Document of

The World Bank

Report No. 16666 MAG

PROJECT APPRAISAL DOCUMENT

ON A PROPOSED

INTERNATIONAL DEVELOPMENT ASSOCIATION CREDIT

TO THE

REPUBLIC OF MADAGASCAR

FOR AN

EDUCATION SECTOR DEVELOPMENT PROJECT

February 13, 1998

Human Development 2 andCountry Department 8Africa Region

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

CURRENCY EQUIVALENTCurrency Unit = Malagasy Franc (FMG)U.S. $ 1 FMG 5,500SDR 1 FMG 7,500

MEASURESMetric System

FISCAL YEARJanuary I - December 31

ABBREVIATIONS AND ACRONYMS

BPE Project Implementation Unit established under the on-going CRESED (Cr. 2394-MAG) (Bureau Projet Education)

CiSco District Education Office (Circonscription Scolaire)CEG Lower Secondary School (College d'Enseignement General)CNTEMAD National Distance Education Center (Centre National de Tele-enseignement de

Madagascar)CRESED Education Sector Reinforcement Credit (Credit de Renforcement du Secteur de

l'Education)DIRESEB Provincial Directorate of Education (Direction R6gionale de l'Enseignement

Secondaire et de I'Aducation de Base),.EPM Permanent Household Survey (Enquete Permanente aupres des Menages)FDES Fund for the Development of Higher Education (Fonds de Developpement de

l'Enseignement Superieur)FID Regional Development Fund (Fonds d'Intervention pour le Developpement)IM Implementation Manual (Manuel d 'Operation)IST Higher Institute of Technology (Institut Superieur de Technologie)MINESEB Ministry of Secondary and Basic Education (Ministere de l'Enseignement

Secondaire et de l'Education de Base)MINESUP Ministry of Higher Education (Ministere de l'Enseignement Superieur)MOF Ministry of Finance (Ministere des Finances et du Budget)ONEP National Bureau for Private Education (Office National de l'Enseignement Prive)PMU Project Management Unit (Bureau de Coordination du Projet)PNAE National Education Improvement Program (Programme National dAmelioration

de l'Education)PRAGAP Program for the Reinforcement and Strengthening of Administrative and

Pedagogic Management (Programme de Renforcement et dAmelioration de laGestion Administrative et PMdagogique)

PREFTEC Vocational Training Reinforcement Project (Projet de Renforcement de laFormation Technique)

UERP Curriculum and Research Development Unit (Unite d'Etudes et de RecherchesPedagogiques)

UNICEF United Nations International Children's Emergency FundZAP Sub-district Office (for primary education) (Zone Administrative et Pedagogique)

Vice President Callisto MadavoCountry Director Michael SarrisTechnical Manager Nicholas BurnettTask Team Leader Daniel Viens

REPUBLIC OF MADAGASCAREDUCATION SECTOR DEVELOPMENT PROJECT (CRESED II)

TABLE OF CONTENTS

Project Financing Data 1

1. Project Description 2Background 2Project Development Objectives 2Project Components 2Benefits and Target Population 3Institutional and Implementation Arrangements 4

2. Project Rationale 4CAS Objectives Supported by the Project 4Main Sector Issues and Government Strategy 5Sector Issues to Be Addressed by the Project and Strategic Choices 5Project Alternatives Considered and Reasons for Rejection 6Major Related Projects Financed by the Bank and/or Other Development 7

AgenciesLessons Learned and Reflected in the Project Design 8Indications of Borrower Commitment and Ownership 8Value Added of Bank Support 9

3. Summary Project Assessments 9Economic Assessment 9Financial Assessment 9Technical Assessment 9Institutional Assessment 10

Executing Agencies 10Project Management 10

Social Assessment 10Environmental Assessment 10Participatory Approach 10Sustainability 11Critical Risks 11Possible Controversial Aspects 11

4. Main Loan Conditions 12Board Presentation Condition 12Effectiveness Conditions 12Other 12

5. Readiness for Implementation 126. Compliance with Bank Policies 13

Annexes

Annex 1: Project Design Summary and Policy MatrixAnnex 2: Detailed Program and Project DescriptionAnnex 3: Total Estimated Costs and Sources of FinanceAnnex 4: Economic AnalysisAnnex 5: Financial Summary for the Education SectorAnnex 6: Procurement and Disbursement ArrangementsAnnex 7: Project Processing and Budget ScheduleAnnex 8: Documents in the Project FileAnnex 9: Status of Bank Group Operations in MadagascarAnnex 10: Madagascar at a GlanceAnnex 11: Technical Note of the Methodology for Ministry of Education -

Community Collaboration for School ImprovementAnnex 12: Program and Project Implementation Arrangements

Map: IBRD Reference Number 29353

INTERNATnONAL BANK FOR RECONSTRUCTION AND DEVELOPMENTINTERNATONAL DEVELOPMENT ASSOCIATnoN

Africa Regional OfficeAFC08

Project Appraisal Document

MadagascarEducation Sector Development Project (CRESED II)

Date: January 29, 1998 [I Draft IX] FinalTask Manager: Daniel Viens Country Manager: Michael SarrisProject ID: MG-PE-1559 Sector: EducationLending Instrument: Sector Investment and Maintenance Loan PTI: PXl Yes [ I No

Project Financing Data [] Loan [X1 Credit I Guarantee [ Other [Specify]

For Loans/Credits/Others:

Amount (US$m/SDRm): 65.0/47.7Proposed Terms: [XI Multicurrency [ Single currency

Grace period (years): 40 [ Standard Variable [ Fixed 1] LIBOR-basedYears to maturity: 10Commitment fee: N/A

Service charge: 0.75%

Financing plan (US$m):Source Local Foreign Total

Program 67.0 116.0 183.0Government 23.0 0.0 23.0Communities/Beneficiaries 10.0 0.0 10.0Cofinanciers (proposals to date):IBRD/IDA 25.0 40.0 65.0World Food Program 0.0 2.4 2.4France (CooperationfranVaise) 1.0 5.0 6.0Germany 0.1 0.2 0.3UEK 0.1 0.2 0.3Cofinanciers (expressed interest):AfDB (under preparation) 3.0 17.0 20.0European Union (under preparation) 1.8 10.2 12.0Japan (JICA) (appraisal completed) 1.0 11.0 12.0OPEC (under preparation) 1.0 9.0 10.0UNICEF (including NORAD and ILO participation) 1.0 9.0 10.0

Others (to be determined) 0.0 12.0 12.0

Borrower: Republic of MadagascarGuarantor: N/AResponsible agency(ies): Ministries of Primary and Secondary Education (MINESEB) and of Higher Education (MINESUP)Estimated disbursements (Bank FY/US$M): 1998 1999 2000 2001 2002 2003

Annual 6.0 9.0 11.0 13.0 15.0 11.0Cumulative 6.0 15.0 26.0 39.0 54.0 65.0

For Guarantees: NA [] Partial Credit [ ] Partial risk

Expected effctiveness date: June 26, 1998 Closing date: October 31, 2003

Project Appraisal Document Pap 2Country: Madagascar Project Title: Education Sector Development Project

Block 1: Project Description0. Background:Madagascar is at a watershed in its development. After a long period in the 1970's and 1980's during which the economy andstandard of living have declined, compounded by a decline in education from the early 1980s, Madagascar is now at the point where,with international support, it could begin to achieve a fundamental turnaround. Since the early 1990's, the commencement ofdemocratization in society at large has prepared the groundwork for reform. From an emphasis on state-controlled, top-downapproaches, Government has begun to enlist the efforts of a diversity of partners in the reform of its economy and its educationsystem, recognizing the contribution of the private sector, local communities and non-goverrunental organizations (NGOs) asindispensable to economic, social and educational progress. With the signature of the agreements with the IMF, the World Bankand the Paris Club in late 1996 and early 1997, an appropriate macroeconomic framework has been forged which has thecommitment of a govermment with an increasing capacity to carry through the necessary reforms. Its priorities are firmly lockedonto those of the Country Assistance Strategy (CAS), emphasizing growth and human resource development as key to povertyreduction.To strengthen human resources, the Government has formulated detailed plans for each of the sub-sectors of education and training,as well an integrated master plan (PNAE II) (December 1997), building on the experience of the PNAE I (initiated in 1989 andsupported in part by an IDA-financed Credit, CRESED Cr. 2094-MAG; see Annex 11 for details) and extensive consultation overthe last two years. An inter-ministerial committee and an inter-sectoral working group have been established in order to ensure thecoherence of the commitments of all partners in the sector.The objectives of PNAE II shared by all sub-sectors and donors are: (a) to achieve as rapidly as possible universal access to a qualityprimary education, (b) to support a gradual expansion and improvement of secondary education, (c) to modernize and diversifyhigher education and (d) to continue the reforms in vocational training initiated in 1992 and supported by PREFTEC (Cr. 2382-MAG) which is expected to close on June 30, 1998.The proposed Credit (US$65 million) would assist the Govermnent of Madagascar in financing its Program (total cost estimated atUS$183 million) in the education sector, over a five-year period. A separate follow-up operation to PREFTEC to continue reformsin manpower training is envisaged in the second half of 1998. While several other donors are expected to cofinance the Program,the operations planned under the proposed Credit are designed to achieve results even if cofinancing does not fully materialize.

1. Project development objectives (see Annex 1 for key performance indicators):The project supports the development objective of the Education Sector Program to produce more and better trained students at alllevels of education at sustainable cost. The impact of the Program would be measured through improvements in learning outcomes,in internal and external efficiency of education, and in access to primary and secondary education, particularly in rural areas. Thestrategic orientation adopted is centered on the devolution of responsibility to local and institutional levels, supported by a set ofcoherent policies at the national level.

2. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown):

Component Categorv Cost Incl. Contingencies % of Total(US$M)

A. Universalize quality primary education by 37.0 57%supporting community- and school-based projectsaimed at improving access and learning outcomesin about 4,100 public schools (out of 12,500)through provision of:* support services to prepare, sign, monitor Institutional and professional (3.0)implementation and evaluate about 4,100 school- development;based contracts;* quality inputs to improve school management, Professional development; (4.5)teaching processes and staff development for about9,400 teachers and 4,100 school heads;* adequate infrastructure, furniture and equipment Physical (29.5)of about 9,400 classrooms, of which 8,000 to berehabilitated and an additional 1,400 to beconstructed.

Form

Projct Apprisal Document Pge 3Counby: Madagascar Project Title: Educaton Sctor Devlopmt Projed

B. Improve quality of and access to secondary 3.5 5%

education, in particular in rural areas, throughsupport to school-based pilot programs in about 40public lower secondary schools (CEG) and 10public upper secondary schools (Lycees). Similarto Component A, this component would provide: Institutional and professional (0.6)

support services to pilot school-based projects in development;5 schools in Year 1, evaluate results, and extendthe approach to an additional 45 schools; Professional development; (0.9)

a quality inputs to improve school management,teaching processes and staff development for about600 teachers and 50 school heads; Physical (2.0)* adequate infrastructure, furniture and equipmentto about 375 classrooms, of which 188 to berehabilitated and an additional 187 to beconstructed.C. Imnprove access to quality textbooks and 14.0 21%teaching-learning materials to all primaryschools in the country through:* production, design and testing of 20 new titles, Capacity development; (1.8)including teaching guides; Institutional development;* printing and distribution to all primary schools (9.5)of about 7.2 million textbooks and 0.4 million Physical;teaching guides;* distribution of basic teaching-learning materials Physical; (1.7)(e.g. reference books, maps, and charts) to allprimary schools; and* in-service training of teachers on use of Professional development. (1.0)textbooks and educational materials.D. Institutional development for key functions Institutional and professional 3.0 5%in the Ministry of Secondary and Primary development.Education (MINESEB) at central anddeconcentrated levels, including strengthening ofeducational planning, bi-annual learningassessments at primary and secondary levels,workshops and networking of schooladministrators, human resources development andfinancial management strengthening, and pre-investments studies.E. Support reform of higher education in Capacity development; 5.0 8%assisting institutions to modernize and to diversify Institution buildingthrough financing sub-projects under a Fund forthe Development of Higher Education (FDES).F. Project management at central, provincial / Capacity development; 2.5 4%regional and local levels, including support to a Institution buildingsmall team of local staff at central level, regionalteams (6) and local teams (in about 41 schooldistricts).

Total 65.0 100%3. Benefits and target population:Benefits:* Higher enrollment at primary level, from a current level of 62% (net, e.g. excluding over-aged children) to about 80% by the year

2003. (This is the Program target; the project would contribute to an increase of about 10 percentage points in net enrollment).

* Private and social benefits associated with a literate population and an educated labor force: potential for higher income streams;

adaptability to changing economic and technological environment; effect on productivity of skilled workers; effects on fertility,

Form

Projet Appraisal Docurment Pae 4Counry: Madascar Project rT: Education Sector Deveopmet Project

adaptability to changing economic and technological environment, effect on productivity of skilled workers; effects on fertility,nutrition and poverty reduction.* Increased efficiency and responsiveness of education system to labor market needs.. Enhanced partnership and ownership by local communities, private sector, and beneficiaries.. Greater efficiency in utilization of Government funding and reduction in burden on state expenditures.* Improved management ability of Ministries (MINESEB and MINESUP) to manage education system.* Greater integration between the outputs of higher education and the demands of the world market.* Broad-based support, both financial and institutional, from donor community and stakeholders in the sector.Target Populations:* School-age children in the poorest, mostly rural areas of the countly.• Localities underserved by provision of lower secondary education.* Higher level technicians and skilled professionals.4. Institutional and implementation arrangements:

Implementation Period: 1998-2003Executing Agencies: Ministries of Primary and Secondary Education (MINESEB) and Higher Education (MINESUP)Program oversight: this will be the responsibility of the inter-ministerial committee which was established in February 1997.

The inter-ministerial committee comprises a wide representation of higher level staff in the key ministries (MINESEB, MINESUP,Ministry of Vocational Training, Finance, Budget and Public Service). The first meeting between the inter-ministerial committeeand donors took place in April 1997. After the adoption of the Program by Govermment (December 1997), it is expected that thecommittee wi1l be transformed into a working group of staff who will ensure overall coordination of program- and project-supportedactivities within the ministries in charge of education as well as with donors.

Program Coordination: the Program Coordinator will act as Executive Secretary of the inter-ministerial working group.Specifically, the working group will coordinate: (a) preparation of annual work programs in close collaboration with implementingagencies; Qb) review of performance on previous work programs, incorporating lessons learned and recommending necessarychanges; (c) development of standard operating procedures and common implementation mechanisms where appropriate and costeffective; and (d) implementation of beneficiary assessments and impact evaluation studies. The working group will prepare anannual progress report on the Program which will be submitted to Government for discussion and dissemination.

Project Coordination: the overall project coordination will be undertaken by a Project Management Unit (PMU) headed by aProject Coordinator who will be assisted by five managers in charge of: (a) all project-financed activities at primary level; (b) allproject-financed activities at secondary level; (c) the Executive Secretariat of the Fund for the Development of Higher Education(EDES); (d) the procurement unit; and (e) the accounting unit. Implementation of school- and community-based sub-projects will bemonitored by MINESEB staff at regional (6), district (112) and sub-district (1,250) levels. In higher education, the Fund for theDevelopment of Higher Education (FDES) will be managed by an independent Council comprising representatives of Government,the private sector, institutions and the business world.

