Papua New Guinea - Education Development Project

,A 3SZ 7 -w Dammit of The World Bank FOR OmFAL USE ONLY MICROFICHE COPY Report No.:P- 5803 PNG Type: (PM) Title: EDUCATION DEVELOPMENT PROJECT Author: REES, WILLIAM RqWI N. P-5803-PNG Ext. :81210 Room:E9 033 Dept. :ASTPH MEMRANUMAND RCMEDTO OF TME PRESIDENT OF TMlE INlTE}NOA .ANK FOR RECNSTRCTIOA DEVELOPMT TO THE EXECUTE DIRECTS ON A PROPOSED LOAN IN AN AMON EQUIVALENT TO US$35 MLION TO THE INDEPENTDEN STATE OF PAPUA MEM GUIUEA FOR AN EDUCATION DEVELOPMENT PROJECT OCTOBER 6, 1992 This document a a estricted distributio and may be wsed by reciiens only in the pertomance of their official dties its contents may not othew be disclosed witbout World Bank authorization.  CURRENCY EOUIVALENTS (As of September 1992) Currency Unit - Papua New Guinea Kina (K) US$1.00 - KO.95 WEIGHTS AND MEASURES Metric System FISCAL YEAR January 1 - December 31 ACADEMIC YEAR January - December ABBREVIATIONS ESR - Education Sector Review NDOE - National Department of Education PCC - Project Coordinating Committee PEOF - Program in Education for Overseas Funding PIU - Project Implementation Unit PNG - Papua New Guinea UPE - Universal Primary Education  FOR OmCUIL USE ONLY PAPUA NEW GUINEA EDUCATION DEVELOPMENT PROJECT Loan and Project Summary Borrower: The Independent State of Papua New Guine& Amount : US$35 million equivalent Terms : Repayable in 20 years including 5 years of grace at the Bank's standard variable interest rate Local Foreign Total -_. __ US$ million------- Financing Plan: Government 16.3 - 16.3 IBRD 3.1 31.9 35.0 Total 19.4 31.5 Rate of Return: Not applicable Staff Appraisal Regort: Report No. 10640-PNG IBRD No. 24164 This document has a restricted distribution and may be used by recipients only in the performance of their offcial duties. Its contents nmay not otherwise be disclosed without World Bank authoriation.  MEMORANDUM AND RECOM9 ENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THIE INDEPENDENT STATE OF PAPUA NEW GUINEA FOR AN EDUCATION DEVELQPMENT PROJECT 1. I submit for your approval the following memorandum and recommendation on a proposed loan to the Independent State of Papua New Guinea for US$35 million equivalent to help finance a project for education development. The loan would be at the Bank's standard variable interest rate, with a maturity of 20 years, including 5 years of grace. 2. Background. Although substantial progress has been made in expanding education in PNG since independence in 1975, the development of modern education in the country is little more than a generation oldY This is reflected in the low educational status of the population in general and of the workforce in particular. In addition to the general lack of education in the community, a number of problems beset the education system such as poor quality and low student achievement, high dropout rates and marked disparities in enrollment rates between provinces and by gender. Inadequate access remains a problem - gross enrollments for the primary age group are a relatively modest 731, in lower secondary only 16X of the age group is enrolled and at the upper secondary level and in higher education, the enrollment rates are a mere 2X. The lack of expansion in the upper secondary schools over the last decade has restricted the supply of qualified grade 12 graduates and this in turn has greatly retarded the growth of higher education. 3. The Government's policies and Rlans, which are outlined in the recently-prepared Education Sector Review (ESR), are directed towards addressing many of these problems, and are generally sound, although the timetables for achieving some of the targets appear to be overly optimistic. Primary enrollments are planned to expand at 5% p.a. to achieve universal primary education (UPE) by 2000. However, given the high dropout rate (45X over the primary cycle) and the difficulty of reducing it in the foreseeable future, UPE is unlikely to be achieved by 2000. The causes of dropout are complex and the Government has asked provincial education authorities to prepare plans, relevant to local circumstances, to reduce dropout rates over the long term. Continued emphasis will be given to raising quality through improving teacher training and giving special attention to expanding the supply of textbooks. The transition rate from grade 6 to grade 7 has remained static at around 35% in recent years and it is planned to raise the rate to 501 by 2000. This would require an additional 144 lower secondary schools and nearly 2,000 new teachers. These requirements could be reduced by appropriate measures such as expanding the physical capacity of existing schools, introducing double shifts and raising the student teacher ratio from the v The school sytem in iNG comprises a six-year primarY cycle (grades 1-6), followed by a lower secondary cycle of four years (tgrades 7-10) and two years of upper secondary education (grades 11- 12). In 190, enrollmants at these levels were 413,900; 53,100; and 1,970 respectively. 