China - Basic Education in Western Areas Project

OFFICIAL USE ONLY R2003-0 159/1 August 20,2003 Streamlined Procedure For meeting of Board: Tuesday, September 9,2003 FROM: The Acting Corporate Secretary China: Basic Education in Western Areas Project Project Appraisal Document Attached is the Project Appraisal Document regarding a proposed loan to the People's Republic of China for a Basic Education in Western Areas Project (R2003-0159). This project will be taken up at a meeting of the Executive Directors on Tuesday, September 9,2003 under the Streamlined Procedure. Distribution: Executive Directors and Alternates President Bank Group Senior Management Vice Presidents, Bank, IFC and MIGA Directors and Department Heads, Bank, IFC and MIGA This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank Group authorization.  Document o f The World Bank FOR OFFICIAL USE ONLY Report No: 25 172 PROJECT APPRAISAL DOCUMENT ON A PROPOSED L O A N IN THE AMOUNT OF US$ 100 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR A BASIC EDUCATION IN WESTERN AREAS PROJECT August 13,2003 Human Development Sector Unit East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. I t s contents may not be otherwise disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (Exchange Rate Effective November 22,2002) Currency Unit = Renminbi (RBM) RMB 1.0 = US$0.12 US$1 = R M B 8.26 FISCAL YEAR January 1 -- December 31 ABBREVIATIONS AND ACRONYMS CEP Chinese Experts Panel DFID Department for International Development EMES Ethnic Minorities Education Strategy ERAT Education Research Advisory Team FILO Foreign Investment and Loan Office GBEP Gansu Basic Education Project GDP Gross National Product B I m International Bank for Reconstruction and Development ICR Implementation Completion Report IDA International Development Association IT Information Technology MBD Model Bidding Documents MDG MillenniumDevelopment Goals MOE Ministry of Education NCEP National Compulsory Education Program NYCE Nine Year Compulsory Education PED Provincial Education Departments PER Provincial Expenditure Review PIP Project Implementation Plan PMO Project Management Office SBD Standard Bidding Document SDP School Development Planning SDRC State Development and Reform Commission SOE Statement of Expenditure SYCE Six Year Compulsory Education TOR Terms of Reference Vice President: Jemal-ud-din Kassum, EAPVP Country Managermirector: Yukon Huang, EACCF Sector ManagedDirector: Emmanuel Jimenez, EASHD Task Team Leader/Task Manager: Eduardo Velez Bustillo, EASHD  FOR OFFICLAL USE ONLY ! CHINA BASIC EDUCATION IN WESTERN AREAS PROJECT CONTENTS A. Project Development Objective Page 1. Project development objective 3 2. K e y performance indicators 3 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported b y the project 3 2. M a i n sector issues and Government strategy 4 3. Sector issues to be addressed by the project and strategic choices 10 C. Project Description Summary 1. Project components 12 2. K e y policy and institutional reforms supported by the project 13 3. Benefits and target population 14 4. Institutional and implementation arrangements 15 D. Project Rationale 1. Project alternatives considered and reasons for rejection 17 2. M a j o r related projects financed by the Bank and/or other development agencies 19 3. Lessons learned and reflected in the project design 20 4. Indications o f borrower commitment and ownership 21 5. Value added o f Bank support in this project 21 E. Summary Project Analysis 1. Economic 22 2. Financial 23 3. Technical 24 4. Institutional 25 5. Environmental 26 6. Social 27 7. Safeguard Policies 30 This document has a restricted distribution and may b e used by recipients only in the performance o f t h e i r official duties. I t s contents may n o t be otherwise disclosed without W o r l d Bank authorization. F. Sustainability and R i s k s ~ 1. Sustainability 31 2. Critical r i s k s 31 3. Possible controversial aspects 32 G. M a i n Conditions 1. Effectiveness Condition 34 2. Other 34 H. Readiness for Implementation 35 I.Compliance w i t h Bank Policies 36 Annexes Annex 1: Project Design Summary 37 Annex 2: Detailed Project Description 42 Annex 3: Estimated Project Costs 50 Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary 51 Annex 5: Financial Summary f o r Revenue-Earning Project Entities, or Financial Summary 58 Annex 6: (A) Procurement Arrangements 59 (B) Financial Management and Disbursement Arrangements 65 Annex 7: Project Processing Schedule 72 Annex 8: Documents in the Project F i l e 74 Annex 9: Statement of Loans and Credits 75 Annex 10: Country at a Glance 79 Annex 11: Ethnic Minorities Education Strategy 81 Annex 12: Ethnic Minorities Education Strategy M a t r i x 88 MAP(S) IBRD M a p 32722  CHINA Basic Education in Western Areas Project Project Appraisal Document East Asia and Pacific Region EASHD bate: August 13, 2003 Team Leader: Eduardo Velez Bustillo ector ManagerDirector: Emmanuel Y. Jimenez Sector(s): Primary education (90%), Central government Jountry ManagerDirector: Yukon Huang administration (10%) 'roject ID: PO73002 Theme(s): Education for all (P), Civic engagement, ,ending Instrument: Specific Investment Loan (SIL) Participation and CoDUnitY driven development (p)> Gender (S), Indigenous peoples (S) [XI Loan [ ]Credit [ ]Grant [ ]Guarantee [ ]Other: For Loans/Credits/Others: Loan Currency: United States Dollar Amount (US$m): $100.0 Note: The United Kingdom's Department for International Development (DFID) has agreed [o provide to the PRC a grant not exceeding US$34.4 million to be blended with an IBRD Loan of US$lOO million to reduce the effective interest rate to the PRC. Borrower Rationale for Choice of Loan Terms Available on File: Yes Proposed Terms (IBRD): Fixed-Spread Loan (FSL) Grace period (years): 8 Years to maturity: 20 Front end fee (FEF) on Bank loan: 1.00% Payment for FEF: Capitalize from Loan Proceeds BORROWER 47.34 0.00 47.34 [BRD 84.05 15.95 100.00 rotai: 131.39 15.95 147.34 Expected effectiveness date: 01/15/2004 Expected closing date: 06/30/2009 -2- A. Project Development Objective 111IbA 1) Improved access to and completion o f affordable and quality basic education for poor boys and girls in Sichuan, Gansu, Yunnan Provinces, Ningxia Hui and Guangxi Zhuang Autonomous Regions. 2. Key performance indicators: (see Annex 1) The project resources are targeted to 112 counties in poor and remote areas o f western China. In project provinces and counties there w i l l be: 0 increased numbers o f counties achieving Six Year Compulsory Education (SYCE) and Nine Year Compulsory Education (NYCE); 0 increased percentage o f 15 year-old age children who enroll in primary education (boys, girls, minorities); 0 increased percentage o f 15 year-old age children who complete primary education (boys, girls, minorities); 0 a decrease in the gender gap in primary and junior secondary education enrollment; 0 increased percentage o f 17 year year-old age group who enroll in junior secondary school (boys, girls, minorities); 0 increased percentage o f 17 year year-old age group who complete junior secondary school (boys, girls, minorities); 0 improvement in learning achievement as measured b y pass rates in math and Chinese language (boys, girls, minorities); 0 increases in the number o f poor boys, girls and minorities receiving fee exemptions (from parallel Government funding); 0 increases in the number o f poor boys, girls and minorities receiving free textbooks (from parallel Government funding); 0 increased qualification rate o f primary school teachers; and 0 increased qualification rate o f junior secondary teachers. In addition, National or provincial standards for equipment, books per student and classroom furniture w i l l be met by all project schools; Local communities w i l l become more involved in local school activities through introduction o f school based management (SDP) techniques at the local level; and Administrative and management capacity w i l l be strengthened within Ministry o f Education (MOE) and provincial and county education bureaus. B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: R2002-0218 CAS for Board Presentation 12/19/02 Date of latest CAS discussion: 12/19/02 The Bank’s new CAS has a continuing emphasis on basic education and s k i l l s development, particularly in the poor areas o f western China. This complements the United Kingdom (UK) -3- Department for International Development's (DFID) new Country Strategy which also seeks to improve access to quality and affordable basic education for poor boys and girls and ethnic China. Improved basic education win enable disadvantaged groups, including a high proportion o f the minority population, to take advantage o f economic (employment and income diversification) and social opportunities. The project i s targeted on some o f the poorer communities in five western provinces to increase the access to quality primary and junior secondary schooling where enrollment and completion rates have lagged behind. I t works in parallel with the Government's o w n support to ensuring affordable access to schools for poor boys and girls. This strategy supports the Government's o w n policy goals o f universal completion o f nine years o f compulsory education by the year 2010 which are included in the Government's Tenth Five Year Plan. 2. M a i n sector issues and Government strategy: Background. Educational progress in China has been impressive. With reported enrollment o f 135 m i l l i o n pupils and 5.9 million teachers in about 582,000 primary schools in 1999, China runs the largest primary school system in the world. At the junior secondary level there are 63,100 schools with an enrollment o f 58.2 million pupils and 3.1 m i l l i o n teachers. In 2001 the reported overall national net enrollment rates for the f i r s t six years o f schooling were approximately 99.1 percent of the 6-1 1 age cohort enrolled in primary education, and more than 88.7 percent o f the 12-15 age cohorts in junior secondary schools. Of the primary graduates, 94.4 percent reportedly went on to middle school (regular or vocational). A significant consequence o f these high enrollment figures i s the l o w national illiteracy rate: 8.7 percent o f those above 15 years o f age and about 4.8 percent among those between 15 and 50 years o f age. However, these figures mask disparities in basic education development, with notable imbalances in the availability o f educational services between the economically advanced and underdeveloped regions. Generally, urban and coastal areas have achieved the goal of nine-year compulsory education (NYCE), but many poor, sparsely-populated and remote areas have not yet achieved primary education targets. Schooling in poor counties i s markedby poor attendance and high repetition and drop-out rates. Net enrollment and completion rates in all five provinces and autonomous regions in the proposed project lag far behind the rest o f China. While the national average completion rate in 1999 was estimated to be 90.5 percent, one Gansu county surveyed b y the social assessment team i t was found to be only 63 percent. The actual disparities are very likely larger than these numbers would indicate given that there i s s t i l l a need to improve the quality o f education statistics, especially in poor rural areas. Ethnic minorities, girls, and disabled children are the most educationally disadvantaged. For example, a study o f 25 minority counties shows that the gross enrollment rate o f school aged minority children was 20 percentage points lower than the national mean. Disabled children are the most disadvantaged with the majority of them being out o f school. Poverty and prejudice play a role, but the l o w enrollment rates also reflect the difficulty in integrating children with special needs into mainstream education. Additional resources and teacher training are needed, as special schools w i l l only ever provide education for a very small proportion o f rural disabled children. -A- Important to the design and targeting strategies o f this investment project have been the findings of the Banks latest sector work o n Chinese education, "Strategic Goals for Chinese Education in the Z l s t Century" Keport No. 18969-CHA - November 1999. The report's primary recommendation as relates to basic education was that "..to ensure that there are adequate resources for the weakest parts o f the system, especially in the poor rural areas, in order to provide increased access to high-quality basic education to all." The report stated a number o f short-, medium- and long-term priorities. The most immediate priority was to provide increased funding for the poorest parts o f China to increase access to quality basic education for all o f China's poorest children. A corollary priority was the introduction o f more effective outcome indicators to assure the government that efficiencies are being achieved. I t i s w i t h this strong poverty focus, emphasis on increasing resources, both financial and human, attention to effective outcome indicators, and an overall concern for quality that the proposed project has been prepared b y the Government with support f r o m the Bank and DFID preparation team. Main Sector Issues. The barriers to universalizing basic education in poor counties are: (a) Financing. Inadequate funding o f the rural education system i s the key challenge and i t i s an underlying cause for many o f the other problems faced b y the education sector. T o a great extent, this i s rooted in China's highly decentralized fiscal system which assigns the main responsibility for financing local services to county and district governments. Consequently, there are great disparities between regions and counties in terms o f the standard and coverage o f education services, with poor, rural counties suffering the most. L o w investment in poor, rural areas translates into weak and deteriorating school facilities, insufficient supplies o f equipment and instructional materials, shortages o f funds for non-personnel costs (such as heating and clean water), and a lack o f professional development opportunities for teachers. The budget problems also affect recurrent expenditures. Poor areas face difficulties in recruiting or retaining high quality teachers. In all project provinces, between 10 and 30 percent o f teachers are temporary daike (substitute) teachers. On average daike teachers have lower levels o f education and are paid substantially less than normal teachers. Daike teachers are normally found in the more remote rural communities. Teacher salaries are often in arrears for extended nrural areas there i s a nominal budget for non-personnel costs but funds very periods o f time. I rarely reach the school level. The l o w level o f public spending o n education results in much o f the financial burden o f non-salary education being absorbed b y parents in the form o f school fees and charges. For the more than 230 m i l l i o n people living o n less than US$1 per day, the cost o f education can be very high. The costs are especially high for ethnic minority families who tend to be poorer and have larger families on average. Preliminary analysis o f data f r o m the household survey which was done as part o f the project economic and financial analysis found in the areas o f Sichuan and Guangxi sampled b y the study that the average private educational spending for primary school students living at home to be RMB 3 11 per year per child while this rose to RMB 1,165 for children in boarding schools (where parents also have to pay for subsistence). For junior -5- secondary school students costs are roughly RMB 694 per year for students who live at home and those who board. Government i s reforming the rules governing extra-budgetary funds. W h i l e the policy o f “converting fees into taxes” i s designed to bring extra-budgetary funds into the regular budget and to reduce the tax burden o n farmers, i t could put stress o n the education system because the current system i s heavily dependent o n extra-budgetary surcharges and fees. When the reform was piloted in Anhui province i t led to a considerable shortfall in funding for education which had to be covered by an additional allocation o f central Government funds. The reform i s now being piloted in a number o f other provinces (including Sichuan, Gansu and Ningxia in this proposed project). Maintaining financing for the education sector i s one o f the Government’s “three guarantees” to be safeguarded as part o f the reform. However, i t i s far from certain that the central Government w i l l be able to cover shortfalls across the western region should they emerge and there i s a risk that education and other services could deteriorate. The Bank‘s recent Provincial Expenditure Review (PER) i s instructive o n this issue and provides insights into the evolving nature o f this fee to tax issue. One issue i s that with the end o f raising earmarked education funds, the percentage o f new comprehensive county budgets n o w being devoted to education may fall as other competing needs have to be considered. Another issue i s that county-level counterpart fund availability for both domestic and internationally financed projects may be negatively affected. While taking the heavy tax burden o f f the farmers in rural China, additional funds w i l l be necessary from other (i-e., provincial, national) sources to provide services at the county level, especially in the social sectors. Some provinces are experimenting o n a pilot basis w i t h equalization schemes (e.g., there i s a three county pilot in Yunnan). The project w i l l watch carefully for the results o f this and other experiments to deal with the implications o f this evolving fee to tax policy. (b) Enrollment and completion rates. The high aggregate enrollment and completion rates in China mask the fact that in many townships and poor villages - including those targeted b y this project - a large number o f boys and girls are not in school. The problem i s significant in primary school, and even more so at the junior secondary level. As noted above, girls, ethnic minorities, and disabled children have the lowest enrollment and completion rates. The main reason for children not entering or dropping out o f school i s poverty -- parents cannot afford the direct and indirect costs o f schooling for their children. The economic and financial analysis carried out for this project has indicated that the average family spends 20 percent o f i t s income on education for children studying in their o w n communities and 29 percent when children need to attend boarding schools. The proportion i s higher for poor families. And families with more than one child face particular difficulties, often resulting in having to choose to send some children to school at the expense o f others. In such cases girls tend to be the ones who miss out due to the prevalence o f son-preference in rural areas. Another significant cause o f l o w enrollment and completion rates in remote communities i s distance to school. This i s particularly important for young girls where international experience shows that distance to school i s a major factor in determining enrollment and completion. -6- Government’s policy i s that children should not travel more than 2.5 km to school, but this has not yet been fully realized and many children are s t i l l not within easy reach o f a primary school. Sparsely populated rural areas pose the greatest chaflenge. In these cases Government has often resorted to boarding schools. However, as noted above, this also poses problems because the private costs o f boarding are beyond the reach o f many families. Added to this are concerns that families have about the care and safety o f their children. The Bank and DFID have consistently urged the Government to consider alternatives to boarding schools, including multi-grade schools, schools with alternate year intakes, or networks o f incomplete satellite feeder schools and complete core schools. (c) Student achievement. Learning achievement i s lower in poor rural areas than in wealthier urban areas. Contributing factors are the l o w quality o f teaching, as well as the poor teaching environment (such as poor infrastructure, poor lighting, inadequate heating, etc.) and insufficient and inappropriate equipment and teaching materials. M a n y teachers, especially in teaching points and the more remote communities, are inadequately trained and this i s particularly so for daike teachers. In-service training opportunities are scarce in rural areas and often come at a personal expense to teachers. Participation i s difficult, if not impossible, for daike teachers given their l o w wages. Furthermore, training courses tend to be strong o n subject matter content and weak on the development o f pedagogical skills. The Government i s introducing participatory teaching techniques throughout the country but the effort has yet to begin in many rural areas. Significant work remains to be done in the training o f teachers to meet the needs o f children w i t h physical or learning disabilities. The language o f instruction poses another barrier to learning for some students. The standard of bilingual education i s highly variable. While well-developed in some areas, mother tongue curricula o f acceptable quality and a good process o f transition to the national language are not always available. (d) Management Capacity. China’s c i v i l service i s strong compared to other developing countries, but rural areas need to strengthen their capacity to plan, implement, monitor, and evaluate reform programs if they want to achieve universal basic education. Improved mechanisms to involve communities in the planning and implementation o f primary education programs are also required. Specifically, the system needs to be strengthened with more and better qualified planners, data-processors, statisticians and analysts. Better data o n education financing, school facilities, staff deployment and student outcomes - and better analysis o f that data - would contribute to improved policies and greater efficiency in the system. (e) Information Technology (IT). There are significant disparities in the provision o f IT between eastern and western China and between rural and urban areas. Narrowing this gap w i l l require greater access to materials and support for teachers in more remote areas; tailoring some o f the materials for teachers in l o w resource situations; and improving links between classroom teaching and training, especially in rural areas, and more attention to the variability in learner levels in distance education. Cost-effectiveness and sustainability concerns should be guiding principles in the decision to upgrade IT capacities in areas where the budget i s stressed. -7- Government Strategy. The Government has put in place a range o f policies and programs to address the issues identified above. However, i t should be noted that success depends on the extent to which poor provinces and counties can overcome resource constraints to avail themselves o f programs and ultimately sustain investments made with their support. (a) Financing. The reform o f the local taxation system, with i t s policy of “converting fees into taxes” i s a key part o f the Government’s fiscal reform strategy. A key concern i s the maintenance o f education expenditure at the local level. The national Government i s currently transferring funds to the provinces to smooth the transition to the new system, and thereby compensating for some o f the lost revenues. The compensation funds are not earmarked b y sector but are meant to cover a variety o f local expenditure areas, including education. I t i s intended through the three guarantees that necessary funding for rural education be ensured. Central Government has also put in place a range o f initiatives to fund basic education in poor areas that have not yet achieved nine year compulsory education (NYCE). These include two national compulsory education projects (NCEP). The f i r s t - NCEP I - was launched in 1998 with a budget o f RMB 3.9 billion (US$475.6 million). NCEP I1was launched in 2001 with a budget o f RMB 5 billion (US$610.0 million). The NCEP projects provide resources for school facilities, equipment, learning materials, teacher training, and scholarships for poor students. NCEP I1requires matching funds from participating counties o f 1:OS. Most o f the funding from NCEP I1i s directed to junior secondary rather than primary because the Government recognizes that there i s a major problem in providing adequate junior secondary schooling for the increasing numbers o f primary school graduates. The National Development and Reform Commission (NDRC), MOF and MOE are also providing approximately RMB 3 billion (US$366 million) for the rehabilitation o f infrastructure in poor areas. In addition, the Government i s providing free tuition and school books in border areas, which are mainly inhabited by ethnic minorities. However, these initiatives are unable to cover the major funding gap that s t i l l exists. Government budget for education in 2000 amounted to 2.87 percent o f GDP, which i s l o w b y international comparison and short o f the national goal o f spending 4 percent o f GDP on education. Additional funding would improve children’s access to school and the quality o f teaching. Furthermore, the development impact o f that funding could be improved with some redefinition o f the targeting mechanism to ensure that more funds are directed to the s t i l l significant number o f children who do not complete primary school. Currently, a county i s deemed to have achieved NYCE and becomes ineligible for some funding when 85 percent o f i t s children complete lower secondary school. However, within many counties that have achieved NYCE, there may s t i l l be many poor, remote communities with l o w completion rates. The use o f SYCE as a funding indicator, with SYCE redefined to mean that 95 percent or more o f the children complete primary school, would sharpen the targeting o f funds to poor and educationally disadvantaged communities. (b) Educational quality. Several new central Government policies to improve educational quality are being put in place. The most important o f these i s the introduction o f a new, quality focused, -8- child-centered, participatory national teaching curriculum and the promotion o f participatory teaching techniques. The new curriculum allows for wider choice in textbooks and the addition or local c u l muium content . Tine new nationai curricuium was piioteci in approximateiy 500 . ,1 1 counties (some o f which are in the project) and i s being introduced o n a much wider scale in 2003. The ability to train an increasing number o f teachers in this new curriculum i s one o f the major challenges in upgrading the quality o f education in the rural parts o f western China. With regard to bilingual education, Chinese policy encourages the use o f the mother tongue language when requested by local communities. Consequently, there i s an increasing use o f minority languages as the initial medium o f instruction at primary level through grade four and in some cases through the senior secondary levels. However, the Government recognizes that there i s s t i l l a long way to go in providing comprehensive bilingual education where needed. In particular, there are limited numbers o f teachers and principals f r o m minority backgrounds, and good quality minority language texts and other education materials are in short supply. (c) Girls’ Education. Legislation promotes the equal rights o f boys and girls to education. The State Council’s Program for the Development o f the Chinese Women and the Program for the Development o f Chinese Children, May 2001, takes as main targets ensuring a girls’ right to receive nine year compulsory education and to narrow the gap between men and women in education. To back this up, a number o f other measures have been taken such as publicity drives to stress the importance o f educating girls, the strengthening o f teacher training - particularly for female teachers and principals - and the promotion o f quasi non-governmental initiatives such as the “Hope Project” and “Spring Bud Project” that provide extra financial assistance for girls. Some provinces have created girl-only schools and classrooms. (d) Teaching Points. In an attempt to improve the quality and efficiency o f education in primary school, the Government i s consolidating small teaching points and increasing the number o f boarding schools. Mountainous and sparsely populated areas are most affected b y the closures. The policy rationale i s reflected in the findings o f the social assessment, which identifies poor quality teachers as a reason for high rural drop-out, and the teaching points as having considerably higher rates o f daike and unqualified teachers. However, the private cost o f educating a child in a boarding school i s higher than the cost o f educating a child at or near home. Moreover the findings o f the social assessment suggest that families may be reluctant for safety and security reasons f r o m sending younger children, especially girls, to boarding schools. Increasing reliance o n boarding schools therefore poses a significant risk o f actually reducing the access to education for poor children, and especially so for girls and minorities. (e) Information Technology (IT) and distance education. In 1998 the Government introduced a new policy on the use o f distance education and IT (the Plan o f Action for Rejuvenating Education in the 21st Century, and the National Plan o f Action for Distance Education Development). This i s supported by considerable Government investment in IT infrastructure and equipment. A national plan, now under development, for using technology for poverty reduction through distance education w i l l provide the fundamental infrastructure support in western China. However, as suggested above, i t w i l l likely be some time before poor rural areas in the west w i l l be able to acquire and sustain IT technologies for the majority o f their students. -9- 3. Sector issues to be addressed by the project and strategic choices: Given the magnitude o f the challenges i t i s unrealistic to expect this project to address all of the key issues set out above. The project w i l l help to relieve the financing gap in poor areas, providing a partial bridge to a time when revenue collection and budget systems function better. M o r e importantly, i t w i l l support investments that are designed to complement and improve the effectiveness o f good government policies and programs. The key sector issues to be addressed in the project are: ( a )Access to education. The project will support the construction o f new schools that are designed to