Planning, accounting, financial reporting and auditing arrangements: the implementation arrangements and processes aredetailed in a Project Implementation Manual (1M) prepared by Government in consultation with the Bank and other donors. The IMdescribes the processes and implementation arrangements for school- and community-based sub-projects, including the planningcycle, progress monitoring, financial reporting and account auditing. The finalization of this Manual, including the specificprocedures governing IDA funds disbursement, is a condition of Effectiveness. An annual planning and budgeting process will becritical to the effective implementation of the project, and is detailed in the Manual. Each year, school districts with assistance fromregional authorities will prepare annual work plans and funding requests. The development of a satisfactory accounting system atthe district and national levels is a condition of effectiveness. Quarterly progress reports will be sent to Government and donors,and project accounts and the FDES will be audited annually. In addition to the auditing of all project accounts, a procurement auditwill be conducted of expenditures incurred by communities, by an independent auditor.

Monitoring and evaluation arrangements: a detailed monitoring and evaluation system is being developed as part of the NM.With the guidance from the inter-ministerial committee and the Program Coordinator, project monitoring and evaluation will be ashared responsibility of the central MRNESEB and School District staffs. The monitoring system, which will be computerized, willinform the management, policy makers and donors on the progress of activities and outputs of the Program on the ground.Monitoring of outputs will be based on data collected at local, district and regional levels, and aggregated by MINESEB, MINESUP,and the FDES, as well as from annual statistics produced by implementing agencies. Impact on poverty reduction and participationof local communities will be monitored through beneficiary assessments, and learning achievement in core subjects at primary andsecondary levels will be evaluated bi-annually through achievement tests. Performance indicators include: increase in new intakes inGrade 1; reduced drop-out and repetition rates in each class; improved attendance of pupils and teachers; higher proportion ofchildren reaching standards at the end of the cycle; frequency of teacher's use of new teaching skills; ratio of children with textbooksand school implements; reduction of disparities between urban and rural areas in access to secondary education; proportion of

Form

Project Appraial Documen Pap SCountry: Madagascar Project Tile: Education Sector Deveopment Project

students attending private secondary schools; and number of sub-projects completed in higher education. (A detailed table of |I expected outcomes and performance indicators is presented in Annex 2).

Block 2: Project RationaleS. CAS objective(s) supported by the project Latest CAS discussion: 16249-MAG, February 18, 1997The proposed Program is in line with the CAS objective of human capital development in support of high growth and meaningfilpoverty reduction within a generation. Specifically, the Program aims to overshoot CAS objectives of primary net enrollment ratioof 70% by 1999 (compared to 62% now), and 2,000 schools rehabilitated nationwide. However, in view of the limited scope toincrease public expenditure in the education sector in the short term, the CAS objective of increasing education expenditure to 3.5%of GDP (from 1.5% at present) is likely to be met only in the medium to long term (e.g. by 2005) once fiscal revenues increase as aresult of economic growth. A key focus of this Program is to assist in the empowerment of local communities, especially in ruralareas, to manage and finance their human capital development, an aim which is also central to the CAS. In addition, the Programaims at reducing inequities in distribution of public resources through reallocation of public expenditures toward provision of basicsupplies to schools and pupils in rural areas. The establishment of the FDES in higher education also supports the CAS's emphasison economic opening. More generally, control of demographic growth - which is not a stated CAS objective but a fundamentalbasis for per capita income growth -- is closely tied to education levels of the population.

6. Main sector issues and Government strategy:Sector work has included a World Bank study on factors to improve efficiency in primary and secondary education (Madagascar -Towards a School-Based Strategyfor Improving Primary and Secondary Education, April 7, 1995, Report No. 13450-MAG), and aseries of studies financed under the on-going CRESED Project (Cr. 2094-MAG, approved in February 1990) on educationalachievement, barriers to participation, and higher education development plans. An evaluation by the French Cooperation hasidentified as a major issue the poor quality of education. Also, the MINESEB has been experimenting with methods for ministry-community collaboration in improving primary education since end of 1993, supported by the on-going IDA-financed CRESED(referred to as the PRAGAP Program) and UNICEF-financed project (referred to as the DINA Project) (see Annex 11 for detailedobservations, results and recommendations). In addition, with support from a Japan PHRD Grant, the MINESUP has prepared aMaster Plan for the development of the sector and initiated important institutional development projects related to quality assurance.These studies and experiments have documented the following issues:* Low allocation of public resources to education in general (1.5% of GDP in 1997, compared to an average of 3.6% in SSA);* Declining participation in primary and secondary education (Madagascar had nearly achieved universal primary education in theearly 1980's) due to deteriorating financial conditions, poor school management and perceived low quality of public schooling;* Inefficient utilization of human and financial resources at all levels of the education system, e.g. poor distribution of teachers inrural areas and inefficient deployment of teachers in secondary schools. Low internal and external efficiency in higher education which Government has begun to address in 1992 through a program of'assainissementr of public universities (reducing the total number of students from about 44,000 in 1992 to nearly 18.000 in 1997);* Uneven access to basic education, especially in isolated areas of the country due to poor infrastructure and inadequatecommunications;* Inequitable access to secondary education, especially in rural areas;

Insufficient supervisory and advisory services to teachers; and* Lack of instruments and information systems to maximize coordination of donor efforts and inputs.7. Sector issues to be addressed by the project and strategic choices:The program will:1. Reassess the financial rationale of public investments in education* Increase allocation to education sector (as public resources become available) and share allocated to primary education;* Improve efficiency of utilization of Government resources allocated to education;* Optinize utilization of community resources;.* Increase beneficiary contributions, particularly in higher education;* Maximize private funding for education sector at secondary and higher education levels;* Privatize non-essential functions in higher education.2. Increase education efficiency* Improve teacher deployment and utilization;* Improve teaching and learning;* Reduce repetition and drop-out;* Increase the number of pupils completing the primary cycle while reducing drop-out and repetition rates;* Provide universal access of children in schools to textbooks and supplementary materials;* Increase and improve teacher professional support and development;

Form

Project Appraisal Document PagS Country: Madagascar Project Title: Education Sector Development Project

* Improve education administration and management of teacher career patterns.3. Universalize access to quality primary educationa Engage communities in contract with authorities to: maintain physical infrastructure; monitor delivery of quality pnmaryeducation; and ensure full commitment and increased motivation of teachers;* Provide materials and professional support;* Reduce urban-rural inequalities.4. Improve access to secondary education

I Improve provision of secondary education, particularly in rural areas;* Improve deployment and utilization of teachers and physical infrastructure;* Empower groups of local communities to establish, develop and enhance the provision of lower secondary education in their area;* Improve quality of teaching and learning;* Reduce repetition and drop-out;5. Modernize and diversify higher education* Improve efficiency of utilization of public resources allocated to higher education while reducing their overall share of the totalsector budget;* Increase participation of private sector;* Diversify sources of financing for higher education;* Increase internal and external efficiency;* Improve quality of higher education on basis of regional and international comparisons.6. Enhance donor coordination* Share and support common understanding of the Govermnent's program (PNAE II);* Develop management information systems to: assist local authorities and communities in planning and implementing theircontributions to education; monitor performance; and provide adequate coordination of donor efforts.

8. Project alternatives considered and reasons for rejection:* Standard ad hoc investment projects vs. sector investnent approach (programmatic). Given a general consensus on policy and aseries of associated action plans for sub-sectors and the sector as a whole, the Govermnent is now in a better position to marshal itsown efforts and those of donors under its Program (PNAE II).* Input-driven approach (where the budget is an outcome of projected needs) vs. a planning approach which is attentive both to thebudgetary constraints and to the potential social and economic efficiency gains of community participation. In essence, theapproaches differ in the way in which needs are identified and translated in budget allocation and resource utilization. A planningapproach was selected because of its fit with experiments conducted over the last three years and the need to rationalize andprioritize investments.* Centrally-managed personnel functions vs. decentralized approach to staff management. One of the major issues in the sector isthe uneven distribution and underemployment of civil servants (teaching and administrative staff) at all three levels. The policy ofcentrally-managed redeployment of staff adopted in the early 1990s has not proved successful. However, redeployment at local level(within school districts) has shown itself to be a satisfactory policy option (for example, under the PRAGAP more than 200 teachershave been transferred to rural primary schools). The Program will address this central issue through a number of interrelatedstrategies, such as: (i) shift responsibility of personnel management from the Ministry of Civil Service to the technical ministries(MINESEB and MINESUP) which in turn will delegate responsibility to provincial / regional authorities; (ii) deconcentrate paymentof salaries at provincial / regional level; (iii) introduction of establishment of staffing by institution based on allocated posts at schoollevel ("gestion par poste budgetaire"); (iv) allocate budgetary resources to district-level offices for redeployment of staff at locallevel; (v) community recruitment and local training of primary level teachers; (vi) time limits for staff who are surplus to need tofind an alternative position within institutional establishments for staffing; (vii) payment by number of hours taught at secondary andhigher education levels, combined with increase in the mandatory workload at higher education level, plus a freeze on newrecruitment and an increase in fixed-term appointment; (viii) establishment of secondary schools on local initiatives by localauthorities, business enterprises, groups of parents; and (ix) sub-contracting by Government of management of secondary schools(and some facilities in higher education) to private groups (mostly religious organizations).* Top-down approach vs. community participation and school-based project. Recent evaluated experience of several donors(UNICEF, World Bank, Aide et Action, FID - see Annex 11) has demonstrated the effectiveness and sustainability of localcommunity-based development operations at primary level. These experiences have also informed policy-making in the design ofthe Government's Program (PNAE II).* Public provision vs. private provision of secondary and higher education. For the foreseeable future, Government resources willbe insufficient to cover the totality of needs at secondary and higher education levels. The need therefore arises to diversifyparticipation in the financing and provision of education at these levels, and the increase of beneficiary contributions particularly in

Form

Projct Appraisal Document Page 7Country: Madagascar Project Title: Education Sector Development Project

higher education where benefits are captured mainly by the beneficiaries (see Annex 4 for a discussion of the rationale for publicintervention in the education sector).* Financing of specific investments vs. establishment of a Fund for higher education. The utilization of the scarce funding whichcan be allocated to higher education under the Program can be maximized through an open, competitive and transparent process ofbidding. Additionally, with the experience obtained and the human resources trained under Japan PHRD Grant activities (1994-1997), the capacity is now available for the higher education sub-sector to consider its own policy options and to make its owndecisions with regard to priorities for financing.* Uniform vs. differentiated design, materials and techniques of construction of schools. The debate during preparation includedadvocates of a centralized, uniform approach to the design and construction of primary schools, particularly in view of the fact thatcertain areas of the country are regularly prone to cyclone damage. Based on evaluated experience under PRAGAP, UNICEF, FID,however, the weight of opinion was that a more localized environmentally-sensitive and economical approach which included a highlevel of community participation was a more effective way of achieving universal primary education within the envisaged budgets,albeit one which allows for construction of substantial school buildings in cyclone-prone areas.* Selective coverage of quality buildings in each district vs. universal coverage with limited funds. The debate on this issue centeredaround the provision of two or three high quality model schools in each sub-district, probably fairly close to access roads, or fullcoverage of more modest school constructions which would assist the Government in achieving its goal of universal primaryeducation by year 2010. The first option would defer the achievement of universal primary education, thus reduce equity of accessand substantially increase the cost.9. Major related projects financed by the Bank and/or other development agencies.Sector Issue Proiect Latest Form 590 Ratings

(Bank-financed projects only)IP DO

Bank-financedPilot work in community involvement in CRESED (Cr. 2094-MAG) S Sthe education sector; rehabilitation ofinfrastructures; redeployment of teachers;provision of textbooks and teaching-learning materials; reform ofadministration and devolution ofmanagement of education; introduction ofalternative, more market-responsive formsof higher education.Demand-driven provision of vocational PREFTEC (Cr. 2382-MAG) HS HStraining; open competition andtransparent procedures for selection ofproviders; cost-recovery; establishment ofan employment observatory.Major reforms introduced in: CRESAN (Cr. 225 I-MAG) S Sstrengthening of district health services,cost sharing mechanisms and communitymanagement, and institutional capacity.Through provision of supplemental Social Fund II (FID) (Cr. 2778-MAG) S Sfinancing to the Fonds dIntervention pourle Developpement (FD), the projectsupports community development throughpartnership with NGOs and beneficiariesfor: rehabilitation / construction of socialinfrstucture through labor intensivework, income generating activities andprivate sector initiatives.Other development agenciesCurriculum development, teacher PRESEM and PRESUP (French Cooperation) Not Applicable NAtraining, and management reform atprimary and secondary levels. In highereducation, curriculum development,particularly introduction of 2-year short

Form

Projec Appraisal Documet P Country: Madaga_ar Project Title: Education Sector Developert Pro)ect

cycle courses, reform management andfinancial administration of institutions,specific and general technical assistance.School feeding program, food security and WFP NA NAnutrition.Pilot community-based primary school UNICEF NA NAprovision.Textbooks and supplementary materials GTZ NA NAfor primary education in Malagasylanguage. In higher education,curriculum development and institutionallinkage. Support for book and materialpurchase.Budgetary support for non-salary European Union NA NArecurrent expenditure. Plans to finance acommunity-based program of primaryschools in three zones.Support for construction / reconstruction Japan (JICA) NA NAof 300 primary school classrooms.Support for English language training and United Kingdom NA NAestablishment of language centers. Smallscale support for pilot experiment inprimary education to improve quality.Resuming operations in Madagascar. AfDB NA NA'Current plans include support for: primaryeducation; teacher development; andhigher education.10. Lessons learned and reflected in the project design:* Experience at local level in previous projects, especially under PRAGAP (see Annex I 1), helped formulate national policies.* Local communities, when given the initiative and modest resources, can effectively identify their own priorities, deliver a qualityprimary education which is sustainable, and increase their participation in the development process.* Participatory approaches at all levels have proved an effective instrument for project planning and implementation, as well as aninstrument of learning from experience. Development of social capital at national and local levels, formation of teams, continuityand cross-fertilization between regions and localities are additional benefits which accrue from the participatory approaches adopted.* Experience under the on-going CRESED supports the need for a gradualist (planned and phased) approach to the devolution ofresponsibility and resources to the local level, accompanied by appropriate capacity building measures (e.g. pre-contract workshops,dialogue with community representatives and school teachers, training for acceptance of financial responsibility, managing financialresources).. The Training Fund financed under the IDA-financed PREFIEC project (Cr. 2382-MAG) and activities conducted under a JapanHuman Resources Development Grant provided a proving ground for testing a "fund" approach to the financing of educationalprovision in higher education. Key results include: (a) targeting of funds to specific activities which are justified under the projectscope; (b) development of institutional capacity, e.g. mastering new skills in appraising proposals, negotiating contracts, settingmeasurable performance indicators, monitoring progress and evaluating outcomes; and (c) accountability and transparency in the useof public resources.* The need for a diversity of specific initiatives to address the problem of the maldistribution and underemployment of teaching andother staff.* Importance of Government coordination of donor responses to its program.11. Indications of borrower commitment and ownership:* The Government has shown its commitment through the preparation of sub-sectoral plans and an integrated national Master planfor the development of education and training, as well as the formation of an inter-ministerial coordinating committee and an inter-sectoral working group which have agreed priorities for the government's program. At Government initiative, meetings of all donorsactive in the sector were called by the three ministries (MINESEB, MINESUP and METFP) in April and July 1997 to ensure supportfor the Government' s program and facilitate the coordination of financial inputs. Such meetings are planned to occur regularly.* In its work with the Bank, in the implementation of PRAGAP and in its work in similar projects with other donors (UNICEF,Aide etAction), Governnent has shown its conunitment to devolution of responsibilities to the local level.* A review of current projects in education and training shows satisfactory management and availability of counterpart funding.