8igher education and training (post-grade 10) is carried out in 55 institutions with a total full-time equivalent enrollment of about 9,800. In 1991, education accounted for 16.1S of total budgetary expenditures and 6.2S of GDP.  -2- present relatively generous 26:1. The plan to raise the throughput from g. le 10 to grade 11 from 10 to 25X by 2000 is feasible provided careful attention is given to the recruitment of teachers, the majority of whom are likely to be expatriate. This expansion would more than double the output of grade 12 graduates thus permitting the planned 501 increase in university enrollments to be achieved. 4. In order to focus investments more closely on education policy objectives and to provite guidance for the donor community, the National Department of Education (NDOE) has prepared, as part of a national education review exercise and at the Bank's request, the Program in Education for Overseas Funding (PEOF). The PEOF includes 10 major projects aimed at increasing access to primary, secondary, vocational and nonformal education and improving their quality and relevance. Specific investments will support expansion of school facilities, improved maintenance of buildings, the upgrading of teacher support services and school libraries, curriculum development and the increased supply of textbooks and teaching materials. The total cost of the PEOF is estimated at US$261 million during 1992-99. 5. Lessons from Previous Bank Experience. Previous implementation experience offers several major lessons of relevance to the design of the proposed project. First, textbook production must be accompanied by efficient procedures for the timely distribution of the books. The proposed project recognizes that although arrangements for the physical distribution of textbooks are adequate, past experience has shown that inadequate funling has delayed distribution. The project therefore allocates to distribution activities about 121 of the funds for textbook provision. Second, textbooks tend to disappear from classrooms. To address this issue, the project would include a pilot program aimed at providing solutions to book retention and security problems. Third, planning activities are greatly weakened wban trained planning staff are not retained in key planning positions. Project design therefore specifies that the planning advisors, to be trained under the project, would be retained in their positions for an appropriate period of service. Fourth, effective implementation depends upon strong project management arrangements. Project design would replicate the arrangements used for the successful implementation of previous Bank projects and would consist of a high-level PCC and a well-staffed PIU assisted by evaluation officers to monitor ongoing implementation activities. 6. Rationale for Bank Involvement. The low level of educational achievement in PNG continues to act as a major constraint to the country's development. In response, the present Government is giving high priority to expanding and improving the quality of education. In the face of increasingly difficult macroeconomic conditions, resource constraints have tightened and the Government has been barely able, in recent years, to maintain a constant real level of recurrent budget allocations to the sector. It is important to maintain momentum in support for education in the face of the critical need for human resource development. Project design has also provided an opportunity for the Bank to play a leadership role in encouraging NDOE to prepare a coherent statement of educational policies and strategies (the ESR) and in the preparation of an education investment program (the PEOF). These activities will provide guidance to donors and should result in a more  -3- rational approach to supporting the development of education. The proposed project supports the highest priorities in the PEOF, as defined by NDOE, and represents the first donor effort to support implementation of the PEOF. 7. ProjgCt Qbjectives. The overall objective of the project is to help the Government implement its education sector policies and investment plans through assistance for increasing access, improving quality and strengthening institutional management. More specifically, the project aims to increase enrollment in upper secondary education, improve the quality of primary and lower secondary education, strengthen school maintenance and reinforce education planning and management. The project would also assist in developing policies and strategies to address three key problems - female education, cost effectiveness and teacher education. 