commitments are projected to cover about 17 percent (US$239 million) of the external financing required for 1989-91. Grants and expected new loan commitments would provide an additional US$907 million. The remaining gap of US$264 million would be financed by the Paris Club and/or other debt relief and new quick-disbursing non-project aid commitments, including IDA adjustment lending and W resources. The adjustment component of the proposed education sector adjustment credit plus cofinancing (totalling US$12 million equivalent), would cover 4.5 percent of this remaining gap while ensuring a sustainable flow of essential imports to the education sector. Given Mali's debt servicing capacity, the viability of the financing plan will depend on success in mobilizing additional assistance in grant form or on terms comparable to those of IDA. 59. Linkage between the sectoral and the structural adiustment programs. The proposed program would reinforce at the sectoral levels reforms which are key elements of the IMF and IDA - supported adjustment programs, principally in four areas: (i) improving the efficiency with which public (and private) educational resources are mobilized, allocated and used, and to that effect, strengthening budgetary and expenditure control procedures and bringing greater transparency in the budget (paras. 51, 55 and 56); (ii) promoting the role of the private sector in three different ways: (a) stimulating the private financing of education through matching contributions at the primary level (para. 54) and by determining the scope of, and modalities for, introducing cost-recovery at the secondary and higher levels (para. 50); (b) providing incentives for the improvement of existing muslim and catholic schools and for the creation of new types of private schools (paras. 46 and 65); and (c)  - 22 - encouraging students' initiative and entrepreneurship to better prepare them for self or small enterprise employment through the introduction of more interactive pedagogic methods and an adaptation of curricula (para. 72) and through technical advice and the establishment of an experimental line of credit to help young graduates create microenterprises (para. 77); (iii) ensuring that the flow of investment and operating resources allocated to education is sufficient to bring about a noticeable improvement in human capital formation in Mali. Renewed and sustained sectoral development, in turn allowing better exploitation of the country's natural resource potential, will ultimately be one of the key determinants of its long-term growth performance; and (iv) mitigating the effects of the adjustment process during the present transitory period by providing support to a critical social sector. D. Investment Element 60. 'While the adjustment program would provide the policy and institutional framework necessary to increase the efficiency of the sector at large, this element of the proposed project would be focused on primary education and on reinforcing the sector planning and management capacity. It would support the core package of investments required to reach the four objectives listed in para 43. 1. Increasins the SupplV of. and Demand for, Primary Education 61. This component would: (i) in the urban areas, increase the supply of primary school places; (ii) in the rural areas, support actions to reverse the decline in social demand for education; (iii) provide incentives to the development of private education; and (iv) test new ways to stimulate female participation. These activities would be geographically limited to three regions (Bamako, Segou, Sikasso) selected by MEN for having a large unmet demand for education and a strong contributive capacity. Details concerning this component are in Annex 3-2 of the Implementation Book (I.B.). 62. Approach Proposed. As indicated in para. 54, a new mechanism, the "Fonds d'appui A l'enseignement fondamentall (FAEF) would be established to mobilize additional resources from external donors, NGOs and APEs and channel them towards project activities. Under the project, the FAEF would be funded by the IDA credit and the US grant to match APE contributions in the three regions of concentration. In subsequent projects, if the approach proves conclusive, it could be extended to other regions of Mali and other donors. This approach is already under experimentation, for the construction of six prototype schools in the Segou area with 'ACTION-ECOLE', an umbrella organization working with 18 NGOs in Mali. FAEF funding would be available for sub- projects submitted by APEs representing individual schools or groups of schools, meeting certain pedagogic, financial and technical criteria and agreeing to specific conditions. Following and information/sensitization campaign, APE applications would be screened at the inspectorate (IEF) and regional Directorate (DRE) levels, then approved at the Central level by a FAEF Steering Committee, for inclusion in the yearly program. The goal is that selected APEs would contribute, on average, about 50 percent of the total cost estimates, based on their own resources and ad hoc contributions (e.g., Regional Development Funds, NGOs). This figure might have to be revised in light of experience. A simple agreement specifying the obligations of both parties would be signed, and FAEF funds would be released in tranches upon satisfactory completion of pre-agreed work phases and technical requirements certifications by MEN's Technical Studies Division  - 23 - (para. 82). Of the activities described in paras. 