Form

ProJect AWraisaI Document Page 9Country Madapscar Project Tftle: Education Sector Development Project

* In higher education, the Government has been willing to undertake politically difficult and sensitive decisions since 1992 as wellas to maintain a consistent and developmental approach to planning for the sub-sector. For example, the "assainissemenr of allcampuses including the expulsion of squatters from university campuses, leading to the return of normal functioning in theuniversities; delegation of greater academic autonomy to the universities and within the universities with the establishment ofindependent Councils for each university, and Boards at Faculty and Departmental levels; substantial reduction of student numbers(from over 44,000 in 1992 to about 18,000 in 1997); introduction of selection for entry for all subjects; rationalization and devolutionof budgetary responsibility, including the introduction of budgetary norms and cost centers in each university, as well as movementstoward the introduction of contract programs.* A stable approach to policy development has been maintained despite changes in Govermnent and administrative responsibility.

12. Value added of Bank support:* The Bank has been the lead donor in Madagascar in supporting the development of policy in education and training, and has beeninstrumental in the preparation of sub-sectoral and integrated sectoral master plans drawing lessons from experience (for example inPRAGAP), as well as in encouraging donor coordination and exchange of informnation.a The Bank will continue to bring its macroeconomic and decentralization-related policy dialogue to bear on education sector issues,particularly with regard to community involvement, encouragement of the private sector and public expenditure.e The Bank will seek to coordinate this project more closely with cognate projects in the sector, as well as in other sectors such asnutrition, health, water and sanitation, and social funds.* With Bank support, the Govemrnent will deepen its expertise in program monitoring and evaluation.* Equity issues will continue to be at the center of the policy dialogue between the Bank and Government, and with other donors.

Block 3: Summary Project Assessments (Detailed assessments are in the project file. See Annex 8)13. Economic Assessment [ Cost-Benefit Analysis: N/A t Cost Effectiveness [XI Other(see Annex 4): Analysis:This project supports Madagascar's education sector-wide program, for which a cost-benefit analysis is not informative (see draftpaper on Sector Investment Programs: An Update, produced by KNIT, Africa Region, and dated May 19, 1997). On the other hand,the program's focus on primary education is shown to be economically rational from an examination of social rates of return byeducation level (see Annex 4).An equity analysis was carried out which indicated the following: (a) increases in primary level enrollments and unit cost are equity-improving; (b) regional disparities in enrollments cannot be attributed to an unequal distribution of public education sector resources,but to an unequal effectiveness of utilization of these subsidies; (c) there is a highly biased distribution of subsidies at secondary levelin favor of urban areas; and (d) targeting by gender is not equity-improving at any education level.

14. Financial Assessment: NPV=US$ N/A million; FRR= N/AIncremental recurrent costs associated with the Program remain within the budgetary envelope that is likely to be made available tothe sector under realistic assumptions of GNP growth and allocations to the education sector. Sustainability can be achieved underthe core case scenario provided that program costs are closely monitored. (See Annex 4 for a detailed discussion of the financialimpact of the Program). Agreements reached during the recently completed (November 1997) Public Expenditure Review, include:* the incorporation of all projected investments (on-going as well as proposed investment projects) within the framework of theProgram;* an increase in .the share of public resources to the education sector, from 1.5% of GDP in FY997 to 1.8% in 1998, which isexpected to be followed by a gradual increase to 2.0% by the year 2000;* within the proposed budget for education, an increase in the share of public resources allocated to primary education (from 38.8%of all non-salary recurrent expenditure to primary and secondary education in FYI 997 to 40.6% in FYI998), while at the same timemaintaining the current non-salary budget for higher education to its FY1997 level (thus reducing its share within the sector from44.9%/o in FY1997 to 44.1% in FY1998);* within the proposed budget for non-salary expenditure for primary and secondary education, a reallocation of expenditure fromcentral and regional administration to operating expenditure at the primary school level. For example, the amount of direct transfersto primary schools would increase ftom FMG 5.6 billion in FY1997 (or 14% of the FMG 39.8 billion non-salary budget) to FMG 24billion in FY1998 (or 44% of the budgeted FMG 54 billion). These additional resources would be earmarked for provision of schoolimplements to pupils and staff (exercise books, pens, chalk), school-level administrative expenditure (e.g. student and staff records),replacement of essential furniture (benches), and maintenance of physical facilities;* a series of measures to ensure timely availability of financial resources (earlier in the fiscal year) and to improve the rate ofdisbursements (historically, more than 95% of budget was spent compared to an estimated 70-80% in FY1997 which is due to recentdecisions to decentralize commitment authority to local level that has led to delays in committing budgetary resources); and

Form

Proie Appaisal Document Pap 10Counby. Madagar Project Tite: Education Sector Develope Project

a a strict application of budget procedures in higher education in order to avoid over-spending (public higher education institutionshave committed an amount of FMG 8.5 billion in FY1996 over the allocated budget) and a series of measures to stop accumulationand absorb past arrears (estimated at about FMG 27 billion over the period 1992-93 to 1995-96) over a period of 3 years.

15. Technical Assessment:The Project design for the three principal components -- primary education (US$37 million), textbooks and teaching-learningmaterials (US$14 million) and higher education (US$5 million) -- has been piloted successfully under the on-going educationproject, and are technically sound. Those aspects of the project that are innovative -- secondary education (US$3.5 million) will firstbe tested for design robustness in a limited number of conumunities. Targeting is based on a systematic analysis of disparities and oftheir causes (see Annex 4).16. Institutional Assessment:

a. Executing agencies: established in 1990, the project implementation unit (BPE) has been the main executing agencyresponsible for the implementation of CRESED. Following a slow start, the BPE has gained experience and confidence in managingcomplex procurement operations (such as procurement and distribution of 2.7 million textbooks to 11,500 primary schools), liaisingeffectively with line staff at central, regional and district levels, and delivering support services (equipping services, training staff,monitoring implementation, and reporting) to MINESEB and MINESUP. In order to meet efficiently the challenges of the proposedsector investment program, the role, structure and management systems of the Project Management Unit (PMU) will be reviewed andstrengthened with a view to: (a) develop an effective planning and monitoring system at all levels which will ensure timely deliveryof information on the program, collection of data, processing of information and dissemination to line ministries and donors.Experience gamed under PRAGAP form the basis of the new system detailed in the Implementation Manual; (b) assist staff inregional, district and sub-district offices in sharing common understanding of the system, developing the necessary skills to use andevolve within the system, strengthening decision-making skills and processes at all levels, and participating in all phases of theimplementation program; and (c) analyze, package and disseminate in a timely manner information generated by the monitoringsystem, and following-up on actions to be taken. In addition, specialized agencies and consultants would be recruited to assist thePMU in managing large procurement contracts, top supervision of civil works, accounting and auditing of program and projectaccounts. High staff turnover at key managerial positions in MINESEB, especially Directors at central and regional levels, andDistrict Officers, has been an issue in recent years, in large part related to frequent changes in government and political leaders.While it is reasonable to expect changes in managerial positions in the future, disruptions will be minimized by the establishment ofcore groups of technical staff who generally demonstrate a solid experience in their milieu, high level of professional and personalcommitment, and higher level of stability in the job. To ensure continuity and benefit fully from investments in human resourcedevelopment, participation to staff development programs would be conditioned upon a cormitment of individuals and theirsupervisors to remain in their position for at least two years after completion of the training.

b. Project management: at local level, experience gained under PRAGAP shows that management capacity had to be developedfirst at regional level (DIRESEB, or Provincial Directorate of National Education) before it could be delegated to district level(CiSco, or District Office for Education). In the 20 pilot districts where PRAGAP has been implemented since 1994, it is now clearthat the actual day-to-day management of the conunuity-based development process has to be delegated to the sub-district level(ZAP, or Local Administrative Zone which groups an average of 10 primary schools), supported by appropriate technical specialistsfrom the District Office. On-the-job training will continue to be the main vehicle for developing skills in the areas of information,education and communication (IEC) activities to local communities, assisting local authorities in establishing a School Council andpreparing a school-based project, providing the necessary support and inputs to the implementation of the sub-project, monitoringprogress and participating in evaluation of activities. At central level, the Program will support development of core skills in twoways: (a) contracting out specialized services to the private sector in the areas of engineering, construction management andsupervision, delivery of equipment and goods to the schools, accounting, auditing, impact evaluation and beneficiary assessments;and (b) strengthening core skills of technical staff in implementing agencies in the areas of program monitoring, projectmanagement, and maintenance of management information systems.

17. Social Assmment:Beneficiary assessments carried out under the on-going education project indicate that communities are willing to incur the necessarycosts to send their children to school and to participate in school rehabilitation. A number of communities overshot the objectives oftheir school projects by constructing additional classrooms to accommodate increase in enrollments.

18 Environmental Assessment: Environmental Category I I A [ I B [XI CThe environmental impact of the proposed project is likely to be neutral. There would be environmental disruption associated withthe construction of small primary and lower secondary schools. However, the project would improve the sanitary environment ofabout 7,000 existing schools, which lack basic sanitary facilities, and provide such basic facilities for all new construction. The

Form_

Project Appraisal Document Pae 11Country. Madagascar Project Title: Education Sector Deelopment Project

project will finance teaching-learning materials and teacher training to incorporate environmental education in the existingcurriculum at primary level.

19. Participatory Approach: Identification/Preparation Implementation OperationBeneficiaries/community groups CON; COL CON; COL CON; COLIntermediary NGOs IS CON CONAcademic institutions CON; COL CON; COL CON; COLLocal government IS COL COLOther donors IS; CON COL CONNote: IS = information sharing; CONS = consultation; COL = collaboration.20. Sustainability:. The project's strong commitment to community involvement in the planning, implementation and evaluation of their own provisionshould ensure long term viability and sustainability.* The budgetary approach adopted ensures that investment plans, as well as incremental recurrent expenditures generated by theseinvestments, are compatible with resources likely to be made available over the next five years and upon completion of the five-yearprogram. (See Annex 4 for a detailed discussion of the sustainability of the Program).. Production and ownership by Government and educational institutions of their own program is likely to evoke greater comniitment,effectiveness and sustainability.* Cost sharing schemes in higher education imply a high level of commitment on the part of stakeholders.

21. Critical Risks (see fourth column of Annex 1):Project outputs to development objectives

Risk Risk Rating Risk Minimization Measure1. Failure to follow-through with financial MR 1. 1 Government support of the PNAE IIimplications of devolution of responsibility to 1.2 Public Expenditure Reviewsregional and local levels; 1.3 Strong and cohesive commitment by donors to achievement of

Government's program2. Varying capacities of local communities to NR 2.1 Preparatory visits by school administrators and monitoring of thecontribute financially to local school-based implementation of contractsprojects and to organize and manage them; 2.2 Flexibility of school-based contracts with differentiated local

community and Govermnent contributions3. Failure to develop management skills MR 3.1 Staff development programs at district and sub-district levelsnecessary for implementation of community- 3.2 Annual work programs ensure timely delivery of inputs andbased approaches nationwide; perseverance to achieve goals

Project components to outputsRisk Risk Rating Risk Minimization Measure

1. Inability of ministries to manage the MR 1. 1 Implementation of a range of policies (described in section 8 ofnecessary redeployment of teachers in order to the PAD) some of which have been already piloted.improve efficiency of utilization of teachingstaff and salary budget;2. Ability of Government to manage MR 2.1 Government's commitment manifest in politically sensitivepolitically sensitive reforms in higher measures already undertaken, e.g. "assainissemenf' of universityeducation, in particular privatization of campuses.services & cost-recovery schemes3. Lack of synergy among the strategies NR 3.1 Ensure strong coordination between implementing agencies andadopted for the various components donors.

3.2 Preparation of annual work programs and beneficiary assessmentswill facilitate early identification and resolution of implementationissues.

Overall project risk ratingRisk Risk Rating

MR

22. Possible Controversial Aspects:

Form

ProJet Appraisal Document Pag 12Country. Madagasa Project TMie: Educaton Sector Developmt Projed

* Privatization of services in higher education and the greater involvement of the private sector in secondary and higher educationprovision could be controversial 121. Government proposes to adopt a gradualist approach, piloting first in one or two institutions, aswell as instituting support for private establishments, monitoring the results as it proceeds and feeding those into future policyformulation. Bank assistance and support in this process will be critical to the successful implementation of the overall policy.. The proposed measures to budget for a staffing establishment in each institution could be controversial for teachers [2]. An arrayof alternative approaches and availability of incentives to teachers to redeploy or take early retirement should help to deflect possibleadverse reactions.* Introduction of greater cost-recovery in higher education may be controversial because it will affect predominantly politicallyinfluential high income groups 131. The Goverment's Master Plan proposes a gradual increase in beneficiary contributions and thelinking of scholarships to student achievement.* Changes in the workload of teachers in higher education and tying payment to hours taught in secondary education could beresisted by professional associations [2]. Future salary increases negotiated by Government would be linked to gradual changes inconditions of service at both levels.Note: Ratings of the degree of potential controversy range from low [11 to high [5]

Block 4: Main Loan Conditions23. Board Presentation Condition: The Govermment has approved a Letter of Development Policy which will include, inter alia,detailed measures and related performance indicators, and a calendar for their implementation, to ensure that: newly recruitedteachers at primary level (about 900 in 1997-98) have signed a contract with the local School Committee and the District Head (ChefCiSco) representing the Government, and have effectively taken up their assignment in designated nual primary schools; MINESEBhas approved procedures, satisfactory to IDA, for local payment of salaries to teachers; and MINESEB has approved procedures,satisfactory to IDA, related to sanctioning of the presence and work-related performance of teachers, which are administered locally(at school-, sub-district and/or district levels).