reduce recurrent expenditure (e.g. b y increasing natural light and reducing the cost o f heating). The rehabilitation o f local schools and the provision o f new equipment and furniture w i l l make them more attractive to pupils and parents. I t will also support training for more female teachers and principals. In junior secondary boarding schools, special attention w i l l be given to providing girls w i t h adequate dormitories and standards o f safety and security. The project’s rural education reform pilot w i l l focus, in part, o n increasing the access to school o f poor and vulnerable children. Improved monitoring and evaluation will provide a better understanding o f the real situation w i t h regard to out-of-school children and w i l l enable provincial governments to better design strategies for supporting children in remote communities, particularly among ethnic minorities. The project w i l l not directly support student assistance programs to help poor students and their families to reduce the household burden o f education and improve access for poor children. This i s because there are Government programs that provide student assistance in the project counties that w i l l run parallel to the project activities and investments. The provinces will, however, provide information o n the student assistance funds given to poor students in the project counties over the l i f e o f the project. Previous Bank-supported projects and the DFID-supported Gansu Basic Education Project (GBEP) have provided support for valuable pilots in student assistance programs. As these pilots and the ones supported by the governments at the county, provincial and national level have been evaluated b y the Ministry o f Education and the Bank, i t i s now evident that only those student support activities which are financed f r o m county and provincial recurrent budgets appear to be sustainable. This strategy o f depending o n the availability o f Government resources, some o f which are the result o f intergovernmental transfers from the central Government, i s a strong indication o f the synergies developed during project preparation between what the Government can and does provide for basic education in rural poor areas and what the limited resources o f a Bank/DFID loan can provide. A research activity, supported through parallel DFID funding, i s aimed at establishing an effective mechanism o f student assistance throughout the country. The project w i l l directly attempt to deal with other causes o f l o w enrollment and completion rates in poor communities. The project w i l l seek, through parallel DFID grant funding, to support a national research activity on school mapping in rural areas with the aim o f creating a more -10- rational school location and consolidation strategy. The project w i l l not support the construction o f new boarding schools at the primary level nor w i l l project funds be used to increase the capacity of existing boarding schoois to compensate tor the closure o f teaching points. The construction and expansion o f junior secondary schools will play a major role in increasing the transition o f poor children f r o m primary to secondary school. Closing teaching points may well, as earlier suggested, affect minority groups disproportionately. But i t i s also true that i t i s necessary to review the distribution o f the locations o f teaching points. The issues around teaching points and boarding schools merit empirical study. DFID grant funding w i l l support such a study in Yunnan Province. (b) Education quality. Improving the quality o f education in project townships will be a key aim o f the project. A fundamental aspect o f this effort w i l l be the support to the expansion o f the new national curriculum through enhanced teacher training, both in-service and pre-service, the procurement and distribution o f sets o f library books keyed to the new curriculum, and teaching equipment necessary to use the new curriculum in classrooms and teaching laboratories. This will also involve the provision o f a better teaching environment through improved infrastructure, and a focus o n increasing the capacity o f teachers in line with the national curriculum reforms. On-going governmental attempts to improve the standard o f teacher training w i l l be built on b y the project, and around 10 percent o f the project funds will be dedicated to building the capacity o f teachers, including daike teachers. The introduction o f participatory teaching skills, a key element o f the new national curriculum and an important aspect o f the GBEP project, will be an aim o f the project, although this w i l l be initially addressed as a pilot scheme. Certain key aspects o f bilingual education, such as the development o f new curricula, are beyond the scope o f the project. However, the project will seek to enhance the quality o f bilingual education in areas where initiatives are already underway and to expand and accelerate the distribution o f minority language books and textual materials already produced under earlier Bank-supported projects. The project w i l l provide training to a significant number o f bilingual teachers. The project w i l l not be able to support improvements to the standard o f special needs teaching in mainstream primary schools, although i t w i l l seek to influence Government to direct resources to this important area. The project’s rural education reform activities w i l l be available to provide finance and expertise in support o f small-scale school-based initiatives that directly impact on improving educational quality in poor communities. (c) Improving management skills and capacity. The project w i l l provide training to all levels of school management. This w i l l include improvement o f data gathering which w i l l be closely linked into enhanced project monitoring and a focus o n monitoring educational outcomes and improving the quality of education statistics. At the school level, a key area o f management development w i l l be the support provided to school development planning (SDP). This activity w i l l seek to improve the relationship between schools and communities and will, ultimately, be aimed at giving communities increased decision-making powers over the local school. Each province w i l l introduce school development -11 - planning as a pilot scheme in the province. In some provinces the plan i s to introduce the pilots in two counties, in other provinces there i s a more general introduction o f the pilots in more numerous counties. ' ne provinces have developed a plan for expanding the successful I experiences o f SDP to non-project areas. (d) Znformation technology. The project w i l l provide limited support to the introduction of information technology in primary schools. A small number o f p i l o t schools w i l l be chosen in each province in which to try out new approaches. I f successful, this could be expanded in later years, although any expansion would be funded from provincial a n d o r county budgets. Support w i l l be given to establishing computer networks in junior secondary schools where the benefits are more clear-cut. The project w i l l not be able to support the development o f support networks for IT. C. Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): The proposed project design will be formulated around three key goals which w i l l also form the basis of the project outputs. The components and sub-components are: Component 1. Improving School Facilities School Construction and Upgrading School Furniture, Teaching Equipment, and Library Books Component 2. Strengthening Management and Administration School Development Planning Project Monitoring Institutional Development -12- Component 3. Implementing Strategies to Improve the Quality of Teaching and Learning ner and Staff Training - 1 Rural Education Reform Pilots 1.Component 1: Improving School Facilities 1.1 School Construction and Upgrading 89.95 61.0 62.96 63.0 1.2 School Furniture and Teaching Equipment 23.03 15.6 13.62 13.6 1.3 Library Books 10.22 6.9 7.15 7.2 Component 2. Strengthening Mngt. Administration 2.1 School Development Planning 2.46 1.7 1.47 1.5 2.2 Institutional Development 2.94 2.0 1.66 1.7 2.3 Project Monitoring 2.08 1.4 0.97 1.o 3. Component 3. Implementing Strategies to Improve the Quality of Teaching and Learning 3.1 Teacher Training 14.98 10.2 10.49 10.5 3.2. Rural Education Reform Pilots 0.68 0.5 0.68 0.7 Total Project Costs I 146.34 99.3 I 99.00 99.0 Front-end fee I 1.00 0.7 1 1.00 1.o Total Financing: Reauired I 147.34 100.0 I 100.00 100.0 2. Key policy and institutional reforms supported by the project: The project w i l l pursue the policy and institutional reforms which directly address the major issues identified in Section B.2. The project w i l l focus o n three key reforms: 0 creating, through a grant-funded research activity, a model student assistance mechanism that will help improve the targeting, effectiveness and efficiency o f the Government’s student aid resources; 0 through the rural education reform pilot activities, formulating, testing and evaluating education related interventions to better understand h o w to improve education outcomes in rural areas; and, establishment o f the school based management p i l o t programs in five provinces so as to test ways o f improving educational management methods and to pilot methods o f encouraging greater community participation in school management. -13- 3. Benefits and target population: The project will improve access to and the quality o f basic education for about 2.4 million poor children in 112 counties in the five provinces and autonomous regions o f Sichuan, Yunnan, Guangxi, Ningxia and Gansu. Project impact w i l l be variable depending on location and need and the largest numbers o f children w i l l benefit from the substantive investment in teacher training which w i l l take place during the project. Teacher training will benefit many more schools than w i l l benefit from the c i v i l works program. Ethnic minority children in remote parts o f western China w i l l comprise a substantial share o f the project beneficiaries. The expected project benefits w i l l be: (a) increased access to a higher quality basic education for poor rural children; (b) increased literacy and numeracy rates in rural areas; (c) a reduction in the number o f dangerous classroom buildings; (d) a stronger community voice in the management o f schools; (e) increased access to bilingual and mother tongue instruction for ethnic minority children; and (f) principals and teachers who are better equipped to deliver a higher quality education. B y working alongside the Government's o w n support to student assistance, the project w i l l seek to ensure improved affordability in education o f poor boys and girls in project provinces and autonomous regions. ~~ Number of Counties Provinces (school aged Project Counties children) Yunnan Number 29 Number 184 I1 Number 696,000( I Percent 37 Guangxi 18 156 I 769,0001 77 Sichuan 28 211 I 50832001 7 Ningxia Gansu 20 17 121 I 30632001 44 Total 112 2,400,000 -14- 4. Institutional and implementation arrangements: World Bank/DFID Partnership. DFID and the World Bank worked in partnership with the Government to prepare the project. The DFID financed Gansu Basic Education Project provided particularly important insights for the design for this project. Central to the DFID Gansu experience, i s the emphasis on a strong participatory process, aspects o f which have been used in the development o f this project. Likewise, the experience o f the Gansu Project in school based management schemes provides an important foundation for the design and implementation o f pilot activities in the various provinces in this project. DFID has played a very active role during project development and i t i s expected to play an equally active role during project implementation. This project design reflects a pioneering effort to combine grant funds with an IBRD loan to soften lending terms for high priority social sector projects with the overarching objective o f poverty reduction. In doing so, i t expands the availability o f concessional financing for development to provinces for key social sector investments. Following the path o f the Bank-DFID supported CHZNA:TubercuZosis Control Project, the UK's DFID has agreed to provide the People's Republic o f China (PRC) a grant o f US$34.4 million to be blended with an IBRD loan o f US$lOO.O million to significantly reduce the effective interest rate to China. The DFID grant w i l l reduce the effective interest rate on the Bank loan to the Government o f China (GOC), based on an agreed set o f assumptions. I t w i l l be used to prepay approximately 34.4 percent o f IBRD disbursements in order to reduce the effective interest rate on the total Bank loan to approximately 2 percent per annum over the 20 year period. The MOF w i l l pass the proceeds o f the loan to the project provinces at the guaranteed interest rate o f 2 percent per annum. Project Implementation. The project w i l l begin January 15, 2004 and w i l l be implementedover a five year period. The Foreign Investment and Loan Office (FILO) o f the Ministry of Education (MOE) w i l l be the decision-making body o f the project and w i l l coordinate the work o f the project and ensure that resources from the Bank/DFID loan are distributed in a timely and efficient fashion at the central level. FILO, through the Institutional Development Component, w i l l implement national level project activities in which each province has shared involvement. These activities w i l l include: (i) national-level management training for provincial trainers, education managers and administrators, and project implementation staff; (ii) centrally-organized seminars and workshops in support o f various project components, including the organization o f overseas study tours; (iii) support for the Chinese Experts Panel which w i l l assist M O E F I L O in the monitoring o f the project; and (iv) monitoring, largely through the preparation of monitoring reports, which w i l l include the management and utilization o f the computerized data gathering to strengthen administration and implementation. FILO, with the assistance o f appropriate technical departments of MOE, such as teacher training, and the administrative resources used satisfactorily in past projects, w i l l monitor and supervise the project's implementation goals. FILO w i l l make supplementary changes in management o f the project when necessary, keeping the Bank and DFID informed about these changes. FILO w i l l assume responsibility for: (i) carrying out national level training activities (including a limited number o f overseas training programs and study tours) in accordance with an action plan -15- acceptable to the Bank and DFID; (ii) coordination and oversight o f project implementation carried out at the national, provincial, prefecture and county levels; (iii)review o f goods and W G tney are Deing carried out in accordance with the Loan Agreement; (iv) carrying out periodic supervision, jointly with provincial authorities, o f action plan implementation at the provincial, prefecture and county levels. This w i l l entail review meetings at the provincial level and site visits to selected project counties; and (v) preparation o f a mid-term report b y September 1, 2006, and implementation completion report (ICR) in a format agreeable to the Bank. Provincial Level Implementation. The actual implementation o f the project w i l l take place at county-level in the provinces. However, major management and coordination o f county project activities w i l l be the responsibility o f the Provincial Education Bureaus (PEB). At the provincial level, Project Management Offices (PMOs) have been formed, headed b y the Deputy Directors o f the respective PEBs and staffed w i t h officials experienced in education planning and management, financial management and accounting and c i v i l works and equipment procurement. PMOs will: (i) mobilize institutional, technical and financial resources and carryout the preparation and implementation o f the project; ( ii)coordinate the provision o f provincial level counterpart funding for the project, (iii) provide a critical coordination and monitoring function; and (iv) furnish annual action plans to the Bank and DFID to ensure proper implementation o f the Education Programs. County Level Implementation. While management o f implementation in project counties i s the responsibility o f the provinces, actual implementation w i l l be the responsibility o f the County Education Bureaus. All project c i v i l works, for example, w i l l be carried out at the county level, in townships and rural villages. Training for county level project implementation w i l l be organized b y the PEB. County-level project implementation offices w i l l replicate those at the provincial level. County level PMOs have been formed within the County Education Bureau. These responsibilities will include but not be limited to: (i) c i v i l works construction; (ii) ensuring adequate financial resources for counterpart funding; and (iii) monitoring the targeting o f project resources at the township level. A national level Chinese Experts Panel (CEP) w i l l be established to provide support for project implementation. The panel w i l l provide advice and guidance o n pedagogical, social, cultural and operational aspects o f the project. Monitoring and Supervision. The project includes activities and processes aimed at strengthening national, provincial and local monitoring capacity. While MOEEILO has overall responsibility for monitoring and supervising, i t s effectiveness will depend o n the cooperative contribution made b y every provincial and county/municipal implementing agency. At provincial, prefecture and county levels, the project will include personnel training linked with the establishment or upgrading o f appropriate data gathering mechanisms. Efforts w i l l be made to assist provincial and county levels in organizing data collection and analysis in order to monitor and supervise project implementation as well as local monitoring capabilities in general. -16- The project completion date i s December 31, 2008 and closes on June 30, 2009. This includes five years for implementation, plus six months to complete payments o n obligations incurred - . . .. ' ou. m n g project impiemenration reguiar B a n k D F i D missions ' w i l l review the progress o f the project implementation and development indicators according to the supervision plan outlined in the National Project Implementation Plan (PIP). The MOEFILO, with the assistance o f the Chinese Experts Panel, w i l l monitor progress on a province by province basis using indicators agreed for each province. Each year, the Bank, DFID and MOE/FILO will jointly review the provinces' progress in completing their annual action plans and assess the next year's annual action plan. Annual reports on progress o f the project implementation w i l l be prepared by MOE/FILO, beginning April 15, 2004, based on information received from review meetings, operational units, and agencies o f the project. A mid-term review will take place October 15, 2006 and MOEFILO w i l l produce a mid-term report by September 1, 2006, prior to the mid-term review. A project completion report w i l l be prepared by MOEFILO and submitted to the Bank within six months o f the closing o f the project. D. Project Rationale 1. Project alternatives considered and reasons for rejection: The project was originally conceived b y the Government as a ten province program to provide counties with support to achieve the Governments' nine year compulsory education goals, especially in civil works and staff training. Targeting was to be based on a combination o f l o w education enrollment and poverty indicators. Duringproject preparation, increased emphasis was placed on a more accurate and more highly weighted poverty focus. While recognizing that the county level i s appropriate for the delivery o f these services, the targeting o f the project narrowed considerably in order to focus on poor townships rather than counties thereby increasing the amount o f project resources reaching the poorer in- and out-of-school children. One design alternative reviewed and rejected was the use o f loan funds for student assistance programs. Experience with earlier Bank-supported projects in which counterpart funding was used to set up interest-bearing accounts to finance student assistance programs proved to be unsatisfactory (not enough revenue earned) and unsustainable (domestic interest rates kept dropping). The lesson from these earlier experiences was that student assistance programs are only sustainable if funds are taken from recurrent education budgets whatever the source o f funds (Le., provincial, national, or local). Therefore, the provincial governments have indicated the amounts and sources o f student assistance programs in their PIPSthat are administered in the counties and townships covered by the project. While not counted as counterpart funding, these student assistance programs w i l l be included in the total provincial and county financing available in the project areas and w i l l be reported during project implementation period. Another design alternative considered and modified substantially was an initial design element which focused a higher percentage o f project funding on junior secondary schools. This was in line with the Government's policy o f accelerating the achievement o f Nine Year Compulsory Education (NYCE) b y the year 2010. However, after a review with the MOE o f enrollment figures at the primary level and the findings o f the interim social assessment, both o f which -17- indicated a large number o f unmet primary school targets in the poorer parts o f the project area, i t was decided that the project would focus on primary level with a secondary focus on the junior n modification also fits within the poverty reduction strategies or both the Bank and DFID which see targeting education funding at the primary level in the poorer rural areas as a first priority. The project was originally conceived to include investments in infrastructure, teacher training and a small number o f national level activities. However, this traditional design was modified due to the fact that remote schools face challenges that are different f r o m those in the more developed areas. It was recognized that community involvement in the delivery o f educational services should be included to try and address some o f these challenges. Therefore, the project design now includes some pilot activities related to SDP and participatory teacher training. The latter takes a more student-centered learning approach in the training programs. The project also includes a rural education reform pilot activity that w i l l provide local educators with a limited amount o f resources to experiment with ways to address challenges at the local level to provide practical evidence to policy makers. Targeting Criteria. The project focuses on five of the poorer provinces and autonomous regions in northwestern and southwestern China. All o f these have substantial concentrations o f poor people, particularly ethnic minority people. The project design calls for project-supported activities to be designed and implemented at the township level and managed at the county level. Therefore, the selection o f both the counties and townships was critical. Criteria for the selection process were as follows: First Priority was given to financing operations in listed poor townships in national and provincial poor counties. (National Poor Counties are those currently o n the Government o f China's 8/7 poverty counties list. Provinces' poor counties are those that are currently designated as poor counties b y the province Government which have not achieved universalization o f primary education. Listed poor townships are those o n provincial l i s t s o f poor townships.) Second Prioritv was given to financing operations in listed poor townships o f national and provincial poor counties which have not yet achieved universalization o f nine year compulsory education. Third Priority was given to financing operations in listed poor townships o f poor (but not national or provincial designated) counties w i t h l o w levels o f nine year compulsory education achievement in order to achieve (a) as a first priority the universalization o f primary education and (b) as a second priority the universalization o f lower secondary education, and thirdly (c) in counties which had achieved universalization o f NYCE but have retreated from that achievement and now n o longer can be counted as having achieved NYCE goals. The selection o f townships in this third priority required a reasonable number o f poor townships per county in order to allow for management efficiency and learning from each other. -18- 2. M a j o r related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). Latest Supervision Sector Issue Project (PSR) Ratings (Bank-finance projects only) Implementation Development Progress (IP) Objective (DO) 3an k-financed ;upport the attainment o f universal Education Development in S S Irimary education and expansion o f Poor Provinces-Cr. 2339 ower secondary education in poor and ninority areas and build stronger nstitutions for education delivery. Basic Education in Poor and S Minority Areas-Cr. 2650 Third Basic Education Project S Cr. 2831 Fourth Basic Education Project S Cr. 2954 Ither development agencies 3FID Basic Education Gansu Basic Education Project United Nations Development Program : m P ) Project for Improving Compulsory Education in Poor Areas Focusing on Girls Education DFID/UNDP Distance Education and I C T to Improve Teacher Quality in Poor Areas of Western China UNESCO Bridging the Digital Divide: A New Stage in Joint Innovative Project on I C T for Primary and Secondary Education in China European Union Sino-EU Gansu Basic Education Project Canadian International Development Strengthening Capacity in Agency Basic Education in Western China 4sian Development Bank I C T for Basic Education Project UNICEF School Leader Training and School Development Planning Project Save the ChildrenDFID Yunnan and Tibet Basic Education Projects P/DO Ratings: HS (Highly Satisfactory), S satisfactory), U (Unsatisfactory), H l iighly Unsatisfa ory) -19- 3. Lessons learned and reflected in the project design: The successful implementation o f four Bank-supported basic education projects in China as well as the recently completed mid-term review o f the DFlD-supported GBEP have offered lessons for preparing the proposed project: 0 Poverty-focused social service delivery projects should be increasingly targeted at the township rather than the county level. With more than half o f China's absolute poor living outside the 592 nationally designated counties, targeting at the poor township level will more effectively include larger percentages o f the absolute poor. However, in that townships lack the adequate administrative capacity to manage such poverty-targeted projects, the counties should be given chief administrative responsibility for such projects. The project has included management training for county level administrators to improve capacity to deliver education services. As provinces and counties which have benefited from IDA and IBRD financing have to repay the credits or loans, and most likely f r o m provincial and county education budgets, caution must be taken in the design o f future poverty-focused education projects to fully take into consideration not only the assumed counterpart obligations but also the future repayment responsibilities when calculating project sustainability. The project has been able to obtain assurances that the provinces w i l l provide a larger portion o f the counterpart and repayment obligation. 0 The key issue in developing education projects at the provincial, county and township levels i s to convince the Chinese preparation teams that focusing o n development outcomes i s more important than emphasis o n investment inputs. The project will include output and outcome monitoring indicators as well as benefit f r o m a parallel DFID grant funded impact assessment study employing quantitative and qualitative techniques in the project areas. 0 Scholarships and other financial incentives to increase enrollments and decrease dropout rate in poor areas make a difference but must be sustainable and are therefore best supported from expanded existing recurrent budgets rather than short-term project financing. The project w i l l not support student assistance programs but w i l l be located in areas where parallel student assistance programs are being implemented by the provincial and national Govemments. The GOC w i l l report numbers o f children receiving financial support f r o m the parallel programs in order that the project supervision missions can monitor the coverage provided. In project areas where there i s a traditional resistance to girls' education, new school facilities and scholarships - especially when the latter are targeted at girls - have been sufficient to encourage many girls to attend school. The project w i l l look at ways to improve girls education taking into consideration location conditions. I t w i l l emphasize the training o f women teachers and women head teachers. Teacher and staff training components have been chronically weak in Bank supported basic - 20 -  education projects. Training programs are generally set by formulae provided b y the province which often follow the national standards. School principals have little contact with 1 allu ng. iYoIr&cnoois > T navefew horizontal links w i t h the counties and villages where teaching i s delivered. The project w i l l include introduction o f new participatory teacher training materials produced with the assistance o f DFID in Gansu Province. These materials, which are more focused on student centered learning, have also been adapted to the MOEs new national curriculum and w i l l be used to train all teachers in the project areas. 0 Language o f instruction issues in minority language areas are important but the answers as to which system to be used are not always self evident. Talking to parents and grandparents through social surveys i s one way to better understand this issue. The project w i l l include training o f bilingual teachers, minority head teachers and a rural education reform pilot that w i l l provide funds to experiment at the local level w i t h development o f local content in the curriculum. The project w i l l also support a participatory school development planning activity in some pilot areas to continue to help to address the special concerns o f parents on issues such as language o f instruction. 