63 - 66 below, about half or US$5.5 million, would be funded through the FAEF. Legal establishment of the FAEF would be an effectiveness condition. Experience with the mobilization of APE contributions would be reviewed jointly by Government and IDA each year. 63. Increasing the supply of primary education in urban areas. In order to maximize the productivity of existing investments prior to undertaking new ones, this sub- component would, in the 'communesa of the three regions of concentrations (i) introduce minimum comfort conditions (cross ventilation, false ceilings, broader windows) in about 375 existing classrooms (30 percent of present stock in the three concerned regions) so as to intensify the use of teachers and facilities through the extension of double- shift teaching techniques even under the harsh afternoon climatic conditions; (ii) repair about 1,000 classrooms and rehabilitate another 235 to maintain the capital stock; and (iii) construct about 275 new classrooms using low amortization cost techniques so as to expand the capacity of the primary school system. Double-shift would be extended gradually (para. 52) with all the necessary safeguards: sensitization campaign with inspectors, teachers and parents, the design of new experimental curricula, special teacher training and continuous evaluation. Teachers selected for the p -ogram would receive for overtime worked (40 contact hours vs 32.5), a compensation equal to 25 percent of their salary during the nine months of the school year (half of which financed under the credit through 1994). This measure could allow a 27 percent increase in urban enrollments in the three project areas for less than one-third of what a similar increase would cost under a one-shift regime (including salaries, construction, maintenance, etc, amortized over a 20 year period). Low-cost/low- maintenance construction design using regionally available materials and labor-intensive techniques, were refined during preparation through the building of prototypes. The construction program would be based on a two-tiered organization withs (a) overall management supportlsupervision at the central level; and (b) operational coordination at the regional level from three Regional Centers,each staffed with two nationals (one technician, one community organizer) and one Volunteer (construction specialist) to provide technical advice and guidance to the APEs/communities. A preventive school maintenance system would also be established (para. 82). A school-of-the-year contest would be organized to promote principles of sound resource management. Annex VIII shows how the needs for new teachers could be met within existing teacher training capacities and recruitment ceilings. A condition of disbursement against the whole FAEF-supported school constructionlrehabilitation component would be the signature of a contract with a Volunteers Association. Details of what the Proiect would finance (total: VS$9.4 million) are in Annex V. 64. Stimulating social demand in rural areas. In order to reverse the decline in the primary enrollment ratio in the "hors-communes" areas, about US$0.5 million would be earmarked out of the credit to finance corrective measures. The exact nature of these actions was determined by a beneficiary assessment of the responsiveness of schooling to local needs, in particular parents' expectations from education, attitudes vis-a- vis schooling for girls, the role of religion, the degree of learning and utility of what is learned, distance from school, physical environment, language of instruction, impact of schooling on farm productivity. The assessment showed that the costs associated with distance from school and the low perceived benefits of education are key issues. The FAEF would therefore leverage APE contributions under cofinancing arrangements with NGOs for improvements in the schooling environment, including borewells; it would finance equipment for school canteens run by APEs or with NGO assistance (the European Development Fund would be prepared, under its Cereal Market Restructuring Program, to fund the purchase of food staples from local producers to run  - 24 - such programs) and a media campaign aimed at convincing parents that education is a worthwhile investment, even with limited modern employment prospects. Curriculum adaptation (para. 72) should also contribute to redress this negative trend. The rules of the FAEF with respect to initial financial community commitment could be adapted to fit the promotional nature of the activities envisaged. Details of what the proiect would finance (total: US$0.5 million) are in Annex V. 65. Support to private education. In order to operationalize the Government's policy of developing quality private educational services (para. 46) under this sub-component existing catholic schools and medersas would be eligible for FAEF assistance for construction and renovation, equipment and pedagogic materials (to become eligible, the medersas would have to sign a contract with MEN under which they would agree to follow the Ministry's programs and regulations); selected schools would then receive books (in French or Arabic) and their teachers would gain access to project-financed in-service training and receive pedagogic support/supervision. In addition, the project would support Government's experiment with two new formulae, namely about 30 district schools (ecole de base) in urban areas and 30 village schools (ecole de village) in rural areas. Details of what the proiect would finance (total: US$1.6 million) are in Annex V. 66. Encouraeements to female participation. In support of the short and medium term policy measures outlined in para. 47 to address the issue of low girls enrollments and female participation in the teaching corps, under this sub-component: (i) a more detailed and systematic data collection and analysis of gender-specific issues in all levels of the education system (regional and socio-economic patterns, repeater and