24, Effectiveness Conditions(a) The Project Implementation Manual and the Procedures Manual for the FDES have been approved by IDA, and adopted by

the Government of Madagascar;(b) An adequate financial management and accounting system, and a management information system to monitor performance

indicators have been established and are satisfactory to IDA;(c) The FDES has been duly established, and the FDES Convention signed and delivered on behalf of the Government and

FDES;(d) Two project accounts in Malagasy Francs -- one operated by the Project Management Unit and one operated by the FDES -

have been opened, and the amounts of the initial deposits deposited by in these accounts;(e) The Project Coordinator, the FDES Executive Director, the Head of the Primary Education component, the Head of the

Secondary Education component, the procurement officer and the project accountant have been recruited according toprocedures satisfactory to IDA;

(f) The vINESEB has made satisfactory progress in the implementation of its teachers recruitment program in accordance withtargets specified in its national Program; and

(g) Independent auditors, satisfactory to IDA, have been recruted;

25. OtherExecution of the Project: The Government / Executing Agencies will:(a) Maintain an Inter-Ministerial Working Party for the Education Sector for overall coordination of the Govermnent's strategy

for the education sector, and a suitably qualified and experienced official to be the Coordinator of the Program and ExecutiveSecretary of the Working Party;

(b) Ensure that the positions of the Project Coordinator, FDES Executive Director, Heads of Components, procurement officerand project accountant in the Project Management Unit are filled at all times with personnel whose qualifications,experience and terms of reference are acceptable to IDA;

(c) Ensure that the positions of School District Head (Chef CiSco), Deputy School District Heads, School Supervisors (ChefsZAP) and School Heads in the Districts where the Project will finance school-based projects are filled at all times withpersonnel whose qualifications and experience are acceptable to IDA;

(d) Ensure that every school affected by a school-based sub-project is provided with the requisite number of school teachers;(e) Submit to IDA not later than October 31 of each year, for review and approval, proposed annual work plans and budget for

the forthcoming fiscal year; and

(i) Conduct with IDA not later than November 30 of each year a joint annual review of the Project; in the case of the review to

Form

Proeca Apprisal Document Po 13Country Madagscar Project TRIe: Education Sector Development Project

be conducted not later than November 30, 2000, a joint mid-term review will be conducted;

Financial Covenants (see Annex 6 on procurement and disbursement arrangements).Disbursements and Soecial Accounts (see Annex 6 on procurement and disbursement arrangements).Procurement and Consultant Services (see Annex 6 on procurement and disbursement arrangements).

Block 5: Readiness for ImplementationP[] This project complies with all applicable Bank policies.[C] The procurement documents for the first year's activities are complete and ready for the start of project implementation.

Standard bidding documents are included in the Manual of Operations of the Project and in the Manual of Procedures ofFDES.

[Xl The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality

Block 5: Compliance with Bank PoliciesI P(1 This project complies with all applicable Bank policies.

Task Manager: Daniel Viens Acting Country Director: Herminia Martinez

Form

I

Project Appraisal Document Annex 1Miadagascar - Education Sector Development Project Page I

Project Design Summaxy

Narrative Summary Key Performance Indicators Monitoring and Supervision Critical Assumptionsand Risks

CAS Objective (CAS Objective to BankMission)

Broad sections of population Monitoring of human resource MINESEB and MINESUP Economic and socialable to participate in development statistical yearbooks; stability, and economiceconomic development. Household surveys - EPM growth;

(1998; and every 3 to 5 years Failing Governmentthereafter); commitment to povertyBeneficiary assessments. reduction.

Program Development (Development ObjectivesObjectives to CAS Objective)

More and better-trained * Primary enrollment increased by 10% * MIS data including: * Empowerment of localstudents graduate at all (from 62% in 1997) by 2003 (note: the MINESEB and MINESUP communities andlevels of education at Program target is 80%/o); statistical yearbooks; district- beneficiaries contributessustainable cost. * Nation-wide lower and upper level statistical reports and to improved

secondary net enrollment ratio increased school statistics; management andby 2% and 1% per year, respectively; * Annual PNAE-II status effectiveness;* Gross enrollments ratio gap between reports. * Ownership of aurban and rural areas reduced from 16% national programin 1997 to 8% by 2003; contributes to increased- Primary level dropout rates reduced ability and institutionalfrom 22% in 1997 to 15% in 2003; and capacity of the tworepetition rates reduced from 31% in ministries (MINESEB1997 to 20% by 2003; and MINESUP) and the* Secondary level dropout rates reduced FDES to select, ,managefrom 12% in 1997 to 8% in 2003 and and evaluate priorityrepetition rates in lower secondary actions;reduced from 14% in 1997 to 10% by * Availability of timely2003; and sufficient budgetary* Improved results in national and resources at all levelsschool-based achievement tests at all contribute to sustainedlevels; quality improvement;* Proportion of students enrolled in * Improved stability inprivate secondary schools increased personnel contributes tofrom 45% in 1997 to 55% by 2003; effective and efficient* Share of students in non-university implementation of thetertiary institutions (such as the Higher Program and the Project.Institutes of Technology) increased from30% in 1997 to 45% by 2003;* Increased share of public resources toeducation to 2% of GNP by 2000;* Fiscally sustainable incremental publicrecurrent expenditures; and* University ratio of revenues toexpenditures increased from 14% in

_ 1997 to 25% by 2003.

Form_

Project Appraisal Document Annex IMadagascar -Education Sector Development Project Page 2

Project Outputs (Outputs to DevelopmentObjectives)

1. Awareness of 1.1 School committees established and . Annual PNAE-II status * Quality of completedcommunities of the school- functioning in targeted areas. reports; school-based projectsbased sub-projects approach * Annual MINESEB; district- and sub-projectsincreased. 2.1 10,250 school contracts signed level statistical reports and financed under FDES is

(involving 4,100 public primary school statistics; satisfactory;2. Partnership between schools) and sub-projects implemented . Project data; * Communityteachers, administrators, by communities by 2003; . Annual status reports of the participation andand local communities to 2.2 Pilot school contracts with 5 National Bureau for Private partnerships remain aprepare and implement secondary schools implemented Education (ONEP); high priority for theschool-based sub-projects successfully, and nationwide extension . Regular specialized Bank operation andimproved. to an additional 45 schools pending supervision missions; maintenance of

recommendations of the pilot's * Regular follow-up completed school-basedevaluation; coordination meetings of projects and sub-projects;2.3 About 100 pre- and sub-projects donors with inter-ministerial * Devolution ofsubmitted, approved and completed with comnuittee and the inter- responsibility -FDES financing. sectoral working party; accompanied by transfer

. Statistics and annual reports of appropriate financial3. Capacity of communities 3.1 Number of new private schools of FDES and ANE. resources - from centraland networks to mobilize established; to regional and localand attract private sector, 3.2 Number of post-primary private and levels remains a priorityparticularly at post-primary public non-university institutions for Government in itslevel. established and number of students policy of

participating in them; decentralization;* Sub-projects aretailored to different

4. Availability and use of 4.1 Improved ratio of children to capacities of localtextbooks and other textbooks for each subject and year; communities toeducational materials presence in all schools of supplementary contribute financially toincreased. readers and exercise books; local school-based

projects and to organize5. Teaching-learning 5.1 Increased frequency of teachers' use and manage them;methods and classroom of a repertoire of teaching-learning * Management skillsmanagement improved; techniques (question and answer; group necessary for

work; marked homework; monthly implementation ofquizzes; use of exercise books). community-based

approaches nationwideare developed;

6. District management 6.1 Structured teacher development * Coordination ofstrengthened and delivery of activities planned and implemented; community networksadministrative and 6.2 Head teacher capacity developed. wishing to propose aprofessional services to 6.3 In-service training organized by secondary school projectschools and teachers district agencies; is effective.improved; 6.4 Number of visits by administrators

and advisors to schools increased;6.5 Increased capacity at school, sub-district, and district levels for datacollection and analysis, and forevaluating outcomes.

Fornm

Project Appraisal Document Annex IMadagascar -Education Sector Development Project Page 3

7. Teachers recruited in 7.1 Number of school contractssufficient numbers; requesting additional teachers honored;

7.2 Number of days attended byteachers and number of hours spent ontask increased;

8. Adequate infrastructure 8.1 Number of schools rehabilitatedand equipment provided. and equipped.

Project Components (Components to Outputs)[See Annex 2 for a detaileddescription.]

Component 1: Universalize Component input (including 1. MIS data, including: * Local communitiesquality primary education contingencies): US$37.0 million. annual MINESEB and committed toby supporting community- MINESUP reports; district- community-basedbased projects to improve level statistical reports and approach and school-access and learning school statistics; based projects;outcomes in about 4,100 2. Regular Bank supervision * Availability of apublic primary schools. missions; sufficient number ofComponent 2: Improve Component input (including 3. Annual PNAE-II status competent teachers atquality of, and access to contingencies): US$3.5 million. reports; local level (throughsecondary education, in 4. Project data; redeployment of staff orparticular in rural areas 5. Regular follow-up hiring of new teachers);through support to school- coordination meetings of * Adequate coordinationbased pilot programs in inter-ministerial committee within MINESEB andabout 40 lower secondary and the inter-sectoral working M[NESUP to ensureschools and 10 upper party effective participation ofsecondary schools. 6. Statistics and annual all staff at all levels;Component 3: Improve Component input (including reports of FDES and ANE; * School-based and sub-access to quality textbooks contingencies): US$14.0 million. 7. Evaluation of specific projects are implementedand teaching-learning components. in a timely manner andmaterials to all primary within budget.schools in the country.Component 4: Institutional Component input (includingdevelopment for key contingencies): US$3.0 million.functions in the MINESEBat central anddeconcentrated levels.Component 5: Supportreform of higher education Component input (includingin assisting institutions to contingencies): US$5.0 million.modernize and to diversifythrough financing sub-projects under a Fund(FDES).Component 6: Support Component input (includingproject management at contingencies): US$2.5 million.central, provincial / regionaland local levels.

Form

Policy Matrix

Policy areas Primary Secondary TertiaryImplementation * Extension of community-based contractual * Community-based approach tested at * Procedures based on those

approach to the rest of the country. primary level would be extended to successfully tried out in the PHRD-* Central Ministry devolves management secondary level. financed mini-projects.responsibilities to local authorities and * School-Government collaboration definedcoordinates activities to support contractually.implementation of school contracts. * Districts (CiSco) to play key role in

coordinating community networks.Financing/Equity * 80% of future increases in public resources * 20% of future increases in public * Maintain budgetary allocations to

to education allocated to primary level. resources to education allocated to higher education at their 1997 level.* Half of non-salary education sector budget secondary level. * Grant allocations to universitiesallocated to each school. * Promote private sector participation in reviewed for greater selectivity.* Universal coverage using school-based urban areas, including opening new schools * Diversification of sources of revenue.contract approach. and contracting management services for * Increased beneficiary participation.

public schools;* Government to focus its efforts in ruralareas, in partnership with NGOs.

Staff recruitment * Decentralized recruitment and hiring * Conventions to allow private sector to * Staff development plans eligible for& development decisions at district and local levels. benefit from publicly-funded teacher FDES funding;

* Institutional establishment system (gestion training schemes. * Freeze appointment of full-time,par postes budgetaires) implemented. regular staff.* As part of school contract, support to:distance education, supervision, teaching-learning materials, and staff development.

Efficiency/Quality * School contracts to incorporate quality * Conventions between Government and * System of accreditation and qualityinputs (in addition to rehabilitation); private sector for quality support services. assurance implemented.* Differentiated designs and construction * Add lower secondary classes to primary * Diversified delivery: short-cycle,management for civil works to enable schools where appropriate to maxinmize use distance education, part-time training..communities to participate in rehabilitation of staff. * Eligibility to state-fundedand maintenance of schools. _________________________ scholarships tied to academic success.

Project Appraisal Document Annex 2Madagascar - Education Sector Development Project Page 1

Detailed Program and Project Description

Introduction

1. The proposed Program is aimed at producing cost-effectively the diverse human resourceswhich are necessary for economic, social and cultural development by improving access to,efficiency and quality of education. Drawing on the results of the implementation of the firstphase of the national Program (PNAE I) initiated in 1989, the proposed Program -- PNAE II --aims specifically at achieving three objectives:

(a) to enable every child to have access to a primary education of quality which offers a firmbasis of learning in language, mathematics and the social aspects of education (in short,reading, writing, arithmetic and the exercise of his/her role as a citizen) in order that he orshe may fulfill his or her productive role in modem society;

(b) to improve quality of, and access to, secondary education, in particular in rural areas, inorder to allow deserving students to pursue their studies; and

(c) to support the reform of higher education which was begun in 1992 in assisting institutionsto modernize and to diversify their programs of education and training.

2. The strategies proposed for the effective implementation of the Program are multiple, butcomplementary. They are based on the conception of the institution as the central place in whichthe improvement of the learning of the pupils and students takes place at all levels. They arebased on the critical role of the Heads of these institutions who, in close collaboration withteachers, pupils, parents, and the surrounding community, have to assume responsibility forachieving the goals which are set by the education system. They are expressive of political andsocial choices which favor effectiveness, equity, partnership and transparency in the managementof public goods and services. Finally, these strategies favor up-to-date access to, andmanagement of knowledge and know-how which will permit Madagascar to develop humanresources which are capable of confronting challenges of the 21st century.

3. The Project would support achievement of these objectives through implementation of sixcomponents:

(a) Component 1: Universalize quality primary education by supporting community- andschool-based projects aimed at improving access and learning outcomes in about 4,100public schools (out of 12,500 nationwide);

(b) Component 2: Improve quality and access to secondary education, in particular in ruralareas, through support to school-based pilot programs in about 40 lower secondaryschools (CEG) and 10 upper secondary schools (Lycees) (out of 695 and 94 publicinstitutions nationwide, respectively);

(c) Component 3: Improve access to quality textbooks and teaching-learning materials to allprimary schools in the country;

Project Appraisal Document Annex 2Madagascar - Education Sector Development Project Page 2

(d) Component 4: Support institutional development for key functions in the Ministry ofSecondary and Primary Education (M4NESEB) at central and deconcentrated levels;

(e) Component 5: Support reform of higher education in assisting institutions to modernizeand diversify through financing of sub-projects under a Fund for the Development ofHigher Education (FDES); and

(f) Component 6: Support project management at central, provincial / regional and locallevels.

First Component: Universalize Quality Primary Education (Total Program Cost Estimatedat US$100.0 million. Total ]DA Financing: US$ 37.0 million)

4. With the aim of securing in the long term universal access to primary education, theProgram would support IMlNESEB-community collaboration strategies which have beendeveloped and tested since 1994 (see Annex 11 for a detailed description of these strategies).This component supports the Government's goals to: (a) recruit and deploy teachers in sufficientnumber, especially in rural primary schools; (b) increase awareness of communities toward theschool-based approach; (c) develop partnership between teachers, administrators andrepresentatives of the local communities to prepare and implement school-based sub-projects; (d)improve availability and use of textbooks and other educational materials; (e) improve teaching-learning methods and classroom management; (f) strengthen district management and delivery ofadministrative and professional services to schools and teachers; and (g) provide adequateinfrastructure and equipment to primary schools.

A. The Deployment of Effective Heads and Teachers

5. Studies conducted by the Ministry of Education since 1993, as well as the experience ofPRAGAP, demonstrate the crucial importance of the Head Teacher in the process of improvingeducation. In effect, it is the primary school Head Teacher who assumes the primaryresponsibility for assuring the effective participation of the community in the school project, forthe training of teachers and for the supervision of their work as well as for the effective presenceof both staff and pupils at school, for transmitting to the Ministry of Secondary and BasicEducation (MINESEB) the specific needs of the school (textbooks, equipment and furniture, etc.)and for managing the school. In sum, the Head Teacher provides the personality of the schooland vitalizes the school project in partnership with the community.

6. The teachers have the premier responsibility for the learning of the pupils at school. Thisresponsibility requires them to be available for the pupils, i.e. to teach effectively 160 days a year,to demonstrate their ability to work with children, to give manifest of their moral and socialprobity, to show that they themselves wish to learn, to train and to improve their teachingcompetence throughout their professional career.

7. The vast majority of primary school teachers (82 percent) actually in the public primaryschools do have the required profile defined by MINESEB. However, qualified candidates arenot motivated to remain deployed in rural areas that are distant from urban centers.

