Tanzania - Education Rationalization Credit Project

Report No. PID7994 Project Name Tanzania-Education Rationalization Credit (@) Region Africa Sector Human Resources Project ID TZPE61106 Borrower United Republic of Tanzania Implementing Agencies Ministry of Finance and Ministry of Science Technology and Higher education Date this PID prepared: July 21, 1999 Project Appraisal date November 1999 Projected Board date July, 2000 A. Country and Sector Background 1. Although Tanzania remains one of the poorest countries in the world, there has been steady growth in the economy since adjustment began in the mid-1980s. Annual GDP growth rate has increased from an average of 2 percent in the 1980s to over 4 percent in the last 8 years. Since 1996 the government has succeeded in arresting deficiencies in fiscal management and some measures have been introduced to restore fiscal discipline. Economic growth has raised household expenditure and reduced poverty. While 65 percent of the population was living on the equivalent of $1 per day in the mid 1980s, the percentage has dropped to approximately 51 percent s the century comes to an end. 2. However, growth has been accompanied by greater inequality. The very poor have benefited little, due mainly to the skewed distribution of human capital and rural infrastructure. Despite steady income growth for the country as a whole, indicators of basic human welfare have been stagnant or worsening compared to levels achieved in the early 1980s. Gross primary enrollments dropped form 93 percent in 1993 to about 78 percent at the present time. Secondary and tertiary school enrollment are among the lowest in the world. The stagnation of education indicators is a serious concern. B. Project Objectives 3. The Higher and Technical Education sector faces a genuine crisis. The origins of the problem stem from the nationalization emphases of the 70s and early 1980s when Ministries and parastatal organizations proliferated, and every industrial and commercial activity felt the need to have associated training institutions for mid level management. The problem manifests itself now in an extensive number of underutilized, expensive, inefficient, uncoordinated institutions, originally developed and still run by a variety of different Ministries. Often with extensive infrastructure, few are performing the functions for which they were originally designed and many have few students and many staff. They act in relative isolation and respond to perceived ministerial demands, rather than to market needs They embody duplication, and the misallocation of resources and reflect a serious need for rationalization for cost saving purposes.  4. The benefits of rationalization are clearly evident: available infrastructure and potential resources that could be put to new, relevant and cost effective purposes. The government has recognized the significance of the problem and the need to address it. It has given parliamentary approval to a rationalization program which is featured centrally in the latest Public Expenditure Review, the Medium Term Expenditure Framework and the new Education Sector Development Program. 5 The broad objectives of this project are to support four core government purposes: (i) to use the limited resources in the education sector in an efficient and cost effective way; (ii) to improve the relevance of education and training to the labor market; (iii) to increase enrollments and expand access to education and training opportunities and (iv) to make the provision of education and training more equitable. 6. Specific objectives of the project are to assist the government in carrying out the preparatory work for the rationalization and in implementing the program which results from that work. This will involve providing support for the costs associated with restructuring, including possible redundancy compensation and assistance to the THET sector. C. Project Description 7. Increasing access to the THET sector, and improving efficiency and cost effectiveness, will require significant institutional and financial reforms. Institutional reforms will be concerned with the overall management and administration of the THET sector, to enable decisions on reforms to be more easily made and carried through. Financial reforms will be concerned with the longer-term financial viability and sustainability of the sector. 8. Using the limited resources in the THET sector in an efficient and cost-effective manner will involve, most notably, a reduction in the number of technical and higher education training institutions. Funding will be withdrawn from obsolete institutions. Others will be amalgamated, privatized or converted to alternative use such as secondary schools. Resources will be re-directed and staff re-deployed. 9. Institutional reform will center on achieving greater coordination of institutions within the education sector. Authority over technical and higher education institutions, which are currently under different ministries, will be transferred, a least temporarily to a single coordinating body with executive authority to rationalize and re-structure such institutions. 