ISLAMIC DEVELOPMENT BANKBANQUE ISLAMIQUE DE DEVELOPPEMENT

أفضل ً مستقبال نبني ً معاTOGETHER WE BUILD A BETTER FUTURE

ENSEMBLE NOUS CONSTRUISONS UN AVENIR MEILLEUR

اجتماع مجلس المديرين التنفيذيين

MEETING OF THE BOARD

OFEXECUTIVE DIRECTORS

REUNION DU CONSEILDES DIRECTEURS EXECUTIFS

( )

SUBJECT : REPORT AND RECOMMENDATIONS OF THE PRESIDENT, IDB ON THE STRENGTHENING THE EMPLOYABILITY OF YOUTH DURING TUNISIA’S TRANSITIONG TO A GREEN ECONOMY.

Country: Republic of TunisiaSector: EducationDepartment: Human Development Department (HDE)Date (Hijri): Rajab 1434H Date (Georgian): May 2013

TABLE OF CONTENTS

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The RRP is a succinct version of the Project Appraisal Document (PAD). The details about the Country, Sector, IDB Operations, and Project’s Technical and Financial Justifications are given in the PAD.

NO. TABLE OF CONTENTS Page No.

IDB PROJECT INFORMATION SHEET iii

LIST OF ACRONYMS/ABBREVIATIONS iv

EXECUTIVE SUMMARY v

I BACKGROUND 1

III THE SECTOR 2

IV RATIONALE, OBJECTIVES AND KEY RESULTS 4

V THE PROJECT 3

VI PROJECT COST ESTIMATE & FINANCING PLAN 8

VII IMPLEMENTATION ARRANGEMENTS 8

VIII RISKS AND SUSTAINABILITY 10

IX PROJECT JUSTIFICATION 11

X RECOMMENDATIONS 12

List of Annexes

1. Results Based Logical Framework 2. Socio-Economic and Financial Indicators of Tunisia3. IDB Financing for Tunisia4. Map of Tunisia and Project Location 5. Project Risks and Mitigation Measures

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LIST OF ACRONYMS AND ABBREVIATIONS

BED Board of Executive DirectorsBTS Tunisian Bank for SolidarityCHDPRS Comprehensive Human Development & Poverty Reduction StrategyEDU Education DivisionE4e Education For EmploymentGDP Gross Domestic ProductGER Gross Enrolment RateGJP Green Jobs ProgrammeGOED Group Operations Evaluation DepartmentGOT Government of TunisiaHDE Human Development DepartmentHDI Human Development IndexICIEC Islamic Corporation for the Insurance of Investment and Export Credit ICD Islamic Corporation for the Development of the Private SectorID Islamic DinarIDB Islamic Development BankIFC International Finance CorporationIRTI Islamic Research & Training InstituteISI Implementation Support AgencyITFC Islamic Trade Finance CorporationMDGs Millennium Development GoalsMENA Middle East & North AfricaMVTE Ministry of Vocational Training and EmploymentNER Net Enrolment RateNGOs Non-Governmental OrganizationsOCR Ordinary Capital ResourcesOECD Organization for Economic Development OPSD Operations Policy and Service DepartmentPMU Project Management UnitTND Tunisian DinarUNOPS United Nations Office for Project Services: WB World Bank

CURRENCY EQUIVALENTS(As of April 2013)

Currency Unit: Currency Equivalent Tunisian Dinar = TND 1 US$ = TND 1.59

Islamic Dinar = ID 1 US$ = ID 1.52

Project Team Members: 1. Br Abdi M Abdullahi, Education Specialist, EDU, HDE, IDB2. Br Said Kechida, Senior Advisor, Middle East & North Africa Partnership

OECD3. Br Abdelkafi Rami, Country Manager, CTY, IDB

Peer Reviewers (1):(2):

Br Mohamed Ahmed Zubair, Lead Economist, CTY IDBBr Ahmed Musbah Elsadig, Country Manager, CTY, IDD

Project Team Leader: Br Abdi M Abdullahi, Education SpecialistSector Division Manager: Dr Mohamed Abderrahmane BeddiSector Director: Dr Daouda Malle.

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Date: May 2013

IDB PROJECT INFORMATION SHEET

TUNISIASTRENGTHENING THE EMPLOYABILITY OF YOUTH DURING TUNISIA’S

TRANSITION TO A GREEN ECONOMY.Beneficiary (Country/Organization): The Government of Tunisia

Executing/Implementing Agency: Ministry of Vocational and Training For Employment

Project Title: Strengthening the Employability of Youth During Tunisia’s Transition to a Green Economy.

Sector/Sub-Sector: Vocational Education

Total Project Cost: US$ 6.47 Million

TFs Contribution: US$ 4.42 million

Co-financiers Contribution 1.75 million

Government Contribution: US$ 0.30 million

Proposed IDB Financing:

Modes(s) Amount (US$, Million)

Repayment Period (Years)

Gestation/Grace Period (Years)

Service Fee/ Mark-up

- - - - -

- - - - -

Co-financers & Terms of Co-financing:

Co-financier(s) Amount (US$, Million)

Maturity (Years)

Grace/Gestation Period (Years)

Service Fee/ Mark-up

Solidarity Bank of Tunisia

1.75 - - -

Government 0.300 - - -

Implementation Period (Years) from the First Date of Disbursement 4 years

Key Milestones:

Approval 15th May 2013

Signature 30th June 2013

Effectiveness 31st August 2013

Planned First Date of Disbursement 1st September 2013

Planned Last Date of Disbursement 31st December 2013

Planned Date of Completion 31st December 2016

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EXECUTIVE SUMMARYStrengthening the Employability of Youth During Tunisia’s Transition to a Green Economy.