Project Appraisal Document Annex 2Madagascar - Education Sector Development Project Page 3

8. In order to ensure the effective presence of competent heads and teachers the MINESEBintends to implement a multi-faceted strategy which will influence both the process of recruitmentand deployment of teachers, as well as their professional development and career management.This strategy takes account of the constraints on deployment, particularly in remote rural areas,the present limits on the initial training of teachers, the perspective of the decentralization of themanagement and administration of schools, and of a pragmatic approach to the professionaldevelopment of teachers and heads.

9. In the perspective of decentralization, administrative responsibility for the recruitment anddeployment of teachers is devolved to the authorities at school district and commune levels. Thisimportant change underlines the stated intention of Government to make the local authoritiesaccountable in the context of the "communal" or village school. In practice this implies that newrecruits are identified, chosen and deployed by the authorities at school district level (CiSco) inclose collaboration with the Heads of schools -- a devolution of responsibility which has bothadvantages and disadvantages.

10. This formula has the advantage of enabling local authorities to ensure that primary schoolteachers are both appropriate and available to work in their district. As a consequence theformula is conducive to the stabilization of personnel in their posts. Linked with a new approachto management by institutional establishment -- under which each school is allocated a number ofposts corresponding to the norms laid down by the school-mapping exercise -- this practiceaffords the opportunity to manage educational personnel more efficiently and transparently.

11. On the other hand, this new formula also encounters practical difficulties. For, contrary tothe system which has prevailed for the past 20 years, teachers would no longer enjoy theprivileges of security of employment and of automatic redeployment in cases provided for in thecurrent civil service regulations (for example, in cases of social need, ill-health and reunification ofspouses). The decentralization of responsibility for recruitment also risks encouraging nepotismat local level. Moreover, remote areas far away from centers, where initial training is offered,may be disadvantaged in recruitment of newly trained teachers, given that the natural tendency isto accept deployment in the urban areas.

12. In order to minimize such risks, the MINESEB intends to adopt a series of measureswhich will permit the reinforcement of the positive aspects of decentralization, while at the sametime assuring an equitable distribution of qualified personnel between urban and rural areas andinvesting in the professional development of teachers at all stages of their careers. Thesemeasures include:

(a) the involvement of the school district in the recruitment of pupil-teachers: thus, eachschool district within a region or province, where there is a primary teacher trainingcollege will be able to recruit and recommend a limited number of candidates, who whilecorresponding to the required profile, will be able to register in the institutions of initialtraining, on the understanding that the student who completes his or her studiessuccessfully shall serve for a minimum of three years in the school district of recruitment;

Project Appraisal Document Annex 2Madagascar -Education Sector Development Project Page 4

(b) the definition and implementation of profiles of recruitment and of methods of selection ofthe candidates, as well as the inception of a probationary period of two years for all newrecruits. Newly appointed teachers would be twinned with a teacher who already hassubstantial experience and their performance would be evaluated by a committeecomprising the Head of the school to which the teachers is deployed, the Chief Officer ofthe sub-district office (ZAP) and the education advisor ("conseiller pedagogique") fromthe same zone;

(c) the statutory requirement of each new entrant, regardless of his/her age or level ofrecruitment, to work for three years in a rural area where at least two experiencedteachers are already in post in the school or in the immediate vicinity; and

(d) the introduction of methods of education and training on a continuous basis, including thepossibility of completing secondary or higher level studies by correspondence and aboveall new programs of training and professional development which are adapted to the needsof teachers.

B. School-based Projects

13. The IDA Credit would support this objective through a sub-program (total estimated costof US$37.0 million) aimed at financing school-based projects to improve participation in qualityprimary education especially in rural areas. Related components (provision of textbooks andteaching-learning materials, and strengthening of key institutional functions within MINESEB) aredescribed in other sections of this annex.

14. Drawing on the experience gained under PRAGAP and other programs initiated in 1994,the Program will support school-based projects. The process comprises the following activities:

(a) IEC campaigns for village communities where there is a public primary school;

(b) the preparation of a school-based contract (Fanakena) which will define, starting with ananalysis of the needs of the community and the school, the objectives which have beendecided on for the school year, the responsibilities of each partner, the principal activities,a calendar for their achievement, the cost and the sources of financing;

(c) the implementation of actions which the partners to the school contract are committed(including the community, the Head Teacher and the teachers, the parents, and theMNIIESEB;

(d) the continuation of the achievement of the school contract in the context of regular visitsby the local and regional authorities; and

(e) joint evaluation of the results achieved and the impact of the Program followed by thepreparation of a new school contract for the following school year.

15. In the course of the first year of implementation of school-based projects in a schooldistrict (the initial phase), experience has shown that the school contract supports in priority thedeployment of sufficient staff to the school and the rehabilitation of the school. Thus, with the

Project Appraisal Document Annex 2Madagascar -Education Sector Development Project Page 5

aim of regaining the confidence of parents and of local authorities vis-a-vis MINESEB and tocreate mininal conditions necessary for success, it is crucial to ensure the effective presence of aHead Teacher who is accepted by the community, of teachers who are competent and available toteach, and of an adequate educational environment, i.e. one or more classrooms which respond tothe needs of the community, cupboards for storage and desks for pupils, educational materials insufficient quantities, and an appropriate school site with hedges, gardens, playground, etc.

16. The process and the modalities for the implementation of the school-based projects aredescribed in an Implementation Manual which was put together based on experiences conductedsince 1994 (see Annex 11 for an account of these experiences). The first responsibility for thisimplementation belongs to the School Council ("Conseil d'ecole") and the Head Teacher whocommit themselves through the contract to achieve the activities which have been set out in theschool project. The school and the village community are supported by the sub-district ZAPOfficers who are each responsible for the educational and administrative training of approximately10 primary schools on average, situated within a reasonable distance of a village or majorhabitation in the district. The services of facilitation and supervision of the school contract aresecured by sub-district Officer (ZAP) and the District Officers (CiSco). The School DistrictOfficer calls on and coordinates the activities of a team of specialized professionals in the field ofprimary education, educational planning, financing and management, resource management andprofessional training. The team from the school district and the ZAP Officers in their turn call asnecessary on the resources of MINESEB for specialized services such as school andadministrative inspections, initial or in-service training of teachers, professional development ofteachers, financial services, statistical and school mapping services, curricula, studies andevaluation.

17. The approach is focused on the individual needs of each school, differentiated and uniqueto each institution. Thus, the choice of the factors arises from an analysis of the needs of theschool community, which determines, through a series of workshops, the priority factors whichare to be addressed in any given period, usually lasting one school year. It is thus the prerogativeof the school partners -- the Head Teacher, the teachers, the parents of the pupils, the villagecommunity, the authorities and the services of the Ministry of Education -- to define inoperational terms the factors which will be the object of specific interventions.

18. The experience of such workshops already organized under PRAGAP indicates that eachschool has specific needs and that the school partners express these needs in their own terms. Theworkshops also permit them to choose from the factors considered those which in their view arepriorities; their number is consequently limited to three or four. Nevertheless, these factors tendto cross-check with each other and there is a similarity among schools. The following examplesare illustrative of the visits and experiences of the last few years:

(a) the familiarization of teachers with new curricula prepared by the Ministry of Education;

(b) the utilization in the teaching situation of school texts and educational support materialsproposed in the syllabus;

(c) the preparation of lessons and practical exercises on the basis of modules and learningguides contained in the new teaching programs;

Project Appraisal Document Annex 2Madagascar -Education Sector Development Project Page 6

(d) the management of time in a classroom, in particular the organization of lessons, smallgroup work, correction of exercises or of work done in school or at home;

(e) learning of reading and writing in Malagasy in the initial classes of primary school;

(f) the learning of a second language, French, in the middle and final years of primary school;

(g) the preparation of tests and other tools to measure the learning of the pupils and theirutilization to reinforce learning, to correct errors and to improve the performance ofpupils;

(h) the preparation and conduct of school activities of collaboration with the Ministry ofPublic Health on subjects such as hygiene, vaccination, drinking water, nutrition, etc.; and

(i) the preparation and conduct of school activities in collaboration with representatives ofthe National Office for the Environment on subjects such as the protection of theenvironment, forestry resources, water, etc.

19. The Program will support, to the extent of the resources available at local and regionallevels, the achievement of the objectives specified in the school contract for the provision ofgoods and services which are required: educational materials, equipment, services of informationand training, regular visits by educational advisors, working and evaluation meetings.

20. The Project would finance school-based projects and the provision of quality inputs toprimary schools in about 4,100 public primary schools (out of a total of about 12,500 nationwide)in about 41 of 112 districts (CiSco) of the six provinces (DIRESEB) of Madagascar. Theremaining schools and CiScos would be supported by projects which are being prepared byGovernment in close collaboration with donors, including UNICEF, OPEC, the AfricanDevelopment Bank, and the European Union. A typical package of quality inputs wouldcomprise: (a) delivery of textbooks and teaching-learning materials to public primary schools; (b)provision of basic management tools for Head Teachers and in-service training; (c) professionaldevelopment activities for Head Teachers and teachers, including tailored in-service programs,regular visits of supervision, documentation and dissemination of best practices, and coaching byexperienced teachers and pedagogical advisors; and (d) conduct of bi-annual national learningassessments, starting in 1999 with a view to assess changes in actual learning in the core subjects.

21. At the completion of the Project, the following results are expected:

(a) preparation, negotiation and implementation of school-based contracts which would beimplemented at the rate of 410 during the first year (e.g. 410 schools in 4 CiSco), 1,025 inyear 2 (including 615 new schools in 6 CiSco), 1,845 in year 3, 2,870 in year 4, and 4,100in year 5;

(b) the ZAP Officer and staff from the CiSco would have visited each school under contract aminimum of 4 times per year to monitor implementation of agreed upon activities specifiedin the contract and to conduct an evaluation of impact;

Project Appraisal Document Annex 2Madagascar -Education Sector Development Project Page 7

(c) financial contribution estimated at about US$500 per year for each school under contractto support activities related to school management, professional development and in-service training of teachers, changes in teaching methods in the classroom and othersupport services offered by pedagogical advisors at the District level;

(d) the construction of about 1,415 classrooms and the rehabilitation of about 8,015classrooms in 4,100 schools. The type of construction and materials used would beadapted to local conditions according to available resources. It is expected that about1,880 classrooms would be constructed or rehabilitated using modem techniques (e.g.brick and mortar, corrugated steel roof), while approximately 4,720 classrooms would uselocal materials (e.g. wood planks, mud walls, thatched roof) and the remaining 2,830classrooms would use a mixed type of design; and

(e) all project-financed schools would be furnished with adequate black boards, storagecapacity and benches.

Component 2: Improve Access to Quality Secondary Education in Rural Areas (TotalProgram Cost Estimated at US$27.5 million. Total IDA Financing: US$ 3.5million)

22. At secondary level, the objective of PNAE II consists principally in the improvement ofquality and of access, particularly in rural areas. The intended result is the improvement ofinternal and external efficiency. This policy requires that in future efforts on the part of publiceducation will need to be more concentrated. A school map will be developed corresponding tothe needs of secondary education in the context of the existing financial constraints, which willguide the MINESEB in its investments and in the distribution of resources.

23. The Government proposes to undertake reform measures at secondary level whilstincreasing enrollment. It will undertake a campaign of information and sensitization for parentsand for the public at large. According to the state of the resources available to the year 2003, it isenvisaged that enrollment in lower secondary education will increase at a rate of 2 percent peryear, and that of upper secondary schools will increase at a rate of 1 percent per year. Two-thirdsof the lower secondary schools and one-third of upper secondary schools located in rural areaswhich cover a third of students at the moment would be subject of modest investment in the firstinstance.

24. The development of secondary education will thus take place in stages in successive areas.The choice of area and their prioritization will attack the problem of regional disparities. Thecriteria for selection at the beginning of each stage of secondary education will be reviewed. Itwill therefore be opportune to improve resources allocated to institutions for their functioning andto improve administration. It will be necessary to: (a) suppress double shift working in lowersecondary education (15 percent of the classes are currently organized in this way); (b) increasethe size of classes (at the moment, class size is approximately 29 in lower secondary educationand 32 in upper secondary education); and (c) redeploy part of the educational personnel in uppersecondary education to lower secondary education, and part of the staff of lower secondaryeducation into primary education. This last measure is justified by the fact that workloads are

Project Appraisal Document Annex 2Madagascar -Education Sector Development Project Page 8

very low -- about 15 hours a week in lower secondary school and 13 in upper secondary schools -- and could improve the average level of qualification of teachers.

25. Based on successful experiments conducted at primary level, the project will supportexperimental school-based sub-projects prepared by a network of rural communities interested inimproving access and quality of secondary education. Using an approach similar to the onedeveloped for primary education, a School Council will be requested to prepare and submit aschool-based project which will be evaluated by a ad hoc committee in MINESEB. The projectwill finance the necessary technical assistance and specialist services, construction / rehabilitation,furniture, equipment, educational materials, training and staff development activities.

26. Given the innovative character of this process at secondary level, characteristics ofsecondary schools, and specific issues facing the sub-sector, the first phase of the program wouldconsist of an experiment in 4 lower secondary schools (CEG) and one upper secondary schoollocated in the four districts selected for school-based contracts under the first year of the Project.In addition, the management of one of those four schools would be contracted out to the privatesector. An evaluation would take place at the end of year 1, and the results would guide theprocess of extending the approach to an additional 45 schools during the remaining four years ofthe Project.

27. At the completion of the Project, the following results are expected:

(a) community- and school-based projects will be prepared, negotiated and implemented in 5secondary schools located in rural areas. Those institutions will have been selected in thefour Districts chosen for implementation of the primary education component with theview to ensure complementarity of approaches and synergy of local resources. Acomprehensive evaluation will be completed by the end of the first year, and the resultswill be reviewed both by local and national authorities and the Bank prior to the extensionof the approach to an additional 45 schools;

(b) a detailed program will be prepared for the remaining four years of the Project beforeSeptember 1999; and

(c) monitoring and evaluation procedures will be implemented for the remaining contracts.

Component 3: Textbooks and Teaching-learning Materials (Total IIDA Financing: US$14.0 million)

28. Based on results achieved under the on-going CRESED project (Cr. 2094-MAG) whichinclude distribution of about 2.7 million textbooks at primary level (including 15 titles in Malagasylanguage), and 0.5 million textbooks at lower secondary level, the objective of this component isto consolidate and improve access to quality materials at primary level. The Project wouldsupport the following objectives: (a) maintaining the current ratios of teacher guides:teacher atprimary level; (b) improve the textbook:pupil ratio to one book per pupil in all primary schools ofthe country; (c) improve the distribution and monitoring of textbooks and teaching-learning

Project Appraisal Document Annex 2Madagascar - Education Sector Development Project Page 9

materials; and (d) strengthen in-service training and support services to teachers to improveeffectiveness in the use of materials. The IDA contribution is estimated at US$14.0 million.

29. At the completion of the Project, the following results are expected:

(a) design, experiment and editing of 20 new titles (textbooks and corresponding teacherguides);

(b) printing and delivery of about 7.2 million textbooks (including reprint of existing titles)and 0.4 million teacher guides; and

(c) in-service training of teachers in using efficiently pedagogical materials in learningsituations in the classroom.