4. Indications of borrower commitment and ownership: There i s a high degree o f commitment from both the Central and Provincial levels. The Vice Minister o f Education, in meetings w i t h the Country Director in September 2001, strongly supported the preparation o f the project and agreed, subsequently, to the selection of the five project provinces. The MOE has surveyed the provinces to ensure that they fully understand the costs and benefits of the activities envisioned under the project before they applied for assistance under the project. All five provinces, which have participated in earlier Bank-supported basic education projects, are fully aware of the financial and other implications. Issues around counterpart and repayment responsibilities are discussed in Section E. Staff from the five Provincial Education and Finance Bureaus met w i t h the project preparation team and discussed project design and financing issues. These meetings made clear that both the education and finance bureaus at the provincial level support the project. Each project province prepared i t s o w n project proposal which required all counties to prepare county-level programs. This ensured participation and commitment to the project objectives b y all participating project counties. 5. Value added of Bank support in this project: The major value added f r o m the Bank's support for this project has been: (a) an increasingly finely focused poverty-targeting strategy derived from the work that was done b y the Bank's recent Rural Poverty sector study and DFID's experience o f poverty reduction projects in China and globally; (b) a better understanding o f the problems o f intra-provincial rather than inter-provincial disparities in education financing which came from the Bank's recent Provincial Expenditure Review (PER); (c) a better understanding o f the consequences o f the fee-to-tax financing reforms and how to better target intergovernmental transfers to poor areas which came -21 - f r o m the ASEM-supported research in these areas as w e l l as current DFID work; (d) the capacity t o design and implement large scale projects and p i l o t activities which can be used to d m ” t e to higher levels in fne Chinese Government innovative methods of education financing and management and development o f community and school based solutions to local issues; and (e) the ability to carry out sector strategy reviews such as the Strategic Goals for Chinese Education in the 21st Century and providing advice to the Ministry o f Education o n education policy changes and reforms and helped i n f o r m many o f the policies which are being followed in this project. E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (see Annex 4): 0 Cost benefit NPV=US$ million; ERR = % (see Annex 4) 0 Cost effectiveness 0 Other (specify) This project aims to improve access to and completion o f affordable and quality basic education for poor boys and girls in Sichuan, Gansu and Yunnan provinces, and Ningxia Hui and Guangxi Zhuang Autonomous Regions. I t builds o n and extends the experience o f previous Bank and DFID-funded basic education projects, and aims to respond to and support the development o f the Government’s o w n evolving education policy environment. A full economic and financial analysis o f the project was prepared b y an independent research team at Beijing University, and i s contained in Annex 4. The main thrust o f China’s education reforms since 1985 has been the decentralization o f operational responsibilities and diversification o f financing, which have had a significant impact o n education spending and placed greater demand o n local resources and managerial capacity. Poorer areas rely heavily on financial transfer payments to fulfill basic administrative duties. M o s t funding i s used for personnel compensation and there i s n o reasonable guarantee for non-personnel expenditure in many schools. Disparity in education funding across areas and regions i s substantial, impacting negatively o n educational opportunity and children’s right to education in poor areas in particular. In support o f the project objectives, this project i s tightly focused o n the poorer areas where education provision i s weak and educational access limited. Project provinces (and counties and townships within these provinces) all have below average economic and financial indicators, in addition to l o w educational attainment. Project expenditure w i l l be targeted at township level, which provides opportunities for channeling resources most closely to disadvantaged children in project areas and thus increasing the effectiveness o f the loan’s resources in meeting the project objectives. However this approach, which targets the poorer as primary project beneficiaries, also presents a challenge to the project’s financial sustainability given China’s highly decentralized fiscal system and the current approach being taken to loan repayment and provision o f counterpart funds. These issues and their relationship to recent sub-national fiscal reform are covered in the financial section below. At the household level, financial barriers to education remain high. While Government resources as a proportion o f funds spent o n education have increased, and the Government operates a - 22 - number o f substantial special purpose financial transfer programs for education in poor areas, fees o n aggregate nonetheless comprise the third largest share o f resources supporting the As part o f the economic and financial analysis, a household survey was conducted in Sichuan and Guangxi to explore the education financing burden placed o n families in project areas. Most fees and taxes collected from these households to finance local education provision are not progressive. Educational expenditure expressed as a proportion o f total household expenditure and as a proportion o f net income are both high. In 2001 over 35 percent o f surveyed households had borrowed money or received donations f r o m family members to meet educational costs. A preliminary analysis o f the financial burden o n families w i t h children attending boarding school highlighted the substantial increase in direct costs to households f r o m a boarding school education. These substantially increased cost burdens are o f particular concern, coming o n top o f other non-cost issues which might discourage parents f r o m sending their children (especially girls) to boarding schools. The project has stated clearly that project funds will not be used to support the expansion o f boarding at primary level. These cost and other barriers to education, particularly in poor areas also have the potential to hamper economic development and income poverty reduction. The report’s analysis confirms that education can play a major role in enhancing labor productivity and reducing poverty and provides an analysis o f private rates o f return to education in China. I t also highlights the social rates o f return that arise f r o m investments in education. The economic and financial analysis considered the approach taken to reduce cost barriers faced b y families in previous basic education projects. The analysis suggests that student assistance i s most sustainably financed f r o m grant or Government’s o w n resources. This project i s therefore encouraging project provinces to use existing parallel student assistance programs in the project areas to realize synergies between project interventions to increase retention and reduce drop out by improving physical environments and teaching, and these methods for reducing financial barriers to education. Project provinces will report the number o f students receiving student assistance in the project area during the full implementation period. A DFID grant-supported research activity focused o n developing a more efficient and equitable student assistance system will support this approach. This research activity w i l l allow for a continuing dialogue w i t h the Government o n these issues throughout the implementation o f the project. 2. Financial (see Annex 4 and Annex 5): NPV=US$ million; FRR = % (see Annex 4) Reforms to the fiscal system, in particular the pilot fee to tax reform (which i s being introduced in three project provinces and autonomous regions: Gansu, Sichuan and Ningxia) also impact closely on education financing at county level, and therefore o n project sustainability. The reform alters and standardizes the source o f educational revenues (with authorities less able to raise funds from rural households through administrative measures). So far the shortfall in resources at county level that has resulted from this reform has been met through transfers from central Government. Nonetheless the analysis highlights the lack o f transparency in this resource - 23 - transfer process and the concerns o f some project provinces undertaking the reform as to whether central transfers will continue to be made o n the current scale. This i s a key issue for project This reform and the generally weak state o f county level public finance also have important implications for the financial sustainability o f the project, especially w i t h regard to responsibility for loan repayment and counterpart funding. The analysis notes that under the background o f taxation and fees’ reform, i t w i l l be more difficult for some poor counties to complete the plan o f counterpart funding for this project if they do not receive transfer payments from higher levels of Government. I t i s hard to deal w i t h the issue within a county because o f the current heavy education financial load on the shoulder o f the public finance. The analysis therefore recommends providing those counties o f poorer economic and financial capability (e.g., the national and provincial poor counties) with certain preferential policies, reducing or exempting the counterpart funding requirements, and asking the provincial Government to plan accordingly. T o date progress on this issue has been achieved in some project areas. A number o f project provinces treat national poor counties and minority regions differently o n counterpart funding and repayment (which the independent economic and financial team commend), but there remains r o o m for further improvement. M a n y poor areas are s t i l l being required to provide counterpart funding and meet loan repayments. Fiscal Impact: N o t applicable. 3. Technical: China operates the largest basic education system in the w o r l d and has substantial experience in the development o f successful primary and junior secondary programs in rural as well as urban areas, and has over the last twenty years designed a number o f large and small pilot projects which have experimented w i t h different ways o f delivering education programs in poor and minority areas. Over the last ten years the W o r l d Bank has worked w i t h the Ministry o f Education and individual provinces to expand the education in poor and minority areas and supported a number o f experiments to make this process more efficient and effective. This being said, there remain a number o f technical issues which were the focus o f the provincial and national project preparation teams. While not exhaustive, they are illustrative o f the issues dealt w i t h during project preparation and reflected in the current design. H o w can the project best deal with the impact o f the inadequacy o f financial resources flowing to schools in poor and minority areas? 0 What are the cost effectiveness lessons from DFID-supported county projects, which w i l l lead to sustainability to the models tested after project completion. 0 What i s the most effective way o f ensuring enrollment and retention o f school-age children - 24 - - f r o m the poorer families? TT . 1 1 ..t resources into counties and townships where the locai I financial resources may not be able to provide counterpart funding for the project? 0 How, within the Chinese context o f weak educational statistics, can the project deal with the technical challenge o f proper monitoring and evaluation? 0 Within a Chinese educational context, h o w would the project best support the introduction o f school based management and increased community participation into the delivery o f basic education services in poor and minority areas? 0 H o w would the project best support increasing the quality o f teacher training, both in-service and pre-service? 0 What are the most efficient and effective ways o f using information technology in the provision o f basic education services in poor and minority areas? 0 What i s the most efficient way to build, repair and maintain classroom buildings in poor rural and often mountainous areas o f western China? 4. Institutional: China’s Ministry of Education (MOE) has a long and successful history o f coordinating and overseeing the preparation and implementation o f Bank-supported education projects, and has, over the last ten years, worked w i t h a number of provincial education bureaus to prepare and implement a program o f four basic education projects. The Ministry’s Finance Department has managed the project design and preparation process for over fifteen Bank-supported projects and has good working relations with the MOE technical departments w i t h whom the preparation team worked to prepare the project. The MOE/FILO has been implementing Bank-supported education projects for over twenty years and i s well practiced in the Bank’s requirements for financial management and procurement as well as ongoing supervision of the program o f projects. M o s t o f the project activities w i l l be implemented w i t h the provinces, especially at the county level. There i s an adequate level o f experience in all five provinces which have in all cases designed and implemented Bank-supported basic education projects but substantial work will have to be done to strengthen the capacity of county level Government’s to be able to adequately implement the project at that level. The role o f the county in managing the project activities at the township level was reviewed during preparation and appraisal. I t i s evident that there i s need for capacity building at the county level if the project i s to be implemented well, and therefore provincial and national training courses have been provided for county level officials. This i s especially important in the counties which are likely to be pilots for demonstrating the positive aspects o f school based management and community involvement in school activities. 4.1 Executing agencies: - 25 - The MOEFILO along with the five provincial education bureaus will be responsible for project execution. The five project provinces w i l l implement the project because they have primary . .,. 4.2 Project management: Project management capacity in each participating county will be strengthened through training workshops for project management staff in modern techniques o f project management encompassing planning and execution o f c i v i l works and procurement o f equipment and books; project accounting and disbursement o f Loan and counterpart funds and project monitoring. Special emphasis w i l l be given to financial planning and management and the importance o f keeping financial accounts in step w i t h project implementation. The training w i l l take into consideration provincial experience in four earlier basic education projects as w e l l as other Bank-supported education projects. Each province has established a project steering committee and working group to train county staff, and developed an appropriate training program including planning o f provincial and inter-provincial workshops and the hiring o f local specialists services. 4.3 Procurement issues: There are n o major issues related to procurement. A procurement assessment o f the implementing agencies to be responsible for the execution o f this project was carried out that focused o n reviewing the capacity o f established Project Management Offices (PMOs) at provincial and county levels covering their organization structure and functions, past experience, staff skills, quality and adequacy o f supporting and control systems, and suitability o f the laws, rules and regulations applicable to the PMOs. The assessment was done in accordance with Mr. Alfonso Sanchez’s Memo-Assessment o f Agency’s Capacity to Implement Procurement; Setting o f Prior Review Threshold, and Procurement Supervision Plan dated August 11, 1998 and Mr. Armando Araujo’s Memo-Revised Instruction for Carrying out Assessment o f Agency’s Capacity Assessment to Implement Procurement; Setting o f Prior-Review Thresholds and Procurement Supervision Plan dated July 15, 2002. The main findings, analysis and proposed action plan can be found in Annex 6. 4.4 Financial management issues: An assessment o f the adequacy o f the project financial management system o f the Basic Education in Western Areas Project was conducted (see Annex 6 B for details). The assessment, based o n guidelines issued b y the Financial Management Sector Board o n June 30, 2001, has concluded that the project meets minimum Bank financial management requirements, as stipulated in BP/OP 10.02. In the team’s opinion, the project w i l l have in place an adequate project financial management system that can provide, with reasonable assurance, accurate and timely information o n the status o f the project in the reporting format agreed with the project and as required b y the Bank. T o facilitate disbursement, five Special Accounts w i l l be established for the project and the Provincial Financial Bureaus (PFB) o f five provinces w i l l be responsible for the management, monitoring, maintenance and reconciliation o f the Special Account activities o f the project. A sixth Special Account w i l l be established to support national level activities (such as national level training, study tours, and national level dissemination activities) administered b y the MOE on behalf o f the five provinces. 5. Environmental: Environmental Category: C (Not Required) - 26 - 5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. ' l ' h i s project i s expected to have n o adverse environmental impact. Civil works w i l l include new c i v i l works as w e l l as repairs and renovations o f existing buildings. The government has given the Bank assurances that any c i v i l works w i l l be done o n existing school sites and there w i l l be n o acquisition o f land or assets for c i v i l works under the project. 5.2 What are the main features o f the EMP and are they adequate'? NA 5.3 F o r Category A and B projects, timeline and status of EA: Date o f receipt o f final draft: NA NA 5.4 H o w have stakeholders been consulted at the stage o f (a) environmental screening and (b) draft EA report o n the environmental impacts and proposed environment management plan? Describe mechanisms o f consultation that were used and which groups were consulted? NA 5.5 What mechanisms have been established to monitor and evaluate the impact o f the project on the environment? Do the indicators reflect the objectives and results o f the EMP'? NA 6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes. Project beneficiaries are mainly poor rural boys and girls in western provinces. Approximately 19 percent o f beneficiaries w i l l be from ethnic minorities while the project w i l l also have a focus o n girls' education. K e y social issues which have been addressed during project preparation and will continue to be addressed throughout implementation include: Increasing access to education o f poor boys and girls, in particular those in the more remote and mountainous communities, while, at the same time, improving the quality o f education for these same boys and girls. Addressing specific gender concerns within education, including the lower rates o f enrollment and completion o f girls in many areas covered b y the project. This w i l l be an issue in both primary schools and transition from primary to junior secondary. Poverty focused student assistance programs provided from Government parallel funding - both national and provincial -will have a priority for girls. Training o f female head teachers, especially in areas with l o w girls' enrollments, w i l l provide positive role models for girls moving from primary to junior secondary schools. Ethnic minorities, particularly those in mountainous areas, suffer disproportionately f r o m l o w enrollment and completion rates and lower quality education. The project w i l l have a focus on ethnic minority areas and w i l l consider issues such as h o w to bring schools nearer to ethnic minority communities - although this w i l l be a particular challenge given existing plans to bias infrastructure development towards townships centers - and how to expand bilingual education - 27 - among ethnic minority groups for which i t i s feasible. Addressing the needs o f nomadic peoples w i l l be o f particular concern and w i l l involve bringing junior secondary schools closer to 1- IS. During the preparation o f the project the Government prepared and presented to the Bank an Ethnic Minorities Education Strategy (EMES) and Action Matrix which outlines in some detail the current Government policies pertaining to education o f ethnic minorities and actions which this project w i l l finance in support o f these policies. (The Strategy and Action Matrix, which has been reviewed and agreed b y the Bank, and a summary o f both can be found in Annex 11 and 12.) The preparation team reviewed the new curriculum and found that i t takes into account students’ differences in gender, cultural background, minority and region and encourages diversity. Additionally, the new curricular standards ask teachers to compose local teaching materials based o n the specific situation o f local areas, school and class, make full use o f minority ethnic characteristics, customs and culture to develop curriculum resources. One o f the learning goals o f the curricula i s to understand the differences and richness o f cultures, and to appreciate and respect the creations o f different minority groups. The project will seek to complement existing Government programs in making schools more accessible to disabled children. For instance, the provinces w i l l hold consultations w i t h the Provincial Disabled Federation in order to consider school design work that w i l l allow for increased access to education for disabled children. DFID-supported technical assistance i s available at the provincial level for provinces which decide to study alternative ways to provide access to disable children. 6.2 Participatory Approach: How are key stakeholders participating in the project? During the project design, a social assessment team consulted a range o f beneficiaries in mainly poor villages in each o f the five provinces. These consultations used questionnaires and interviews. The focus o f the consultations was on existing students and their families. The consultations provided useful insights into the perspectives o f poor families and children and there have been attempts to take these perspectives into account in project design. Following the social assessment consultations and the provision o f their final report, i t was decided b y the Bank team that further consultations, focused on the project’s ethnic minority beneficiaries, was necessary. This work, undertaken by three teams o f specialists led by Bank staff, completed fieldwork and consultations in five provinces and among 12 o f the project’s 24 ethnic minorities. (This brought the total number o f ethnic minorities in the project areas consulted to 21 out o f 24. A desk study o f the last remaining three was completed and the appraisal team judged that the educational challenges faced b y these remaining three did not differ substantially f r o m the other 21 groups and therefore that the E M E S adequately provided for education activities which would be appropriate for the last three groups.) The results o f these village level consultations were discussed with the five provincial project preparation teams as well as the MOE’s preparation team. The provinces and the MOE have reflected the results o f these consultations in the final set o f provincial project implementation plans (PIPS)and the final version o f the EMES (see 6.4 below). The consultations, which w i t h those conducted in the initial stages o f the social assessment, were structured to confirm the appropriateness o f the strategy and solicit - 28 - recommendations f r o m the ethnic minorities o n project design. 'mpiemenration period, the MOE and me 1 . . tne provinces are committed to a p i l o t o f school development planning (SDP) in several counties in each province and autonomous region. This w i l l build o n lessons learned in the DFID Gansu Basic Education project where SDP i s currently being tried out. Provisional results f r o m Gansu are encouraging and around 2 percent o f project investment w i l l be devoted to promoting SDP. SDP, if successful, w i l l provide poor communities w i t h influence over the school development priorities in their communities and, eventually, over h o w resources are spent. If the pilots are successful, provinces are likely to r o l l out SDP throughout project counties using recurrent budgets or other non-project funds. A range o f secondary stakeholders have been involved in project design. In particular, the project builds o n plans developed b y county education bureaus. At provincial level, other Government departments have participated, in particular Bureaus o f Finance and Planning Commissions. The preparation team has been able to talk with the provincial level education specialists f r o m provinces outside the project area on such areas as the teaching pointhoarding school issue. 6.3 H o w does the project involve consultations or collaboration with NGOs or other civil society organizations? During both the initial and secondary stages o f the social assessment process, consultations took place at the village and township level. These consultations involved parents, children, school officials, village leaders and education managers at various levels. Additionally, the provincial education authorities have consulted with such groups as the All China Women's Federation and ethnic minority representatives in the project areas. Provincial education offices, which manage NGO inputs into the local education systems, have given assurances that such activities as the Spring Bud Foundation, a charity organization which supports girls' education, w i l l continue its support o f girls' education through grants to poor girls to pay for school fees. This i s an example o f the parallel financing available which supports the objectives o f this project. 6.4 What institutional arrangements have been provided to ensure the project achieves i t s social development outcomes'? Social development goals for this project are increased access to basic education, more balanced gender ratios in primary and junior secondary schools and the overarching Millennium Development Goal (MDG) goal o f achieving universal primary completion. Counties have set appropriate enrollment targets and identified a set o f activities that w i l l support achievement o f these targets (see the Ethnic Minorities Education Strategy as an example). A data gathering system w i l l be put in place to measure progress. Progress w i l l be monitored b y provincial authorities, the Chinese Experts Panel (CEP) and Bank/DFID supervision missions. The MOE has presented the Bank with an EMES which describes the challenges o f minority education in Western rural China, the MOE's national responses to the challenges, and the actions being undertaken at the provincial and county level to ensure that the education of ethnic minorities i s given a strong emphasis in this project. - 29 - During supervision missions, the B a n k D F I D team w i l l ensure that relevant expertise i s present to focus o n the project’s social development outcomes. A minority and gender education e l and w i l l provide advice to the Ministry o f Education and provinces f r o m a social development perspective. 6.5 How w i l l the project monitor performance in terms of social development outcomes‘? DFID w i l l contribute grant funds for the development o f an impact evaluation system for the project. A data gathering system w i l l be developed and this w i l l permit the collection o f pertinent and gender disaggregated data from a social development perspective. In addition, the project w i l l support the training o f project and education department staff in monitoring. 