1) Rationale for Country and Sector Support:

The project is in line with the objectives of the newly adopted Social Pact and the National Vocational Training Strategy of the Government of Tunisia, which aims at supporting the employment policies and increasing the work return. The proposed project responds to the recommendation of the National Dialogue on Employment on exploring emerging sectors such as green jobs, which represent an untapped source of jobs for youth, by anticipating needs for qualifications and encouraging entrepreneurship. The project is aligned with the IDB 1440H vision, Comprehensive Human Development and Poverty Reduction Strategy (CHDPRS) and the Bank Medium Term Business Strategy of the Bank ( 2013 – 2015).

The project will be financed by the Middle East and North Africa Transition Fund. It is in line with the overall objective of the Transition Fund, in particular, it aims at: (ii) identifying key measures to deliver high-quality vocational education and training (VET) that is well connected and responsive to the needs of the labour market. Such programmes can also provide alternative pathways to boost completion of upper-secondary education; (ii) addressing the main factors hindering basic skills, notably among the most socially disadvantaged Tunisian youth, many of whom live in backward regions; and (iii) supporting the transition towards new sectors and new jobs, particularly Green Jobs.

The proposed project is complementary to broader IDB engagement and financing package in Tunisia. It is also in line with the strategies defined in the e4e Action Plan for Tunisia endorsed by the stakeholders in May 2012 under the joint IDB and International Finance Corporation (IFC) Education for Employment (e4e) initiative”. Furthermore, the proposed project will complement the recently IDB approved Youth Employment Support Program.

2) Project Objectives and Key Results:

The main objective of this project is to support the GOT in its endeavour to design and implement a comprehensive approach for improving the employability of Tunisian young generations. The programme specifically will support the creation of an enabling environment, conducive to the formation of the right skills mix needed to integrate Tunisian youth into the formal labour market, while at the same time accessing more stable and better quality jobs. At completion, the key expected results of the project include: (i) pilot programme is implemented in one region; (ii) 50 cleanTech companies created; (iii) capacity of the ministry of vocational and training for employment enhanced.

3) Project Description:

The project components include (a) policy options for investing in youth through a comprehensive review of youth employment issues and challenges that will be carried out by the OECD; (b) developing and implementing Green Jobs Platform through youth professional development in the field of Green Jobs Market including integrated training, eco experience; coaching; mentoring; and green business creation and financial support; and (c)

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Capacity Development of local Partner through training of employability, employment and integration advisors.

4) Project Cost Estimate and Financing Plan: in US$ Million

No Description Transition Fund BTS* GOT TotalAmount % Amount % Amount %I Invest in Youth: Tunisia Report 0.52 100.00 - - - - 0.52

II

Developing and implementing the Green Jobs Platform - - - - - - -

Youth Professional Development in the field Green Jobs Market 1.80 100.00 - - - - 1.80

Green Business Creation 0.90 90.00 - - 0.200 20.00 1.10Financial Support - - 1.75 100.00 - - 1.75

III Capacity Development 1.10 90.90 - - 0.100 9.10 1.20

IV

Budget Breakdown of Indirect Costs Requested (USD). - - - - - - -

For grant preparation, administration and implementation support

0.100 - - - - - 0.10

 Grand Total 4.42 68.31 1.75 27.05 0.300 4.64 6.47* Tunisian Bank of Solidarity

5) Implementation Arrangements:

The Ministry of Vocational Training and Employment (MVTE) of the GOT will be responsible for the overall coordination of the project. IDB will also be Implementation Support Agency (ISA) to oversee the implementation, procurement and judiciary aspects of the project The OECD and GOT are responsible for the implementation for the investing in youth component. The Green jobs platform component will be managed by a steering committee consisting of representatives of the MVTE, BTS and the Cleantech enterprises. The project is expected to take 4 years to complete starting from the date of its approval.

6) Project Justification:

The unemployment rate in Tunisia remained above 14% between 1999 and 2009, peaking at 44% among those aged between 15 and 29 years and young graduates. This situation raises questions about the employability of job seekers and the quality and orientation of education. Employment in the informal sector is still high, and the informal economy represents 30% of Tunisia’s GDP. One key policy challenge to set Tunisia on a path of sustainable growth will be strengthening the human capital basis and the skills of its population, starting from the young generations. Against this background, the focus of this joint proposal to the MENA TF is on two complementary aspects of Tunisia’s broader efforts to shit to a greener economy and to enhance the employability of the youth.

7) Recommendations:

To approve the appointment of IDB as the Implementation Support Agency (ISA) for the preparation and implementation of the Strengthening the Employability of Youth During Tunisia’s Transition to a Green Economy.

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REPORT AND RECOMMENDATIONS OF THE PRESIDENT OF THE IDB ON THE PROPOSED STRENGTHENING THE EMPLOYABILITY OF YOUTH DURING TUNISIA’S TRANSITIONG TO A GREEN ECONOMY PROJECT.

I. BACKGROUND

1.The MENA TF is under Deauville Partnership with Arab Countries in Transition, which is an international effort launched by the G-8 at the Leaders Meeting in Deauville, France in 2011. The MENA TF is unique grant financing facility designed to complement existing bilateral and multilateral programs to support the Governments in the region in carrying out necessary economic and social reforms. IDB is part of the steering committee of the Fund for project’s processing and approval.

2.The project will be co-financed by the MENA TF and the Tunisian Bank of Solidarity (BTS). The portion financed by the BTS will be executed by the Government of Tunisia (GOT) and will consist in extending microfinance schemes to support youth entrepreneurs to setup CleanTech start-ups. The portion financed by the MENA TF will be jointly executed by the GOT and the OECD. The portion executed by the OECD will serve to provide GOT with a set of policy options to: (i) address skills mismatches; (ii) encourage transition from precarious and low quality jobs to stable ones; (iii) reinforce youth employability in formal activities; (iv) support the transition towards a “green economy” model, leading to the emergence of new employment opportunities, respectful of the need to safeguard the environment.