drop out rates, orientation, tracer studies, female professors, etc) would be undertaken by MEN's Planning Directorate; and (ii) for secondary education, following a market/feasibility/pre-investment study, one of several possible options would be retained to reinforce female vocational training (rehabilitating the existing Bamako National Technological School for Women, ENTF, or an alternative to be determined). Details of what the proiect would finance (US$O.1 million) are in Annex V. 2. Improving the Performance and Relevance of Primary Education 67. To attain this objective countrywide this component would reinforce the capabilities of the National Pedagogic Institute (IPN) to: (i) monitor and evaluate the qualitative impact of program activities; (ii) raise teacher effectiveness through the new approach to pre-service training and the reactivation of in-service training; (iii) support the adaptation of the primary curriculum agreed under the program; (iv) provide all primary schools with an adequate supply of affordable, pedagogically relevant textbooks and pedagogic materials; and (v) strengthen pedagogic support and control. Details are in Annex 3-3 of the I.B. 68. Approach Proposed. IPN wishes to create in its midst nuclei of competence so as to carry its work program especially in the areas of curricula and textbook development, rationalization of the teacher training system, the design and administration of tests and surveys, decentralized school management, library and information science. To achieve that capacity-building objective, IPN, following a management review undertaken with USAID funding, would be "twinned' with two reputable institutions, capable of: (i) offering to carefully selected IPN specialists (many of whom have studied in Canada or the US) complementary training in the required disciplines; and (ii) flexibly providing short-term specialist services in the same disciplines. Most of the pedagogic improvements described in paras. 69-74 would involve the same approach: (a) training of  - 25 - IPN specialists at the twin institution; (b) upon their re,,urn, their participating, with experienced Malian field staff (inspectors, teachers, pedagogic advisors) in Task Forces given specific assignments (e.g. curriculum or textbook revision); and (c) punctual technical assistance of the twin institution to these Malian teams for the timely completion of the assignment. The twin institutions would be, under French financing, the International Center for Pedagogic Studies (Centre International d'Etudes Pedagogiques, or CIEP), for pre-service training and program development, and under US financing, a university-type institution, for M & E and in-service training. 69. Monitoring and evaluation. In order to assess the qualitative improvements expected from the proposed investment and to make adjustments as necessary, a pedagogic "Tableau de bord' ("control panel") would be developed. It would focus on three aspects: (i) student achievements: in PYl (first project year), a stratified sample of about 3,000 pupils in second, third, fourth, and fifth grades would be tested in Arabic/French and arithmetic to determine their initial skill levels; the tests would then be repeated every other year to follow progress; the ruralization and national language experiments would also be covered in the sample; (ii) classroom working conditions: each year a sample of about 100 schools would be surveyed to monitor the availability and use of pedagogic materials, school physical environment and staff/pupils attitudes; and (iii) parental perceptions about education: periodic surveys would be conducted, using the 'beneficiary-assessment' approach to monitor parents expectations and opinions. This information would be fed back to IPN's Evaluation Division for analysis; it would provide MEN's officials a scientific basis, missing hitherto, on which to decide whether to expand, reorient, scale down or discontinue specific activities. Details on what the proiect would finance (totalt US$0.4 million) are in Annex V. 70. Teacher pre- and in-service trAining. To enhance the basic and professional skills of the primary teaching corps, this sub-component would: (i) finance the investment required to revise the organization, curriculum and teaching methods for pre- service training at the IPEGs as agreed under the program; and (ii) support a major in- service training program for primary education personnel. The revision proposed for IPEGs is discussed in para. 48. Starting from the results of the initial achievement tests, which would highlight the weaknesses in instructional practices, the Malian team would develop the new IPEG program in PY2, test it in PY3 and introduce it in PY4. This program would take into account the higher level of general education of new recruits, as well as the need to develop them into resourceful, flexible, practically-oriented and innovative teachers. 