7. Safeguard Policies: Pest Management (OP 4.09) 0 Yes 0 No Cultural Property (OPN 11.03) 0 Yes 0 NO Indigenous Peoples (OD 4.20) 0 Yes 0 NO Involuntary Resettlement (OP/BP 4.12) 0 Yes 0 NO Safety of Dams (OP 4.37, BP 4.37) 0 Yes 0 NO Projects in InternationalWaters (OP 7.50, BP 7.50, GP 7.50) 0 Yes 0 NO Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)* 0 Yes 0 NO 7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies. Initial social assessment research results confirm the overall enrollment rate o f minorities in basic education i s lower than the average. The initial findings identify physical distance, financial cost, cultural differences, language o f instruction, discriminatory gender practices, cultural contents o f textbooks, and other factors as barriers to education for minority nationality children. Within the context o f the W o r l d Bank’s OD 4.20, however, Bank staff judged that further consultations in minority nationality communities were necessary regarding their views o n educational constraints, and their preferences regarding measures to improve educational attainment. In order to improve basic education access and to meet the requirements o f W o r l d Bank OD 4.20, i t was important to engage various stakeholders in minority nationality communities (especially mothers and fathers, school-age boys and girls, teachers and county-level education officials) in the project preparation process. These supplementary consultations have taken place and have, as indicated above, provided information necessary for completion o f an Ethnic Minorities Education Strategy. The specific purpose o f these consultations was to: a) consult w i t h a selected set o f minority nationality stakeholders as well as local minority officials and educational officials, to understand their perception on basic education; b) verify key access issues (such as minority enrollment and completion rates, language o f instruction, distance and cost) for minority children and to support preparation o f project design; c) study county-level plans for project implementation as they - 30 - relate to education o f minority children; d) obtain views from minority nationality stakeholders regarding project design (including the draft Ethnic Minorities Education Strategy); and e) make recommendations as aeemed relevant for improvement o f the Ethnic Minorities kducation Strategy. The project, taking the preferences o f the social assessment into consideration, w i l l include: training o f bilingual and multi-grade teachers, procurement o f minority language library and reference books, school based management, participatory techniques in pilot areas to increase parent and student participation in the decision making process at the school level, and when appropriate, development o f local content for the new national curriculum through the rural education reform pilot activities. F. Sustainability and Risks 1. Sustainability: Several factors are important for project sustainability. First, the project i s targeted in the poorer counties in five poor western provinces. In the first instance this means that counterpart funding to match the loan fund for such expenses as c i v i l works and books and materials w i l l place a heavy burden on these county budgets, as w i l l loan repayment after project completion. In the second instance, w i t h the bulk o f the recurrent funds which support basic education currently coming from county budgets, there i s always the concern that the counties b y themselves w i l l not be able to maintain the investments after completion o f the project. Second, the project w i l l support several pilot activities which are designed to demonstrate best practice in school based management and community involvement w i t h supporting local schools. While the results o f these p i l o t activities are important in and o f themselves, the dissemination and sustainability o f good results in wider areas w i l l depend largely on existing Government structure and units and financial resources. Experience has shown that the existing structures are well suited for top-down dissemination o f guidelines and information but less adept at taki'ng the results o f bottom-up pilots and experiments. Third, the skills and capabilities o f the county, township and school level education leaders - men and women - to design, develop and implement new school management and financing mechanisms i s limited, especially in the poorer o f the proposed project counties. Human capital development at the sub-provincial level w i l l be critical. 2. Critical R i s k s (retlecting the failure of critical assumptions found in the fourth column of Annex 1): Risk Risk Rating Risk Mitigation Measure From Outputs to Objective 1. Commitment at provincial and lower M Plans w i l l be obtained from each province on levels may not be enough to provide their own student assistance, fee reductions or adequate resources to get poor children eliminations and free textbooks, as a condition into schools of their participation in the project. Adequate student assistance w i l l provide support access to quality education in incomplete or complete -31 -  primary and junior secondary schools. J increase the number of boarding schools in project areas which may have a negative impact on enrollments as school mapping w i l l provide more accurate teaching points may be closed. database for malung closing decisions. 3. Availability o f funds at the county M Undertalungs to be obtained from each level to implement the project w i l l be province that adequate revenues from the hampered b y the uncertainty o f revenue provincial budgets as well as the national funds delivery during the earmarked education which are now used to compensate for the loss fee-to-comprehensive tax reforms. o f education revenues from the reforms w i l l be directed to county level education budgets. From Components to Outputs Inadequate counterpart funding may M This risk i s moderate based on the experience hamper successful implementation. of related education projects. This w i l l require regular monitoring b y central and provincial Governments as well as b y World Bank and DFID's Beijing offices or their representatives ,duringsupervision. Dissemination o f pilot activities [SDP, s Assurances to be obtained from each province participatory teacher training, etc.] w i l l to provide and institutional base of support plus be weak due to lack of continuous adequate access to recurrent education budgets institutional support. to ensure dissemination in the latter years o f the project. Cultural attitudes in some areas o f rural M Government policies on universal access to China tend to exclude boys and girls quality education, especially in girls' education. from education w i l l could a negative w i l l continue to be stressed throughout the impact on increasing enrollments and project implementation period. Innovation 1 decreasing drop-out rates. activities implemented at the local level to help find solutions to local problems. Overall Risk Rating M - Risk Rating H (High Risk), S (Substantial Ri: , M (Modest Risk), N(Neg1igible or Low Risk) 3. Possible Controversial Aspects: In an attempt to improve the quality and efficiency o f education, the Government i s following a policy o f consolidating small teaching points and increasing the number o f boarding schools. Mountainous and sparsely populated areas are most affected b y the closures. The policy rationale i s reflected in the findings o f the interim social assessment, which identifies poor quality teachers as a reason for high rural drop-out, and the teaching points as having considerably higher rates o f daike and unqualified teachers. However where the private cost o f educating a child in a boarding school i s higher than the cost o f educating a child locally, this - 32 - policy may reduce enrollment o f poor children, especially girls and ethnic minorities, in primary school. The Bank and DFID would like to see village schools and teaching points strengthened rather than closed because distance from school, especially for girls, i s a critical factor in enrollments at grades one and two. During the project the MOE and the provinces w i l l have an opportunity to use this project as a knowledge generation or learning experience regarding the most appropriate location o f schools. This w i l l include: a cost effectiveness study o n the issue o f teaching points vs. boarding schools in Yunnan Province (to be supported b y a DFID grant); the project’s impact assessment will also look at the relative merits o f boarding schools versus village schools; and parallel DFID grant funding w i l l be used to finance a study to look at more rational and equitable distribution o f schools in the project provinces and strengthen capacity. Approximately 1,600 total schools w i l l benefit from the c i v i l works component o f the project, 805 w i l l be village primary schools and teaching points and 398 w i l l be township-level complete primary schools. Funding o f the 398 township-level complete primary schools may be seen as controversial by some because there will be some village schools s t i l l in need. Government argues that other sources o f funding w i l l be available for village schools and that township schools are stressed b y migrants coming to the townships because o f changes in rural economic development pattern. Monitoring annual action plans for new construction w i l l be important throughout the project implementation period to ensure the project investments continue to support education activities in the poorer parts o f townships and villages, in keeping with the fundamental design the project. The Bank and DFID have worked o n projects successfully in minority areas and nineteen percent o f the project beneficiaries are members o f ethnic minority groups. Recognizing that education projects which have a focus o n ethnic minorities can raise sensitivities, the team has undertaken a careful review o f the project design and key safeguard related issues to make sure that the project takes into consideration the needs o f the ethnic minorities in the project areas. The team has reached an understanding with the Government o n an action plan to fulfill the requirements o f OD 4.20. This action plan includes conducting supplemental consultations with project beneficiaries, with a specific focus on minority peoples. At the same time, and taking the results o f these consultations into consideration, the Ministry o f Education developed an Ethnic Minorities Education Strategy and worked with the provinces to ensure that this strategy was reflected in both the national and provincial Project Implementation Plans. These plans were reviewed and found acceptable. However, the preparation team believes, and the Social Assessment concurs, that the vast majority o f people surveyed support elements which are included in the project design - such as bilingual instruction, and the training o f minority teachers, and community participation. The balance in the project design i s toward providing the numeracy and literacy s k i l l s necessary for economic and social development while at the same time supporting bilingualism and local content in the curriculum. - 33 - G. Main Loan Conditions 1. Effectiveness Condition The following events are additional conditions o f Loan Effectiveness: 1, The Borrower w i l l provide the Bank with Education Program Implementation Agreements, acceptable to the Bank, entered into between the Government and the five participating provinces. 2. The execution o f the Tripartite Arrangement by DFID, the Borrower and the Bank. 3. Completion o f the f i r s t DFID deposit into the Trust Fund. 2. O t h e r [classify according to covenant types used in the Legal Agreements.] Implementation The Borrower shall maintain throughout the period o f implementation o f the Project, with composition, terms o f reference, staffing and other resources acceptable to the Bank: (i) the Foreign Investment and Loan Office established within MOE, which shall report to a Vice Chairman o f MOE; said Project Office to be responsible for: coordinating and overseeing Project implementation at the national, provincial and local levels. B y January 15, 2004 the Borrower shall establish the Chinese Experts Panel, headed b y a chairman, and supported b y a specialist in minority education and a core o f experts in various disciplines. The Borrower w i l l maintain throughout the project period (a) project implementation offices at the provincial levels, with terms o f reference, staffing and other resources acceptable to the Bank, carry out i t s activities in accordance with an action plan to be provided b y October 3 1 o f each year during project implementation and acceptable to the Bank and (b) project provinces w i l l maintain implementation units in Project counties with Terms o f Reference (TORS),staff and resources acceptable to the Bank. Reporting and Monitoring The Borrower shall maintain policies and procedures adequate to monitor and evaluate on an ongoing basis, in accordance with project indicators (Annex 1) satisfactory to the Bank, and shall ensure that each Project Province shall maintain policies and procedures, adequate to enable each o f them to monitor and evaluate on an ongoing basis, in accordance with indicators satisfactory to the Bank. The Borrower w i l l monitor and evaluate project progress, based inter alia on data provided by the Provincial Education Bureaus by March 1 o f each year, using indicators acceptable to the Bank, and furnish the Bank the results o f such review as part o f an annual progress report b y April 15 o f each year. - 34 - The participating provinces shall carry out their Project Implementation Plans in accordance with annual action plans (to be provided to the Bank by October 3 1 o f each year during project . . . c m i works plans, .? 1 1 I1 a m , wrn- I maintenance plan, training program, and a program to ensure participation o f village education committees in the implementation o f the project; The Borrower w i l l prepare a mid-term report b y September 1, 2006 according to guidelines acceptable to the Bank. Financial The Borrower shall have the records and accounts for each fiscal year audited, and furnish to the Bank as soon as available, but in any case not later than six months after the end o f each such year the audit report. Each Province shall have the records and accounts for each fiscal year audited and furnish to the Bank as soon as available, but in any case not later than six months after the end o f each such year. Proiect DesiEn Project Provinces shall implement the Ethnic Minorities Education Strategy in a manner satisfactory to the Bank. Project Provinces shall provide special training for daike (temporary) teachers to upgrade the skills o f such teachers in areas including, multi-grade teaching and bilingual education. Project Provinces shall select counties in which the Project Province proposes to carry out rural education reform pilot activities according to criteria, acceptable to the Bank, including criteria that takes into account the following in the proposed county: (i) the size o f the ethnic minority population, (ii) status o f economic development; and (iii) education performance (including the enrolment and drop-out rates o f girls and ethnic minority persons). Within six months o f the signing o f i t s respective Implementation Agreement, furnish to the Bank for approval a draft time-bound action plan for the carrying out o f rural education reform pilot activities (including the dissemination o f the results o f said activities) and thereafter, carry out said action plan taking into account the Bank’s comments. Project Provinces shall prepare and furnish annual action plans to the Bank for review and approval. H. Readiness for Implementation 0 1. a) The engineering design documents for the first year’s activities are complete and ready for the start of project implementation. 1. b) N o t applicable. - 35 -  2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory - quality. u 4. The following items are lacking and are discussed under loan conditions (Section G): 1. Compliance with Bank Policies @ 1. This project complies with a l l applicable Bank policies. fl 2. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies. Yukon Huang Team Leader Sector ManagedDirector Country ManagdDirector - 36 -  Annex 1 : Project Design Summary CHINA: Basic Education in Western Areas Project iector-related CAS Goal: iector Indicators: 'rom Goal to Bank Mission) )evelopment o f Human 'he mission o f DFID and the !esources b y addressing needs ,ank i s poverty reduction. f poorer and lagging regions iith emphasis on basic nproving access to education ducation. nd the quality o f education )r all w i l l lead to increased To support and accelerate the roductivity, and therefore chievement o f the Chinese icreased income, and iovernment's Nine-Year ltimately to a reduction in :ompulsory Education overty. NYCE) goals.) mproving the quality o f ducation w i l l also lead to nprovements in health, xtility, and income istribution, which in turn ontribute to poverty eduction. 'roject Development Iutcome I Impact 'roject reports: from Objective to Goal) Ibjective: ndicators: mproved access to and 0 Percent o f 15 year-old 0 Annual reports from 0 Government o f China :ompletion o f affordable, and age-group who complete provinces and MOE/FILO remains committed to pality, basic education for primary education (boys, promoting education as a )oor boys and girls in girls, minorities) i s riangulated with key driver of development jichuan, Gansu and Yunnan increased and to the strategy o f 'rovinces and Ningxia Hui 0 Impact assessment system developing the western md Guangxi Zhuang Drop out rate i s decreased MOE/Bank/DFID region. lutonomous Regions (boys and girls) supervision missions 0 The combined effects o f 0 Gender gap in primary the current provincial education enrollment i s level tax reform and decreased planned increases in the National Compulsory 0 Gender gap in junior Education Program secondary education funding result in an enrollment i s decreased increase (or at least no deterioration) in funding 0 Gender gap in primary for education in the education completion i s project provinces. decreased 0 Government o f China 0 Gender gap in junior remains committed to secondary education increasing parallel student completion i s decreased assistance funds in an effort to eliminate cost 0 Percent o f 17 year-old barriers to education - 37 -  age-group who complete junior secondary education (boys, girls, minorities) i s increased 0 Teachers qualification rate i s increased Learning achievement as measured b y pass rates in math and Chinese language (boys, girls, and minorities) in grade 6 i s improved Jote: Different targets w i l l be et by each province gote: Completion rates for ninority children w i l l be :ollected in four pilot counties n each province. h t p u t from each lutput Indicators: 'roject reports: From Outputs to Objective) :omponent: Zomponent 1: Improving 1.1.lDecrease in the rate o f Baseline reports from 0 Government o f China ichool Facilities iilapidated buildings b y provinces and M O E E I L O remains committed to irimary schools 0 Mid-term review increasing student ..lA better school Impact assessment assistance funds in an :nvironment for all children. 1.1.2 Decrease in the rate o f Implementation effort to eliminate cost liapidated buildings b y junior completion report barriers to education ower secondary schools MOE/Bank/DFID supervision missions GOC remains committed 1.1.3. Increase in the number to their policy o f i f schools with project maintaining a balanced upported civil works which approach to teaching Fully meet provincial points and boarding :onstruction standards in all schools in an effort to xeas increase access to education 1.1.4 Reduction in the number i f oversized (over-crowded) 0 A better school :lasses, as measured b y m2 environment leads to Jer student in primary schools improved attendance 1.1.5 Reduction in the number i f oversized (over-crowded) :lasses, as measured by m2per student in junior secondary jchools 1.1.6 Implementation o f a set 3 f standards for health, safety - 38 -  1child protection, support 1supervision in boarding lo o l R 2 Increased availability of !.1 Increase in schools iching and learning iieving the school desk and 0 Increases in numbers o f aterials in schools air completion rate in materials and books leads mary schools; to improvements in quality of education !.2 Increase in schools hieving the school desk and air completion rate in junior :ondaq schools; L.3 Increase in number of 1001s achieving the indardised instrument and uipment rate (primary and i i o r secondary) 2.4 Increase in the number library books per student rimary and junior zondary) bte: Individual targets have e n set by each province lese indicators are required der the M O E N Y C E ,gram omponent 2:Strengthening Annual reports from 0 Training provided leads tc [anagement and provinces improved practice dministration Annual reports from MOEPILO 0 An effective and ,lMore effective planning, 1.1 Increase in 0 Mid-term review appropriately resourced ianagement and monitoring imputer-aided data reporting 0 Impact assessment dissemination strategy for stems in use in project Implementation SDP i s developed iunties and townships completion report 0 MOE/Bank/DFID 1.2 The number o f (i) supervision missions lministrators trained in anagement and (ii) the imber o f male and female ,incipals and deputy ,incipals trained in anagement, i s increased .2 School management whicl 2.1 Number of trainees in i more effective and 3P i s increased :sponsible to the needs o f the ommunity 2.2 Increased involvement c 2.2.2 Monitored on a sample m"mnities and parents in )asis during supervision rgeting student assistance nissions - 39 -  L2.3 Number o f schools :onducting SDP pilot program s increased 2.2.4 Number o f non-pilot schools to which SDP xogramme i s disseminated i s .ncreased :omponent 3: Implementing 0 Annual reports from 0 Govemment continues to itrategies to Improve the provinces implement their )uality of Teaching and 0 Annual reports from curriculum reform in .earning MOEFILO terms o f more Mid-term review child-centred learning .1 Better teaching and 3.1.1 Rate o f qualified 0 Impact assessment :aming in project supported :eachers increased. (Note: 0 Implementation Improved quality leads to chools reachers need the completion report increased enrolment and qualification for NYCE) 0 MOE/Bank/DFID completion rates supervision missions 3.1.2 Total number o f teachers 0 National and provinc 0 Pilot activities produce trained, o f which, research reports (par relevant and innovative numbers o f teachers trained funded) measures in support o f From : access to, affordability, i) teaching points and quality o f education ii)incomplete village primary schools iii)village primary schools 3.1.3 Number o f teachers trained in participatory learning techniques i s increased 3.1.4 Number o f schools using participatory methods 3.1.5 Improvements in teacher behaviour observed 5.1.5 Assessed on a Sam1 )asis during supervision nissions and impact issessment studies 3.1.6 Increases in student achievement rates recorded 1.1.6 Impact assessment itudies 3.2.1 Findings from pilot i.2 Ideas generated and tested projects monitored, evaluated 0 County, provincial a iy Rural Education Reform disseminated and successful ERAT reports 'ilots experience replicated 0 Impact assessments'  bomponents I nputs: (budget for each Sub-components: omponent) lutputs) Component 1: Improving JS$ 112.0 million base cost 'rogress Reports Timely and adequate school facilities counterpart funds Component 2. Strengthening JS$ 6.7 million base cost 'rogress Reports Timely and adequate management and counterpart funds administration Component 3. Implementing JS$ 13.90 million base cost 'rogress Reports 0 Timely and adequate strategies to improve quality counterpart funds o f teaching and learning. -41 -  Annex 2: Detailed Project Description CHINA: Basic Education in Western Areas Project The project has three main components. Component 1: Improving School Facilities; Component 2: Strengthening Management and Administration; and Component 3: Implementing Strategies to Improve the Quality o f Teaching and Learning. All three components will be implemented in five provinces and autonomous regions and 112 counties with a population o f approximately 38 million. A small number o f activities will be conducted at the national level on behalf o f the five provinces. The project provinces and autonomous regions are Yunnan, Sichuan, Guangxi, Gansu and Ningxia. Detailed descriptions o f each component are in the Project Implementation Plans (PIPs) provided for both Provincial and National Level activities. The National PIP and Provincial PIPs are in project files. The project aims to respond to and support the development o f the Government’s own evolving education policy. Research, active learning and dissemination will play important roles in achieving the project outcomes and objectives. By Component: - Project Component 1 US$111.70 million Component 1. Improving School Facilities. This component comprises two subcomponents including school construction and upgrading, purchasing teaching equipment, school furniture and books. Schools that serve poor children do not meet the needs o f this population because these schools and their teaching points are often distant from where the children live, under-equipped or are in dangerous and deteriorated condition. The objective o f this component i s to improve access to quality primary and junior secondary education, by providing schools which are close to where children live and eliminating dangerous and dilapidated school buildings. Additionally this component w i l l provide a sufficiency o f school furniture and teaching equipment and supplementary reading materials for primary and junior secondary schools. School Construction and Upgrading (US$81.92 million-Base Costs). This subcomponent will assist county and township governments to finance the construction and repair o f approximately 1,600 schools. The civil works activities directly contribute to the national government’s goal o f increasing the number o f classrooms in rural areas and eliminating dangerous and dilapidated school buildings. This should contribute to increasing access to school for poor girls and boys. School construction and upgrading w i l l be managed at the county level by the education bureaus under the supervision o f the provincial level implementation units. Quality control will be provided by the county government quality control offices. Construction and upgrading plans w i l l be presented, reviewed and approved annually by joint Bank/DFID supervision missions. The estimated coverage o f the school construction and upgradinghepair program is: Primary Schools 1,203 Village primary schools and teaching points 805 Township-level complete primary schools 398 Junior Secondary schools 366 - 42 - The project w i l l favor the retention and strengthening o f village schools, teaching points and incompiere primary schoois in villages and project funds w i i i not be used to construct new primary level boarding schools nor w i l l they be used to expand existing boarding schools to compensate for the closure o f village primary schools and teaching points. However, the project will support boarding school construction at the junior secondary school level. Construction o f new c i v i l works that replace existing teaching points or incomplete primary schools w i l l adhere to provincial education construction guidelines which stipulate that primary school aged children should not b e further than 2.5 kilometers or 20 minutes walking distance from the child’s home. (Yunnan Province has a provincial limit o f 3.0 km distance f r o m home). C i v i l works w i l l be done on existing school sites and there will be n o acquisition o f land or assets for c i v i l works under the project. Community consultations played an important role in determining the design o f this component w i t h regard to the location o f schools in the poor villages. Construction plans have also taken into account such things as township boarding junior secondary schools in nomadic areas. Such initiatives should play a role in increasing enrollments and decreasing dropouts in areas which face special challenges. Progress o f the component will be measured by: (i) rates o f dilapidated school buildings eliminated; (ii) number o f schools with project supported c i v i l works which fully meet provincial construction standards in all aspects; (iii) school desk and chair completion rates; (iv) square meters o f classroom per student. In addition annual supervision missions w i l l consider how national and provincial standards for health, safety and child protection support and supervision in boarding schools are being met in project locations. School Furniture, Teaching Equipment, and L i b r a r y Books (US$29.78 million-Base Costs). This subcomponent w i l l support acquisition o f school furniture, teaching equipment and library books for primary and lower secondary schools. Schools w i l l be furnished and equipped according to standards set out in the MOE’s national Nine Year Compulsory Education policy. Equipment standards vary according to school location and school size, and the school’s responsibility in relation to other schools. The MOE and provinces conduct periodic surveys to assess current levels and new procurement needs and has done this for project county schools participating in this project. Standards for school furniture are set at the provincial level based o n recommendations f r o m the national level. Furniture w i l l normally be contracted and constructed at the township or county level. Library books will be selected b y each school from a standard l i s t suggested b y provinces and the MOE. Individual school l i s t s w i l l be consolidated at the county level sent to the provinces for further consolidation and purchased b y the provinces based o n the individual schools requests. In addition, previous Bank-supported basic education projects have supported the translation o f minority language books and supplementary reading materials for many o f the ethnic groups that live in the area covered b y this project. This project w i l l promote the wider distribution o f these materials that are appropriate for minority children. The Rural Education Reform Pilot Activities (see below), once the individual county pilot activities are set, may support the development o f - 43 - local content materials for the new curriculum. This component w i i i also support the introduction of information technology (Le., computers, printers and limited intemet access) o n a pilot basis in a limited number o f township center primary schools. This effort i s in support o f the government’s policy o f providing interconnectivity to township center primary schools so that they may access national information databases and teacher training modules and provide limited access to both students and teachers to information technology. The government i s concerned about the increasing digital divide between coastal and western China and therefore supports a national program o f providing intemet and computational access to poorer western schools. The project also provides for training for the end-users in the schools through an IT element o f the teacher training component. - Project Component 2 US$6.67 million Component 2. Strengthening Management and Administration. The objective o f this component i s strengthen the capacity o f local departments o f education to implement the project and administer education policies. Additionally, this component will strengthen community participation in improving access to basic education as well as to improve capacity to monitor and evaluate project outcomes. Finally, this component will provide support for overall project coordination and technical advice. This component comprises three sub-components: school development planning (SDP), institutional development, and monitoring. School Development Planning (US$2.20 million-Base Costs). The social assessment report concludes that as the responsibility for financing basic education moves f r o m the township to the county, community involvement in the schooling process decreases. This project subcomponent attempts to reverse this decline b y piloting new methods o f school management in a sample o f counties in each of the project provinces. The provincial and county level education bureaus will work jointly to implement this pilot activity. Additional technical assistance w i l l be provided through a parallel DFID grant facility and using experience and materials f r o m the Gansu Basic Education Project (GBEP). SDP i s local level planning to encourage the school to work closely