3.The portion executed by the GOT under the MENA TF will consist in the launch of an innovative pilot project aiming at increasing employability of young graduate job seekers. The GOT will lead the implementation of this project portion, in particular through local experts, increased staff and continuous feedback.

4.The IsDB will be the Implementation Support Agency (ISA) responsible for the oversight and management of the funds used for the country-executed portion.

5.The RRP was prepared based on a project proposal submitted to the Bank by the report prepared by the IDB and OECD and the findings of an country dialogue mission to Tunisia 10th – 14th April 2013.

Lessons Learnt

6.Lessons learned from previous IDB involvement in the education sector in Tunisia include: (i) undertaking of studies prior to embarking on new projects, (ii) full involvement of the executing agency in the design of the project is critical to ensure appropriation and ownership (iii) close coordination and harmonization of activities with IDB enhances efficiency of utilization of resources, (iv) existence of a stable and effective project management team is crucial to successful project implementation; (v) monitoring and evaluation are critical to managing risks and enhancing achievement of results; (vi) extensive supervision of the project activities by the Bank is crucial to successful project implementation and (v) reinforcement of the preventive and curative maintenance mechanism as guarantee for durability of the infrastructure.

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II. THE SECTOR

7.The problem of poor labor market outcomes for the young is not new to Tunisia and has generally been recognized as one of the key factors leading up to the Arab Spring, which originated in the country. The unemployment rate in Tunisia remained above 14% between 1999 and 2009, peaking at 44% among those aged between 15 and 29 years and young graduates. This situation raises questions about the employability of job seekers and the quality and orientation of education. Employment in the informal sector is still high, and the informal economy represents 30% of Tunisia’s GDP. 46% of young people prefer to work for the public administration, which already employs many people.

8.To this day, youth employment remains one of the key policy challenges in the country’s transition. It is important to note that the country is experiencing the highest rates of unemployment ever and more so for the educated youth. This situation is further complicated by the return of an estimated 100,000 Tunisian workers from neighboring Libya. In 2010, there were 500,000 unemployed young people: 157,000 post graduates (31%), 139,000 graduates (27%) and 204,000 high school leavers (42%). The breakdown for university graduates and post graduates is as follows: 20% science; 16% economic, management and law; 15% humanities, and 7% medicine, pharmacy and engineering.

9.At the macro level, the Tunisian economy is not generating enough jobs to absorb the high number of university graduates (an average of 70 000 expected to graduate every year until 2016) who enter the labor market annually. With nearly 400 000 students, higher education in Tunisia faces great challenges in terms of the system’s quality, its relevance and the degree to which it is adapted to the needs of the economy and society. At present, Tunisia lacks modern, well-designed vocational education/apprenticeship/internship programmes, which could facilitate school-to-work transitions, provide more attractive alternatives to university education and provide a steady supply of middle-level and technical skills. Attention should therefore be paid to the policies that Tunisia could implement to create productive and sustainable jobs through a comprehensive approach which tackles supply issues (education, vocational training, etc.), demand issues (macro policy, structure of the economy, sector mix, etc.), and institutional issues (policy development and coordination, implementation, monitoring and evaluation, and social dialogue) to be developed over the short, medium, and long term.

10. Strong and sustained economic growth is obviously a first requirement to foster the transition to a “new” Tunisia. It serves to create jobs, while at the same time generating the self-worth and motivations that individuals need to trust both institutions and government. One key policy challenge to set Tunisia on a path of sustainable growth will be strengthening the human capital basis and the skills of its population, starting from the young generations. While this is a challenge for all countries, it is even more compelling for Tunisia, a country which, in the comparison with other MENA neighbours, appears relatively weakly endowed with natural resources. However, making the best utilisation of Tunisian human resources and enhancing the employability of youth should not be seen as a priority in itself. It is an essential vehicle if Tunisia wants to jumpstart into new, more productive and diversified economic opportunities, such as the activities linked to the expansion of the green economy.

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11. Against this background, the focus of this joint proposal to the MENA Transition Fund is on two complementary aspects of Tunisia’s broader efforts to shit to a greener economy. One is on the general labour market and education policies that need to be in place in order to allow Tunisia become increasingly adaptable to the needs of flourishing new productive sectors. This will include a focussed attention to the institutions that will encourage the absorption of Tunisian youth labour force by the greener sectors. The other is a pilot project on green jobs – The extensive proposal of a Green Jobs Platform.

III. RATIONALE, OBJECTIVES AND KEY RESULTS

12. Rationale for Country and Sector Support: The proposed project is in line with the objectives of the newly adopted Social Pact and the National Vocational Training Strategy of the Government of Tunisia (GOT), which aims at supporting the employment policies and increasing the work return. The project responds to the recommendation of the National Dialogue on Employment on exploring emerging sectors such as green jobs, which represent an untapped source of jobs for youth, by anticipating needs for qualifications and encouraging entrepreneurship.

13. The Project Objectives: The main objective of this project is to support the GOT in its endeavour to design and implement a comprehensive approach for improving the employability of Tunisian young generations. The programme specifically will support the creation of an enabling environment, conducive to the formation of the right skills mix needed to integrate Tunisian youth into the formal labour market, while at the same time accessing more stable and better quality jobs.

14. Key Results: By 2019, At completion, the key expected results of the project include: (i) current characteristics of Tunisian youth labour market assessed and related main policy challenges identified; (ii) policy options for reinforcing youth labour markets and the employability of youth identified, including key elements for a youth action plan; (iii) policy options for transition to green jobs proposed; (iv) 50 cleanTech companies created; (v) capacity of the ministry of vocational and training for employment enhanced; (vi) 300 direct and indirect jobs are created through incubators; and (vii) 50 MVTE staff and qualified unemployed trained. The results based logical framework of the project is attached as Annex-1.