30. Modalities for the production of new titles, the preparation of bidding documents, thepreparation of manuscripts, the experiment of new textbooks, their edition and the printing anddistribution of textbooks and teacher guides have been defined, and an operational plan has beencompleted and appraised in July 1997.

Component 4: Institutional Development for Key Functions of the MINESEB (Total IDAfinancing: US$3.0 million)

31. The PNAE II is the product of a joint, collaborative effort of staff in the MIINESEB andIvlNESUP, based on studies, experiments and results achieved under a vast number of initiativessupported by the Government and donors. Since the early 1990's, main achievements include: amajor study on the management of MINESEB financed under the on-going CRESED (Cr. 2094-MAG); training of inspectors, school supervisors and pedagogical advisors financed under theFrench Cooperation PRESEM project; development of in-country capacity and training of staff inschool mapping and educational planning activities through a Bank-financed programimplemented by UNESCO and IIEP; experimentation and implementation of new forms ofcollaboration between the school and the local communities supported by UNICEF, the Bank andNGOs in the country; strengthening of personnel management functions (surveys, establishmentof a data base, rationalization in the deployment of staff) through project-financed activities underPRESEM and CRESED; revision of the curriculum at primary and secondary levels, productionof textbooks and teaching-learning materials by UERP, an autonomous body established in 1990in MINESEB with the assistance from the German Government and the Bank; the production of aMaster Plan for the development of higher education and the launching of quality assurancesystems supported initially by the CRESED and more recently by the Japan Government througha PHRD Grant; and the production and dissemination of two specialized periodicals (one forprimary and one for secondary level) circulated to all teachers in Madagascar with the assistancefrom the French Cooperation.

32. These initiatives were designed and have contributed to strengthening the institutionalcapacity in the ministries in charge of education at all levels of the hierarchy. However, theexperience gained in the preparation of PNAE II has demonstrated the need to consolidate andextend these capacities beyond small groups of staff who have been involved at central level, to

Project Appraisal Document Annex 2Madagascar -Education Sector Development Project Page 10

create a network between individuals and groups that have a natural tendency to work in isolationfrom one another, and to engage in essential activities which have been neglected until now,especially in the areas of learning assessment and program monitoring. In addition, theGovernment's goal to improve efficiency and accountability of public administration throughdecentralization requires major changes in management practices, long-term investments in humancapital development and major enhancements in information processing and technologies tosupport decision-making at regional and local levels.

33. The Project will support institutional development activities at central and deconcentrated(provincial/regional and local) levels aimed at supporting implementation of the Government'sProgram, especially in key areas of monitoring and impact evaluation. Adopting similar contract-based approaches, this component would finance specific, well-defined activities based on detailedTerms of Reference in the areas of educational planning, personnel management, bi-annuallearning assessments at primary and secondary levels, networking of staff and institutions, andpre-investment studies.

34. At the completion of the Project, the following results are expected:

(a) production of an annual report on sub-programs aimed at improving quality of learning atprimary and secondary levels, which will be prepared by MINESEB and transmitted to theBank and other donors before end of June of each year. These reports will assess thestatus of implementation of school-based contracts based on agreed upon performanceindicators, document issues and recommend corrective measures, propose a detailedprogram for the next period (between 12 and 24 months), including cost estimates, workprogram and budgetary resources (internal, as well as external) at each level ofmanagement. Each report will be reviewed with the Bank and other donors in the sectorprior to their translation in the annual budget and public expenditure program;

(b) support to the planning services at central, regional and local (CiSco) levels for theproduction of a school map, data collection, analysis and production of statistical reports,and detailed analysis of performance indicators;

(c) support programs and activities aimed at decentralizing personnel management andstrengthening services at regional, district and local levels in the context of the PublicService Reform;

(d) bi-annual national learning assessments at primary and secondary levels by year 2 and year4 of the Project. Standard tests will be developed and random testing will be conductedby teams of specialists in MINESEB. Results will be published and disseminated topartners in the sector;

(e) workshops will be held each semester to review procedures adopted for the managementof school-based contracts, and to revise, as necessary, the Manual of Operations;

Project Appraisal Document Annex 2Madagascar -Education Sector Development Project Page 11

(f) networks will be established and professional exchanges will be conducted with countriesthat have experimented similar approaches, including El Salvador, Columbia and Senegal;and

(g) feasibility and pre-investment studies will be conducted to prepare future investments inthe sector.

Component 5: Support Reforms of Higher Education (Total Program Cost Estimated atUS$ 25.5 million. Total IIDA Financing: US$ 5.0 million)

35. The inception of the policy of autonomy for public universities and the "assainissement"of university campuses from 1992 onward, the creation of Higher Institutes of Technology (ISTs)in 1991, the development of distance higher education from 1993, and the regrouping of a numberof service centers under the concept of a "Technopole" at the University of Toamasina in 1995are examples of the courageous decisions and important innovations which have marked thebeginning of reform of higher education as part of the first national plan for education (PNAE I).In addition and in parallel with these developments, an exercise of strategic reflection, of planning,costing and development of new systems and approaches was conducted, which resulted inJanuary 1997 in the publication of the Master Plan for Higher Education. This Master Plandefines two major policy orientations: modernization and diversification of the institutions ofhigher education and their programs.

36. The first of these, modernization of institutions and programs, is aimed at creating, bymeans of new relationships between the partners involved, a system of higher education whichwill contribute actively to the overall development aims set by the Government of Madagascar,namely: to liberalize the economy, to open Madagascar to the world; to stimulate financialparticipation on the part of all beneficiaries and to improve the utilization of scarce publicresources by gains in internal and external efficiency. Traditional higher education in theMalagasy universities has not responded to the needs of an economy which is evolving inresponse to the requirement for human resources which can sustain an economic development,which includes opening up to world markets and to the globalization of economic exchange. TheMaster Plan recognizes this gap and this challenge and it traces out important new policyorientations, including:

(a) the re-examination by the traditional universities of their mission, their structure ofgovernance and the realignment of their management and financing with a new mission,more supportive of the nation's development;

(b) the encouragement of the creation of private universities and institutions;

(c) the rapid and effective development by higher education institutions of short programs ofvocational orientation which respond more rapidly and closely to the needs of commercialand industrial enterprises;

(d) the creation of institutional networks for research, for the application of new technologies,for access to, and management of, knowledge and for its dissemination not only amongMalagasy universities and institutions of higher education themselves, but also urgently

Project Appraisal Document Annex 2Madagscar - Education Sector Development Project Page 12

with partners from the economic sectors and with centers of excellence throughout theworld;

(e) support for the development at home and abroad of networks amongst the variouspartners (professors, lecturers, researchers, employers, students, professionals andtechnicians) to enrich the lives of institutions; and,

(f) equipment of institutions with central administrations and management which.have thenecessary and effective tools to measure the internal and external efficiency of theseinstitutions and to regulate and adapt financial policies to support their development.

37. In response the challenge of these new orientations, a range of policies, measures andactivities have already been put in place or are currently proposed. With the assistance of donors,a range of new short cycle programs are presently in development in a number of institutions andall institutions are in the process of aligning their development plans with the Master Plan. Theprivate sector of higher education is also developing rapidly with programs in particular in theareas of business, information technology and social sciences. Distance higher education,although recent, has experienced a rapid increase in programs and student numbers and models ofthe open university are currently under study with the aim of serving a much larger number ofstudents at an improved unit cost, not least in remote areas, as well as to diversify,' the range ofprograms and to respond to the need for continuous retraining at a distance via the media.Regional initiatives such as the creation of the University of the Indian Ocean and joint programswith other universities including La R6union are under active planning. New measures for theaccreditation of all programs and the evaluation of all institutions are currently beingimplemented.

38. Diversification of the institutions and their programs aims at creating favorable conditionsfor the improvement of the quality of services provided, whether programs, consultancy orresearch. The internal diversification of institutions presupposes that they are capable of creatingnot only new programs or new educational strategies, but also that they assume the responsibilityto do so. For this goal, the institutions need to put in place: tools of statistical and financialmanagement which will permit the measurement of the real economic costs of educationalprograms and of the quality of programs and services; policies for differentiated financing andsupport for programs which respect nevertheless the criteria and overall orientation laid down byGovernment. The diversification of programs implies the establishment of a rigorous process ofanalysis of the needs for training and education expressed by the world of work and theenlargement of the range of sources and methods for the dissemination of scientific knowledgeand techniques.

39. The Master Plan recognizes these challenges and identifies a number of new orientations:

(a) the Ministry responsible for higher education should introduce in close collaboration withthe institutions, teachers and researchers, a system of institutional analysis and ofinstitutional and curricular quality assurance;

(b) the policy of institutional autonomy, begun in 1992, requires on the one hand transparentand rigorous norms of administration and financial management, elaborated by the State

Project Appraisal Document Annex 2Madagascar -Education Sector Development Project Page 13

and applied to institutions of higher education, and on the other hand administrativestructures and institutional management systems which will guarantee transparency andeffectiveness;

(c) institutions should prepare and subject to the approval of their senate a tri-annualdevelopment plan which will serve as a basis inter alia for the definition of financetransferred from the State;

(d) the institutions should in the context of their development plan diversify their sources offinancing in order to gradually reduce the Government's proportion of the funding of theirservices. Measures for cost recovery of social services will also be put in place as well asdevelopments in the privatization in the management of certain services, an increase indirect beneficiary contributions, and award of scholarships to students on the basis ofeducational merit; and

(e) institutions will be encouraged to adopt each at their own level policies for the admissionof students and for educational regulation concerning repetition and student pathways.Measures to limit the number of new entrants (numerus clausus) to select students on thebasis of their files or competitive examination, the limitation of the number of repetitionsand to the maximum number of students in a Faculty, a Department or a Program havealready been implemented and achieved satisfactory results, for example in the case of theHigher Institutes of Technology.

40. The Project will support the inception of the above new orientations by means of thecreation of a Fund for the Development of Higher Education (FDES) which will be madeavailable to the ministry responsible for higher education and the public and private institutions ofhigher education. FDES will be administered by a Council which will include representatives ofthe universities, research institutes, private institutions, commercial and industrial interests, of theGovernment and of distance education. The Council will be responsible for the approval of sub-projects, for the monitoring of their achievement and for the evaluation of their impact. All publicand private institutions of higher education recognized by the ministry responsible for that sub-sector will be eligible for finance and support from the FDES on condition that they present sub-projects which respect the following objectives and criteria:

(a) the proposer of a sub-project will have to demonstrate that the sub-project is part of thedevelopment plan of the institution and if it concerns a public institution, that thisdevelopment plan has been approved by the ministry responsible for higher education;

(b) the sub-project will have to be linked with or associated with institutions partners, forexample a University, institute, research center or scientific foundation which has itsprincipal place of business outside Madagascar;

(c) the proposer and the associated institutions will have to demonstrate the feasibility of thesub-project;

(d) the proposer of a sub-project will have to demonstrate (i) the availability of internalresources amounting to at least 25 percent of the total cost of the project for the first yearof its implementation; (ii) the availability of a contribution from associate institutions

Project Appraisal Document Annex 2Madagascar -Education Sector Development Project Page 14

amounting to at least 25 percent of the cost for the first year; and (iii) if there is scope, aviable pluri-annual financing plan. In consequence, the FDES will not be able to providemore than a maximum of 50 percent of the financing for the first year of implementation ofa sub-project;

(e) eligible sub-projects will be classified in one or several of the following three categories:(i) a higher level training program offered full- or part-time in one or more of theassociated institutions, for example the Malagasy proposer and one of the otherinstitutions, or by distance methods; (ii) a piece of action research or of applied research;and/or (iii) an operation which has the objective of institutional reinforcement, for examplethe inception of an administrative structure or systems of management, the professionaldevelopment of university teachers or institutional research, the establishment of anetwork of scientific exchanges, either technical or cultural, etc.;

(f) a training sub-project should permit the organization in the first year of its implementationof learning and training activities which will take place in Madagascar or abroad inassociation with institutional partners;

(g) such training will need to be approved in part or in whole and on a joint basis with theinstitutional partners, and all institutions concerned will need to be involved in either a partof or the whole of the examination of the work of the students;

(h) a sub-project which involves action research will have to associate, in addition to theinternational partners, public or private enterprises in Madagascar which are active in thedefined area; and

(i) a sub-project for institutional reinforcement will need to be able to benefit at least threeinstitutions of higher education in Madagascar, or preferably a national network of publicor private institutions in Madagascar, and the proposer should be able to give proof thatinstitutional agreements between the beneficiary institutions have been signed before thesubmission of a sub-project to the Council of FDES.

41. Procedures relative to such matters as the elaboration of a preparatory project, the criteriafor eligibility and financing, the approval of sub-projects and their monitoring, the mode offinancing and the control of expenditures financed by FDES, the monitoring and evaluation ofsub-projects, are detailed in the Manual of Procedures of FDES.

42. At the completion of the Project, the following results are expected:

(a) about 20 pre-projects (for which participation of the FDES is limited to a maximum ofUS$20.000) and about 50 sub-projects (for which participation of the FDES is limited to amaximum of US$100.000) will be implemented;

(b) partnerships will be negotiated and signed between malagasy and foreign institutions ofhigher education for the implementation of these sub-projects; and,

(c) the Council, the General Assembly, the FDES and a Panel of international experts will beoperational, and complementary sources of finance and partnerships will be investigated.

Project Appraisal Document Annex 2Madagascar -Education Sector Development Project Page 15

Component 6: Support to project management (Total IDA Financing: US$2.5 million)

43. To ensure effective and efficient management of the project-financed activities in supportof the PNAE II, a small Project Management Unit (PMU) will be established. The PMU willcomprise a General Coordinator, assisted by Heads of Components -- Primary, Secondary andFDES, represented by its Executive Secretary -- recruited and hired by Government under theauthority of the two Ministers in charge of primary and secondary education, and, highereducation. In addition, the PMU will recruit two specialists: one in charge of project accounting,and one in charge of procurement operations. Detailed Terms of Reference have been preparedfor each of these positions.

44. The PMU will coordinate implementation of project-financed activities with line managersand staff at all levels of MINESEB and MINESUP who will be responsible for actualimplementation of contracts and project-financed activities. At central level, Heads ofcomponents will liaise with staff in the Directorates of the Ministries to ensure that agreed upongoals, strategies and action plans are understood and shared fully, and that detailed activitiesfinanced under the IDA Credit and other donors involved in the sector are complementary andefficiently implemented. At provincial and regional levels, the PMU will liaise with the Directorsand their staff to disseminate information on the Program and the Project, collect and analyzerelevant information, process decisions, monitor implementation and evaluate results. At locallevel, the PMU will organize training on implementation procedures for staff in the CiSco (Headof the CiSco, assistants, pedagogical advisors, and Heads of the sub-districts or Chefs ZAP),facilitate management, monitor progress and evaluate results.

45. Production and dissemination of information, experiences and knowledge will be builtaround networks of managers and staff through publication and dissemination of good practices,exchange programs and professional development activities in Madagascar and abroad.Beneficiary assessments, joint annual evaluations, learning assessments and mid-term review willbe conducted under the overall coordination of the PMU, and results will be disseminated with theview to inform decision, take appropriate corrective measures, and revise and improve the Manualof Operations for the Project at primary and secondary level and the Manual of Procedures of theFDES.