10 This body will have the ability to generate information, through the creation of data bases and surveys for the management and monitoring of institutional and labor market information. D. Project Financing 11. The project will be financed through an IDA credit. The borrower is the United Republic of Tanzania and the credit will be disbursed in two tranches which will help Tanzania fill its budgetary financing gap for the - 2-  rationalization of THET education which is essential for the improvement of the education sector. 12. Disbursement arrangements will follow the procedures approved by the Board in February 1996 13. Co-financing can be anticipated, because many of the institutions due for rationalization were established with funding from donors who now wish to see their old and new resources utilized more efficiently. E. Project Implementation. 14. The project will be implemented over a five year period: 2000-20005. The Ministry of Finance will be the Governmental agency responsible for overall coordination of the proposed program, while other ministries and parastatals, coordinated by MOSTE, will be responsible for the implementation of the education sector reform. 15. The essential first step will be a detailed survey or inventory of all categories of institution being considered for rationalization. Based on an already prepared instrument, this inventory will provide detailed information on each institution including staff and student numbers, costs, facilities, employment of graduates, source of financing and so forth. 16. Following parliamentary approval for rationalization, a Technical Task group has been established and meets regularly for the purpose of planning how to proceed with the survey and the advocacy work that the exercise involves. To ensure continuity and day to day commitment a small secretariat will be established for preparatory work. 17. Overall supervision of the THET rationalization will be in the hands of a high level Steering Committee chaired by the Chief Secretary, with membership at a senior level from all involved Ministries, including Planning, Finance, the Civil Service and the Vice President's office. F. Project Sustainability 18. The project itself will be a finite exercise that will end with the accomplishment of the full range of specific rationalization measures that emerge from the survey recommendations which are approved by government. 19. However, the achievement of this first major comprehensive phase should ensure that rationalization as a process becomes an integral and continuous part of Ministry planning. This will occur if recognition of the importance of rationalization for cost effectiveness remains central to Ministry planning and, at the same time, continuously updated date bases, criteria of institutional assessment and instruments for monitoring remain part of Ministerial apparatus for conducting rationalization exercises. G. Lesson Learned from Past Operations 20. Human resource development is a key component of IDA's assistance strategy towards Tanzania. Nine projects over the past three decades have concentrated investment upon primary and secondary education. Four important and related lessons have been learned from this experience and guide the form - 3 -  of this project. 21. First, it has been recognized that tertiary level institutions can not be ignored because the way in which they are organized and financed has implications not simply for the professional labor market and the state of national capacity but also for the total resources available for the education sector. 22. Second, stemming form this recognition is the appreciation by government, the Bank and other donors of the need to treat the education sector in its totality, rather than as individual projects applied to separate sub sectors. The result is the Education Sector Development Program which, henceforth, will provide the framework for government and donor partnership. THET rationalization is an integral part of this new Program. 23. A third lesson learned concerns the importance of ensuring that educational projects have the support of Treasury and are included within Public Expenditure Review exercises both of which have occurred in this case. 24. Four, both the Bank and the Government of Tanzania have recognized, in their planning for rationalization, that the political complexities and sensitivities inherent in the exercise require specific institutionalized government commitment at the highest level. H. Poverty Category 25. The essence of the THET rationalization is to reduce the unit cost while improving the quality and relevance of tertiary level training. The resulting expanded access to educational and training opportunities should in itself help to reduce poverty while the enhanced capacity for economic management should contribute to economic growth with the same result. 26. Resources released by the rationalization of institutions will be available for application to other poverty reducing activities. I. Environmental Aspects 27. No negative environmental effects are envisaged in this project. H. Program Objective Category. 28. The program objective category is tertiary and technical education. Contact Point: The InfoShop The World Bank 1818 H Street, N.W. Washington D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 -4-  Processed by the InfoShop week ending July 30, 1999. Note: This is information on an evolving project. Certain components may not be necessarily included in the final project. - 5 -