IV. THE PROJECT

15. Project Location. The project locations will be decided during the implementation based on the following criteria; (i) the availability private sector, economy and green jobs to absorb the graduates (ii) the unemployment rate; (iii) regional disparities; (iv) priorities of the GOT. The Map of Tunisia and project locations are attached as Annex-4.

Project Components

Component 1: Policy Options for Investing in Youth.

16. This OECD report will aim at providing GOT with a set of policy options to: (i) address skills mismatches; (ii) encourage transition from precarious and low quality jobs to stable

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ones; (iii) reinforce youth employability in formal activities; (iv) support the transition towards a “green economy” model, leading to the emergence of new employment opportunities, respectful of the need to safeguard the environment. Pending consultations with the MVTE and other relevant Tunisian authorities and stakeholders about the precise scope and coverage, the OECD report would tackle the following policy areas:

17. Overview of youth labour market challenges including: (i) an assessment of the situation of youth in the labour market, with a particular attention on, unskilled youth and poorer youth, including from disadvantaged regions as well as on young women; (ii) a look at the adequacy of the education and training system in equipping young people with relevant skills (skills shortages and mismatches, including the regional dimension of skills mismatches; (iii) a look at the factors hindering school-to-work transitions, including a strong dependence on public sector jobs; and (iv) a discussion of the size and characteristics of informal employment in Tunisia.

18. The role of education and training policies with a particular focus on Vocational Education and Training (VET). Policy options for: (i) developing and implementing an expanded set of high quality and relevant VET programmes; (ii) strengthening the role of apprenticeship programmes for low-skilled youth, drawing from the practical country experiences with implementing successful school-to-work pathways; and (iii) skills upgrading, with particular attention to raising the productivity of informal workers as a means to enhance their opportunities for moving to formal jobs.

19. The role of labour market institutions that affect the demand for labour. Policy options for: (i) reducing the segmentation of the labour market between regular workers -- typically prime-age workers with permanent contracts, often employed by the public sector -- and non-regular workers -- typically vulnerable youth working in more precarious and low quality jobs; (ii) using the minimum wage as a vehicle to enhance youth employability (for example, lessons from country experiences with sub-minimum wages); options for reviewing the burden of social security contributions on non-wage labour costs; and (iii) addressing discriminatory practices resulting in “unreasonable” differences in wages and/or benefits between workers performing similar jobs.

20. The role of active labour market policies and the social welfare system in reinforcing employability in the formal sector. Policy options for: (i) improving the social welfare system through cost-effective instruments that encourage the transition of youth workers from the informal to the formal sector and their access to more stable jobs; (ii) strengthening the role of the Public Employment Services and improving their coordination with job creation schemes and training; and (iii) creating tax and benefits policies that reinforce youth work incentives, including through the introduction of a system of earned income tax credits, the design of wage subsidies schemes and cash transfer schemes; supporting young job seekers without creating benefits dependency.

21. A focus on green jobs: (i) a look at the expected characteristics of Tunisia’s economic

transition. As Tunisia shifts to a greener economic model, certain business activities will start declining; other will supply the same outputs using greener production processes; at the same time, other and completely new activities will be created; (ii) the supportive role in facilitating this transition of policy reforms in the labour market, education and training

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areas; and (iii) examples of what other countries are doing to face similar challenges and adjustment needs.

22. The OECD report will be supported by an extensive use of international indicators, as a mean to put the case of Tunisia in international context.

Component 2: Developing and implementing the Green Jobs Platform

23. This component builds on the results of a detailed analysis of the country’s economic and environmental policy as well as on extensive interviews with various stakeholders, including young unemployed graduates associations, NGOs, public and private sector organisations. This component will be implemented in a pilot governorate selected by the MTVE. It aims at improving the employability of young graduates in different sectors of the green economy and is built around three main subcomponents. The overall project foresees interventions that require an established management team to direct the project and provide the required monitoring and backstopping to ensure outputs with the quality expected to achieve the results under each subcomponent. These descriptions of subcomponents focus on the purpose and results forecasted:

24. Subcomponent 2.1: Youth Professional Development in the field of Green Jobs Market: Enrolled young unemployed graduates will get up to four weeks of training combining theoretical knowledge and practical hand on experience/operational proficiency in the field of “green jobs”. They will be provided with the necessary support, monitoring, supervision and backstopping by local and international experts in professional integration and individual trainings before, during and after their conversion to the green economy sector. These initiatives, developed following the preparation of personal projects, match the professional ambitions of the beneficiaries to find suitable, lucrative and sustainable jobs, which are fully in line with the country’s green growth agenda. The subcomponent comprises:

- Integrated Training : planned on the basis of individual training programmes, as well as in the context of interactive group workshops with eco-experience experts and mentors, this training aims at developing the know-how, interpersonal skills, job search techniques and key knowledge concerning the green economy. Specific training courses will include: (i) technical skills such as business plan development, marketing, financial planning, management and project development, preparation of budgets; (ii) Interpersonal skills such as addressing audiences, negotiation skills, stress management, teamwork, project approach, group facilitation, active listening techniques; (iii) job search techniques such as CV preparation, job interviews, social networking, negotiation of wages; (iv) and specific courses on green economy and sustainable development to provide beneficiaries with an overview on the political, socioeconomic development in a transition to a green economy and the opportunities arising for employment and entrepreneurship in Tunisia.