71. The in-service training program would be three-tiered, involving in sequence: (i) all the 93 inspectors and pedagogic advisors; (ii) about 1,000 primary school principals (3/4 of the total); and (iii) about 3,000 primary school teachers (1/3 of the total). Trainees would be selected on a combination of first come, first served and performance criteria, with efforts to constitute 'teams' at the school level. The program would be designed by IPN, using the results of the achievement tests and of an evaluation of existing curricula (para. 72). The duration would be two weeks for the inspectors, advisors and directors, to be trained at the Bamako IPEG (transformed into a Center for Continuous Upgrading, operating year-round) and three weeks for the teachers, to be trained in existing DRE or IEF facilities. Topics covered would include: (a) for the inspectors: decentralized educational administration (including personnel management, statistics and planning, reporting and inspection, finance, examinations); (b) for pedagogic advisors: pedagogic support, especially to support young teachers; (c) for principals: relations with teachers and APEs, school budget and  - 26 - accounting, timetabling, preventive maintenance, safety; and (d) for teacherss remedial instruction in basic disciplines, new teaching methods, multigrade and double-shift, resource management. Details of what the proiect would finance (totals US$1.3 million) are in Annex V. 72. Curriculam adaptation. In order to ensure that primary school pupils acquire not only the basic literacy and numeracy skills, but also the attitudes and values required to promote economic and social development, this sub-component would support the adaptation of Cycle I curriculum agreed under the adjustment program. The thrust of the reform is given in para. 49, and the methodological approach in para. 68. The IPN team would base its work on the results of the achievement tests, of an in-depth evaluation of the ruralization and national language (bambara) experiments, and of the beneficiary assessment of the causes behind the decline in social demand for education. Initiation to environmental issues and to health/nutrition /child care would be included, taking into account work already done by the Malian Institute of Agricultural Economy tIER), UNICEF and NGOs, and with support from the US Peace Corps. The new programs and textbooks would be ready for testing by PY3 in pilot schools. Following a national seminar to review the experiment and make the necessary adjustments, the new programs would be introduced in school year 1992/93, and their impact monitored as per para. 69. Details of what the proiect would finance (total: US$0.5 million) are in Annex V. 73. Pedaaogic materials. In order to promote more active teaching and learning methods and thus, enhance the effectiveness of primary education, this sub-component would ensure that each Cycle I teacher and pupil has access to a minimum set of pedagogically relevant material in basic disciplines (reading, mathematics and basic science, adapted to the Malian context). To that effect, the proposed project woulds (i) support the distribution of the remaining textbooks provided as a grant to Mali by FAC, but sold to pupils by Government, cf para. 27(a); (ii) complete the development and testing of about 11 titles, three of which are at an advanced stage of drafting, the others in line with the new curriculum development program; and prepare matching teachers guides; (iii) print or reprint about 1.1 million books from these 11 titles and 4 existing ones, plus about 40,000 teachers guides; and (iv) strengthen the existing storage and distribution system at the central and regional levels. These actions would be complemented by the provision of basic kits of documentation for each school and of materials for each classroom under the construction component. A new textbook policy (based on payment by installments and, for future books, on lower unit prices, the creation of a second-hand market and the establishment of a book renewal fund) was reviewed at negotiations and is being finalized with specialized assistance. The printing or reprinting of existing or future manuscripts would follow international competitive bidding and simplified production specifications so as to reduce unit costs by as much as 50 percent. Transport and delivery of the books to the DREs would be covered under a contract with UNICEF, which has a broad network of field staff and a fleet of vehicles. Details of what the proiect would finance (totalt US$4.1 million) are in Annex V. 74. Pedaiogic support and control. In order to reinforce pedagogic supervision and guidance to primary teachers countrywide, this sub-component would strengthen the 31 inspectorates (IEFs)in two ways. First, pre- and in-service training would be provided to all primary inspectors and pedagogic advisers (paras. 70-71) both in their professional field and to prepare them to run and/or supervise teacher in-service training. The administrative part of this training would reinforce the decentralization of MEN and the training provided to the DREs (para. 81), while the pedagogic part, combined with the in-service training of principals, would promote a more efficient use  - 27 - of teachers, classrooms, classhours and other educational resources, including vehicles for inspection. This would be combined with a streamlining of the administrative tasks requested. from the inspectors so as to allow them to devote more time to advising the teachers, especially those who are young and inexperienced. Second, the project would provide logistical means for each of the IEFs to permit regular school visits. These measures, combined with the availability of bools and better trained teachers, represent the key ingredients for improving the effectiveness of the delivery system, independently of the content of the curriculum. Details of what the proiect would finance (total: US$1.6 million) are in Annex V. 3. Developing and Initiating a StrateRt for Restructuring Secondary and Hiaher Education. 