46. Also, the PMU will participate in the overall coordination of the PNAE II by providingdetailed quarterly reports, exchanging views and participating in decisions in coliaboration withthe Program Coordinator and the inter-ministerial working group.

'Project Appraisal Documen¶t Annex 3Madagascar - Educaton Sector Development Project Page 1

REPUBLIC OF MADAGASCAREDUCATION SECTOR DEVELOPMENT PROGRAM

Total Estimated Cost and Sources of Finance(expressed in USS million)

Source of Finance TotalLevel of Education / Training Government Donors (of which IDA) Communities USS million As%

I I I Beneficiaries | of total

Primary Education 10.0 86.0 (55.5) 4.0 100.0 55%

Secondary Education 4.0 22.0 (4.5) 1.5 27.5 15%

Higher Education 4.0 20.0 (5.0) 1.5 25.5 14%

Sub-Total for Education 18.0 128.0 (65.0) 7.0 153.0 84%

Sub-Total for Vocational Training 1/ 5.0 22.0 0.00 3.0 30.0 16%

TOTAL 23.0 150.0 (65.0) 10.0 183.0 t0o%

As a % of total 13% 82% 36% 5% 100%

1/ Based on Government request, the Bank is considering a separate financing for vocational training.

Project Appraisal Document _ Annox cMadagasar - Education Sector Development Program Page 2

REPUBLIC OF MADAGASCAREDUCATION SECTOR DEVELOPMENT PROGRAM

Estimated Cost for Primary, Secondary and Higber Educationby Level of Education, Category of Expenditure and Sources of Finance

(expressed in USS million. except otherwise noted)

. | Total Avcrage | Sources of FinanceAssumptions (5-year Program) Annual Goverment Donors 1 Communities

I I ~ ~ ~~ ~~~~I I I Be~neficiariesI - PRIMARY EDUCATIONCategories of Investments

Redeployment of Staff S.000 teachers 2.5 0.5 2.5 0.0 0.0Program Management 10/. of total 10.0 2.0 1.0 9.0 0.0Quality Inputs USS3 /pupil/yewr 21.0 4.2 2.1 18.9 0.0Infrastructures Remaining balance 66.5 13.3 4.4 58.1 4.0

Total 100.0 20.0 10.0 86.0 4.0

A. Redeployment of Staff 8.000 teachers 2.5 0.5 2.5 0.0 0.0

B. Program ManagementCentral Level (MINESEB) 2% coordination 2.0 0.4 0.1 1.9 0.0Regional (DEPESEB) 2% data processing 2.0 0.4 0.1 1.9 0.0District (CiSco) 3% management 3.0 0.6 0.2 2.9 0.0Sub-district (ZAP) 3% monitoring 3.0 0.6 0.2 2.9 0.0Sub-total 10.0 2.0 0.5 9.5 0.0

B. Quality InputsTextbooks; teaching-learning mat'ls USS2 /pupil/yr 14.0 2.8 0.7 13.3 0.0Management tools for School Head USSO.20 /pupilUyr 1.4 0.3 0.1 1.3 0.0Professional development USSO.60/pupilUyr 4.2 0.8 0.2 4.0 0.0Learning assessment USSO.20/pupilUyr 1.4 0.3 0.1 1.3 0.0Sub-total 21.0 4.2 1.1 20.0 0.0

C. InfrastructuresWell / fresh water Sectoral projectsLatrines Community 2.5 0.5 0.0 1.8 0.8Classrooms 54.4 10.9 5.4 46.2 2.7Storage (material) 1.9 0.4 0.1 1.7 0.1Furniture and equipment 7.7 1.5 0.5 6.8 0.4Sub-total 66.5 13.3 6.0 56.5 4.0

Summary: Average Investment (USS)by School 12,500 6.552 1,310 544 5,687 316by Sub-district (ZAP) 1,250 71.280 14,256 5,726 62,339 3,160by District(CiSco) 112 822,321 164,464 65,247 721,191 35,268by Region / Province (DEPESEB) 6 15.916.667 3.183,333 1,246,275 14,000,560 658.333MINESEB: program management NA 2,000,000 400,000 100,000 1,900,000 0

11 - SECONDARY EDUCATIONCategories of Investments

Program Management 10M of total 2.5 0.5 0.4 2.0 0.2School-based Sub-Projects Allocation 25 0 5.0 3.6 20.0 1.4

Toal 27.5 5.5 4.0 22.0 1.5

III - HIGHER EDUCATIONCategories of InvestmentProgram Management 10% of total 2.5 0.5 0.4 2.0 0.2Fund for Higher Education (FDES) Allocation 5 0 1.0 0.0 5.0 0.0Other Inputs 180 3.6 3.7 13.0 1.4

Total 25 5 5.1 4.0 20.0 1.5

GRAND TOTAL 153 0 30.6 18.0 128.0 70

Project Appraisal Document- Annex 3Madagascar - Education Sector Development Project Page 3

Republic of MadagascarEducation Sector Development Program

Estimated Program Costs by Component, Local / Foreign and Contingencies 1/(expressed in USS million)

Program Component Local Foreign Total I% Foreign 1% Base__________________________________________ . I Exchange |Cost

A. Universalize Primary EducationI. Deployment of Staff in Schools 2.4 0.0 2.4 00% 2%2. Program Management 7.1 2.4 9.4 25% 7%3. Quality Inputs to Schools 3.0 16.7 19.7 85% 14%4. Improved Infrastructures 22.2 40.3 62.5 65% 44%Component sub-total 34.5 59.4 94.0 63% 66%

B. Inmprove Access to Secondary Education1. Program Management 1.7 0.6 2.3 25% 2%2. School-based Sub-projects 8.2 15.1 23.3 65% 16%Component sub-total 9.9 15.7 25.6 61% 18%

C. Modernize and Diversify Higher Education1. Program Management 1.5 0.5 2.0 25% 1%2. Fund for Higher Education (FDES) 1.4 3.3 4.7 70%/o 3%3. Other Inputs 5.0 11.6 16.5 70% 12%Component sub-total 7.9 15.3 23.2 66% 16%

Total Baseline Cost 52.3 90.5 142.8 63% 100%/o

Physical Contingencies (3% of Base Cost) 1.6 2.7 4.3 63% 3%Price Contingencies (4% of Base Cost) 2.2 3.8 5.9 63% 4%

Total Program Cost 56.0 96.9 153.0 63% 107%j

1/ Total does not include the sub-program for Vocational Training (estimated cost of US$30.0 million)

Project Appraisal Document Annex 3Madagascar - Educaton Sector Development Project Page 4,

REPUBLIC OF MADAGASCAREDUCATION SECTOR DEVELOPMENT PROJECTComponent 1: Universalize Quality Primary Education

Estimated Costs for School-based Projects(expressed in USS million, except otherwise noted)

Basis for calculation Implementation CalendarYear I Year2 Year3 Year4 Year5 Total

AssumptionsTotal number of schools 4,100Number of classrooms per school 2.3 9,430

to be rehabilitated 85% 8,016 802 1,202 1,603 2,004 2,405 8.016to be constructed 15% 1,415 141 212 283 354 424 1.415

Distribution / type of constructionconcrete 20% 1.886 19 283 377 472 566 1.886half concrete I half traditional 30% 2,829 283 424 566 707 849 2.829traditional / local materials 50% 4,715 472 707 943 1,179 1,415 4.715

Distribution of contracts per year Par annde 10% 15% 20% 25% 30%

number of new contracts 410 615 820 1,025 1,230cumulative total 410 1,025 1,845 2,870 4,100 10,250

Distribution of classrooms per yearnumber of classrooms 943 1,415 1,886 2,358 2,829 9,430

Detailed estimated costs

I - School-based ContractsA. Management of school-basedcontracts IOOS/year 0.10 41 103 185 287 410 1.025B. School Management SOSlyear 0.05 21 51 92 144 205 513C. Quality Improvement 200Slyear 0.20 82 206 371 577 824 2.060D. Teachers' Professional Develop. 150S/year 0.15 63 157 282 439 627 1.568E. Construction

concrete 7000S/classroom 7.00 198 297 396 495 594 1.980half concrete I half traditional 5000S/classroom 5.00 212 318 424 530 637 2.122traditional / local materials 2000S/classroom 2.00 141 212 283 354 424 1.415

F. Rehabilitationconcrete 2800S/classroom 2.80 449 673 898 1,122 1,347 4.489half concrete / half traditional 2000S/classroom 2.00 481 721 962 1,202 1,443 4.809traditional / local materials 800$/classroom 0.80 321 481 641 802 962 3.206

G. Furniture and Equipment 650S/classroom 0.65 615 922 1,230 1,537 1.845 6.148H. Professional Services (for Works) 150S/classroom 0.15 143 215 287 358 430 1.433

11 - Institutional BuildingSupport to ZAP and CiSco 130S/school 0.13 53 134 240 374 534 1.336

Total - Base CostAnnual 2.820 4.491 6,291 8,221 10,282 32.10;Cumulative 2.820 7,311 13,602 21,823 32,105

Contingencies: 1.04 1.04 1.08 1.12 1.17 1.22

Total Cost (incl. Contingencies)Annual 2.933 4.857 7,076 9,618 12,509| 36.993

Cumulative 2.933 7.790 14.867 24,484 36,993

Project Appraisal Document Annex 3Madagascar - Education Sector Development Project Page 5

REPUBLIC OF MADAGASCAREDUCATION SECTOR DEVELOPMENT PROJECT

Component 2: Improve Quality and Access to Secondary EducationEstimated Costs for School-based Projects

(expressed in USS million, except otherwise noted)

Basis for calculation Implementation CalendarYear I Year 2 Year 3 Year 4 Year S Total

AssunptionTotal Number of Schools 50 50Number of Classrooms per School 7.5 375

to be rehabilitated 50% 188 19 28 38 47 56 188to be constructed 50% 188 19 28 38 47 56 188

Distribution / type of constructionconcrete 100% 375 38 56 75 94 113 375half concrete / half traditional 0% 0 0 0 0 0 0 0traditional / local materials 0% 0 0 0 0 0 0 0

Distribution of contracts per year Per year10% 15% 20%/o 25% 30%/O

number of new contracts 5 8 10 13 15cumulative total 5 13 23 35 50

Distribution of classrooms per yearnumber of classrooms 38 56 75 94 113 375

Detailed Estimated Costs

I-- School-based ContractsA. Management of School-basedContracts 100S/year 0.10 I 1 2 4 5 13B. School Management 100S/year 0.10 I 1 2 4 5 13C. Quality Improvement 300S/year 0.30 2 4 7 11 15 38D. Teachers Professional Develop. 300$/year 0.30 2 4 7 11 15 38E. Construction

Concrete 9000S/class 9.00 169 253 338 422 506 1.688F. Rehabilitation

concrete 4500S/class 4.50 84 127 169 211 253 844G. Fumiture and Equipment 800S/class 0.80 30 45 60 75 90 300H. Professional Services (for Works) 270$/class 0.27 10 15 20 25 30 101

II - Institutional BuildingSupport to CiSco 300S/CEG 0.30 2 4 7 11 15 38

Total - Base CostAnnual 299 454 611 772 935 3.070Cumulative 299 752 1,364 2,135 3,070

Contingencies 1.04 1.04 1.08 1.12 1.17 1.22Total Cost (incl. Contingencies)

Annual 311 491 688 903 1,137| 3.5291Cumulative 311 801 1.489 2,392 3.529

Project Appraisal Document Annex 4Madagascar -Education Sector Development Project Page 1

Economic Analysis

This annex addresses two important economic issues: (a) the rationale for publicinvolvement in the education sector through both its efficiency and its equity dimensions; and (b)the financial sustainability of the proposed program.

1. Public Involvement in the Education Sector

Public resources are optimally used in the education sector when their level anddistribution within the sector are such that they contribute most efficiently to economic growth(efficiency) and to poverty reduction (equity). Section A, below, discusses the issue ofefficiency and its implications for education sector budget allocations in Madagascar. Section Bdiscusses equity issues and ensuing targeting recommendations for the education sectorinvestment program.

A. Efficiency

A.1 A critical discussion of the theory

Efficiency has long been taken to mean that a productive project or program shouldexhibit high social returns to investment. Table 1 below shows rates of return by education levelfor Madagascar and for sub-Saharan Africa. In the literature, they appear as "social" rates ofreturn. However, insofar as they do not take externalities into account, they do not reflect fillbenefits to education. They are in effect closer to private rates of return with the difference thatcosts here include those not directly incurred by the households.

Table 1: "Social" internal rates of return to education"Social" internal rates of return | Primary Secondary l iher |

Sub-Saharan Africa 24% 18% 11%Madagascar- public schools r 21% 14% 6%Madagascar - private schools 36% 16% 8%From Rasera (1988) & Psacharopoulos (1994)

The pattern in Madagascar is similar to the rest of sub-Saharan Africa with rates ofreturn to primary education far exceeding those of secondary and tertiary education. The tablealso suggests that, in Madagascar, public education at all levels is a lesser attractive option thanprivate education, and that returns to public education are consistently lower than the region-wide average. These results must not be taken face value given the uncertain robustness of thedata utilized for these computations.

While it is clear that any investment program envisaged should demonstrate that theassociated benefits outweigh the costs, it is not necessary that it display high rates of return.Indeed, if rates of return to a project are high, it could persuasively be argued that the proposed

Project Appraisal Document Annex 4Madagascar - Education Sector Development Project Page 2

investment is crowding out a lucrative private endeavor. The rationale for investment of publicfunds and the meaning of efficiency for the public sector are slightly different.

There are gains to public intervention in a sector when the pure market equilibrium issub-optimal from the perspective of society and when such an intervention corrects marketfailures. In the case of education, such market failures are typically in the form of"externalities." Households, left on their own, would invest in the education of their children tothe extent that their private benefits sufficiently exceed the costs they incur. From theperspective of society, however, the outcome of this system is unlikely to be optimal becausehouseholds do not take into account the public benefits from education (impact of education onfertility, health, co-worker productivity, etc.). Returns computed from the perspective ofsociety would, in this case, exceed private returns, thereby warranting higher investment levelsthan in the pure market situation. Some form of public intervention in the education sector istherefore justified when social rates of return exceed private rates. The difficulty lies incomputing those social rates - valuing externalities having proved a near-impossible task. Fromthat perspective, table 1 above is only mildly interesting for the policy-maker.

Mingat and Tan (1996) have attempted to address this problem head-on and to capturethe externalities associated with different education levels or different groups of countries. Table2 summarizes their findings which provide an economically sound basis for making policyrecommendations for public sector intervention.

Table 2: Rates of return calculation based on full benefits to educationI__ _____________ 7Groups of countries |

Education levels Low-income Middle-income High-incomePrimay 47% 39% NASecondary 8% 52% <0%Tertiary <0% <0% 20%0 XMingat & Tan (September 1996)

Madagascar belongs to the low-income category for which the social returns (i.e.,inclusive of externalities) to primary education are very high and far exceed private rates ofreturn, suggesting that there are economic efficiency arguments for public intervention in thissub-sector. Returns to post-primary levels of education, on the contrary, are lower than privatereturns, suggesting that private sector involvement should be encouraged for efficiency reasons.

The policy implications from the discussion above are that the government should investin education because it is a high-yield investment, and particularly in primary education bothbecause is it- associated with substantial externalities and because it is the best means to enablethe poor to build their human capital.