- The Eco Experience : aims at developing practical skills in a green business with a future growth potential. It provides an appropriate way to deal with the lack of practical experience for new graduates. The Eco-experience also seeks to strengthen employment-generating projects in the area of green economy. The

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Eco-experience will take several forms: (i) Induction training to green jobs, which are conventional trainings tailored to the needs of the beneficiary with the aim of gaining a practical green job experience; (ii) Subsidized Eco-jobs, which represent an adaptation of the PC50 guideline to the eco-experience, including through revising the legal framework and securing additional public funding; (iii) Eco-solidarity jobs, which is an adaptation of the solidarity jobs guidance (Contrat Emploi de solidarité) to the regional and local promotion of green jobs; (iv) International internships and training courses in Europe in the area of the green economy and sustainable development for 6 to 12 months. The platform proposes to negotiate an exchange programme with the United States and employers in Europe and Africa.

- Coaching and mentoring : Each beneficiary from green jobs platform is advised, supported, and oriented by several actors: employability advisors, supervisors, mentors, trainers, integration advisors and employment advisors.

- Participation in conferences and debates : At least two conferences will be held to share testimonies related to green jobs and green economy. Lecturers are practitioners as well as potential employers. These conferences will enable beneficiaries to expand their professional network and to get critical information for their projects as well as for paid jobs seeking.

25. Subcomponent 2.2. Green Business Creation: This component aims at providing on job training to the enrolled group of unemployed youth graduates to create their “Cleantech companies”. Local and international experts will coach the selected entrepreneurs throughout the process of business creation and start up. A series of instruments will be made available to facilitate the launch of the selected “Cleantech projects” such as financial and technical assistance, guarantee funds and incubation to facilitate proper development, and other active measures related to the establishment of green enterprises. This subcomponent comprises:

- Technical Assistance : International experts will be recruited to help the MVTE to …Series of instruments will be at the disposal to resolve the main obstacles expected:

- Enterprise creation assistance: An advisor is assigned to every entrepreneur. S/He advises, supports, guides the beneficiaries throughout the whole process of enterprises creation. S/He works closely with the experts from different key areas in the implementation of enterprises. The advisor possesses a global knowledge of the Green Economy and business opportunity, legal framework as well as the support measures for the creation of enterprises;

- Technical advice: In line with the specificities of each company, the advisor in enterprise creation may call for local and international experts in different technical areas, such as communication, finance, commercial law and others, established by the Green Job Platform.

- Business Intelligence: This tool will help identify and disseminate information on business opportunities to the beneficiaries .The Information will be disseminated to beneficiaries through various means: web, information sessions, mails and will be available for the advisors in creation of green enterprises.

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- Marketing advice: A marketing advisor will be assigned to a group of entrepreneurs. S/He plays a key role in the creation of instruments to facilitate the entrepreneurs’ sales efforts. The marketing advisor handles the creation of the identity required in the market: graphic, logo, the sale concept, brochures, and web page, the use of social networks and others. The marketing advisor supports the entrepreneurs in their sales effort and s/he is responsible for the promotion of the image of the platform at the regional level.

- Incubation : Series of instruments will be made available to beneficiaries, such as: (i) shared collective enterprise: a legal entity designated in carrying “Green jobs start-up“ during the start-up phase. This instrument enables entrepreneurs to delay the creation of the legal personality until the viability of the company is provided. A partnership to import the expertise of this instrument will be considered; (ii) shared premises: a workplace will be put at the disposal of GJP candidates under request. All beneficiaries receive common services (secretary, telephone, web site, communication materials and others). Common Services will support the green enterprises to emphasize their presence and visibility in order to improve their credibility in the market.

26. Subcomponent 2.3: Financial support: The Project will provide financial support to youth entrepreneurs in form of micro finance schemes to set-up their own CleanTech Companies. It is expected that 50 start-up will be created each will be eligible to a financing amount of about US$ 35,000. This subcomponent will be financed by BTS.. The project will put in place a post financing monitoring and follow-up mechanism to ensure the success of the start-ups. Business Angels will also be mobilized to engage in early-stage risk financing and business coaching.

Component 3: Capacity Development of local Partners:

27. This component aims at building the capacities of the MTVE and BTS in the pilot governorate as well as the central level through trainings, personalized on-the–job backstopping and monitoring. Under this component, the project will use international experienced and qualified expertise to ensure the process of transfer of knowledge and knowhow while on-the-job and prepare follow-ups and backstopping for employability, employment and integration advisors. The component comprises:

- Training of Employability Advisors : to acquire a global knowledge of the various tools to foster the integration of the beneficiaries. They have to develop good knowledge of green jobs market, social security laws as well as of measures to promote employability. Employability Advisors are responsible for reaching concrete results for the improvement of beneficiaries’ employability. They enable the job seeker to acquire the necessary qualifications to be in line with the labour market needs and with the individual professional projects. They are the main interlocutor of the beneficiary along the process of the individual professional project implementation and have the responsibility of enabling the group of beneficiaries acquire capacities and knowledge. They are in charge of improving the beneficiaries’ employability within green jobs platform, including through assigning active measures and providing practical experience (Eco-trainings, Solidarity Eco-jobs, paid-green jobs).

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- Training of Employment Advisors : who are responsible for facilitating beneficiaries’ access to a paid job. They establish and manage a network of potential employers within the pilot governorate. They initiate and establish a monitoring mechanism for the green jobs market with its perspectives and opportunities. Their role is to bridge the gap between beneficiaries and potential employers. Employment advisors will work closely with employability advisors

- Training of Integration Advisors : which requires the assistance of experts from other countries who successfully developed a mechanism of personalized backstopping for professional integration. A decentralized cooperation mechanism with the Employment and Investment Agencies in Canada, France and Switzerland will be implemented. Agreements will be established between these countries and the specialized schools to train Tunisian Advisors. Moreover, foreign advisors will be recruited in Tunisia to train the future local advisors.