75. In recent months, the Government has made concerted efforts to explore solutions to the issues of secondary and higher education. For instance, scholarships have been reduced, studies have been conducted on the underutilization of facilities, and some of the GEs, such as ERA, are trying to adjust to the need for preparing students to self or private employment. To ensure that these efforts are sustained to a successful fruition, this sub-component wouldt (i) reinforce the capacities of the Directorate for secondary education (DESGT) and the National Directorate for Higher Education and Scientific Research (DNESRS), especially its scholarship service, to execute the program and formulate a Master Plan for the restructuring and development of these levels of education, in line with the country's human capital formation needs and its budgetary constraints (para. 50); (ii) finance (in coordination with the AfDB) the pre-investment studies needed to fully develop that Master Plan into a project; (iii) support, at these levels, some immediate improvements so as to ease the first phase of the reform process, i.e., (a) the renovation and replenishment of the libraries in three of the GEs so as to encourage independent study and improve the effectiveness of the learning process in these schools; and (b) the opening of an experimental line of credit for the creation of micro enterprises by young graduates, so as to stimulate the emergence of a class of young entrepreneurs. Details on this component are in Annex 3-4 of the I.B. 76. Through training and outside expertise provided under a twinning arrangement with a reputable institution specialized in educational economics (Burgundy University's Institute for Research on Educational Economics, or IREDU which provided support to the Planning Directorate throughout the Third Education Project), the Directorates for secondary and higher education would sharpen their analysis of the problems in their respective sub-sectors, propose realistic options and implement them. These studies would form an integral part of the strategy formulation process (para. 50). The DNESRS would be relocated in more functional premises on the MEN compound, and both Directorates would be computerized, especially the scholarship service. For rationalization of the University Library system,following a review of various options, it was decided to rehabilitate the existing libraries at ENI, ERA and ENSUP which are centrally located, have the greatest needs and together span a broad range of disciplines. An initial supply of 20,000 commonly used books would be provided. Details of what the Project would finance (total: US$0.4 million for the two Directorates, US$0.1 million for pre-investments studies, and US$1.4 million for the Libraries) are in Annex V. 77. Experimental line of credit for graduate employment creation. The proposed project would, as part of a broad employment-creation scheme supported by various donors (Canada, European Economic Communities, France, Federal Republic of Germany, United States), promote on an experimental basis, the emergence of a class of young  - 28 - entrepreneurs. This part of the scheme would be the only one exclusively targeted at young higher education graduates. More specifically, this sub-component would give operational content to the existing ILO/UNDP Unit for the placement of graduates, based at the Ministry of Labor, which has developed a good data base and efficient screening and advisory techniques. Under a Subsidiary Loan Agreement, to be approved by IDA, a US$1.0 million line of credit would be opened with a local private Bank to provide seed money to selected groups of aspiring young entrepreneurs meeting well-defined technical and financial criteria as defined by the ILO/UNDP Unit. The operating conditions of the line of credit would draw on the experience of the European Development Fund (EDF), which has successfully run a technical support and monitoring Unit for Small and Medium Enterprise (SME) creation. The line of credit would be on-lent by Government to the participating Bank at a 3 percent annual interest rate with a reimbursement period of 10 years, including 3 years grace. Sub-loans to students would carry a 12 percent annual interest rate, with a 6-year reimbursement period, including one year grace. Out of the 12 percent interest rate charged to students, the participating Benk would pay the equivalent of 3 percentage points to the Government, 4 points to a Guarantee Fund, and would retain the remaining 5 points as a fee. The foreign exchange risk would be borne by the Government. The line of credit would operate as a revolving fund. M&E would be, for this as for all similar operations, the responsibility of the technical secretariat of the Donors' Cor'ittee on employment creation. On the technical side, the selection of applicants, processing and follow-up aspects would be entrusted to the ILOIUNDP Unit, which would be expanded (from one to three micro-enterprise specialists, each with a Malian counterpart for training purposes) under separate UNDP financing. On the financing side, bankable dossiers would be submitted to the participating Bank. The latter's financial and technical capabilities would be reinforced through the training of its investment officers by a nNDP-financed senior banking techniques specialist posted in the Bank for 3 years. A condition of disbursement for this component would be the effective reinforcement of the ILOIUNDP Unit to IDA's satisfaction. The experience would be reviewed regularly in coordination with the Donors Committee and in-depth after three years by the Government/ILO)UNDP/and IDA to decide whether adjustments are needed and the formula should be expanded, discontinued or reoriented. Details of what the nroiect would finance (total: US$1.6 million) are in Annex V. 4. Strengthening the Education Sector Planning and Management Canacity. 