w i t h i t s community to solve i t s problems and to improve access for poor children and raise achievement levels. SDP emphasizes school-community links which are facilitated b y participatory approaches; the involvement of members o f the community with traditionally less voice; encouraging schools to look at planning as a tool to provide locally based solutions; and developing better teaching and learning conditions in schools. Each province w i l l pilot SDP based o n their provincial needs and has provided their plans in the provincial PIPS. These plans include proposals for dissemination o f successful p i l o t results. One o f the SDP pilots in each province w i l l be in a minority county. All pilot SDP schools w i l l go through at least four annual cycles o f SDP and all head teachers w i l l need to be trained in SDP twice and county and prefecture trainers may each need to receive three or four sessions o f training. The provinces will use SDP Guidelines which have been produced b y Gansu Basic Education - 44 - Project (GBEP) and a training workshop manual for school head teachers and school district directors. Head teachers and school district directors w i l l use the skills and methods creatively under their o w n specific circumstances. '1he workshops will assist head teachers to deveiop sufficient knowledge, s k i l l s and attitudes to conduct the school development planning process with their o w n school community. Project Monitoring (US$1.86 million-Base Costs). This subcomponent w i l l support project monitoring using a set o f project indicators (Annex l),a data gathering format agreed during appraisal and computerization o f township and county level data reporting. The monitoring w i l l be managed at the county and provincial levels b y project implementations offices, under the supervision o f the Foreign Investment and Loan Office (FILO) o f the MOE. Training in monitoring for provincial and county staff will be supported by the project. The computerization o f data reporting at the county and township levels w i l l be supported b y the purchase o f computers, printers and software compatible with the national EMIS system. The project w i l l provide technical assistance o n the collection and utilization o f educational data. Associated training o f staff in the effective utilization o f the system w i l l also take place. As a parallel DFlD grant supported activity, a project impact evaluation system (see below) which w i l l include support for a team o f technical experts to develop impact indicators, conduct a pilot baseline study and develop and support the roll-out o f an impact monitoring and assessment system across all five project provinces and regions. Institutional Development (US$2.61 million-Base Costs). This subcomponent w i l l strengthen the management skills at the provincial and county levels to: (i) implement the project, and (ii) administer education policies, including minority education strategies. The subcomponent w i l l be managed, for the most part, at the provincial level by provincial implementation units with some activities carried out at the national level b y FILO on behalf o f the provinces. The Foreign Investment and Loan Office (FILO), w i t h project funding, w i l l coordinate national level training activities o n behalf o f provinces to provide project specific training, education administrator training, seminars, study tours and overseas training. The domestic training will provide training for provincial project implementation staff in c i v i l works supervision, Bank procurement procedures, project management, and project financial management. Education administrator training w i l l include school development planning and participatory teacher training methodology. The domestic training w i l l also provide seminars for provincial level policy makers in school development planning, participatory teaching methodology, project implementation and basic education development. Study tours will focus o n Provincial Education Department director generals and other provincial education officials in educational development strategy and planning, teaching training, teaching administration, project management, school development planning and educational finance management. Overseas training w i l l include six months o f overseas training for MOE and provincial authorities. Provincial implementation units w i l l provide training for counties o n Bank procurement procedures for goods and services, financial management and project management. In addition, - 45 - provinces will also provide training to county level education administrators and head teachers f r o m primary and junior secondary schools. Chinese Experts Panel (CEP) (US$ 0.1 million-Base Costs). This subcomponent w i l l support a multi-disciplinary Chinese Experts Panel (CEP), w i t h expertise related to the major activities of the project, which will provide advice and guidance o n the pedagogical, social, cultural, economic and operational aspects o f the project and assist both the MOE and the joint B a n k D F I D supervision o f the project. I t w i l l include a social scientist w i t h expertise in the education sector to assist the provinces in implementing their minority education strategies and address gender issues. The specific role o f the CEP and ERAT in reviewing the DFID supported national and provincial research proposals w i l l be clarified by negotiations. Finally, the CEP w i l l work w i t h MOE in assessing the impact o f the project during the mid-term review and at the time o f the Implementation Completion Review (ICR). The CEP w i l l consist o f a small core o f experts and will be supplemented b y specialized consultants as needed. I t w i l l coordinate w i t h Provincial Expert Panels providing particular support in the areas o f SDP and participatory teacher training methodology. I t w i l l also coordinate closely w i t h the Education Reform Advisory Team. - Project Component 3 US$ 13.84 million Component 3. Implementing Strategies to Improve the Quality of Teaching and Learning, This component seeks to strengthen the delivery o f teacher training services to improve the poor quality and limited coverage o f qualified teachers, including bilingual and multi-grade teachers in primary and junior secondary schools, and upgrading the quality o f temporary (daike) teachers. In addition, the component w i l l enable the five project provinces to carry out small scale pilots o f a set o f research-based reform measures, based o n problems identified in different localities. These w i l l cover comprehensive reform pilot activities in two project counties in each Province/Autonomous Region and provincial level policy research on issues related to project activities. Teacher and Staff Training (US$13.24 million-Base Costs). The social assessment stated that parents and principals see the l o w quality o f teachers as a major reason for l o w achievement and high drop out in poor rural schools. Many o f these are daike or temporary teachers. In addition, lack o f bilingual teachers and minority head teachers are an issue in poor and minority areas. The project w i l l therefore support training o f bilingual teachers in areas where minority languages are spoken with a special emphasis o n training minority and female head teachers. Daike teachers w i l l be provided w i t h special training to upgrade skills, especially in the areas o f multi-grade teaching and bilingual education. A new national government policy promotes the introduction, across China, o f participatory teacher training methods. Participatory teacher training focuses on pedagogy rather than content and tries to give teachers practical skills they can use in their work. This subcomponent w i l l finance approximately 90,700 person times o f teachers and head teachers in participatory methods and w i l l be managed b y provincial education authorities coordinated by the Provincial Project Implementation Offices. Female and minority teachers w i l l be prioritized in training plans. As with other project investments project provinces are encouraged to target funding to - 46 - the poorer communities within project counties and townships by focusing o n training teachers f r o m the more remote and poor areas o f the project. Through improved teacher training and I1 schools (even the poorest) thereby attracting children, reducing drop-out and improving completion rates. Training w i l l be provided to teachers in the following areas: core training to upgrade teachers basic academic qualifications, bilingual teaching, active pedagogy, multi-grade teaching, computer technology and use in the classroom, use o f standard equipment sets, conducting classroom experiments, and monitoring student performance. Librarians w i l l also receive training. There may be scope for adapting training materials (14 courses) that have already been designed for the DFID-supported Gansu Basic Education Project. The MOE and the provinces plan to carry out these activities w i t h a stated goal o f increasing the teacher qualification level to 94.3 and 87.7 percent respectively for primary and junior secondary levels. Principals and deputy principals w i l l receive special training at the county and provincial levels in the new child-centered national curriculum and the special characteristics o f school development planning and participatory teacher training, w i t h priority given to females in these positions. Progress o f this subcomponent w i l l be measured b y (i) the teachers trained (disaggregated b y different types such as female teachers, daike teachers, and minority teachers); (ii) the numbers teachers trained in using participatory teaching methods; and (iii) the qualification rate o f teachers. Learning improvements w i l l be assessed through impact assessmenthesearch activities supported b y parallel DFID financing and designed to identify key areas o f learning (e.g., literacy, numeracy). Rural EducationReform Pilots (US$0.6 million-BaseCosts). This subcomponent w i l l support the research in support o f current education policy reforms in areas o f direct strategic interest to the Ministry of Education and project Provinces and Autonomous Regions. Provinces have conducted research at the local level to identify problems which prevent efficient, effective and equitable provision o f education in poor areas, but lacked the resources to pilot the findings. This project-financed sub-component w i l l enable the five project provinces to carry out small-scale pilots o f a set o f research-based reform measures, based o n problems identified in different localities. Managed by the MOE’s Department o f Finance and advised b y a DFID-grant supported Education Research Advisory Team (ERAT) , these pilots w i l l provide an evidence base for policy decision-making at the provincial and national levels which support provision o f education in poor areas. Pilot activities w i l l be decided in the first six months o f implementation after project launch. Pilot activities may included such areas as (i) efforts to increase girls’ enrollment and completion o f primary and junior secondary school; (ii) development and use o f teaching materials in minority languages; (iii) an increase in locally relevant content for aspects o f the curriculum; and (iv) access for previously excluded children (e.g., the disabled, remote dwellers). The MOE will agree pilot counties w i t h provincial Bureaus o f Education. One o f the two counties in each province w i l l be a minority county. Criteria for selection o f counties where pilots w i l l be carried out w i l l be fairly simple and decided after project launch. Some examples o f the criteria to be considered are: (i) size o f minority population, (ii) economic development, - 47 - and (iii) education performance (including enrolment and dropout o f girls/minorities). as well as lessons mar are iearnea rrom tne 11 1 experience o f education policy reforms, research results, and, from other projects, w i l l be an important aspect o f these activities as well as other project activities. Dissemination will take place through national workshops, study tours to the sites o f successful pilots, and possible publications describing results. They w i l l play a role in dissemination as indicated in the TOR. A dissemination strategy for the project w i l l be developed during the first six months o f project implementation. DFID Parallel Grant Activities. (US$4,432,000 equivalent) The UK Department for International Development will provide grant funding for a number o f parallel activities through a grant facility. These funds w i l l augment and supplement certain specific project-supported activities and w i l l be managed b y the Ministry o f Education, Provincial Education Bureaus and through an international consultancy depending on the activity. DFID and the M O E w i l l enter into a Memorandum o f Understanding (MOU) and DFID w i l l create a special account which the MOE can draw on. These funds w i l l support research and provide additional technical assistance (TA) to provinces. The areas o f support are: (i) provincial level research; (iii) national level research, (ii) project impact assessment; (iv) technical assistance (TA) for SDP and participatory teacher training; (v) partial support for the Chinese Experts Panel (CEP) activities; and (vi) support to the Education Reform Advisory Team (ERAT). The purpose o f these grant funds i s to provide support for the strengthening o f rural education practices and contribute to the possible policy reform in the delivery o f education services to the poor parts o f western China. National Research (US$300,000 equivalent) w i l l be conducted initially o n two subjects: (i) student financial assistance and (ii) school mapping. These subjects areas are o f particular importance to access to education in western China because the efficient targeting and allocation o f limited student assistance resources and appropriate school location strategies which ensure that poor children are close to school are critical to ensure that poor children w i l l enroll in and complete basic education. The research activities w i l l be managed b y the Finance Department o f the MOE which has policy responsibility for these two areas, in consultation with the World Bank and DFID. Further research activities may be identified and supported during project implementation. The specific role o f the CEP and ERAT in reviewing national and provincial research proposals w i l l be clarified by project effectiveness. ProvinciaZ level research activities (US$200,000 equivalent) w i l l support research b y provincial educational research institutes on topics o f relevance to the provinces and the project’s development objective and outcomes. The results o f the research w i l l inform provincial education policy decision and, when relevant, incorporated into the comprehensive reform county pilot area. Research topics w i l l be reviewed b y the Chinese Experts Panel (CEP) and implemented b y Provincial research institutes. Project Zmpact Assessment (US$l,OOO,OOO equivalent) w i l l include support for a team o f technical experts to develop impact indicators, conduct a pilot baseline study and develop and support the roll-out of an impact monitoring and assessment system across all five project Technical Assistance (US$832,000 equivalent) for school development planning and participatory teacher training w i l l support national and provincial level experts in the provision of training and advice for SDP and participatory teacher methodology. The resources w i l l be managed b y the national FILO office. Chinese Experts Panel (CEP) (US$100,000 equivalent) activities w i l l receive partial support f r o m a DFID parallel funding. The actual activities to be supported w i l l be determined b y project effectiveness but are likely to be limited to consulting fees and other honoraria for domestic consultants appointed b y the CEP. The Education Advisory Reform Team (ERAT) (US$200,000 equivalent) w i l l provide support to the MOE and the Provinces in the conduct o f the Rural Education Reform Pilots. Terms o f reference w i l l be agreed b y project effectiveness. In addition, DFID w i l l provide up to U S $ 1,800,000 equivalent for national and international consultancy support. This w i l l support the project impact assessment, national and provincial research and other activities as appropriate. - 49 -  Annex 3: Estimated Project Costs CHINA: Basic Education in Western Areas Project 1. Improving School Facilities 0.00 0.00 0.00 1.1 School Construction and Upgrading 73.72 8.20 8 1.92 1.2 Instructional EquipmentFumiture 15.37 5.21 20.58 1.3 Library Books 9.20 0.00 9.20 2. Strengthening Management and Administration 0.00 0.00 0.00 2.1 School Development Planning 2.20 0.00 2.20 2.2 Institutional Development 2.61 0.00 2.61 2.3 Project Monitoring 1.07 0.79 1.86 3. Implementing Strategies to Improve Quality of Teaching and 0.00 0.00 0.00 Leaming 3.1 Teacher Training 13.24 0.00 13.24 3.2 Rural Education Reform Pilots 0.60 0.00 0.60 Total Baseline Cost 118.01 14.20 132.21 Physical Contingencies 7.26 0.87 8.13 Price Contingencies 5.12 0.88 6.00 Total Project Costs’ 130.39 15.95 146.34 Front-end fee 1.oo 1.oo Total Financing Required 130.39 16.95 147.34 Works 80.80 9.15 89.95 Goods 7.04 28.18 35.22 Consultant Services 0.14 0.00 0.14 Training 21.03 0.00 21.03 Total Project Cost; 109.01 37.33 146.34 Front-end fee 1.oo 1.oo I Total Financing Rewired I 109.01 I 38.33 I 147.34 I 1 Identifiable taxes and duties are 0 (IJSSm) and the total project cost, net of taxes, i s 147.34 (tJS5m). Therefore, the project cost sharing ratio i s 67.87 8 of total project cost net of taxes. - 50 -  Annex 4: Cost Effectiveness Analysis Summary CHINA: Basic Education in Western Areas Project Overview of Expenditures in the Education Sector. In China, county and district governments are responsible for the implementation and financing o f compulsory education. In poor rural areas, the revenue available to county and township governments i s limited. Although education often comprises a very large proportion o f county budgets in poor areas, fiscal allocations are nonetheless only one source o f finance for the sector and are often insufficient to support (particularly non-personnel) expenditures. Statistical data for 1995-2000 show that among the sources o f compulsory education revenue the fiscal budgetary allocation grew steadily, increasing from 52 percent in 1995 to 60 percent in 2000. Among the eight revenue streams financing compulsory education provision, education tax and surcharges are ranked second but have been gradually decreasing. The share o f social donations decreased significantly between 1995 and 2000 from third to sixth place. However, fees from families have become increasingly important, rising to third place and accounting for as much as 10 percent o f all compulsory education revenue. Since 1995 the proportion o f education expenditure devoted to personnel costs has risen continuously. For primary schools, non-personnel funding increased from 71.69 percent o f per student expenditures in 1995 to 76.12 percent in 2000, with corresponding reductions in the proportion o f non-personnel expenditures. The trend was similar for junior secondary schools. Compared to educational expenditures per student in regular primary schools and junior secondary schools nationwide, the personnel expenditure share o f recurrent expenditure in rural areas was higher and increased faster. Public expenditure in the compulsory education system in rural areas i s therefore undesirable both in the level o f expenditure and i t s structure. The poorest counties rely heavily on financial transfer payments to meet their personnel expenditures leaving few if any resources for non-personnel expenditures in many schools. Table 1: National compulsory education funding, 1995-2000 (unit: 100 million o f RMB) Year 1995 1996 1997 1998 1999 2000 Total funding 1061.89 1284.38 1396.11 1533.96 1668.26 1833.82 Percentage o f GDP (%) 1.82 1.89 1.87 1.96 2.03 2.05 -51 - Table 2: The structure of national compulsory education funding, 1995-2000 (%) Data source: The Ministry o f Education, China Note: The explanation of “other revenue” “the revenues different from the other seven revenue item, namely, the revenue delivered from subsidiary unit and other revenue except the investment on school-run enterprises” (See the index definition in “China’s Educational Funding Statistics Yearbook, 2000”). T h e economic situation of project areas. The project focuses o n five o f the poorer provinces and autonomous regions in northwestern and southwestern China. All o f these have substantial concentrations o n poor people. Statistical data show that the economic development o f project provinces lags behind national averages o n a range o f economic and financial indicators, with the project counties in a weaker economic position than the average for the project provinces. Income per capita in rural areas o f these provinces/autonomous regions ranged f r o m 58 percent (Gansu) to 84 percent (Sichuan) o f the national average. Ratios o f fiscal spending to locally generated fiscal income both across project provinces/autonomous regions as a whole and in project counties were all above 100%. In Sichuan, for example, expenditures b y project counties were more than four times as high as locally generated revenues, providing an indication o f the extent o f their reliance o n intergovernmental transfers. Compared to the provincial average, educational funding in project counties depended more heavily o n government budgetary appropriation and the sources from non-governmental appropriation (such as direct charges and fees) in total education funding were smaller. Project counties use more o f their education resources o n personnel costs, and the percentage devoted to meeting non-personnel costs including c i v i l works i s small. Overall, education funding at county level i s inadequate to support teachers’ salaries and non-personnel expenditures. The project’s targeting o f investments, as that relates to the a i m o f targeting economically poor areas w i t h a weak education financing position, can therefore be considered broadly appropriate. Targeting also took account o f education performance indicators. Educational spending b y households in project areas, and cost barriers to access. In order to assess the economic burden o f education o n individual households, a household survey was conducted during June 2002 in 600 households o f eight project counties within the two project provinces o f Sichuan and Guangxi. The survey was undertaken with the help o f the Rural Socioeconomic Survey Teams o f the State Statistics Bureau. The main conclusions from the survey, which are consistent w i t h the findings o f other such similar research including the social assessment for this project, are summarized as follows: Household education spending o n primary school students mainly goes toward fees and textbook expenditures, while fees, textbook expenditures, and food expenditures - 52 -  constituted the major elements o f household educational spending at junior secondary level. The average percentage o f household education expenditure to total household expenditure was high in all the counties surveyed. Within the survey sample education costs account for 13.7 percent o f total household expenditures, a small increase compared to similar survey findings obtained in 1995, which showed about 10 percent. Compared to the 1995 research results, there has been a substantial increase in the proportion o f households devoting 20 percent or more o f total household expenditure to education. Approximately 18.6 percent o f the sample households had a percentage o f household educational expenditure to the household total expenditure equal to or greater than 20 percent. The survey found significant differences in expenditures o n food, boarding, and transportation between boarding and non-boarding students (although the sample size for primary level borders was small). The percentage o f household educational expenditure to household total expenditure for boarding students on average was 20.9 percent, and to household net income, 28.9 percent. During the 2000-2001 academic year, the private educational spending on average for boarding students was 1165 RMB and for non-boarding students was 3 11 RMB. Textbook costs were broadly similar, but expenditure in most other categories was significantly higher for boarding students, particularly traveling, food and lodging costs. Finally, the survey showed that more than 20 percent o f the households that had children in school took loans and received donations from relatives and friends in order to support their children’s education. The survey also investigated educational aspirations amongst parents (around 72 percent o f children’s parents hoped that their children would be able to receive a higher education) and the role o f cost in limiting access to education for some children. The findings o f the social assessment, which surveyed different locations and groups, are also instructive on these issues. The enrolment rate and the rate o f universal nine-year education in school-age population are relatively l o w in the project areas, with relatively high drop out rates. The household survey found the dropout rate in the 13-15 school-age group (about the school-age in junior secondary school) to be higher than that o f the 7-12 school-age group (about the school-age in primary school). The survey did not find a significant difference in drop out rates between Han and minority children, although the social assessment, which surveyed different areas and groups, indicated that amongst minorities, which tend to be poorer, high drop out remains a serious problem, both due to inability to cope with educational expenses and distance from school. Of the families with children who have dropped out o f school, 30.8 percent thought economic difficulties are the main reason, 47.7 percent blamed children’s poor grades or difficulties in learning, and 10.8 percent thought that their children were not receiving education o f sufficient quality due to a lack o f qualified teachers. This lack o f high-quality teachers has therefore not - 53 - only deprived children o f the right to enhance their learning capacity and studying methods, i t has also been an important factor leading children to drop out. Student assistance. All the project provinces have many different channels for financing student assistance, including programs such as grant-in-aid to students, remitting o f incidental fees, textbook subsidies and provision o f free lunches amongst others. Consultations with project provinces showed that provincial education bureaus are not interested in using foreign loans to support student assistance programs. Yunnan province, for example, has experience o f providing student assistance at compulsory educational level, utilizing loan and counterpart funding f r o m W o r l d Bank projects under the Southwest Poverty Project (1995-2001). Staff involved, in both the province and project counties were unenthusiastic about this experience. The fiscal departments o f local governments usually preferred to accept specific grant transfers from central or provincial governments to finance student assistance, rather than loans from foreign organizations which needed to be repaid. In addition under the South West poverty project, student subsidies were financed through the establishment o f a foundation. Only the foundation’s interest income (usually withdrawn from a bank) was used to finance student assistance programs. Bank interest rates have been reduced several times over past years, and the interest income was insufficient to meet the needs o f poor students’ in the project areas. Management costs were also high. The impact of fiscal reform on educational funding in project areas. In 2002,20 provinces in China began piloting fiscal reforms (including Sichuan and Gansu provinces, and Ningxia autonomous region). This fiscal reform w i l l be rolled out nationally in 2003. The purpose o f the reform i s to regulate the system for collecting fees, reduce the collection o f illegal fees, and alleviate the burdens o n farmers. After the reform, some important channels o f education revenue in rural areas, such as education surcharges, unregulated funds raised f r o m peasants and others w i l l be stopped. Although central and provincial governments are expected to increase transfer payments after the fee-to-tax reform, education bureaus have expressed concern about future education revenues once the pilot program i s spread to all provinces in China. Central and provincial transfers are not earmarked so decisions concerning the proportion allocated to education are made locally and can be quite arbitrary, w i t h n o guarantee that the full shortfall in education finance resulting f r o m the reform w i l l be compensated. In addition, they are concerned that despite the central and provincial governments’ promise to increase education transfer payments resources w i l l s t i l l be insufficient to fill the gap. They expect that teachers’ salaries w i l l be guaranteed but that funds to meet non-personnel costs would be much less certain, especially resources to support the reduction o f dangerous classrooms and schools. Prior to the introduction of this reform, education surcharges, collections from peasants, voluntary labor and other charges accounted for a very large percent o f education revenue in rural areas. In the case o f Sichuan, this was almost 40 percent o f the total education expenditure. The project provinces estimated the direct funding gap resulting from the rural fiscal reforms. I f rural education surcharges and donations are completely abolished after the fiscal reforms, the direct funding gap caused b y rural fiscal reforms can be estimated b y calculating the per student rural - 54 - education surcharges and funds raised f r o m peasants in 2001 and multiplying this b y the number o f school-age population in each year after 2002. These estimates are given in Table 3 and Table 4. Table 3: The educational revenue versus expenditure gap caused by fiscal reform in project provinces (in 100 m i l l i o n RMB) ~~ ~ 200 1 2002 ~ 2003 2004 2005 2006 2007 Guangxi 5.994 6.151 6.105 6.120 6.042 5.925 5.784 Sichuan 9.336 9.949 9.657 9.379 9.063 8.727 8.587 Yunnan 3.641 3.816 3.768 3.731 3.715 3.690 3.678 Gansu 2.484 2.538 2.382 2.202 2.064 1.968 1.948 200 1 2002 2003 2004 2005 2006 2007 Guangxi 0.436 0.430 0.422 0.410 0.401 0.390 0.380 Sichuan 1.211 1.496 1.469 1.465 1.47 1 1.392 1.365 Yunnan 0.649 0.653 0.644 0.634 0.622 0 609 I 0.598 Gansu 0.533 0.498 0.512 0.527 0.539 0.546 0.531 D u e to the fragility o f fiscal capacity o f county and below levels, great challenges w i l l be faced in poor rural areas. If central and provincial government could not increase transfer o f payments o n a large scale, huge gaps w i l l emerge in the near future in educational funding in project areas, particularly in the terms o f non-personnel expenses. Project counterpart funding and sustainability Counterpart funding. A review o f the f i r s t four Bank-supported basic education projects showed that that the 1:1 counterpart ratio put pressure o n budgets o f the nationally designated poor counties participating in the projects. Examples of inadequate provision o f counterpart funds, delayed reimbursement and defaulted payments to construction teams for project c i v i l works will have had an impact on project progress and quality. Table 5 shows the counterpart funding expectation for the project provinces and counties. The analysis indicates that i t will be difficult for some poor counties to complete the plan o f counterpart funding for the project if counties do not receive adequate transfer payments f r o m the central and provincial government, particularly in the context o f the fee-to-tax reforms. All project provinces and autonomous regions are making some contribution to the provision o f counterpart funding for at least some o f the counties involved in the project. Table 5: The arrangement o f counterpart funding in project counties and the percentage o f counterpart funding to local fiscal income (10 thousand RMB) - 55 -  ^,-.,-.