- Capacity Building for BTS: this would include Training of BTS staff in project design, evaluation and monitoring. The project will also assist BTS in upgrading and modernising its system of information.

V. PROJECT COST ESTIMATE AND FINANCING PLAN

28. The total cost of the project is estimated at US$ 6.37 million. It is proposed that MENA TF finance the project in amount of US$ 4.42 million – corresponding to 67.82% of the project cost. The GOT will also contribute US$0.30 million to the project cost. Tunisian Bank of Solidarity will finance US$ 1.75 million representing 27.47% of the project cost.

Table 1: Project Cost Estimate and Financing Plan In US$ Million

No Description

Transition Fund BTS* GOT TotalAmoun

t% Amoun

t% Amoun

t %

I Invest in Youth: Tunisia Report 0.52 100.00 - - - - 0.52

II

Developing and implementing the Green Jobs Platform - - - - - - -

Youth Professional Development in the field Green Jobs Market 1.80 100.0

0 - - - - 1.80

Green Business Creation 0.90 90.00 - - 0.200 20.00 1.10

Financial Support - - 1.75 100.00 - - 1.75

III Capacity Development 1.00 90.90 - - 0.100 9.10 1.10

IV

Budget Breakdown of Indirect Costs Requested (USD). - - - - - - -

For grant preparation, administration and implementation support

0.100 - - - - - 0.10

 Grand Total 4.32 67.82 1.75 27.47 0.300 4.71 6.37* Tunisian Bank of Solidarity

VI. IMPLEMENTATION ARRANGEMENTS

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Readiness for Implementation

29. The project has the support of the GOT and all the necessary arrangement for implementation have already been made. The project implementation team from IDB and OECD is constituted.

Implementation Arrangements

30. The Government of Tunisia: The Tunisian Government will be in charge of the overall coordination of the project. The Ministry of Vocational Training and Employment through its institutions, including the Agence Nationale pour l’Emploi et le Travail Indépendant (ANETI) as well as the regional employment offices will form a national project implementation team. The Green jobs platform project will be managed by a steering committee consisting of representatives of the Ministry of Vocational Training and Employment, Tunisian Bank of Solidarity, the union of associations of unemployed graduates, the Cleantech enterprises involved at the National level .e.g. chambers of commerce and the Junior Chamber International. It is expected that other members join core members of the national steering committee, if necessary, such as the Ministry of Tourism, Ministry of Higher Education, Ministry of Industry, Ministry of Agriculture and other public institutions involved in the Green Economy or in related areas. Other representatives the civil society and private sector will also be invited to join the Committee on an ad-hoc basis. The national steering committee for the Green Job Platform may decide to set up direct support units using these different members.

31. The Islamic Development Bank: The IDB has a long and rich experience in implementing development projects in Tunisia. The Bank portfolio in Tunisia is over US$ 1.2 billion in various sectors including education, skill development and micro-finance. The Bank has accumulated knowledge and expertise in project implementation and supervision which will help in implementing the present project. Mutual trust has been established between the country and the Bank and a strong relationship has been built over 40 years of partnership. After the revolution, the IDB has supported youth employment through Education for Employment Action Plan, Vocational Education and Training Project and Youth Employment Support program.

32. The Organization for Economic Cooperation and Development: The OECD brings its long-standing experience in labor market reforms, in capacity building and in knowledge dissemination. This experience can help the buy-in of reforms and their communication, through showing what has worked well and what has worked less well, or not worked at all, in other countries. The OECD developed a Policy toolbox that provides practical tools and examples to assist policymakers with identifying their current strengths and weaknesses and establish a strategy for youth based around five interlocking policy levers drawn from OECD experience, particularly from two recent major OECD studies, Learning for Jobs and Jobs for Youth.

33. The Tunisian Bank for Solidarity (BTS) is a universal bank specialised in financing micro and medium enterprises (SMEs) and providing micro credit. The BTS is a strong and financially viable institution with an annual lending volume of about TND 100 million (US$ 70 million) extended to more than 10,000 SMEs. The BTS has a nationwide network constituted of 25 branches. It can finance micro-projects with investment

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volumes up to TND 150.000 (about US$ 100.000) in all sectors and at all levels and particularly for university graduates. The BTS has built strategic partnerships with national and regional institutions involved in investment and self-employment promotion, including the Ministry of Vocational Training and Employment, micro credit NGOs and Business Centres in order to support micro-entrepreneurs to successfully launch their own projects and guarantee the highest possible loan recovery rate.

34. United Nations Office for Project Services: UNOPS (United Nations Office for Project Services) will also partner with the Ministry of Vocational Training and Employment (MVTE) in Tunisia for the implementation of the Green Jobs Platform. UNOPS is a UN organisation with a large and recognized experience in project management and implementation in different sectors related to economic recovery and in support to countries in transition. UNOPS has an important network of experts and organizations operating in the field of employment and green jobs, in addition UNOPS promotes the use of competent national expertise. The MVTE and UNOPS have signed an MOU related to the support for the Green Jobs Platform.

35. Private Sector: The project will build on the ongoing consultation process in the framework of the National Employment Strategy as well as the E4E action plan to engage with the Private Sector. The project will facilitate dialogue between private and public sector from the outset as this is an essential ingredient of a successful reform of the vocational training system. Workshops will be organized with private sector players and between public and private sector players for that purpose.

36. Parliament and Civil society: Members of the National Constituent Assembly and representatives of civil society (labor union, think tanks, unemployed associations, etc.) will be invited to contribute to the project as stakeholders in the ongoing dialogue on the implementation of the new social pact.