78. To improve 2IEN's capacity to efficiently manage scarce educational resources and meet the program's policy objectives, this component would strengthen (i) MEN's Education Planning and School Equipment Directorate (DNPES); (ii) its Directorate responsible for planning, managing and controlling the sector's financial and human resources (DAP); (iii) the decentralized management of education, especially for the basic level (DNEF at the Central level, DREs in the regions, and IEFs at the local level); and (iv) the Project Coordination Unit (Pf:U) for physical resource management, project coordination and preparation. Details are in Annex 3-4 of the I.B. 79. Educational planning and statistics. The objective would be to enhance MEN's ability to plan and monitor the development of education in line with Mali's developmental needs, labor market opportunities and resource constraints, as well as to formulate and implement measures to increase sectoral cost-efficiency. This sub- component would reinforce DNPES' capacity to (i) ensure the timely collection, analysis and publication of educational statistics; (ii) maintain a country-wide school map and better control the student flow; (iii) conduct surveys and studies designed to propose viable options for addressing key sectoral issues and disseminate their findings within  - 29 _ and outside MEN; (iv) inform and train the other directorates in basic statistics and sectoral policy analysis; and (v) prepare and quarterly update a control panel* ("Tableau de bord") aimed at helping MEN to monitor critical developments in the sector to allow the early adoption of corrective measures. The approach would be based on: (a) a twinning arrangement with the institute mentioned in para. 76; (b) the computerization of DNPES, successfully started under the Third Project, with gradual use of the regional Directorates as data collection and processing centers; and (cl a work program agreed during appraisal. Details uf what the Project would finance (total: US$0.8 million) are in Annex V. 80. Financial and personnel management. In order to increase the efficiency with which MEN's financial and human resources are allocated and used, this sub-component would help DAP establish the management information system required to implement the budget restructuring, staff redeployment and procurement rationalization measures included in the sectoral adjustment program (paras. 51, 52, 56). With assistance from the twin institution mentioned in para. 76, the budget would be made more accurate and transparent through a revision of procedures for budget preparation and execution, accounting,and the introduction of a cost and expenditures monitoring and control system. The procurement process would be made more competitive. MEN's personnel records -ould be updated, reorganized and computerized, and merged with that of the Finance and Civil Service Ministries for completeness and accuracy. The personnel study mentioned in para. 53 would provide a rational basis for improving staff efficiency and motivation. Details of what the %roiect would finance (total: US$0.7 million) are in Annex V. 81. Decentralized management. In order to ensure that all three levels of the basic education management structure effectively play their respective roles in a synergetic manner, this sub-component would: (i) at the central level, strengthen the DNEF, which oversees a total of about 13,000 teachers and about 100 inspectors and pedagogic advisers; (ii) at the regional level, provide the DREs with the training and technical means they need to efficiently manage and control the resources for which they are responsible and to furnish to MEN the quantitative and qualitative information required to develop and implement its strategy; and (iii) at the local level, build up the IEFs, not only for pedagogic control and support but also to disseminate some of the project's resource management approaches. To achieve these objectives, logistical and office equipment would be provided, and sensitization seminars and training would be offered in appropriate managerial and pedagogic techniques. A Task Force consisting of representatives of each level would prepare, during the first six months of implementation, concrete proposals for gradually delegating more responsibility to the DREs, avoiding duplication and wastage, and reducing costs and delays. Details of what the proiect would finance (total: US$0.6 million) are in Annex V. 82. Physical resource manaxement. In order to reduce the capital losses discussed in para. 35, this sub-component would establish a physical resource management capability. Since historically, MEN's PCU has been assigned full responsibility for donor financed school construction,this sub-component would be under its supervision. It would reinforce: ti) the PCU itself, as executing agency and manager of the FAEF; (ii) its Technical Studies Division (DET) for implementation purposes; and (iii) the DREs, especially to provide support to the APEs in school construction and maintenance. DET would be responsible for programming, budgeting, and supervising all activities related to physical resource management. It would provide guidance to the DREs concerning technical advice to APEs, establish construction norms and standards, develop prototypes, plan/program school construction/repair, including procurement aspects, and  - 30 - prepare the yearly civil works program. DET would be reorganized and reinforced by a school facility specialit . while the three regional technical teams described in para. 63 would assist with field level implementation, including information and sensitization of the APEs/local communities. DET would receive assistance through a twinning arrangement with an architectural firm which provided support under the Third Education Project. Details of what the project would finance (totals US$1.2 million) are in Annex V. 83. Proiect coordination. Each investment component would be executed by the relevant Directorate. To ensure overall coordination of these components, as well as the management of relatively complex activities, such as the