^ LUU3 -. LUU4 Lm LUUb LUU I 'l'otal The arrangement o f counterpart funding in each year Guangxi 696.8 696.8 696.8 696.8 696.8 348 Sichuan 907.5 907.5 907.5 907.5 907.5 453 Yunnan 892.1 892.1 892.1 892.1 892.1 446 Gansu 330.4 330.4 330.4 330.4 330.4 165 Ningxia 495.6 495.6 495.6 495.6 495.6 241 The counterpart funding as percentage to local fiscal income (%) Guangxi 0.25 0.24 0.23 0.22 0.21 Sichuan 0.20 0.19 0.18 0.18 0.17 Yunnan 0.13 0.13 0.12 0.12 0.11 Gansu 0.14 0.13 0.12 0.12 0.11 Ningxia 0.12 0.12 0.11 0.10 0.10 Note: the counterpart funding in project counties i s estimated as 40 percent o f total counterpart funding o f the province, assuming that the growth rate o f local fiscal income per year i s 5 percent. Financial Sustainability. In order to maintain the condition o f fixed assets and guarantee the sustainability o f project investments, an estimation o f recurrent cost o f the investment (RCI) after the project i s given in Table 7. Coefficients for c i v i l works, equipment, desk and chairs and training have all followed the criteria used in the Bank-support Fourth Basic Education province (See table 6). The coefficient for IT was set at 0.03. The recurrent cost w i l l not be inconsequential relative to the public expenses o f the project counties. Table 6: R C I coefficients C i v i l work Apparatus Desk and Training Information chair system Coefficient 0.025 0.035 0.020 0.002 0.030 Province Civil Equipment Desk and Training Information Total work chair system Guangxi 400.6 21.2 10.1 0.6 10.2 442.6 I Sichuan 1516.8 135.8 I 0.0 I 1.3 I 10.1 I 564.1 I Yunnan 494.8 0.0 12.9 1.8 16.6 526.0 Gansu 185.9 14.5 8.3 0.0 12.4 221.o I Ningxia 1254.9 I34.7 I 6.4 I 1.1 I 1.1 1298.3 Other financial risks. In addition to the risks to project funding such as the provision o f counterpart funding and repayment funding there w i l l be other non-project financial risks including in particular the possibility o f exchange rate changes. This risk i s expected to be l o w - 56 - during the period o f project implementation, though rises somewhat over the longer time frame o f repayment. The Chinese renminbi i s currently fixed against the U S dollar, and exchange rate restrictions are in place. A move toward depreciation and/or floating o f the currency i s widely expected to be unlikely over the short term. Current professional and market opinion i s that a removal o f exchange rate restrictions and floating o f the current would most likely result in a depreciation o f the renminbi against eth dollar, which would reduce the renmenbi cost o f repayment to project counties and provinces. Project governments at province level have provided guarantees to meet the repayment obligations o f their project counties in case o f difficulty. Analysis of project returns. Researchers at the Institute o f Economics o f Education at Peking University estimated the economic rates o f return to schooling in rural China. The data set for this study contains information o f economic income and expense on more than 6000 rural residents in 1996. The major conclusions included: 0 The marginal impact o f education on income i s positive and significant. An additional year o f schooling can result in about 180 RMB more in annual income. 0 The Mincer rate o f return i s 5.13 percent. Estimates o f this variable b y other researchers produced values o f 2 percent in 1988 on a dataset o f 28 provincial rural residents, and 4.8 percent in 1991 on a dataset o f central and southern-west rural area. 0 The internal returns o f education at various levels are estimated as follows: 26.49 percent for primary schools; 1.33 percent for junior secondary schools; 0.38 percent for senior secondary schools (including vocational schools); 1.02 percent for senior regular secondary schools; 2.04 percent for vocational schools. Conclusions. In summary, the economic and financial analysis undertaken during project preparation and appraisal has: (a) documented the economic effects o f investment in basic education in poor areas; (b) resulted in the revision o f provincial proposals to ensure financial feasibility during project implementation and financial sustainability after project completion; (c) reduced the burden o f counterpart funding on poor counties and thus the risk o f inadequate counterpart funding during project implementation, (d) encouraged additional education funds for project activities from higher levels o f government to poor counties (thus resulting in increased mobilization and equality in compulsory education); and (e) provided additional empirical support for the continuation o f student assistance for poor students using government resources. Summary of benefits and costs: Not Applicable. Main Assumptions: Not Applicable. Cost-effectiveness indicators: Not Applicable. - 57 -  Annex 5: Financial Summary CHINA: Basic Education in Western Areas Project Years Ending December 31 I Year1 I Year2 I Year3 I Year4 1 Year5 I Year6 I Year 7 Total Financing Required Project Costs Investment Costs 9.5 36.4 55.5 34.1 6.9 2.7 1.2 Recurrent Costs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Costs 9.5 36.4 55.5 34.1 6.9 2.7 1.2 Front-end fee 1.o 0.0 0.0 0.0 0.0 0.0 0.0 Total Financina 10.5 36.4 55.5 34.1 6.9 2.7 1.2 Financing IBRD/IDA 6.6 24.8 37.6 22.9 4.4 1.8 0.8 Government 2.9 11.6 17.9 11.2 2.5 0.9 0.4 Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 User FeedBeneficiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Upfront Fee 1.o 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Financing 10.5 36.4 55.5 34.1 6.9 2.7 1.2 M a i n assumptions: This project w i l l be implemented during six twelve-month periods of time over seven calendar years beginning with retroactive financing that starts March 1 , 2003 and project closing March 3 1, 2009. - 58 -  Annex 6(A): Procurement Arrangements CHINA: Basic Education in Western Areas Project Procurement Summary of the Assessment of Agencies’ Procurement Capacity The Foreign Investment and Loan Office (FILO) o f Ministry o f Education (MOE) w i l l be responsible for overall leadership in the project implementation and provide overall procurement guidance to provinces. The five project provinces have designated a Project Management Office (PMO) as the implementing agencies under each provincial education department and w i l l be responsible for the overall implementation o f the project w i t h specific responsibility for procurement o f Goods as well as C i v i l Works procurement with the assistance o f the county level implementation units. A procurement assessment was conducted during the preparation period and found that the: (i) implementing agencies (PMOs) are fully staffed and authorized to implement the project; (ii) PMO staff have participated in the implementation o f previous Bank-supported basic education projects and are familiar w i t h the Bank’s procurement procedures; (iii)PMOs have upgraded the procurement management manuals developed b y previous Bank-supported basic education projects; and (iv) M o d e l Bidding Documents (MBD) and Standard Bidding Documents (SBD) w i l l be used for all project procurement. The conclusion o f assessment i s that the project implementing agencies are capable o f carrying out procurement activities within the project. Moreover, areas that need strengthening, such as the training o f county staff in procurement procedures, have been identified and an action plan for improving their s k i l l s has been agreed. The action plan includes training activities and recruitment o f appropriate staff for county for implementation and procurement activities. In addition, MOEEILO w i t h twenty years o f implementation experience w i t h Bank-supported projects will play a key role in assisting provincial and county implementation units in the procurement activities in this project. The assessment also identified some shortcomings in China’s general procurement framework, especially the Chinese Bidding L a w that became effective January 1, 2000. These shortcomings are as follows: preparation o f cost estimates are based on out-of-date norms and guidelines and they are mandatory; there i s a shorter bid preparation period (20 days); 0 bracketing i s used for evaluation under Works contracts; 0 a merit point system (scoring system) i s used for bid evaluation; and bidding can be cancelled with less than three bidders. These are county-wide issues that are being addressed in the ongoing OPR. This project w i l l ensure that provisions will be incorporated into the procurement schedule o f the Loan Agreement to confirm that there are exemptions to the Chinese Bidding L a w for Bank-financed procurement and that Bank procurement Guidelines are always used when there are difference between the Bank Guidelines and the Chinese Bidding Law. Specific provisions w i l l be indicated in the - 59 - Procurement Schedule o f the Loan Agreement to cover the difference between Bank procedures and Chinese Laws for NCB. Procurement Arrangements Procurement Plans. The five project provincial PMOShave developed a procurement plan for the f i r s t year o f works activities in line with provincial environmental and geographic conditions. These plans include packaging plans (323 contracts) and a time schedule. The Bidding documents for the first two NCB works w i l l be sent to the Bank for prior review based on the procurement plans which include retroactive financing. I t i s planned for approximately 10-20 percent o f the total civil works contracts to begin in 2003. Goods procurement w i l l not begin until second year o f project implementation. The plan w i l l be adjusted and updated annually to reflect the latest changes and demands. Construction Standards. School buildings financed b y the project w i l l be designed based on National Standards issued b y the SRDC, Ministry o f Construction (MOC) and MOE. National standards included the provision o f clear water supply and toilets for students. County officials w i l l also address the needs o f disabled children in the construction designs when appropriate. Noise and construction waste control requirements will be included in the civil works bidding documents as well as the contracts. Advertisement Requirements. The General Procurement Notice (GPN) w i l l be published in the United Nations Development Business (UNDB) and updated every year during the life o f the project. In addition, a Specific Procurement Notice (SPN) for all ICB (if the case) and N C B procurement activities must be published in at least one newspaper with a provincial circulation. I f the project requires consultant services from f i r m s then the consultant assignments for the consulting f i r m s must be advertised in a national gazette or a national newspaper. Procurement Procedures. Bank Guidelines w i l l govern all Bank-financed procurement under the project. The Bank Guidelines and the procurement forms that must be used for all project-supported procurement are as follows : The Procurement o f Goods and Works: Procurement under IBRD Loans and IDA Credits (dated January 1995, revised January and August 1996, September 1997, and January 1999); and The Procurement o f Consultants: Selection and Employment o f Consultants b y World Bank Borrowers (January 1997, revised September 1997, January 1999, and M a y 2002). Model Bidding Documents: The Bank-approved Chinese Model Bidding Documents (MBD), including Works and Goods ICB, NCB, Standard Bid Evaluation Form o f Works and Goods will be adopted for all ICB (if the case) and NCB activities for Works 'and Goods. 0 Evaluation Report and Contract under consultant selection: Bank's Sample Form o f Evaluation Report and Standard Contract w i l l be used for the consulting service contracts. - 60 -  Project-specific Documents: a model procurement document for Works and Goods using shopping procedures w i l l be prepared and used b y the PMOS. Procurement methods (Table A) Civil Works (US$89.95 million equivalent). This includes new construction as well as major and minor repairs o f school buildings. Most o f the schools are in small villages or dispersed rural areas in remote locations with construction spread over time resulting in high mobilization cost for foreign contractors and therefore i t i s unlikely that foreign contractors w i l l be interested in bidding. Considered the nature o f the project and that proposed project sites are scattered in a vast remote area, international competitive bidding (ICB) for c i v i l works would not be foreseen as individual contracts are not expected to cost more than US$4 million. However, if any contract costs more than US$4,000,000, ICB shall be followed. The National Competitive Bidding (NCB) procedure w i l l be used for the new school building construction and packaged major repairs costing US$50,000 or more, but less than US$4 m i l l i o n per contract, up to an aggregate o f US$62.97 million. Small works contracts costing less than US$lOO,OOO up to an aggregate not to exceed U S 2 6 . 9 8 m i l l i o n equivalent w i l l be procured following lump sum contracts on the basis o f three quotations as stated in Article 3.5 and 3.6 o f the guidelines. Goods (US$35.22 million equivalent). Procurement o f teaching equipment and reference books for libraries in primary and secondary schools; furniture - desks and chairs for students in primary and secondary schools w i l l be conducted as Goods procurement. Teaching Equipment and Library books are selected b y schools, county and provincial education authorities from a l i s t prepared by MOE and provincial education bureaus and supplied by competing companies. Past experience and review o f teaching equipment and library book procurement contracts indicate that competition, based o n price, have been the main factor in awarding o f provincial contracts for teaching equipment and library books. Experience with the implementation o f earlier Bank-supported basic education projects indicates that i t i s highly unlikely that International Competitive Bidding (ICB) w i l l be needed for procurement o f goods for the project. However, should there be equipment and instruments procurement with contracts o f US$300,000 or above, they w i l l be awarded through ICB. NCB w i l l be used for contracts estimated to cost more than US$50,000 but less than US$300,000 each for goods, including the primary and junior secondary school teaching equipment, library books and furniture up to an aggregate amount not expected to exceed U S 2 6 . 9 8 million. Goods contracts with an estimated value of less than US$50,000 each and an aggregate amount equivalent to U S 8 . 2 4 million for the project will be awarded under shopping procedures after solicitation and evaluation o f at least three written price quotations. Consultant Services (US$0.14 million equivalent) and Training (US$21.03 million equivalent). The total amount for consultant services i s US$0.14 million w i l l include use o f education research institutions and academics b y project provinces to advise and consult on teaching methodology reform and curriculum reform. Selection o f these consultants w i l l be based on consultants’ qualifications for the contract estimated cost less than US$lOO,OOO per contract up to an aggregate value not exceed US$0.07 million and selection o f individual consultants for contract under US$lOO,OOO per contract with an aggregate amount equivalent to US$0.07 million. -61 - M o s t training activities are local training including workshops and seminars for school policy . . m a ' m and a - m a secondary teachers, teacher assistants, parents and communities, and project management personnel, Subject areas include teacher material and classroom guidelines, monitoring and evaluation, EMIS, training o f trainers and project management. Teacher training colleges and institutions under the Provincial Education Bureaus and MOE, because o f their unique and exceptional nature and n o suitable alternative from private sector are available in China, may be hired to provide training services. A few overseas study tours and national conferences will also be included under this category. Destinations for overseas study tours and national conferences will be selected on the basis o f relevance and quality o f programs, cost and prior experience. Content and costs o f training activities for each year w i l l be reviewed and approved each year in the annual work plan for the project. Table A: Project Costs by Procurement Arrangements (US$ million equivalent) (0.00) (0.00) (1.OO) (0.00) (1.OO) Total 0.00 89.95 57.39 0.00 147.34 (0.00) (61.24) (38.76) I (0.00) I (100.00) " Figures in parentheses are the amounts to be financed b y the Bank Loan. All costs include contingencies. ?' Includes civil works and goods to be procured through national shopping, consulting services, services o f contracted staff o f the project management office, training, and technical assistance services related to (i) managing the project, and (ii) re-lending project funds to local government units. - 62 -  Table A1 : Consultant Selection Arrangements (optional) II I C \ Ill] 1\ Including contingencies Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines), Commercial Practices, etc. N.B.F. = Not Bank-financed Figures in parentheses are the amounts to be financed by the Bank Loan. - 63 - Prior review thresholds (Table B) Works. All contracts for works estimated to cost equivalent o f US$4,000,000 or more; and the first two contracts in each year tor works procured in line with NCB procedure in each province; Goods. All contracts for goods estimated to cost the equivalent o f $300,000 or more; and the f i r s t contract for teaching equipment and reference books procured in accordance with NCB procedure in each province; and Consultant Services. All contracts above US$lOO,OOO for f i r m s and all contracts above US$50,000 for individuals w i l l be prior reviewed. All other consultant contracts below prior review threshold w i l l be subject to random post review. In addition, all single source contracts, if any, and TORSfor all consultants contracts w i l l be subject to prior review regardless o f value. Post Review. I t i s expected that post review o f documents related to 25 percent o f contracts w i l l be conducted according to Bank guidelines. Table B: Thresholds for Procurement Methods and Prior Review' First two N C B contracts I <US$300,000 I NCB I First N C B contract for each province <US$50,000 National shopping 3. Services(Consu1tant) <us$100,000 CQ >US$ 100,000 (if any) - . Firms 4. Individual <US$50,000 Individual >US$50,000 (if any) Total value of contracts subject to prior review: US$2-4 million Overall Procurement Risk Assessment: Average Frequency of procurement supervision missions proposed: One every six months (includes special procurement supervision for post-review/audits) l\ Thresholds generally differ by country and project. Consult "Assessment o f Agency's Capacity to Implement Procurement" and contact the RegionalProcurement Adviser for guidance. - 64 -  Annex 6(B): Financial Management and Disbursement Arrangements CHINA: Basic Education in Western Areas Project Financial Management 1. Summary of the Financial Management Assessment Conclusion of FM assessment. The task team has conducted an assessment o f the adequacy of the project financial management system o f the Basic Education in Western Areas Project (Full FM assessment report available in project file). The assessment, based on guidelines issued b y the Financial Management Sector Board o n June 30,2001, has concluded that the project meets minimum Bank financial management requirements, as stipulated in BP/OP 10.02. In the team’s opinion, the project w i l l have in place an adequate project financial management system that can provide, with reasonable assurance, accurate and timely information o n the status o f the project in the reporting format agreed w i t h the project and as required b y the Bank. Funding sources for the project include Bank loan, grants b y the United Kingdom’s Department for International Development (DFID) and counterpart funds. The Bank loan will be signed between the Bank and the People’s Republic o f China through i t s Ministry o f Finance, and on-lend arrangement for the Bank loans w i l l be signed between MOF and participating provincial governments through respective provincial finance bureaus, and between provincial governments and municipakounty governments. The Bank loan proceeds will f l o w from the Bank into the special accounts to be set up for the project in respect o f reimbursable expenditures incurred, or to contractors or suppliers via bank accounts with major commercial banks acceptable to the Bank. DFID w i l l provide a grant to soften the terms o f the loan for high priority social sector projects with overwhelming objective o f poverty alleviation. The counterpart funds w i l l come f r o m provincial and county government and contributed directly to the project. In terms o f disbursement technique, the project w i l l be disbursing based o n the traditional disbursement techniques and w i l l not be using PMR-based disbursements, in accordance with the agreement between the Bank and MOF. N o outstanding audits or audit issues exist w i t h any o f the implementing agencies involved in the proposed project. The task team however w i l l continue to be attentive to financial management matters and audit covenants during project supervisions. Country Issues. T o date, n o CFAA has been performed for China, though dialogue with the Government o f China in respect o f the CFAA exercise has been initiated and underway. The planned approach to CFAA i s to build o n the Asian Development Bank’s study o f Financial Management and Governance Issues in China in 2000, and analyze areas that have changed rapidly in the past few years or that deserve further scrutiny and over time cover all major areas usually assessed as part o f a full CFAA exercise. Currently, for reference purpose, the Bank relies o n the study work conducted b y the Asian Development Bank. Nevertheless, based on observations o f developments in the areas o f public expenditures, accounting and auditing, and Bank experience w i t h China projects for the past few years, we note that substantial achievement in the aforementioned areas has been made and further improvement - 65 -  i s expected in the next few years. As economic reform program further unfolds, the Government o f China has come to realize the importance o f establishing and maintaining an efficient and k s p a r e n c y ana accountability, and minimize potential fraud or corruption. Due to rather unique arrangement b y the Government o f China, funding (in particular Bank loan) o f Bank projects i s controlled and monitored b y MOF and i t s extension, Le. finance bureaus at provincial, municipal/prefecture and county level. However, project activities are usually carried out b y implementing agencies o f a specific industry or sector, mainly due to technical expertise required for project implementation. The above arrangement then usually requires frequent and close coordination work o n the project, as multilevel management o f funding and implementation mechanism often presents a great challenge to smooth project implementation. As such, this assessment focuses o n respective provincial finance bureaus o f participating provinces, which w i l l handle Special Account activities for the project, and Project Management Office, which w i l l be responsible for managing and implementing various components o f the project. Strengths and Weaknesses. i) Strengths-To date, there has been fifteen education projects in China and all the participating provinces o f the proposed Basic Education in Western Areas project have had different level o f experience from previous education projects and are familiar w i t h Bank’s procedures or requirements. The MOEFILO, established since the Bank’s first education project in China, has been established at the central level to handle overall financial management aspects o f the project. The valuable experience gained b y FILO f r o m prior Bank assisted projects w i l l be passed o n to the proposed project. There i s a strong sense o f commitment from the proposed project to sound financial management practice and compliance with Bank’s disbursement procedures. ii)Weaknesses-Though project staff o f 5 provinces identified to assume financial and accounting work for the project have relevant academic background and work experience, they nonetheless have less exposure to internationally accepted standard practices and therefore would require closer monitoring and assistance from the Bank, in particular at the initial implementation stage. Training in project financial management should be provided b y FILO prior to effectiveness, and Bank w i l l provide assistance as and when needed throughout project implementation. Based on experience from prior education projects, and the fact that there w i l l be five project provinces (with 112 project counties), the major concern lies in the complicated and long reimbursement process. In most cases, the lack o f sufficient revolving funds at each provinces and well-defined withdrawal application procedures at Project Management Offices (PMOS)and finance bureaus at various levels are the factors giving rise to the long and complicated process. ImplementingEntity. A t the central level the MOE/FILO o f the Ministry o f Education (MOE) w i l l be the decision-making body o f the project and w i l l coordinate the work o f the project and ensure that resources from the Bank/DFID loan are distributed in a timely and efficient fashion. FILO w i l l be responsible for monitoring the ongoing implementation o f the project as well as coordinating the national level training, study tour, research and dissemination activities. F L O would also be responsible for working with the Bank and DFID teams o n the supervision o f the implementation o f the project. FILO has been in place for more than twenty years and been - 66 - responsible for the implementation o f more than fifteen Bank-supported project A L L-lL la1 ce - aus w i i i set up provincial impiementation units (Project Management Office) which w i l l a) mobilize institutional, technical and financial resources and support the preparation and implementation o f the project; b) coordinate the provision o f the provincial level counterpart funding for the project; and c) provide a critical coordination and monitoring function. At the county level, project implementation offices will be set up to oversee the implementation o f the project at the township level. This w i l l include ensuring adequate financial resources for counterpart funding for the project as well as monitoring the targeting o f project resources at the township level. Funds flow. i ) Bankfunds The Bank loan w i l l be signed w i t h MOF and on-lending arrangement w i l l be executed between MOF and finance bureaus at provincial/municipal/county level. The Bank loan proceeds w i l l f l o w f r o m the Bank to the special accounts to be set up at and maintained b y respective provincial finance bureaus (PFB), municipal finance bureaus (MFB), county finance bureaus (CFB), county PMOS,and/or to contractors or suppliers; ii) Counterpart funds w i l l be contributed b y the provincial and county governments. Majority o f the funds w i l l be invested b y the provincial governments and for some poor areas n o counterpart fund contributions f r o m the county level will be required. The counterpart funds b y provincial government w i l l follow similar f l o w pattern o f Bank funds; i i i ) DFID grant funds are used to soften the lending terms o f the IBRD loan for high priority social sector projects w i t h overwhelming objective o f poverty alleviation and w i l l f l o w f r o m DFID directly to the Bank. Staffing. Adequate project accounting staff with educational background and work experience commensurate with the work they are expected to perform i s one o f the factors critical to successful implementation o f project financial management. Based on discussions, observation and review o f educational background and work experience, the task team notes that staff identified for financial or accounting positions are qualified and appropriate. Though all project provinces have participated in prior Bank financed projects, some o f the financial or accounting staff identified for the project nonetheless lack direct experience in Bank projects. T o ensure that staff recruited for the project w i l l have good understanding o f Bank’s policy and requirements, i t has been further agreed that a well-designed and focused training program w i l l be provided prior to effectiveness to all staff concerned In order to facilitate financial management work, the task team has recommended that a Project Financial Management Manual (Manual) be prepared. The role and responsibility o f the financial/accounting staff at each level, as well as operational procedures, such as withdrawal applications and preparation o f financial statements, should be clearly defined and recorded in the Manual. Final version o f the Manual should be issued to all relevant staff prior to effectiveness. Accounting Policies and Procedures. The administration, accounting and reporting o f the project w i l l be set up in accordance with the following accounting standards or circular issued b y MOF: w In iine with Bank financed projects in china, the project w i i i use the "'l'emporary Kegulations on Financial and Accounting Management for Projects Financed by the World Bank" (Circular No. 127 issued in 1993) b y MOF as a basis for bookkeeping and preparation o f project financial statements and management reports. Accrual accounting and double-entry bookkeeping w i l l be adopted by the project. 