37. The International network of Green Jobs Platform: This Network gathers a large number of actors from the public sector, civil society and “Cleantech” enterprises in Europe. This international development network offers the advantage of bringing to operational activities a large number of actors, others than partners who have initiated these projects. The Tunisian Green Jobs Platform will take benefit from the ongoing dialogue with representatives of this network of partners as well as from the exchange of experience with other Green Jobs Platforms worldwide.

Implementation Schedule

38. The implementation period is expected to take five (4) years after the date of approval of the project.

Disbursement Procedures and Plan

39. Disbursements will be in accordance with IDB disbursement procedures. A special account will be opened in the Central Bank of Tunisia in line with IDB procedures and guidelines to expedite the project implementation.

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Procurement Arrangements

40. The procurement of goods, works and services will be carried out using IDB procurement guidelines.

VII. RISKS AND SUSTAINABILITY

41. Overall, the project risk is considered moderate. The potential risks associated with the project, the degree/level of the identified risks, and the proposed mitigation measures are provided in the Annex-5.

42. Sustainability: The Government of Tunisia is committed to support the education sector and key employment creation initiatives started to reduce youth unemployment. The project will support graduates through financial support to set up CleanTech companies to ensure the sustainability of the project. The proposed capacity building and extensive training that will be provided by the project to the relevant staff of the MVTE will also contribute to the sustainability of the project. The development of policy options for youth employment support and disseminations will enhance the institutional framework for vocational education sub sector and will create an enabling environment for effective skills development to improve the employability of the youth. Finally, the involvement of the private sector and strengthening partnership between them and the vocational education institutions is expected to significant enhance the employability of the graduates to access sustainable income.

VIII. PROJECT JUSTIFICATION

43. The problem of poor labor market outcomes for the young is not new to Tunisia and has generally been recognized as one of the key factors leading up to the Arab Spring, which originated in the country. The unemployment rate in Tunisia remained above 14% between 1999 and 2009, peaking at 44% among those aged between 15 and 29 years and young graduates. This situation raises questions about the employability of job seekers and the quality and orientation of education. Employment in the informal sector is still high, and the informal economy represents 30% of Tunisia’s GDP. 46% of young people prefer to work for the public administration, which already employs large numbers of people.

44. To this day, youth employment remains one of the key policy challenges in the country’s transition. It is important to note that the country is experiencing the highest rates of unemployment ever and more so for the educated youth. This situation is further complicated by the return of an estimated 100,000 Tunisian workers from neighboring Libya. In 2010, there were 500,000 unemployed young people: 157,000 post graduates (31%), 139,000 graduates (27%) and 204,000 high school leavers (42%). The breakdown for university graduates and post graduates is as follows: 20% science; 16% economic, management and law; 15% humanities, and 7% medicine, pharmacy and engineering. Against this background, the focus of this joint proposal to the MENA Transition Fund is on two complementary aspects of Tunisia’s broader efforts to shit to a greener economy.

45. The project is aligned with the IDB 1440H vision, Comprehensive Human Development and Poverty Reduction Strategy (CHDPRS) and the Bank Medium Term Business

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Strategy of the Bank ( 2013 – 2015). The project is in line with the following pillars of the Transition fund; (i) investment in sustainable growth; (ii) inclusive development and job creation; and (iii) enhanced economic governance and competitiveness.

IX. RECOMMENDATIONS

46. In light of the rationale and justifications provided in the above sections, I recommend to IDB endorses the request of the Government of Tunisia to act as the Implementation Support Agency (ISA) for the Strengthening the Employability of Youth During Tunisia’s Transition to a Green Economy.

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ANNEX-1Results Based Logical Framework

Project Development Objective (PDO):

PDO Level Results Indicators*Unit of

MeasureBaseline

Cumulative Target Values**Frequency

Data Source/Methodology

Responsibility for Data

Collection

Description (indicator definition

etc.)YR 1 YR 2 YR3 YR 4

Indicator One: OECD report assessing the broader policy framework for investing in youth, in particular to promote the employability of youth, through better labour market, education and training policies.

Legal and institutional reforms are adopted

0 0 1

YearlyMVTE / Reports

OECD in cooperation with MVTE and IsDB

Delivery of the OECD report.

Indicator Two: Enrolled beneficiaries are employed or have launched their own projects

Percentage 70% 5% 25% 25% 15% Yearly MVTE GJP Steering Committee + IsDB + UNOPS

Number of enrolled beneficiaries employed.

Indicator Three: Creating small and medium sized "Cleantech Companies”.

Number 45 0 20 20 5 Yearly MVTE GJP Steering Committee + IsDB + UNOPS

Number of small and medium "Cleantech Companies” created.

Indicator Four: Direct and indirect jobs generated by the “Cleantech Companies”

Number 300 0 100 150 50 Yearly MVTE GJP Steering Committee + IsDB + UNOPS

Number of jobs created by incubators.

INTERMEDIATE RESULTS

Intermediate Result (Component One): Comprehensive VT and Employment policy framework analysis

Intermediate Result indicator One: Co-ordination platform for monitoring VT and employment related policies

Inter-ministerial taskforce set up to co-ordinate inputs to policy review process

0 0 1 6 months Regular communication with task-force partnering in policy review process

Inter-ministerial taskforce led by MVTE + OECD + IsDB

Preparation of OECD questionnaire. The MFPE will be in charge of providing answers to the questionnaire, possibly consulting with other experts and officials from the relevant Tunisian authorities. Collection of responses from MFPE. Kick-off seminar back-to-back with OECD mission..

Intermediate Result indicator Two: Invest in Youth: Tunisia” Report completed

Analytic report

0 1 6 months Reports OECD, MFPE and IsDB teams attending two workshops (together with other experts)

OECD Report completed, published and disseminated. Publication of OECD report on policy Options for Investing in Youth will complete the mission of the OECD.