8. Project Descrigtion. The project would comprise seven componants which NDOE has defined as the highest priorities in the PEOF, together with a policy studies component, namely: textbook provision for primary and secondary schools (baseline cost, US$16.2 million); upper secondary enrollment expansion (US$10.8 million); development maintenance (US$8.0 million); teacher support services (inspection and guidance) (US$2.7 million); library grants (US$2.6 million); regional planning advisors (US$0.6 million); certificate of business studies (US$0.3); and policy studies (US$0.3 million). The project would also finance specialist personnel for project management and evaluation (US$0.9 million). The proposed loan of US$35 million equivalent would finance about 701 of total project costs, net of taxes, including 100l of the foreign exchange cost and 161 of the local cost of the project. A breakdown of costs and the financing plan are shown in Zchedule A. Amounts and methods of procurement and of disbursements, and the disbursement schedule are shown in Schedule B. A timetable of key project processing events and the status of Bank Group operations in Papua New Guinea are given in Schedules C and D, respectively. A map is also attached. The Staff Appraisal Report No. 10640- PNG dated October 6, 1992, is being distributed separately. 9. Project Implementation. Overall coordination of project implementation would be the responsibility of a high-level Project Coordinating Committee (PCC) under the chairmanship of the Secretary for Education and including representation from the Departments of Finance and Works. Education components would be implemented by the national and provincial education auth,orities. Civil works would be the responsibility of the Department of Works with the exception of development maintenance for lower secondary schools, vocational centers and distance education centers which would be handled by provincial education authorities. Management of project implementation would be undertaken by a Project Implementation Unit (PIU) which would include a project coordinator, civil works manager and experts in procurement, maintenance and accounting. Ongoing evaluation of project outcomes would be the responsibility of NDOE's Research and Evaluation Unit. The PIU would be expanded over time to handle all donor-assisted projects within NDOE. 10. Project. SustainabilitM. The impact of the proposed project is likely to be sustained in the long term because its components represent the highest priorities of NDOE, which were identified through an exhaustive  -4- planning exercise. The process of designing the project ensured that NDOE took a coherent view of education issues, the policy responses required and the investments necessary to effect improvements. Thus, there is a strong commitment by NDOE to the project's objectives. This is expected to be particularly beneficial to enhancing female education. Furthermore, since the major part of the project aims to support quality improvement rather than capacity expansion, the incremental recurrent cost burden will be well within local budgetary cap icity. 11. Agred Actions. The Government has agreed to: (a) create and fill the additional positions required by the project according to schedules agreed with the Bank; and (b) carry out the policy studies and implement their recommendations according to the action plan. 12. BAnefits. The project would lead to an increase in grade 12 graduates thereby easing the shortage of qualified entrants to higher education, especially with regard to females. The project would also assist in improving the quality of education through the provision of teacher support, improved planning, textbooks and other relevant inputs. Policy and planning would also be strengthened in relation to female participation in education, the cost effectiveness of the education system and the development of teacher education. In addition to dhe benefits to be derived from Bank financing, the project design process ercouraged the preparation of detailed statements of education policies, strategies and investment needs which are available to guide future education investment decisions of the donor community. 13. Risks. In view of the involvement of the provincial education divisions in implementing parts of the project, there is some risk regarding local capacity to implement the project satisfactorily. This potential risk would be reduced through the operation of the PCC and the establishment of a well-staffed PIU which would include an experienced project coordinator. 14. Recommendation. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve it. Lewis T. Preston President Attachments Washington, D.C. October 6, 1992  - 5 - Schedule A PAPUA NEW GUINEA EDUCATIOR DEVELOPMENT PROJECT Estimated Costs and Financing Plan Estimated Costs a Loeal Foreig Toa1 --- (US$ million)------ Increasing access 9.1 10.0 19.1 Improving quality 5.3 16.2 21.5 Strengthening institutional management 0.6 0.3 0.9 Project management and evaluation 0.6 0.3 0.9 Baseline_Cos 15L6 26 42.4 Physical contingencies 1.0 2.2 3.2 Price contingencies 2.8 2.9 5.7 Subtotal3. 1t T-otal Project Cost 1.AI Financing Plan: Government 16.3 - 16.3 IBRD 1 31. Total U$00 3q.ivlent i