0 Circular No. 12: "Regulation for the Submission o f Withdrawal Applications" issued in December 1996 b y MOF - includes detailed procedures for preparing and submitting withdrawal applications and retention o f supporting documentation. Circular No.13: "The Accounting Regulations for World Bank Financed Projects" issued in January 2000 b y MOF. The circular provides in-depth instructions o f accounting treatment o f project activities and covers the following: Chart o f account Detailed accounting instructions for each project account Standard set o f project financial statements 0 Instructions on the preparation o f project financial statements The standard set o f project financial statements mentioned above has been agreed to between the Bank and MOF and applies to all Bank projects appraised after July 1, 1998 and includes the following: Balance sheet Statement o f source and use o f fund Statement o f implementation o f credit/loan/grant agreement Statement o f special account Both circular No. 127 and 13 are simplified versions o f the Accounting Standards for State-owned, Infrastructure Oriented Projects (the 'Standards'), taking into consideration unique characteristics o f Bank projects. The Standards are modeled after the principles o f the International Accounting Standards and provides detailed guidelines appropriate for Bank projects. Each county PMOSw i l l be managing and maintaining respective project accounts, and preparing financial statements. Original supporting documents for project activities will be retained by originating project implementing units, i.e. county PMOs. The consolidation process requires that PMO at municipal level collects and consolidates project financial statements prepared and submitted b y county PMOs. The provincial PMO collects and consolidates project financial statements submitted b y municipal level to arrive at the consolidated provincial level before sending by the provincial P M O to the Bank for review and comment. For the portion executed by MOE, FILO w i l l be in charge o f keeping the records o f project activities, preparing project financial statements and submitting the statements to the Bank for review and comment on a regular basis. - 68 - Internal Audit. The project w i l l have no formal internal audit establishment. However, FILO, PMOs and finance bureaus at all levels w i l l carry out regular supervision. Reporting and Monitoring and Format of Financial Statements. Each project province w i l l prepare i t s o w n consolidated project financial statements. The consolidation process requires that PMO at municipal level collects and consolidates project financial statements prepared and submitted b y county PMOs. The provincial PMO collects and consolidates project financial statements submitted b y municipal level to arrive at the consolidated provincial level before sending by provincial PMO to the Bank for review and comment. The format and content o f the following project financial statements represent the standard project reporting package agreed to between the Bank and MOF, and have been discussed and agreed with all parties concerned. The project consolidated financial statements w i l l be submitted as part o f the Financial Monitoring Report to the Bank for review and comment on a semi-annual basis (prior to August 15 and February 15 o f the subsequent year) and include the following four statements: Balance Sheet Summary o f Sources and Uses o f Funds by Project Component Statement o f Implementation o f Loan Agreement; and 0 Statement o f Special Account Information Systems. Due to the vast number o f implementing units involved, and relatively limited transaction volume for each individual implementing agencies, an information system based o n a manual basis w i l l be sufficient and practical for the project. However, an accounting software package developed b y WBOB w i l l be recommended for bookkeeping and financial reporting purposes, mainly due to the unique features o f the software package and the nature o f the project. Supervision Plan. As five provinces and more than 112 counties w i l l be involved in the project, the financial management would require constant assistance f r o m and close monitoring b y the Bank, due to relatively complicated management structure and less exposure o f project financial and accounting staff to international standard practices. A financial management or disbursement officer should participate in the supervision missions on a regular basis to ensure smooth proceeding o f project financial management related matters. M o r e frequent FMDisbursement mission schedule i s strongly recommended for the initial implementation stage to ensure proper FMDisbursement setup and operations. Project implementing agencies selected for FM/Disbursement site visits should be on a rotational basis, or those found to require immediate attention. In addition, to maximize efficiency and effectiveness o f supervision mission, procurement and FM/SOE/disbursement reviews should be carried out simultaneously. - 69 - 2. Audit Arrangements The Bank requires that project financial statements be audited in accordance with standards acceptable to the Bank. In line with Bank financed projects in China, the project will be audited in accordance with the Government Auditing Standards o f the People's Republic o f China (the 1997 edition). The Foreign Funds Application Audit Department o f the China National Audit Office (CNAO) and provincial audit bureaus in each participating provinces have been identified as auditors for the project. For the portions directly implemented b y the participating provinces, the audit reports will be issued b y respective provincial audit bureaus; For the portion executed by MOE, the audit report w i l l be issued b y CNAO. The Bank currently accepts audit reports issued b y C N A O or provincial audit bureaus for which CNAO i s ultimately responsible. Audit reports on annual project financial statements w i l l be due to the Bank within 6 months of the end o f each calendar year, with a separate opinion on Statement o f Expenditures and Special Account. 3. Disbursement Arrangements 1. The Bank loans w i l l be disbursed against: (i) 75 percent for works; (ii) goods: 100 percent o f the foreign expenditures; 100 percent o f local expenditures ex-factory for locally manufactured items; 75 percent o f local expenditures for other items procured locally; (iii) 9 1 percent o f the expenditures for consulting services, and (iv) 100 percent for study tours and training. N o direct contracting or special commitments are anticipated in the project. 2. T o facilitate disbursement, five Special Accounts w i l l be established for each o f the participating provinces and MOE. The provincial finance bureaus (PFB) o f the five participating provinces will be responsible for the management, monitoring, maintenance and reconciliation of respective Special Account activities. Supporting documents required for Bank disbursements will be prepared and submitted b y county PMOs through various finance bureaus and PMOs at county/municipal/provincial to PFB for final verification and consolidation before sending b y PFB to the Bank for further disbursement processing. For the portion implemented b y MOE, the application'will be prepared b y MOE, further reviewed b y MOF before sending b y MOF to the Bank for processing. Allocation of loan proceeds (Table C) 1. The proposed Loan o f US$ 100 million would be disbursed over a period o f approximately six years. The project closing date i s March 3 1, 2009. The allocation o f Loan proceeds b y IBRD i s shown in Table C. 2. T o ensure timely start-up o f the project, retroactive financing o f up to US$10 million would be available for payments made for eligible expenditures for works and training incurred after March 1,2003. - 70 - Provincial Distribution of L o a n Funds. The distribution o f loan funds i s as follows: Yunnan Province USD 27.0 M i l l i o n Sichuan Province USD 27.0 M i l l i o n Gansu Province USD 10.0 M i l l i o n Ningxia Province USD 15.0 M i l l i o n Guangxi Province USD 21.0 M i l l i o n Table C: Allocation of Loan Proceeds 100% o f foreign expenditures and 100% of local expenditures (ex-factory costs), and 75% of local expenditures for other ITrainine and Studv Tours I 14.10 I 100% 1Total Project Costs with Bank Financing1 99.00 I I Front-end feel 1.oo I (Total I 100.00 I Use of statements of expenditures (SOEs): For expenditures pertaining to c i v i l works contracts valued at less than $4,000,000: goods contracts valued at less than $300,000, and consulting contracts valued at less than $100,000 for f i r m s and $50,000 for individuals and all training and study tours, reimbursement w i l l be made on the basis o f Statement o f Expenditures. Supporting documents need not be submitted to the Bank but w i l l be retained in the project for review b y the Bank supervision missions. Special account: The Special Account (SA) would be established in U S dollars, in a commercial bank acceptable to the Bank and on terms and conditions satisfactory to the Bank. The SA would be used for all eligible foreign and local expenditures. Applications for replenishment o f the Special Account would be submitted monthly or whenever the Account has been drawn down b y about 50 percent o f the initial deposit, whichever occurs first. The authorized allocation of SA w i l l be equivalent to about 4 months o f eligible expenses reimbursable via SA, as follows: 0 Yunnan: The authorized allocation will be US$ 1,700,000. 0 Guangxi: The authorized allocation w i l l be US$ 1,500,000. 0 Sichuan: The authorized allocation w i l l be US$ 1,700,000. 0 Gansu: The authorized allocation w i l l be US$ 800,000. 0 Ningxia: The authorized allocation w i l l be US$ 1,000,000. -71 -  Annex 7: Project Processing Schedule CHINA: Basic Education in Western Areas Project (Time taken to prepare the project (months) 1 15 I 20 I I First Bank mission (identification) I 03/01/2001 I 12/06/2001 I Appraisal mission departure 10/02/2002 0 4 14/2003 Negotiations 12/15/2002 05/ 19/2003 Planned Date of Effectiveness 03/15/2003 09/30/2003 Prepared by: Finance Department, Ministry o f Education Preparation assistance: PHRD TF026772: PHRD TF026649 Bank staff who worked on the Droiect included: I . Name SDecialitv Halsey Beemer Task Team Leader, Lead General Educator Eduardo Velez-Bustillo Lead General Educator, Social Sector Coordinator, Beijing Christopher Thomas Senior General Educator Sandra Erb Operations Officer, Consultant Guo Xiaowei Procurement Specialist Dong Yi Financial Management Specialist Dorothy Judkins Administrative Support Dan Gibson Social Scientist Wang Chaogang Social Scientist Carlos Escudero Chief Counsel Margaret Png Senior Counsel Susiana Iskandar Operations Officer, Indonesia Rosfita Roesli Operations Officer, Indonesia Xiao Liping Education Specialist Ding Xiaohao Education Economist Robert Prouty Peer Reviewer Adriaan Verspoor Peer Reviewer (QER) Robin H o m Peer Reviewer (QER) Kin Bing Wu Peer Reviewer (QER) DIFD Staff who worked on the project include: Melanie Curtis (China Education and Health Programme Manager); Stephen Kidd (Social Development Adviser); Susan Milner (Education Advisor); Clare Roberts (Economic Advisor); David Levesque (Senior Education Advisor); Jillian Popkins (Social Development Advisor); Peter Shelley (Human Development Programme Manager-China); Shalini Bahuguna (Social Development Adviser); Myra - 72 - Harrison (Education Advisor-Consultant) Teachers College, Columbia University); Gregory Eliyu Guldin (Social Scientist); L i s a Croll (Social Scientist-Consultant ) - 73 -  Annex 8: Documents in the Project File* CHINA: Basic Education in Western Areas Project A. Project Implementation Plan Provincial Project Implementation Plans. Revised for Appraisal. December 2002 National Project Implementation Plan. Revised for Appriasal. December 2002 8 . Bank Staff Assessments Identification, Preparation, Pre-appraisal and Appraisal aide-memoires and back-to-office reports Financial Management Assessment. October 8,2002 Procurement Assessment. September 30,2002 C. Other Ethnic Minorities Education Strategy and Matrix Social Assessment. October 30,2002 Social Assessment Second Set o f Consultations Report March 2003 Economic and Financial Analysis-Full Report November 2002 *Including electronic files - 74 -  Annex 9: Statement of Loans and Credits CHINA: Basic Education in Western Areas Project 02-Oct-2002 Difference between expected and actual Original Amount in US$ Millions disbursements' Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd PO70441 2003 Hubei Xiaogan Xiangfan Highway 250.00 0.00 0 00 0 00 250 00 0 00 0 00 PO58847 2003 Third Xinjiang Highway Project 15000 0 00 0 00 0 00 15000 0 00 0 00 PO58846 2002 National Railway Project 16000 0 00 0 00 0 00 101 52 4 02 0 00 P064729 2002 SUSTAINABLE FORESTRY DEVELOPMENT PRO 93 90 0 00 0 00 0 00 93 90 0 47 0 00 P068049 2002 Hubei Hydropower Development in Poor Are 105 00 0 00 0 00 0 00 10500 3 50 0 00 PO70459 2002 Inner Mongolia Highway Project 10000 0 00 0 00 0 00 100 00 0 00 0 00 PO71147 2002 CN-Tuberculosis Control Project 104 00 0 00 0 00 0 00 103 33 -0 67 0 00 PO58845 2001 Jiangxi II Hwy 200 00 0 00 0 00 0 00 184 07 5 07 0 00 PO51859 2001 CN-LIAO RIVER BASIN 100 00 0 00 0 00 0 00 87 60 3 02 0 00 PO56199 2001 Third Inland Waterways 10000 0 00 0 00 0 00 96 00 0 50 0 00 P056596 2001 Shijiazhuang Urban Transport 10000 0 00 0 00 0 00 96 00 32 90 0 00 PO56518 2001 WATER CONSERVATION 74 00 0 00 0 00 0 00 59 12 4 17 0 00 PO45915 2001 Urumqi Urban Transport 10000 0 00 0 00 0 00 71 22 25 87 0 00 PO47345 2001 CN-HUAI RIVER POLLUTION CONTROL 10550 0 00 0 00 0 00 102 05 -3 45 0 00 PO42109 2000 CH-BEIJiNG ENVIRONMENT / I 349 00 0 00 25 00 0 00 352 30 11674 0 00 PO56424 2000 TONGBAI PUMPED STORA 320 00 0 00 0 00 0 00 304 94 55 34 0 00 P045264 2000 SMALLHLDR CATTLE DEV 93 50 0 00 0 00 0 00 47 02 23 67 0 00 PO45910 2000 CN-HEBEI URBAN ENVIRONMENT 15000 0 00 0 00 0 00 140 03 28 28 0 00 PO49436 2000 CN-CHONGQING URBAN ENVIRONMENT 200 00 0 00 0 00 0 00 188 33 27 23 0 00 PO64730 2000 Yangtze Dike Strengthening Project 210 00 0 00 0 00 0 00 174 64 87 64 0 00 PO58843 2000 Guangxi Highway 200 00 0 00 0 00 0 00 152 68 35 18 0 00 P058844 2000 3rd Henan Prov Hwy 15000 0 00 0 00 0 00 11833 23 33 0 00 PO46051 1999 CN-HIGHER EDUC REFORM 20 00 50 00 0 00 0 00 31 11 29 39 0 00 PO38121 1999 RENEWABLE ENERGY DEVELOPMENT 0 00 0 00 35 00 0 00 26 73 15 66 0 00 PO46564 1999 Gansu &Inner Mongolia Poverty Reduction 60 00 10000 0 00 0 00 94 88 39 35 -0 12 PO41268 1999 Nat Hwy4/Hubei-Hunan 350 00 0 00 0 00 0 00 181 48 70 23 0 00 PO43933 1999 CN-SICHUAN URBAN ENVIRONMENT 150 00 2 00 0 00 0 00 97 66 39 53 6 83 P042299 1999 TEC COOP CREDIT IV 10 00 35 00 0 00 0 00 39 17 -4 46 0 00 PO41890 1999 Liaoning Urban Transport 15000 0 00 0 00 0 00 74 15 53 95 0 00 P036953 1999 CN-HEALTH IX 1000 50 00 0 00 0 00 42 73 1260 0 00 PO51856 1999 ACCOUNTING REFORM & DEVELOPMENT 27 40 5 60 0 00 0 00 21 29 20 79 0 00 PO51888 1999 GUANZHONG IRRIGATION 80 00 20 00 0 00 0 00 60 47 29 85 0 00 P058308 1999 CN-PENSION REFORM PJT 0 00 5 00 0 00 0 00 2 53 2 65 0 00 PO56216 1999 LOESS PLATEAU II 100 00 50 00 0 00 0 00 79 95 53 51 0 00 PO57352 1999 CN-RURAL WATER SUPPLY IV 16 00 30 00 0 00 0 00 31 04 14 19 -2 38 PO46829 1999 RENEWABLE ENERGY DEVELOPMENT 10000 0 00 0 00 0 00 12 87 92 37 0 00 PO60270 1999 CN-ENTERPRISE REFORM LN 0 00 5 00 0 00 0 00 3 97 5 76 1 67 PO49665 1999 ANNING VALLEY AG DEV 90 00 30 00 0 00 0 00 49 77 11 40 0 00 P050036 1999 Anhui Provincial Hwy 200 00 0 00 0 00 0 00 96 60 34 45 0 00 PO51705 1999 Fujian I1 Highway 200 00 0 00 0 00 0 00 12849 91 99 0 00 PO03653 1999 Container Transport 71 00 0 00 0 00 3 13 21 95 24 83 0 00 PO03566 1998 CN-BASIC HEALTH (HLTH8) 0 00 85 00 0 00 0 00 39 81 21 95 0 00 PO03606 1998 ENERGY CONSERVATION 63 00 0 00 22 00 0 00 46 97 14 13 0 00 PO03614 1998 Guangzhou City Transport 200 00 0 00 0 00 0 00 129 54 126 25 0 00 PO03619 1998 2nd Inland Waterways 12300 0 00 0 00 0 00 76 42 62 42 0 00 PO51736 1998 E. CHINNJIANGSU PWR 250 00 0 00 0 00 86 00 73 31 159 31 3 21 P045788 1998 Tri-Provincial Hwy 230 00 0 00 0 00 0 00 71 54 38 74 0 00 PO49700 1998 IAIL-2 300 00 0 00 0 00 0 00 31 51 122 0 00 P046563 1998 TARlM BASIN il 90 00 60 00 0 00 2 67 67 53 53 41 0 00 PO46952 1998 FOREST. DEV. POOR AR 10000 100 00 0 00 0 00 74 23 -38 36 45 64 PO40185 1998 CN-SHANDONG ENVIRONMENT 95 00 0 00 0 00 0 00 29 69 24 14 0 00 PO35698 1998 HUNAN POWER DEVELOP. 300 00 0 00 0 00 100 00 17367 237 67 25 61 PO36414 1998 CN-GUANGXI URBAN ENVIRONMENT 72 00 20 00 0 00 0 00 78 15 51 73 1 79 - 75 -  Difference between expected and actual Original Amount in US$ Millions disbursements' Project ID tY Purpose Purpose IBRD IDA GEF Cancel. isb. Undisb. Orig Frm Rev'd P036949 1998 Nat Hwy3-Hubei 250 00 0 00 0 00 0 00 47 29 -0 21 0 00 PO03539 1998 SUSTAINABLE COASTAL RESOURCES DEV 100 00 0 00 0 00 2 31 49 48 34 29 0 00 P037859 1998 EGY CONSERVATION PRO 0 00 0 00 22 00 0 00 5 07 21 79 0 00 PO03591 1998 STATE FARMS COMMERCI 150 00 0 00 0 00 80 91 8 45 83 54 2 80 PO38988 1997 HEILONGJIANG ADP 120 00 0 00 0 00 0 00 21 46 20 11 0 00 PO03637 1997 CN-NATIONAL RURAL WATER Ill 0 00 70 00 0 00 0 00 9 65 10 02 8 84 PO03635 1997 CN-VOC ED REFORMPROJ 1000 20 00 0 00 0 00 0 20 133 0 00 P003590 1997 QINBA MOUNTAINS POVERTY REDUCTION 30 00 15000 0 00 0 00 53 29 56 72 0 00 P035693 1997 FUEL EFFICIENT IND 0 00 0 00 32 80 0 00 9 18 32 81 0 00 PO36405 1997 WANJlAZHAl WATER TRA 400 00 0 00 0 00 75 00 50 80 124 30 -4 20 P044485 1997 SHANGHAI WAIGAOQIAO 400 00 0 00 0 00 0 00 18207 110 12 26 61 P03695 2 1997 CN-BASIC ED IV 0 00 85 00 0 00 0 00 2 26 5 04 0 00 PO03650 1997 TUOKETUO POWERilNNER 400 00 0 00 0 00 102 50 68 54 147 90 -1570 PO34081 1997 XIAOLANGDI MULTI II 430 00 0 00 0 00 0 00 92 63 123 49 120 19 P003654 1997 Nat Hwy2iHunan-Guangdong 400 00 0 00 0 00 0 00 99 72 99 72 0 00 PO03643 1997 Xinliang Hwy II 300 00 0 00 0 00 60 00 11 71 71 71 6 71 P003649 1996 SHANXI POVERTY ALLEV 0 00 10000 0 00 0 00 6 57 15 89 0 00 P003602 1996 C N - H U E URBAN ENVIRONMENT 125 00 25 00 0 00 28 32 52 04 82 49 41 35 PO34618 1996 CN-LABOR MARKET DEV 10 00 20 00 0 00 0 00 6 17 8 40 0 00 PO03599 1996 CN-YUNNAN ENVIRONMENT PROJECT 12500 25 00 0 00 0 00 82 43 77 65 50 09 P003594 1996 GANSU HEXI CORRIDOR 60 00 90 00 0 00 0 00 91 99 65 52 0 00 PO03589 1996 CN-DISEASE PREVENTION (HLTH7) 0 00 10000 0 00 0 00 1531 25 40 0 00 PO03646 1996 CN-CHONGQING IND POL CT 17000 0 00 0 00 16482 2 72 167 54 2 72 P00364 8 1996 CN-SHANGHAI SEWERAGE II 250 00 0 00 0 00 0 00 91 13 91 13 10 14 PO40513 1996 2nd Henan Prov Hwy 21000 0 00 0 00 0 00 60 63 60 63 5 64 P003638 1996 SEEDS SECTOR COMMER 80 00 20 00 0 00 9 40 15 03 25 48 0 00 PO36947 1995 SICHUAN TRANSMISSION 270 00 0 00 0 00 95 00 12 17 107 17 0 95 PO03571 1995 RAILWAYS VI1 400 00 0 00 0 00 109 00 73 10 181 10 30 12 PO03585 1995 SHENYANG IND REFORM 175 00 0 00 0 00 0 00 41 52 41 52 0 00 PO03596 1995 YANGTZE BASIN WATER 10000 11000 0 00 0 00 2 67 5 20 5 20 P003647 1995 China Economic Law Reform -LEGEA 0 00 1000 0 00 0 00 4 20 4 86 0 00 PO03639 1995 SOUTHWEST POVERTY REDUCTION PROJECT 47 50 200 00 0 00 0 00 11 87 36 43 36 43 PO03642 1995 ZHEJIANG POWER DEVT 400 00 0 00 0 00 0 00 58 95 64 57 0 00 PO03603 1995 CN-ENTERPRISE HOUSING & SOC SEC REF 275 00 75 00 0 00 20 00 10040 11888 65 85 PO03598 1995 CN-LIAONING ENVIRONMENT 11000 0 00 0 00 0 00 12 25 1225 8 18 P003600 1995 CN-TECHNOLOGY DEVELOPMENT 200 00 0 00 0 00 3 02 13 81 16 83 0 00 PO03641 1994 YANGZHOU THERMAL POW 350 00 0 00 0 00 11 50 3 32 14 82 2 17 PO03586 1994 CN-SHANGHAI ENVIRONMENT PROJECT 16000 0 00 0 00 0 00 24 94 24 94 12 94 PO03540 1994 LOESS PLATEAU 0 00 15000 0 00 0 00 1 83 0 03 0 00 P003644 1994 XIAOLANGDI RESETTLEMENT 0 00 11000 0 00 0 00 2 04 0 15 -1 51 PO03595 1994 RED SOILS II AREA DEVELOPMENT PROJECT 0 00 15000 0 00 0 00 5 85 119 116 PO03609 1994 SICHUAN GAS DEV & CONSERVATION 255 00 0 00 1000 0 00 51 71 51 71 0 00 P003626 1994 Fujian Prov Highway 140 00 0 00 0 00 18 11 12 29 30 40 30 38 P003404 1994 SICHUAN GAS DEV CON 0 00 0 00 10 00 0 00 0 02 0 78 0 00 PO03473 1993 CN-ZHEJIANG MULTlClTlES DEVELOPMENT 0 00 11000 0 00 0 00 1 06 1 25 -3 01 PO03592 1993 REF INST'L & PREINV 0 00 50 00 0 00 0 00 2 65 3 14 2 72 PO03627 1993 GRAIN DISTRIBUTION P 325 00 16500 0 00 0 00 29 63 30 46 20 46 P003632 1993 CN-ENVIRONMENT TECH ASS 0 00 50 00 0 00 0 00 3 93 4 63 4 31 Total 14099 80 2532 60 156 80 971 68 667327 417857 55379 - 76 -  CHINA STATEMENT OF IFC’s UllU Jun 30 - 2002 In Millions U S Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1997 Orient Finance 9.52 0.00 0.00 11.90 9.52 0.00 0.00 11.90 1997/00 PTP Holdings 0.00 0.03 0.00 0.00 0.00 0.03 0.00 0.00 1997 PTF’ Hubei 11.72 0.00 0.00 23.29 11.72 0.00 0.00 23.29 1996 Pacific Ports 0.00 2.54 0.00 0.00 0.00 2.54 0.00 0.00 2001 Peak Pacific 0.00 0.00 25.00 0.00 0.00 0.00 0.00 0.00 1998 Rabobank SHFC 0.90 0.00 0.00 0.90 0.90 0.00 0.00 0.90 2000 SSIF 0.00 6.00 0.00 0.00 0.00 0.45 0.00 0.00 1998 Shanghai Krupp 30.00 0.00 0.00 68.80 19.74 0.00 0.00 45.26 1999 Shanxi 17.87 0.00 0.00 0.00 15.32 0.00 0.00 0.00 1993 Shenzhen PCCP 3.76 0.99 0.00 0.00 3.76 0.99 0.00 0.00 2001 Sino-Forest 25.00 0.00 0.00 0.00 20.00 0.00 0.00 0.00 1995 Suzhou PVC 0.00 2.48 0.00 0.00 0.00 2.48 0.00 0.00 1998 WIT 5.00 0.00 0.00 5.00 0.00 0.00 0.00 0.00 2000 Wanjie Hospital 15.00 0.00 0.00 0.00 15.00 0.00 0.00 0.00 1996 Weihai Weidongri 1.92 0.00 0.00 0.00 1.92 0.00 0.00 0.00 1993 Y antai Cement 11.13 1.95 0.00 0.00 11.13 1.95 0.00 0.00 1998 Zhen Jing 0.00 2.00 0.00 0.00 0.00 2.00 0.00 0.00 2002 Advantage 0.00 0.25 0.00 0.00 0.00 0.00 0.00 0.00 1999/00/02 Bank of Shanghai 0.00 24.67 0.00 0.00 0.00 24.67 0.00 0.00 1996 Beijing Hormel 2.50 0.50 0.00 1.65 2.50 0.50 0.00 1.65 1998/00 CIG Holdings PLC 0.00 3.00 0.00 0.00 0.00 0.00 0.00 0.00 2002 CPEF 0.00 20.00 0.00 0.00 0.00 0.00 0.00 0.00 1996 Caltex Ocean 18.53 0.00 0.00 28.64 18.53 0.00 0.00 28.64 1998 Chengdu Huarong 7.40 3.20 0.00 8.60 3.70 3.20 0.00 4.30 1998 Chengxin-IBCA 0.00 0.36 0.00 0.00 0.00 0.36 0.00 0.00 1987/92/94 China Bicycles 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1994 China Walden Mgt 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 1994 China Walden Ven 0.00 0.21 0.00 0.00 0.00 0.21 0.00 0.00 1994 Dalian Glass 0.00 2.40 0.00 0.00 0.00 2.40 0.00 0.00 1999 Dujiangyan 25.59 0.00 0.00 30.00 16.11 0.00 0.00 18.89 1995 Dupont Suzhou 12.46 4.15 0.00 10.40 12.46 4.15 0.00 10.40 1994 Dynamic Fund 0.00 9.75 0.00 0.00 0.00 8.09 0.00 0.00 1999 Hansom 0.00 16.10 0.00 0.00 0.00 16.10 0.00 0.00 2002 Huarong AMC 31.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2002 IEC 20.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1996 Jingyang 32.50 0.00 0.00 69.23 32.50 0.00 0.00 69.23 1998 Leshan Scana 6.10 1.35 0.00 0.00 4.50 1.35 0.00 0.00 2001 Maanshan Carbon 9.00 2.00 0.00 0.00 0.00 0.00 0.00 0.00 2002 NCCB 0.00 26.58 0.00 0.00 0.00 26.46 0.00 0.00 1996 Nanjing K u d o 6.82 3.81 0.00 19.38 6.82 3.81 0.00 19.38 2001 New China L i f e 0.00 30.70 0.00 0.00 0.00 23.32 0.00 0.00 1995 Newbridge Inv. 0.00 1.95 0.00 0.00 0.00 1.95 0.00 0.00 Total Portfolio: 304.22 166.98 25.00 277.79 206.13 127.02 0.00 233.84 Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic - 77 -  2002 Darong 10.00 0.00 1s o 8.00 2002 Narada Battery 6.60 0.00 0.00 0.00 v2002 2002 Zhong Chen Sino Mining 25.00 0.00 0.00 1s o 32.00 0.00 5.00 0.00 0.00 5.00 2002 Shuang Deng 12.50 0.00 2.80 0.00 2002 KHIT 0.00 0.00 3.00 0.00 2002 SML 0.00 0.00 6.00 0.00 1996 Jingyang 4.00 0.00 0.00 0.00 1998 PTP Hubei BLINC 0.00 0.00 0.00 1.50 2000 CIG Zhapu 6.00 5.00 0.00 0.00 2000 Meijing 9.00 0.00 0.00 7.30 2000 CIMIC Tile 15.00 5.00 0.00 15.00 2001 Daning Coal 0.00 0.00 2.00 15.00 200 1 AACI 0.00 0.00 2.00 0.00 2001 Minsheng 0.00 23.50 0.00 0.00 2002 Huarong AMC 15.00 0.00 3.00 0.00 2002 IEC 0.00 5.00 0.00 0.00 Total Pending Commitment: 108.10 52.00 21.80 83.80 - 78 -  Annex 10: Country at a Glance CHINA: Basic Education in Western Areas Project East Lower- POVERW and SOCIAL Asia & middle- China Pacific income Development diamond' 2001 Population, mid-year (millions) 1,271.9 1,826 2,164 Life expectancy - GNI per capita (Atlas method, US$) 890 900 1,240 I T GNi (Atlas method, US$ billions) 1,129.3 1,649 2,677 Average annual growth, 1995-01 Population (%) 0.9 1.1 1.o 1 .o 1.3 1.2 GNi Gross Labor force ("A) primary Most recent estimate (latest year available, 1995-01) capita enrollment Poverty PA of population below nationalpoverty line) 5 . .. Urban population (% of total population) 38 37 46 Life expectancy at birth (years) 71 69 69 1 infant mortality (per 1,000 live births) 32 36 33 Child malnutrition (% of children under 5) 10 12 11 Access to improved water source Access to an improved water source ("A of population) 75 74 80 Illiteracy PA of population age 1%) 15 14 15 Gross primary enrollment (% of school-age population) 107 107 107 China Male 106 106 107 Lower-middle-incomegroup Female 109 108 107 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1981 1991 2000 2001 GDP (US$ billions) 228.3 402.6 1,077.5 1,150.1 Gross domestic investmenVGDP Exports of goods and servicedGDP 32.5 8.6 34.8 19.4 36.1 25.9 37.9 25.8 1 Trade Gross domestic savingdGDP 32.9 38.1 38.8 40.3 Gross national savingsiGDP 32.8 38.5 38.0 39.4 1 Current account balanceiGDP 0.4 3.8 1.9 1.5 Domestic interest payments/GDP 0.2 0.7 0.6 0.6 ~ + Investment Total debVGDP 2.5 15.0 13.9 14.8 Total debt servicelexports 6.9 10.1 7.4 6.8 I 1 Present value of debVGDP 12.5 11.7 Present value of debffexports 46.0 43.5 1 Indebtedness 1981-91 1991-01 2000 2001 2001-05 I (average annual growth) GDP 10.0 9.7 8.0 7.3 6.9 a China GDP per capita 8.4 8.6 7.1 6.6 6.1 Lower-middle-incomegroup Exports of goods and services 12 1 83 306 -n 5 - 77 STRUCTURE of the ECONOMY 1981 1991 2000 2001 Growth of investment and GDP ( O b ) (% of GDP) Agriculture 31.8 24.5 15.9 15.2 industry 46.4 42.1 50.9 51.1 Manufacturing 38.5 32.7 34.5 35.4 'I Services 21.8 33.4 33.2 33.6 Private consumption 96 97 98 99 00 01 General government consumption 14.5 13.1 13.1 13.7 GDI -O"GDP Imports of goods and services 8.2 16.1 23.2 23.4 1981-91 1991-01 2000 2001 Growth of exports and imports ( O b ) (average annual growth) L O T Agriculture 5.2 4.0 2.4 2.8 Industry 11.4 12.6 9.6 8.7 Manufacturing 11.1 11.6 9.1 9.0 Services 12.6 8.7 7.8 7.4 Private consumption 8.3 8.6 8.7 6.2 General government consumption 9.9 8.5 12.2 11.5 Gross domestic investment 10.4 10.3 4.2 12.8 I ' * Exports *Imports ImDortS of aoods and sewices 9.6 6.4 24.5 10.8 Note' 2001 data are preliminary estimates 'The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. - 79 -  China PRICES and GOVERNMENT FINANCE +OQ4 - Domestic prices ph change) Consumer prices 25.7 3.4 0.4 0.7 Implicit GDP defiator 2.3 6.7 0.9 0.0 Government finance ph of GDP. includes current grants) Current revenue 24.2 16.9 15.3 17.2 Current budget balance .. 2.3 0.6 1.o Overall surpius/deficit 0.8 -1.1 -3.6 -3.2 I TRADE 1981 1991 2000 2001 Export and import levels (US$ mill.) (US$ millions) Total exports (fob) 22,007 71,843 249,210 266,155 300,000 Food 2,924 7,226 12,282 12,780 Fuel 5,228 4,754 7,851 8,420 200 000 Manufactures 11,759 55,698 223,752 239,800 Total imports (cif) 22,015 63,791 225,097 243,610 Food 3,622 2,799 4,758 4,980 100 000 Fuel and energy 83 2,113 20,637 17,490 I Capital goods 5,866 19,601 91,934 107,040 0 95 95 97 95 99 00 01 Export price index (1995=700) 16 51 67 65 import price index (1995=100) 13 49 75 73 Expods Imports Terms of trade (1995=100) 118 103 90 90 BALANCE of PAYMENTS 1981 1991 2000 2001 Current account balance to GDP (%) (US$ millions) Exports of goods and services 24,410 78,909 279,561 299,410 imports of goods and services 23,426 65,339 250,688 271,324 I5 T Resource balance 984 13,570 28,873 28,086 Net income -124 840 -14,666 -19,173 Net current transfers .. 830 6,311 8,492 Current account balance 860 15,240 20,519 17,405 Financing items (net) .. -4,149 -9,971 29,920 Changes in net reserves ,. -11,091 -10,548 -47,325 I 95 95 97 98 99 00 01 Memo: Reserves including gold (US$ millions) .. 