PAEF, the PCU would also be strengthened, rationalized and reoriented in its project management capacity. It would organize the Annual Reviews, monitor and control FAEF projects; as for the Third Project, it would ensure supervision, coordination and support in the areas of procurement, financial administration (disbursements, accounting), documentation, monitoring and reporting, and liaison with other Government services and IDA. The full- time, experienced project Director would be assisted by: (i) a deputy Director; (ii) the DET, reinforced as indicated above; (iii) a reorganized administration/accounting division; and (iv) an experienced technical advisor to be financed by PAC. The project would also provide the consulting services necessary to maintain adequate standards for accounting, auditing and reporting. At negotiations, Government and IDA agreed on the organizational structure, responsibilities and functions of the PCU, and on the terms of reference for the technical advisor to the Director. A condition of effectiveness would be that the PCU has been reorganized as agreed with IDA. Details of what the proiect would finance (total: US$2.3 million) are in Annex V. E. Costs and Financing. Credit Amount 84. Total costs over the six years of implementation are estimated at US$56.2 million equivalent (net of taxes/duties), of which US$20.7 million (US$12 million foreign exchange, US$8.7 million local costs) for the sectoral adjustment component. Foreign costs amount to US$35,4 million (63 percent). Base cost estimates are at April 1989 prices, using the exchange rate of US$1 - CFAF 314. The project would be financed by IDA (US$26.0 million or 46 percent of total costs), SPA (USAID, the Kingdom of Norway, FAC, CIDA for a total of US$9.0 million or 16 percent of total costs) for the quick- disbursing element, other donors (USAID, PAC, UNDP, for a total amount of US$6.5 million, or 12 percent of total costs) in parallel for the investment element, local communities (APEs of schools selected for FAEF funding), in the form of contributions to primary school rehabilitation/construction (US$4.5 million or 8 percent of total costs) and budgetary allocations from the Government of Mali (US$10.2 million or 18 percent of total costs; of this, US$8.7 million represents the local cost element of MEN's purchases against which the quick disbursements would be made). Details on cost assumptions are found in Annex IX of this Report, and further details in Annex 3 - 6 of the I.B. 85. Th DA credit, totalling US$26.0 million (46 percent of total costs), would consist ef two elements: (i) the quick-disbursing element in support of the sectoral adjustment program (US$3.0 million equivalent); together with the proposed US$9.0 million equivalent from SPA, this element would finance about 100 percent of the education sector's estimated merchandise imports in the period April 1989 to December 1991. This corresponds to about 1.1 percent of Mali's total merchandise imports and .9 percent of its gross capital requirements during the period (Annex I, Table 3); and (ii) the investment element (US$22.9 million equivalent).  - 31 - 86. The USAID would contribute USS7.6 milLion (13 percent of total costs. broken down into US$4.3 million for the adjustment element and US$3.3 million for the investment element); this contribution would form part of a US-financed package of approximately US$100. million, involving complementary project elements still being designed. It would finance on a parallel basis part of the female promotion component (para. 47), improvements in the performance and relevance of primary education (paras. 67-74, except for the pre-service traiAing and curriculum adaptation, financed by FAC, and for the provision of vehicles and the production of textbooks, supported by IDA), the strengthening of DAF personnel management (para. 80, except for the IREDU twinning arrangement, financed by FAC), and of MEN's decentralized management (para. 81 except for vehicles, to be financed by IDA). PAC would contribute US$3.7 million (US$1.0 million for the adjustment element. and US$2.7 million for the investment element); it would finance the services of the volunteers and the Project Director's technical advisor for the construction component (para. 61-66, and 82), pre-service training, curriculum adaptation, books for the GE Libraries (paras. 70, 72, 74 and 76) and the twinning with IREDU (paras. 76 and 79). The UNDP would, in addition to reinforcing its ILOIUNDP Unit, finance for three years the services of the banking technique specialist (US$0.5 million) to be seconded to the Bank participating in the line of credit scheme (para. 77). Effectiveness of the IDA credit would be conditional upon fulfillment of effectiveness conditions of the USAID grant and signing of the contract for the technical advisor to the Project Director. P. Impact of the Proposed Proiect 87. The no-adiustment scenario (N.A.S.). Computer simulations indicate that continuation of present policies would, even writh a budget real growth rate of 3 percent p.a., make it impossible to achieve by year 2000 a total primary enrollment ratio exceeding its 1988 level of about 31 percent. A lower budgetary growth (considered more likely), would lead to decline in the enrollment ratio and further quality deterioration (for example, the ratio would decline to about 27 percent in year 2000 if the budget were to grow by 2.4 percent). Thus, the N.A.S. would mean that, by the start of the 21st century, Mali would be sinking further into iiliteracy, which would seriously impair its ability to achieve its broad development goals. By contrast, the following paragraphs illustrate the positive impact of the adjustment scenario (A.S.). 