Intermediate Result (Component Two): Setting-up the Green Jobs PlatformIntermediate Result indicator Organization 0 1 1 1 1 6 months Workplan and GJP Steering GJP organization

1

One: Organization structure, pilot identified, staffing and skill requirements, including gender focus approach,

structure, pilot identified, staff skills, procedures defined, gender focus

Implementation set up; reports

Committee + IsDB + UNOPS

structure is defined; pilot identified, staff skill requirements are established including gender focus.

Intermediate Result indicator Two: youth professional preparation for the green markets’ jobs and its potential in Tunisia: approach, arrangements and material prepared

Approach including a combined set up of an integrated (academic and practical) training & eco-experience, coaching and mentoring arrangement in place.

0 1 1 1

10 months

Arrangements and integrated training pack, eco experience , coaching and mentoring programme prepared

GJP Steering Committee + IsDB + UNOPS& feedback from enrolled beneficiaries

Arrangements and integrated training pack are prepared, including eco- experience, coaching and mentoring programmes;

Intermediate Result indicator Three: Integrated Training sessions are organized as well as eco-experiences and coaching and mentoring programmes

# enrolled beneficiaries # external participants/experts sharing country experiences

0 0 30 30 30 10 months Reports

Experts &training staff & feedback from training participants

Number of beneficiaries trained, coached and mentored; contacts established with practitioners and other experts and network including at the international level

Intermediate Result indicator Four: Cleantech companies are created and established including its related technical and financial instruments

# of companies

0 0 20 20 5 10 months

MVTE statistics on creation of start-ups accompanied by the GJP.

GJP Steering Committee + IsDB + UNOPS

Technical and financial instruments established to facilitate Projects launched and established in the framework of the Green Jobs Platform

Intermediate Result indicator Five: Direct and Indirect Jobs are generated

# of jobs

0 0 50 150 100 10 months

MVTE statistics, Mission report of monitoring and evaluation and periodic reports to the Steering Committee.

GJP Steering Committee + IsDB + UNOPS

Number of direct and indirect jobs generated by the Cleantech companies + incubators

Intermediate Result indicator Six: Capacity Development provided for selected MVTE staff and qualified youth in the pilot governorate

#of staff in training,

internships and exchange programme

0 10 20 20 0 6 months Reports GJP Steering Committee

Number of staff and youth benefiting from training programs, including internships and exchange programmes with partner countries.

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ANNEX-2Socio-Economic and Financial Indicators of Tunisia

INDICATOR 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Population (Millions) 10.3 10.4 10.5 10.7 10.8 10.9 11.0 11.1 11.2 11.3Real GDP (LCU, Billions) 49.1 50.7 52.2 51.3 52.7 54.4 56.6 59.6 62.9 66.7Real GDP Growth (%) 4.5 3.1 3.1 -1.8 2.7 3.3 4.1 5.3 5.5 6.0

Nominal GDP (LCU, Billions) 55.3 58.8 63.4 64.7 70.4 76.2 82.3 89.8 97.8107.

3Nominal GDP (US$, Billions) 44.9 43.5 44.3 46.0 44.7 45.6 47.0 49.2 51.7 54.8

PPP GDP (Current, US$ Billions) 91.8 95.5 99.7 100.0 104.4109.

3 115.4 123.5 132.7143.

7Real GDP per capita (LCU, Thousands) 4.8 4.9 5.0 4.8 4.9 5.0 5.2 5.4 5.6 5.9GDP per capita (Current, LCU Thousands) 5.4 5.6 6.0 6.1 6.5 7.0 7.5 8.1 8.7 9.5GDP per capita (Current, US$ Thousands) 4.35 4.17 4.20 4.32 4.15 4.19 4.28 4.43 4.60 4.84Inflation (%) 4.9 3.5 4.4 3.5 5.0 4.0 3.5 3.5 3.5 3.5Current Account Balance (US$, Billions) -1.7 -1.2 -2.1 -3.4 -3.6 -3.5 -3.3 -3.1 -3.0 -3.1Current Account Balance (% GDP) -3.8 -2.8 -4.8 -7.3 -7.9 -7.7 -6.9 -6.4 -5.8 -5.6Budget Deficit (% GDP) -0.6 -1.5 -1.3 .. .. .. .. .. .. ..Public Debt (% GDP) 43.3 42.9 40.5 .. .. .. .. .. .. ..External Debt (% GDP) 46.3 49.9 48.8 .. .. .. .. .. .. ..Investment (% GDP) 23.5 24.2 24.3 .. .. .. .. .. .. ..Domestic Savings (% GDP) 22.9 21.9 21.1 .. .. .. .. .. .. ..Merchandise Exports (f.o.b.) (US$ Millions)

18,627.8

13,969.4

15,278.2

16,551.8 .. .. .. .. .. ..

Merchandise Exports (f.o.b.) (% GDP) 41.5 32.1 34.5 36.0 .. .. .. .. .. ..Merchandise Imports (c.i.f.) (US$ Millions)

24,542.0

19,162.2

23,574.7

26,140.7 .. .. .. .. .. ..

Merchandise Imports (c.i.f.) (% GDP) 54.7 44.0 53.2 56.8 .. .. .. .. .. ..

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ANNEX-3IDB Financing for Tunisia

4

5

ANNEX-4 Map of Tunisia and Project Locations

6

ANNEX-5

Project Risks and Mitigation Measures

Risks Scale

Mitigations

Deterioration of the macro-economic situation due to the effect of the revolution

Medium

The new Government is determined to create a stable micro economic environment and has the support of the development partners.

Delay in the adoption of the regulations providing autonomous status of Vocational Training Center

Medium

The texts have been already drafted. The Government is committed to restructure the vocational education and training system.

Insufficient participation of the private sector in the VET.

Low

The project will strengthen the linkage between the privat sector and the VTCs. See component 4.

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