Uganda - Education Sector Adjustment Credit

Report No. PIC5484 Project Name Uganda-Education Sector Adjustment Credit Region Africa Sector Education Adjustment Project ID UGPE2972 Implementing Agency Ministry of Education Mr. Ben Otto, Permanent Secretary Crested Towers No. 17/19 Hannington Rd. P.O. Box 7063 Kampala, Uganda phone (256 41) 257038; fax (256 41 ) 258629 Ministry of Finance Mr. Tumusiime-Mutebile, Permanent Secretary E. A. Communications Building Nile Avenue P.O. Box 8147 Kampala, Uganda phone (256 41) 232759; fax (256 41) 230163 Date Initial PID Prepared May 27, 1997 Appraisal September 15, 1997 Project Board Date February 1, 1998 Country and Sector Background 1. During the 1990s the Government of Uganda (GOU) has established a record of solid economic reform and sustained growth. GDP growth has averaged 6.4w during President Musevini's tenure and 8.19 over the past three years. Inflation has declined and the annual average inflation is in the single digit. Economic policy has been disciplined and the impact on most performance indicators has been positive. The most important structural and institutional reforms include import, export and foreign exchange liberalization, privatization, public enterprises, tax administration, the financial sector, and the civil service. The Government needs to ensure that incentives in the civil service are compatible with achieving improved service delivery. Social indicators, however, show a less impressive picture. In the case of education, much ground was lost due to the political turmoil and economic decline of the 1970s and early 1980s. Although some improvements have been recorded recently, there is much to be done. The implementation of the UPE policy is a major effort from the GOU to improve primary education achievement. 2. Access. Primary education enrollment has stagnated in the 1990s. Up to 1996, before the implementation of the UPE policy,  total enrollment was equivalent to a net primary enrollment ratio of about 63 percent and a gross primary enrollment ratio of 93 percent. Net enrollment and gross enrollment rates for secondary education are about 12 and 19 percent respectively. Only a small proportion of secondary education graduates continue on higher education, with net and gross enrollment rates of about 3 percent. Equity. Access to education has been biased in favor of the rich, males, and the urban areas. Internal Efficiency (Repetition). In 1995, primary government-aided schools repeaters accounted for 19 percent of the total primary education enrollment. Repetition in secondary education, about 2 percent, is less of a problem. Failure rates for undergraduates can reach high levels, for example, 40 percent in Law and 56 percent in Commerce. Quality (Academic Achievement). The high dropout and repetition rates point to general low quality. This is also reflected in low learning achievement. Another concern is low external efficiency. The low human capital level of the labor force is reflected even in the urban areas where the majority of both women and men have not completed primary education. In fact, Uganda has one of the lowest levels of human development in the world. It ranks 158 out of 174 in the UNDP Human Development Index. However, cost-benefit analysis of investment in different education levels in Uganda reports high social rates of return -- 15.7t and 8.3w for primary and secondary education respectively. The Proposed Education Adjustment Credit 3. Overall the Government has made some progress in addressing the major issues; in particular, the implementation of the UPE policy starting this academic year. The financial implications are a major constraint, but the GOU is committed to increase public expenditure for basic education. Investment in education is expected to increase over the current investment levels of about 2.09 of GDP. The GOU is also requesting additional international support for the short run. 4. The policy of providing free primary education for up to four children per family, the UPE policy, has led to a registration of up to 5.2 million aged children for this academic year, about twice the enrollment for the previous year. This increase was not expected and the Government is under significant pressure to develop short term strategies to deal with it. There is concern that unless some actions are taken, the quality of education provision will deteriorate causing a backlash to the UPE policy. 5. The purpose of this sector adjustment operation is to provide budget support in conjunction with the promotion of the reforms urgently needed to improve the performance and organization of the education system in the context of the UPE policy. The operation is tailored to the needs of adjusting the education system and/or complementing other donors' interventions. It would provide budgetary support required for the Government to implement its education development program, with primary focus on improving allocation of resources, efficiency in the use of resources, quality of education inputs, and sector management, planning, -2 -  budgeting and information systems. In this way, it will support the UPE policy GOU has started to implement this year to increase primary education enrollment. Policy Objectives 6. The proposed IDA credit would finance about 23t of the total budget for the primary education level. There are four measures supporting the implementation of UPE: (i) improved allocation of resources; (ii) increased efficiency in the use of resources; (iii) protecting quality inputs; and (iv) strengthening sector management. Project Description 7. IDA assistance, in the amount of about US$100 million, will be divided in two parts: (i) a US$75 million IDA grant would be provided under the HIPC initiative subject to availability of resources under the 11th Replenishment of IDA, and provided that Uganda's other creditors have confirmed their agreement to provide the debt relief envisioned in the HIPC document; and (ii) US$25 million would be provided on IDA terms for a period of 40 years, including a grace period of 10 years, at 0.75 percent per annum. Benefits and Risks 8. The operation will assist the Government to improve the stagnant level of primary and secondary education coverage by supporting the UPE Policy and by opening up opportunities for access to secondary education in places were enrollment levels at this level has been low. Economic Benefits. As noted above, social rates of return for primary and secondary education in Uganda are 15.7w and 8.3w respectively. As a result, this investment will be beneficial to the society at large. Other benefits would be the following: (a) increased equity of educational opportunities for the disadvantaged (mainly rural girls) population; (b) reduced illiteracy due to greater participation in primary education; and (c) increased efficiency of all education levels, resulting in resource savings that would contribute to system expansion and improvements. Target population. The expansion of the system will benefit primarily children from the poorest families, especially girls, who traditionally have had less access to education. The operation will support greater equality of educational opportunities. The re-introduction of double shift teaching will decrease unit cost by covering more students with the same capital investment. By supporting UPE, the proposed project will address the issue related to lower and inequitable access in primary and secondary education. 9. The project would support education inputs that normally are implemented on a regular basis (i.e., hiring of teachers, provision of textbooks and classrooms) so no major problem is anticipated. During the design and initial implementation of the UPE policy, ministry officials have had ample opportunity to internalize the reforms to be supported. One main risk lies in the Central - 3 -  Government's ability to allocate the resources for the education sector. For this, budget monitoring would be in close cooperation with IDA. Environmental Aspects 10. None of the activities foreseen by the project are anticipated to have any negative impact on environment. In accordance with IDA policies for adjustment operations, no environmental rating has been assigned. Contact Point: Public Information Center The World Bank 1818 H Street N.W. Washington, D.C. 20433 Telephone No.: (202) 458-5454 Fax No.: (202) 522-1500 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Processed by the Public Information Center week ending August 15, 1997. - 4 -