1. Educational Impact 88. Enrollments. Allowing for institutional constraints in the regions outside the three areas of project concentration, the program would make it possible to increase the primary enrollment ratio (public + private) to about 36 percent (Table 1) by 1994. This would be equivalent to an annual enrollment growth rate of about 9 percent. Once the approach has been tested, and other donors join in supporting the program, progress could accelerate towards the Government goal of a 50 percent gross enrollment ratio. Reaching that goal by the end of the century will require sustained political comitment and policy refocs. table 1. Pratecto* ?rlMarol1aUt R-tio by 1994 | I 1_1 Im 1. C4mriae, ... f .r.. of_ j aceaitratb.e (sineS, Sa"IIa- Ike* *r e re11 1 1 metof os "not" (GAO,i I i u s s i,.l1k.cX ineam TteabrkSII it' ll us *mll.I _S_ w l^_mm 1 >>  - 32 - 89. Quality and relevance. Increased allocations for quality inputs and revisions in the content and delivery mode of primary education would improve the effectiveness of the learning process. Sensitivity analyses suggest that, even with increases in the cost per primary pupil of CFAF 2,000 (11 percent), the savings achieved through a reduction of repeater and drop-out rates could range from 9 to 36 percent of the cost per primary graduate and 11 to 41 percent of the cost per basic education graduate (Annex VII). Although it is difficult to quantify the causal effect of an increase in quality inputs on repetition and dropout rates, it should be noted that even a five percentage point reduction in average repetition in primary education (i.e from the present 30 percent to 25 percent) would generate savings equal to the additional costs of CFAF 2,000. Eventually the improved skill level and more entrepreneurial behavior of entrants into secondary and higher education would also have a favorable impact on the internal end external efficiency of these higher levels and would contribute to reducing graduate unemployment. 2. Social Impact 90. Efficiency and equity. The proposed project would increase the effectiveness and efficiency of resource use (budgetary reallocations, staff redeployment, more intensive use of physical and human resources, incentives to the private sector) and ensure the productivity of this and future investments (rehabilitation and maintenance, synergy between various quality inputs, M&E). It would also address equity concerns by expanding access to primary education, notably in the poorer rural areas. To do so, the findings of the beneficiary assessment process (para. 64) would guide a revision of the content and the delivery of education; a flexible financing mechanism (FAEF, para. 54) would be introduced to compensate for economic inequities between regions, gradual decentralization would bring the management of the system closer to local concerns; finally, specific actions would be targeted at girls (para. 47) for whom the enrollment ratio could be expected to increase from about 23 percent to about 28 percent (boys: from 38 percent to 43 percent). 3. Financial Impact 91. The program would yield total cost reductions equivalent to about CFAP 2.7 billion (US$9 million), or about 17.3 percent of MEN's 1988 budget by 1994. These "savings" would come from higher education scholarship reductions, a freeze on the Cycle II/secondary/teacher training budget, school mergers, a more competitive procurement system, and teacher redeployment instead of new recruitment. They would be entirely reallocated to allow the 8.5 percent annual increase in the primary education budget and the near tripling of materials allocations by 1994 which would be required to achieve the program's objectives of expanding the primary education enrollment to about 36Z and improving quality at all levels of the system. By 1993, unless further reallocations are undertaken, net incremental costs would occur, increasing from the equivalent of 1.2Z of MEN's 1988 current budget to 2.9% in 1994 (Details in Annex IX). While the level and share of MEN's budget, compared to the N.A.S., would only marginally increase by the end of the project, its structure would be substantially altered, (i) by level of expenditures, with a Cycle I budget 23 percent higher than under the N.A.S in order to improve equity and (ii) by type of expenditures, with a near tripling of the materials budget to improve internal efficiency. Private financing of education would also increase substantially, including a target 50 percent increase in APE financing in the three project areas. These findings are summarized in the two tables below.  - 33 - Tab h 2. Projected MEN Budget, by Lovel of Educatlon Without and With Adjustment (million CFAF, current torm.) ------------------1988----1 ---I---- ------I t | No Adjustment I Adjustment I Amount X I Amount X I Amount X ~~~~~~~~~~~- - ----- - - - - - - - -- _ __ -- - -_ ---- Primary (Cycle I) 5,838 84.6 I 7,149 80.9 I 8,t80 46.0 Secondary . Cycle II 8,189 18.8 I B,949 19.0 I 8,189 16.0 . Secondary genoral 1,712 10.0 1,799 9. 2 1,712 8.2 . Secondary tech./voc. 90 a.6 S o9o 8.60 789 4.0 . Teacher training 884 4.9 1 942 4.8 I 665 2.8 | Subtotal 6,275 87.0 7,1980 8.8 | 8,195 81.9 | Higher Education I I I | GE. 2,e45 12.0 | 2,166 11.0 I 1,971 10.0 | . Abroad 1,828 7.8 1 1,420 7.8 967 4.9 Subtotal 8,868 19.8 I 8,686 18.8 I 2,908 14.9 Administration 680 3.7 I 630 8.2 ! 780 3.7 Subsidies 615 8.9 718 4.8 718 a .8 I Other (literacy progrms) 89 0.5 89 9.4 I 198 0.5 | Total EN Budget 18,80t s 100.0 19,847 .100.0 | 19,448 100.9 As of percontage of I Government recurrent I I I budget 25.5 25.4 I 26.6 1 _ Totals may not add up due to rounding. Source: Mission estimates. Table 8. ProJected MEN Budget, by Type of Expenditure Without and With Adjustment (million CFAF, current terms) l ------1988