48,154 171,753 219,970 Conversion rate (DEC, iocai/US$) 2.1 5.4 8.3 8.3 EXTERNAL DEBT and RESOURCE FLOWS fUS$ millions) 1981 1991 2000 2001 I Composition of 2001 debt (US$ mill.) Total debt ouistanding and disbursed 5,798 60,259 149,800 170,000 IBRD IDA 0 0 3,494 3,672 11,118 8,771 11,479 8,550 I G. 17,662 A: 11,479 L B 8.550 Total debt service 1,744 8,305 21,728 20,900 iBRD 0 357 1,291 1,716 IDA 0 23 131 164 D 23,217 Composition of net resource flows Official grants 19 406 147 Official creditors 506 2,044 1,927 Private creditors 89 2,493 -2,302 I 27,510 Foreign direct investment 0 4,366 42,096 47,052 Portfolio equity 0 565 7,814 2,404 World Bank program Commitments 196 2,622 1,536 1,230 'A.IBRD E - Bilateral Disbursements 0 1,280 1,907 1,947 B - IDA D -Other multilateral . F Private Principal repayments 0 131 644 999 C-IMF G - Short-term Net flows 0 1,149 1,263 948 Interest payments 0 250 778 881 Net transfers 0 899 485 67 - 80 -  Additional Annex 11 : Ethnic Minorities Education Strategy CHINA: Basic Education in Western Areas Project Ethnic Minorities Education Strategy of Basic Education in Western Areas Project (Summary) M I N I S T R Y OF E D U C A T I O N I-- Introduction Project goals and Target beneficiaries The objective o f this project i s to improve access to and completion o f affordable, and quality basic education for poor children in Sichuan, Gansu, Yunnan Provinces, Ningxia Hui and Guangxi Zhuang Autonomous Regions. This project w i l l support and accelerate the achievement o f the Chinese Government’s Nine-Year Compulsory Education (NYCE) goals and w i l l benefit 38 million people in 112 project counties of five project provinces, among which 6,520,000 are ethnic minorities, accounting for 17.15 percent of the total population. - II Legal and Institutional Framework Overarching Framework China’s legal framework for the protection and development of officially designated minority nationalities consists of: 0 The Constitution o f the People’s Republic of China 0 L a w on Autonomy in Minority Nationality Regions 0 Administration Regulation in Minority Nationality Townships 0 L a w on Village Committee Organization The Constitution of the People’s Republic of China, provides that all minorities in the People’s Republic o f China are equal and that the State supports all minority nationalities in their economic and cultural development according to their needs and characteristics. The L a w on Autonomy in Minority Nationality Regions stipulates that all minority nationalities have the freedom to use and develop their own oral and written language, maintain or reform their traditions and customs and provides for the establishment of minority nationality autonomous areas including autonomy in management of local affairs in science, education and culture. The Administration Regulation in Minority Nationality Townships stipulates that the township autonomous administration, in consideration of local needs and minority nationality characteristics, govern according relevant laws and regulations. The L a w on Village Committee Organization also used stipulations regarding the organization of villager committees in minority nationality villages. -81 -  III- Relevant Existing Programs Targeting Ethnic Minorities . . Govemment policy on minority education can be seen in a number o f systemic foci: expanding access through: construction, expansion and renovation o f township/village schools, boarding schools, teaching points and multi-grade schools; mandating universal 6-year education for all minority regions or an elementary graduate per household as a minimum requirement for remote and scattered rural inhabitation; development of a Center Elementary School for every township in each minority county and a Center Secondary School and Literacy and Vocational Training Center for each minority county; improving the relevance and cost-effectiveness o f educational inputs b y improving teacher selection and preparation in pedagogy, bilingual education, curriculum revision and development of bilingual materials for minorities; and increasing the resource base b y preferential policies of increased national and provincial resource allocation targeted at these poor minority regions through specific programs to reduce repetition and drop-out rates. Proiect Provinces: The provision and management of compulsory education in China undertakes the practice that the local authorities take the responsibility, with suitable division of labor at different levels. (The five provinces and autonomous regions have detailed education policies which can be found in the provincial Project Implementation Plans (PIPS) and the full version o f the Ethnic Minorities Education Strategy which i s in project files) IV - The Main Issues of Basic Education in Ethnic Minority Areas Project Social Assessment and Economic Analysis Activities The project covers 112 counties in five provinces and regions. The stakeholders of the project w i l l reach about 38 million, and the minority population i s 6.52 million, or 17.15 percent of the total population. The data show that there are 22 minorities within the 98 counties in the 5 project provinces and regions including Hui minority in Ningxia, Hui and Tibetan minorities in Gansu, Hui, Tibetan, Yi, Qiang, Lisu, Miao, Dai, Buyi minorities in Sichuan, Yi, Zhuang, Miao, Yao, Dong, Mulao, Maonan, Shui, Gelao minorities in Guangxi, Tibetan, Yi, Miao, Lisu, Dai, Buyi, Zhuang, Bai, Hani, Jinuo, Jingbo, Nasi, Wa, Lahu minorities in Yunnan. Large concentrations of minority peoples in the project are in Ningxia (1.9 million Hui nationality), Guangxi (2.2 million Zhuang nationality) and Yunnan (0.9 million Yi nationality). During the preparation period, financial and economic analysis and social assessments were conducted in the five project provinces and regions in order to guarantee the stakeholders of project-covered poor and ethnic minority areas to widely participate in the project design and make the project proposal to be in line with the reality of the covered areas. Briefly, the results are as follows; The Financial and Economic Analvsis. Data for the economic and financial analysis was gathered from more than 2700 individuals, 560 of whom were students. Approximately 56 percent o f the respondents in the household surveys were ethnic minorities. 4200 individuals were surveyed and consulted for - 82 - social assessment and economic and financial investigation and o f which, approximately 3000 or 7 1.4 percent were ethnic minorities. The Social Assessment Process. During the two stages of social assessment, the project design was described to and information was gathered through interview and questionnaire from county administrators, school headmasters, teachers, pupils and parents at the primary and junior secondary levels and community members in a number of sample villages in two minority counties in each of the five participating project provinces and regions. Preliminary data indicate that o f the more than 1500 people from whom information was systematically gathered and whose opinions were analyzed and fed into the provincial project design process, 82.5 percent o f the interviewees were ethnic minorities. The social assessment found that enrollment rates of both primary schools and junior middle schools in the counties visited b y the consultants were much lower and the real dropout rates for both levels much higher than provincial government statistics. I t i s difficult to gauge statistically the magnitude of the problems of the ethnic minorities in the respect of education because enrollment and completion rates reported b y the Ministry o f Education are not categorized b y ethnic nationalities. The Social assessment found a number of other issues which affected basic education delivery in the project provinces. Tibetan and Y i communities, often found on high mountains where the natural environment and living conditions are very harsh, have very low income levels, and cannot easily afford to send their children to school; Customary practices of different ethnic groups are responsible for dropouts in some cases. For instance, some parents think "if financial resources o f the family are not enough for both to go to school, then boys should go". Such values put girls at a disadvantaged place in terms of education; The nomadic life and the preference for constant moves of some ethnic groups make it impossible for children to study at a set place. This can lead to dropouts; Some students drop out o f the school because they live too far away from their schools. Values of parents are also an important factor. As the state no longer allocates college graduates jobs, some parents do not think there i s still a need to send their children to school. Suggestions which came from the Social Assessment and the Economic and Financial Analysis can be listed as follows: 0 promote the training of ethnic minority teachers, female teachers and duike (temporary) teachers; strengthen and adopt effective methods on training of bilingual teachers; increase more local content in the textbooks and supplementary materials; seek better ways to strengthen the communication and linkages between the schools and the local communities; seek the best balance between closing teaching points and improving educational quality in rural areas; and increase the government allocation to student assistance and improve i t s efficiency. I t i s satisfactory that the suggestions of the experts and the design of the project are completely consistent. In order to enhance the pertinence and actual effectiveness of the project, however, five project provinces have made further updating about the provincial project implementation plans - 83 -  (PIPS) in the light of the suggestions. (See details in the final provincial PIPS.) Access to Basic Education Services The vast bulk o f China’s minority populations live in the poorest parts o f China. Whether in the mountains areas o f western Sichuan or the semi-arid hills of southern Ningxia, levels o f economic development are lower than in Han predominated areas. Both government revenues, collected at the township and then sent to the county level, and household incomes are low and therefore investment, b y the local government or the individual family i s also low. A major reason for l o w enrollments among minorities i s the heavy household burden presented b y education costs. This i s aggravated b y the larger families which minority families generally have and include both primary and secondary school students. Education costs tend to rise geometrically as the pupil makes the transition from primary to lower secondary and senior secondary school. The combination of low county level resources and poverty at the family level, with limited intergovernmental transfers at the provincial or national level, have generally left the stock o f education inputs (construction, qualified teachers, books and teaching equipment, etc.) in minority areas at a relatively l o w level. Since the majority of people of ethnic minorities are working in agriculture or herding, which i s labor-intensive, the demand for labor, either at home or on farms i s high. This has several effects on child schooling: 0 the opportunity costs of sending a child to school are high, thus there i s a tendency not to enroll, or enroll late, to be absent for school, and to drop out; children who work long hours on the farm or in the home have less time to study; and pupils are more likely tired after work, thus influencing their learning quality, either in class or in doing home work; and 0 girls are more likely to bear more responsibility for family welfare than boys, compounding the already l o w demand for girls education among some minority groups (most notably the Hui). 0 Poverty alleviation, job creation, even direct economic support are important ways to help families reduce their dependence on child labor. But social programs are equally important to increase the perception of parents on the importance o f education for their children. Educational Attainment of the Adult Population and its Impact on Minority Family Aspirationsfor the Education of Their Children The social assessment points out that the average level of educational attainment o f the adult population among many ethnic minorities i s much lower than the level of the Han population, often within the same village or townships. This i s particularly true for the mothers in minority families with high illiteracy rates and very low primary school completion rates. The intergenerational effects of low levels of parental education are well documented. They include susceptibility to poverty which keep children out of school; a weak perception b y some parents and community leaders o f the need for education and i t s relevance; a shortage o f role models for children, and a less supportive home environment for learning (e.g. a lack of books, shortage of parents able to help with homework, etc.) A number of provinces have large programs of parental education on the economic and social benefits of schooling, the necessity under law of sending children to school, and the types of support that a pupil needs in staying in school, doing homework, and completing grade levels. Impact of Poverty, Fertility, Health, and Nutritional Levels on Demand for Education Poverty rates in China are highest among ethnic minorities. The impact of poverty on demand for education i s rather well - 84 - documented. Poor households in most cases are unable to meet basic education expenses (particularly for large families), while at the same time have more needs to keep their children at home to work as less time at a critical age for learning. Children from poor households are also more likely to fail grades. Poor health and nutrition are strongly associated with poor economic status o f the family. They inhibit learning, regular class attendance, and thus lead to high drop-out and low achievement. Solutions to these problems consist of poverty alleviation programs aimed specifically at areas of ethnic minorities; more investment (development and education); financial and/or material support programs for children andor their families; inclusion o f material programs in food insecure areas; expanded programs o f fees exemptions and improved design those programs (including funding from government rather than the school budget); improved and expanded safety nets, and targeted scholarships. Curriculum China uses the same national curriculum in all parts o f the country while allowing for a certain amount o f local content. This local content often consists of stories o f local heroes, local economics and social development and literature. Review of textual material used in the Tibetan language schools o f western Sichuan indicate that there are stories taken from both historical and contemporary literature. The social assessment also points out that one o f the current problems with the delivery o f the curriculum i s that even in schools where the medium of instruction i s the local language, the teachers are often Mandarin only speakers and therefore the quality o f the teaching i s not good. Even with the translation o f textbooks into minority languages, an option in most of the large minority areas, which have a written language, the teacher’s inability to teach in the local language i s an impediment to good learning. Language of Instruction Teachers in minority areas of China often raise the problem of language as one of the major limitation to their teaching quality. Non-bilingual teachers have problems communicating with their pupils and many children fall behind in their education due to language problems. School head teachers are keen to have a greater number of localized teachers in their schools who can speak the minority language. So far however the number of bilingual teachers i s small and sometimes such teachers have to be shared between schools. Some schools have coped with this b y using bilingual teachers for the lower grades or b y training Chinese teachers in local languages. Bilingual teachers tend to explain lessons simultaneously in minority languages and in Chinese. Boarding Schools and Other Options for Provision o f Services in Sparsely Populated Areas The often rugged topography of the minority inhabited areas such as the sparsely populated mountainous regions and the badly desiccated pastoral lands severely limit the access to education. In response, provincial governments have established boarding schools in these areas. The building of these boarding schools i s often associated with the rationalization or closing o f the distribution of “teaching points” or incomplete primary schools (schools which generally offer grades one to three in a multi-grade environment, most likely taught by a single teacher and often with severely limited training.) As weak as these teaching points are, they are often the only nearby school in the very poorest villages and rural areas. In that these are often the areas where the poorest minority families live, closing the teaching points and incomplete primary schools, often at the primary level, raises questions of cost and distance from home for small children, especially young girls. However, i t must be pointed out that boarding schools must provide good learning environment and adequate protection to children, - a5 - ensuring their security. .. . , A S VI LLdLLU - I lb g conditions in rnese boarding schools nave been critical, but they are nevertheless appealing to some local education officials as a means o f achieving the universal primary education goals o f the Government. M o r e consideration needs to be given to alternative means o f organizing schools that would allow children to remain in their homes, for example, multi-grade schools or alternate year intakes in small schools. - V Actions for the Ethnic Minority Beneficiaries in the Project The project w i l l contribute t o reducing poverty and increasing educational outcomes in five provinces and regions in western China. Expanding basic education for poor minority children w i l l bring additional opportunities for development and growth. Education provides opportunities for personal and community empowerment and thus greater participation in the social, economic development sectors. Literacy in both the national language and mother tongue allows f o r entry into the national economy while at the same time maintaining links w i t h culture. Learning f r o m the national curriculum which preserves space f o r including local materials allows greater participation in economic and civic l i f e while at the same time taking substance f r o m the minority culture. These guides are imbedded in China’s current policies o n minority education and are recognized and supported in this project. School Development Planning (SDP), which i s developed by the project schools, w i l l be piloted in several counties in each province. I t supports community participation in the planning and implementation o f school development plans. Strengthened community participation strategies w i l l be particularly important in areas where the populations o f ethnic monitories w i l l be so small so as to make i t virtually impossible to design project component directly f o r these small numbers. This strategy o f increased participation o f the ethnic groups in the areas where their populations are small and they are l i v i n g in areas where there are other larger numbers o f minorities i s particularly important because it w i l l enable very small national minority groups to have a voice in the government’s delivery o f educational services. The project w i l l support the training o f bilingual teachers, especially drawn f r o m minority populations, in National M i n o r i t y Institutes and teacher training institutes in Sichuan, Yunnan and Guangxi. This w i l l be particularly important for the sizable minority groups in the project whose mother tongue i s nothing Mandarin but Yi, Yao, Zang, and M i a 0 ethnic minorities. In addition, the project w i l l enhance the training o f the ethnic minority teachers, female teachers and daike teachers through the explicit preferred principle. The project w i l l n o t directly support student assistance programs. This i s because that the Chinese Government has carried out many programs and invested a large amount o f money to provide assistance to students in the project counties. Assisting poor students i s the responsibility o f the governments at a l l levels. These programs are consistent with the project activities and the investment goals. During preparation i t was agreed that government resources f r o m the national, the provincial and county levels w i l l be used to finance student assistance programs in a l l five provinces and regions. Furthermore, MOE has required a l l project provinces and regions to strengthen the support t o the student assistance. This strategy o f depending o n the availability o f government resources, some o f which are the result o f intergovernmental transfers f r o m the central government, i s a strong indication o f the synergies developed during project preparation between what the government can and does provide for basic education in poor rural areas and what the limited resources o f a Bank/DFID loan can provide. In addition, in order t o enhance the effectiveness o f the policies o n student assistance implemented by the - 86 - government and then to set up a long-term student assistance system, the Department o f Finance of M O E w i l l conducted the nation-wide research to establish national student assistance system and mechanism €or- 3 . Til, - SL rhe system w i l l proviae strong guarantee for the access of poor students to schools and at the same time have profound influences on realizing the objective of universalizing nine-year compulsory education in China. The project w i l l directly attempt to deal with other causes o f l o w enrollment and completion rates in poor areas. The project w i l l supports Yunnan province to conduct the research on the issues concerning teaching points and boarding schools, exploring other effective education modes which can not only replace boarding schools but also improve the quality o f education. The project w i l l not support the construction o f new boarding primary schools nor w i l l the project funds be used to promote the capacity o f existing boarding schools to compensate for the closure o f teaching points. In order to increase the access of the poor children to junior middle school, one o f the emphasis o f the project i s to build and expand the scale o f the junior middle schools. In order to explore the effective education modes in the rural areas and ensure that the children in the remote rural areas can gain access to compulsory education, the Department of Finance of M O E w i l l carry out rural education reform pilot activities in ten project counties of five provinces and regions. At the same time, the Department of Finance w i l l also conduct the research on the school mapping in rural and ethnic minority areas in five project provinces and regions or even in a larger area by using the grants from DFID. The research results w i l l provide basis for the reform o f schooling modes in rural and ethnic minority areas and help M O E to formulate the policies on the investment to compulsory education in these areas. Based on the findings and recommendations of the social assessment process, this EMES report has organically combined the activities in the project design and the activities which w i l l be conducted in the implementation period (See details in Annex 1). The first draft of the report has been disclosed in the project provinces/regions and all project counties. Furthermore, the table of contents and annex 1 (Matrix) has been translated into Tibetan and made public in the seven Tibetan concentration counties. The goals of this strategy are, through the project, to: T o ensure that project resources are used to benefit disadvantaged children, including the poor, ethnic minorities and girls; 0 To increase the capacity to monitor the educational progress of all children in the project; promote wider distribution of material appropriate for minority children; and 0 To explore a model of rural schooling that i s appropriate to the needs of the local population and cost-effectiveness of the government to deliver through the pilot activities and national research programs o f the project. Benefits beyond the project area w i l l be realized to the extent that the project succeeds in exploring a model o f rural schooling that i s accepted by the national and provincial ministries o f education for wider application.  Additional Annex 12 : Ethnic Minorities Education Strategy Matrix CHINA: Basic Education in Western Areas Project Matrix of Specific Actions to be Taken roject Components h u e s Identified in Specific Action When Implementing .e Social Assessment Responsibility bmponent 1: iproving School silities hool construction iproving access to i) Poorer villages and i) Overall construction oca1 education d upgrading imary education townships will be targeted investment plan finalized ureaus b-component as priority areas for during project appraisal and upgrading and construction annual review o f yearly of schools (expected to be construction plans in the of disproportionate benefit annual plans. Appraisal to minority children reviews confirm that provinces because they tend to live in and counties have used criteria townships and villages agreed and stated in mission outside of the county seats.)aide memories o f December 2001 and April 2002 which included: (a) to specifically address major problems in achieving Six Year Compulsory Education (SYCE) as a priority and (b) recognition should be given to F ncluded in Current the extra challenges some roject Design areas may face in providing education for minorities (e.g. Icost, remoteness, etc.). nproving- access to IInfrastructure investment IInfrastructure investment will .oca1education inior secondary will take place in junior take place in junior secondary ureaus iucation secondary schools in schools in minority areas, minority areas, including including construction o f new construction of new schoolsschools in minority counties in minority counties with with no lower secondary no lower secondary provision. provision. Included in Current Included in Current Project Project Design Design 'rimary school close N o decrease within project Reflected in the project design ,oca1education I minority children townships of schools within proposal. ureaus 2.5 km distance from home or 20 minutes walk. (Yunnan Province has a provincial limit of 3.0 km distance from home.) I t ha: been agreed that project funds will not be used for new boarding schools at t hc primary level and that - 88 -  s. In areas where a rd 6-class model e, alternatives w i l l be OR by project effectiveness [OE and provincial iucation departments DFID grant w i l l support national level school d and rationalize( urther discussion on study ocal, Provincial and uring appraisal. TOR for rational education tudy to be agreed with MOE uthorities. efore project effectiveness. anism. This research ion. MOE has rovided in annual reports (quipmentand 'rovincial equipment and ,oca1education laterials naterials standards specified i ureaus - 89 - b-component equipment in minority schools covered by the final provincial primary and junior project should be consistent implementation plans . . secondary schools withMOF, or prnv"l standard criteria (for all level of schools). Local and provincial ducation authorities id junior secondary minority girls and boys. :hook During the project period, the M O E Department o f Minority Education will continue their development of minority education texts to correspond to new national curriculum. Publication and distributior of the new texts will be the responsibility of the Provinces. Included in Currenl Project Design ) Provincial educatioi b I1i.a) Identification of supplementary reading I uthorities with China ii)Promote wider Jxperts Panel rovided end o f year on distribution o f materials appropriate for minority ii.b) Provincial-level pl; children. MOE plans that supplementary material; in each province two repared in conjunction counties will be selected to :hina Experts Panel by conduct Comprehensive fid-term review; Reform Pilot Activities and ii) M O E with Local in these counties, if ducation authorities c ii.c) Pilot activities to b appropriate, the education conducted after project authorities will develop effectiveness. locally relevant material for the local content part o f the - I -+ curriculum uring Implementation Component 2: Strengthening anagement and ) Minority community i)The pilot activities to ) provincial and Planning iarticipation in ounty authorities Sub-component mproving access to irimary education. - 90 -  problems and promote i t s development. School Development planning facilitates the involvement o f all members o f the community including the poorest, both non-minority and minority parents, women, and children who are given a say in decision Lack of family and making. ii)Methods described in final )County Education implementation ureaus irticipation has had a lans. roject Design :gative impact on irolment and op-out rate in hook School Development lanning. During Implementation Ionitoring Improving capacity i)Monitoring indicators i)collected as part o f overall lational, provincial ib-component Imonitor and have been agreed with the project indicators (baseline, nd county offices Jaluate M O E and include boys, mid-term and completion) girls and minorities. (see PAD Annex One and National PIP for items agreed.) .esearch Team with ii)Impact Assessment ational and provincial Strategy funded by DFID art DFID-funded study to uthorities grant i s to assess project impact and then strengthen government officials’ roject capacity to undertake monitoring and evaluation. During Implementation nstitutional Strengthen the capacity o f Training for county-level rational and provincia Ievelopment local departments o f education bureau chiefs and ducation authorities ub-component education to implement overseas study tour “Strategy education policies which and Planning for Educational include minority education Developments” (Carried out policies. Training module during implementation) implemented through national level training activities. During Implementation Ihinese Experts issure adequate Chinese Experts Panel to Final National implementatioi Iinistry o f Education, ’anel (CEP) ttention to minority include experts in minority plan to describe CEP ‘oreign Investment an( -91 - b-component education issues and gender issues in TOR b y I a n Office education. roject appraisal. During Implem entation mponent 3: Sategies to Improve tality of Teaching d Learning acher training i)poor quality and i)Promote the increase i.a) Plans for training of rovincial education b-component limited coverage o f (including duike ithorities bilingual teachers in have been set out in primary schools. rovincial implementation lans. ii)low enrollment o f minority girls in primary and junior secondary schools. ii)Promote increased teacher in primary and junior secondary schools. i. b b) Provincial-level targets to training for female minority e prepared for annual reports and mid-term review. Included in Current Project Design iii)poor quality o f iii)Improve quality o f temporary (duike) daike teachers through teachers in primary training programs. schools. I Included in Current Project Design :hinese Experts Panel ,v) TOR for Chinese Experts EEP) and Provincial iv)Quality of training anel w i l l include this task. uthorities programs to be assessed and improved. I Included in Current I kroject Design esearch for !Lack o f resources to hesearch for Education (Activities for the use of DFID Linistry of Education. ducation Reform do adequate research Reform activity will, with grant support were agreed Iepartment o f Financc on local minority DFID grant support, during appraisal and TORS foi lfficials and national issues. finance research in areas student assistance and school nd provincial researc which have been identified mapping w i l l be reviewed and inits during the consultation agreed by project effectivenes process to be o f priority in the project minority counties. This include (a) student assistance mechanism (better targetin and more efficient delivery), and (b) school mapping. Included in Current Project Design I darting with project launch dinistry o f Education Rural Education Reform Iepartment o f Financi - 92 -  fficials and national nd provincial research m9 county) w i l l carry out comprehensive reform implementation. These activity w i l l try to find appropriate and effective ways to improve delivery o f education services in a1 areas. Pilot activities decided in the first si: hs after project launcf les o f pilot activities y include such areas as efforts to increase girls’ enrollment and completion o f primary and junior development and use of local content o f curricula, and development and use o teaching materials in minority languages. - 93 -