A.2 Implicationsfor the allocation ofpublic resources in the education sector

This section examines whether the present patterns and levels of public spending inMadagascar are consistent with the above recommendations. More specifically, it discusses

Project Appraisal Document Annex 4Madagascar -Education Sector Development Project Page 3

which budgetary reallocations would be advisable at various levels (inter-sectoral, intra-sectoral,and within education sub-sectors) and whether they are realistic.

A. 2.1 Inter-sectoral allocations

Does the government of Madagascar spend enough in the education sector? Figures 2and 3 below indicate relative spending in primary and secondary education in Madagascar.

Figure 2: Spending in primary & secondary education/ total spending

40.0%

35.0%

30.0%n- -+ Public spending in educaton

25.0% (prim+secytotal public spendingincluding debt service

20.0% -_- Pubic spending In educaton(prim+secYtotal public spending

15.0% - 0 minus debt service

10.0%

5.0%

1900 1991 1992 1993 1994 1995 1996 1997

Figure 3: Recurrent public spending in education I GDP

3.0%

2.5%i

2.0% pripmary + secondary GDP

1.5% -V~,primrry + secndary+ teriary IGDP

1.0%

0.5%

0.0%1990 1991 1992 1993 1994 1995 1996 1997

Although they still compare favorably to the SSA average, allocations to the educationsector as a percentage of total spending' are at decade low. There is some room therefore tomodify the inter-sectoral allocation of public resources in favor of the education sector2.

Education sector public expenditure represented 17.2 percent of public spending including debt service in1997. The average for SSA stands at 15 percent.

2 This recommendation is consistent with the CAS: "reallocations will aim to increase oudays on basichealth, primary education, key rural infrastmcture and public security." (page 7)

Project Appraisal Document Annex 4Maldagascar - Education Sector Development Project Page 4

While Madagascar still allocates a reasonable share of its total public spending to theeducation sector, the absolute level of spending in the sector is clearly insufficient. For the sakeof comparison, public spending in the education sector was 1.5% of GDP in Madagascar in1997, compared to an average for sub-Saharan Africa of 3.6% of GDP. This is ultimately anissue of increasing public revenues and is discussed in the CAS3 which recommends an increasein tax revenue to 11% of GDP by 1999 from its current level of 9% of GDP. The CAS alsosuggests that sustained growth would allow public spending in the education sector to reach thedesired 3.5% of GDP in the medium-term. In the short-term, the government4 aims to raiserecurrent spending in the education sector to 2% of GDP by the year 2000.

A.2.2 Intra-sectoral budgetallocations

The above section established that there is some latitude to increase the education budgetby increasing the share of education as a percentage of total spending. This does not ensure thatprimary education is and will be adequately funded. This section discusses the desirability andfeasibility of resource reallocations between education sub-sectors. Figures 4 and 5 below,show allocations of public resources by education level in 19965.

fta kdad(adymom,mmmbttfl F19L5 :b=aw=1r _qh1y.. bdgfo

Tollky 5A

Taf

Rilwy&9mtXy ~~~~~~T.ddw &\1a

It is clear from the above two figures that the bulk of the education sector budgetdoes go to primary and secondary education. However, reallocations away from technicaland vocational and higher education and into primary and secondary could be necessaryand could be feasible. It is also clear from the above figures that allocations to the primaryand secondary levels are essentially for the payment of teachers. Figure 6 below shows thismore explicitly.

3 Country Assistance Strategy, Report No. 16249-MAG, Jan. 1997.

4 As expressed in the 'Document Cadre de Politique Econoniique'.

5 Public spending data could not be obtained in a disaggregated form for primary and secondary levels. Forthe sake of illustration, in the Republic of Korea, the breakdown for public spending in education is: 44%for the primary level, 34% for the secondary level, 7%/. for the tertiary level, and 15% for administation.

Project Appraisal Document Annex 4Madagascar - Education Sector Development Project Page 5

Figure 6: Education sector recurrent budget breakdown, 1996

90.0%_

80.0% / 70.0% / |,l

PnSrlna & Technical Tertiary Others TotlSecondary & Education

Vocational

The share of the primary education budget that is spent on quality inputs istherefore minimal. There might be a strong case for reallocating some of the salary andnon-salary budget from higher education to primary education, in particular, in view of thefact that (a) that the non-salary university budget includes unsustainable fellowship andscholarship allowances; and (b) that a number of services could be privatized, and thatbeneficiary contribution increased at university level6.

The implications from the above discussion for the sector investment program canbe summarized as follows: (a) it is quite realistic to assume that the education sectorbudget will increase to 2 percent of GDP by the year 2000; indeed, the education sectorbudget as a percentage of total spending is at a historical low, and there is scope for someinter-sectoral reallocations towards education; (b) there is room for further reallocationswithin the education sector, away from university subsidies and grants and into qualityinputs for primary education.

The implication for tertiary level institutions is that they will have to move quicklyto near financial autonomy. The proposed Fund for the Development of Higher Education(FDES) is intended to help overhaul the system to one that is leaner, more autonomous, ofhigher quality, and more attentive to external efficiency. The FDES is not expected tocrowd out private investment in the sub-sector since private tertiary institutions will beable to compete for funding. In addition, one of the expected benefits of the FDES is tomodify institutional behavior towards public financing, making the system more responsiveto labor market signals and cost effective.

Be Equity

6 In the Republic of Korea, beneficiary contributions account for 2% of recurrent spending at primarylevel,; 41% at lower secondary level; 73% at upper secondary level; and 77% at higher level.

Project Appraisal Document Annex 4Madagascar - Education Sector Development Project Page 6

There are other valid reasons why the public sector should want to intervene in theeducation sector. The national economic strategy is one of pro-poor growth, and thegovernment is concerned with enabling the poor to participate in the growth process andmake use of the new employment opportunities. Education, and in particular primaryeducation, is a privileged instrument for helping the poor augment their human capital sothat they can partake of economic growth. It should be noted that while education is anecessary condition for individuals from poor households to benefit from growthopportunities, it is not a sufficient one: if there is little or no growth, it is likely that manywith an adequate level of education will remain poor.

This section examines some of the dimensions of equity and discusses whichmodes of targeting (urban v/s rural, male v/s female, high v/s low incomes) would be themost appropriate levers for reducing inequities in Madagascar.

RI Equity ofpublic spending in education

This section looks at the distribution of cumulative spending in education. Thelonger students stay in the education system, the more they cumulatively benefit frompublic subsidies. A university student will already have cumulated public subsidies for theduration of his/her primary and secondary schooling; a contrario, a child who has neverattended school will never have benefited from public spending in education. The graphbelow is accordingly built on the basis of enrollments and estimated unit costs at eacheducation level.

Figure 7: Lorenz curve for cumulative public spending in education

100%

190%

l 80%5

L 70%80%50.

.M 50%

20%I0%

0% 10% 20% 30% 40% 50% 6% 7% W% 90% 100%

% o popubl.onGini coefficient: 0.74

The graph indicates that about 40% of the population has never benefited frompublic subsidies in education leading to a very inequitable of distribution of publicresources allocated to the education sector, as indicated by a Gini coefficient of 0.74.

Project Appraisal Document Annex 4Madagascar - Education Sector Development Project Page 7

Increases in primary enrollments and in primary unit costs are both equity-improving, asthe simulations in tables 8a and 8b below show.

Table Sa: Gini coeffident with vadation In pdmary Table 8b: Gini coefficent with vadtlons In prlmfny0.74 Iit ee unit costs0.720.70 0.740.68 0.720.66 0o700.64 0.680.62 0 I I

60 65 70 75 80 85 90 S0,OoO 60,000 70,00 OD,0DO 90,000 1W,0

Prinamy ,woUllniut rato unK cost (FMI)

B.2 Income disparities

In view of Government's objective to promote pro-poor growth, it is important toverify whether and to what extent income disparity is likely to be a source of inequitableaccess to education. The Poverty Assessment for Madagascar7 shows quite clearly thatcurrently children from poor and rural households are far less likely to attend school thantheir counterparts from richer urban households. Table 3 below summarizes the enrollmentsituation as of 1994.

Table 3: Gross Enrollment Ratios, All Madagascar, 1994Gross Enrollment Ratios (%) ]I Total Poorest 20% Richest 20%Primary 83 48 113Rural 73 44 92Urban 126 107 138Secondary 18 2 53Rural 9 1 23Urban | 48 9 82

Because of low enrollments of children from poor rural households, the incidenceof public spending in education currently exhibits a heavy bias in favor of rich urbanhouseholds. The inequitable distribution of education subsidies is indicated in Figure 9below8 .

7 Madagascar Poverty Assessment, Report No. 14044-MAG, June 28, 1996.

8 Poverty Assessment; volume 2, page 72, figure 5. 1.

Project Appraisal Document Annex 4Madagascar - Education Sector Development Project Page 8

Figure 9: Per Capita Education Subsidies by Expenditures Quintile

30,000

25,000

a. r l lUnUrve I

EL 15,000 - Secondary

a1,000 iPnmary0

5,000

0

0 ~ ~ ~ ~ ~ ~ ~ CL a: D

Quintiles

The large variation in the per capita subsidy for all education between urban andrural areas is driven by the inequality in distribution of secondary-level and university-levelsubsidy. Primary-level per capita subsidy in urban and rural areas are comparable.Secondary-level per capita subsidy in urban areas is four times as high as that in ruralareas. This suggests that efforts need to be made to expand access and use of secondaryeducation in rural areas. Private provision of secondary and tertiary education would, onthe other hand, be most appropriate for rich urban areas. The Government of Madagascarhas indicated, particularly at tertiary level, its intention to solicit higher beneficiaryparticipation. The Master Plan for Higher Education9 supports a number of policymeasures that, in the short run, wili: (a) double enrollments in private tertiary institutions,(b) double beneficiary contributions in public tertiary institutions; (c) privatize a variety ofservices provided to student.

R3 Regional disparities

This section discusses whether targeting by province is appropriate and, inparticular, whether any one province should benefit from accrued public subsidies.Figures lOa and lOb below show the relative enrollments status in 1995 in the sixprovinces of Madagascar and for the primary and lower secondary levels.

9 Plan Directeur, Ministere de l'Enseignement Supdrieur, January 1997.

Project Appraisal Document Annex 4Madagascar - Education Sector Development Project Page 9

Figure 10a: Primary Enrollments Representaton Index by Province

120Artarnerivo Toamasina

100 'araNntsce

180 hajn

Tollury

140 20 - -

200. I I ' 1

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Cumulatve pecent1e of populafion

Figure 10b: Lower Secondary Enrollments Representation Index byProvince

160t

140 Artnanarivo

120

100 Tomain I Tln

80 Fbnrwan t T

k4020

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Cumulative percentage of populaton

At primary level, Toliary and Fianarantsoa, and at secondary level, Mahajunga,Toamasina and Fianarantsoa are under-represented, suggesting that some form oftargeting by province might be appropriate for either primary or secondary level, but notfor both levels together.

One potential reason for those regional disparities could be an unequal distributionof per capita education subsidy. Figure 1110 below shows the current situation inMadagascar.

10 Poverty Assessment; volume 2, page 74, figure 5.3.

Project Appraisal Document Annex 4Madagascar -Education Sector Development Project Page 10

Figure 11: Regional distribution of per capita education subsidy

18,000

16,000

14,000

:`12,000 13 . | Universityj 10,000 -Secondary

8,000 Prime

4,000

2,000

Antananarivo Fianarantsoa Toamasina Toliary Mahajanga Antairanana

Provinces

The per-capita subsidy for all education is about twice as high for Antananarivothan for any other province, because university-level and, to a lesser extent, secondary-level subsidies are biased towards the capital. The per capita subsidy at the primary levelis, however, more or less equally distributed among regions. It would seem that theunder-representation of Fianarantsoa and of Toliary at primary level, or of Mahajunga,Fianarantsoa and Toamasina at secondary level are not because these provinces arerelatively underfunded, but to the fact that these subsidies are not being properly utilized"1 .The policy recommendation from this section would be to ensure the proper utilization ofexisting subsidies at primary and secondary levels before increases are considered.

14 Gender disparities

Finally, there is the question of the appropriateness of targeting by gender. Figure12 below, shows that there is no significant gender bias in primary schools in all of the sixprovinces. The same applies at secondary and university levels, making Madagascar avery atypical case in Africa.

These subsidies include salaries of the many teachers who are on the payrolls but do not teach in aschool. In the province of Fianarantsoa, over 700 schools have closed over the past few years so thatthe subsidies, which are still being paid out, are grossly under-utilized.

Project Appraisal Document Page IIMadagascar -Education Sector Development Project

Figure 12: Primary Gross Enrollment Ratios by Province & by Gender

Antananlanvo: Gross EnrolIflment Ratios by ~4Mahajanfga Gross Enrollment Ratios byGender

140.0 120.0 _i20-0 8~~~~~~~10.0 - Boys120.0 80.0

80.0 --*--Boys 6.

60.0 40GIls .0SGil40.0 20.0 t20.0 20.020.0o I 1o 91(92 92/93 93/94 94/95

90/91 91/92 92/93 93/94 94195

Toamasina Gross Enrollment Ratios byAntsiranana Gross Enrollment Ratios by GenderGender

'12 '-o I~~~~~~~~~~~~~~2.00By125.0 -100G> = 120.0 101 80.0115.0 60.0

'110.0 ~~~~~~~~~~~~~~~40.0105.0 20.0100.0 0.0 94I95.0 " 09 1/2 9)3 935 49

9091 91/92 92/93 93/94 94/95so9 u2 2/3 314 45

rlanarantsoa Gross Enrollment Ratios by Toliara Gross Enrollment Ratios by GenderGender .0

'120.0 60.0 W- | +BOysI

100 0 r 5 0.0 |11-GIVIS|

40.0120.0 2 .

20.0t 0.0 94' ' I95I0 I I 90/91 91/92 9219 93194 94590/91 91/92 92/93 93194 94/95

RS Implicationsfor targeting of public interventions

Pubiza icn inthernons aimed at ie proving equitY could be devised on the basis of thefollowing concluSionls (a) increases in primary level enrollments and ui pnigo rmreducation are equity-imnproving (1,) regional disParities in enrollments cannot be atttributed to anunequal distribution of public education scor resources, but to an unequal effectiveness ofutilization of these subsidies; (c,) there is a highlybisditruioofusdesascndy

Project Appraisal Document Annex 4Madagascar -Education Sector Development Project Page 12

level in favor of urban areas; and (d) targeting by gender is not equity-improving at any educationlevel.

2. Financial Sustainability of the Proposed Program

The proposed sector investment program needs to continue being adequately fundedbeyond the program implementation period in order to ensure sustainability. Table 4 below is anattempt at determining level of resources likely to be available to the education sector under aseries of assumptions. These assumptions are, for part, taken from the CAS and, for part, derivedfrom past trends.

Scenario 1 shown in Table 4 is based upon the following assumptions:

(a) GDP grows at the CAS high, base and core case rates;

(b) the share of the budget allocated to the education sector is made to increase to 2 percentof GDP by the year 2000 and beyond;

(c) the share of each sub-sector is maintained in the same proportion as in the 1998 budget(primary and secondary education at 83.6 percent, higher education at 12.4 percent, andtechnical education at 4.0 percent of the education budget) throughout the life of theprogram;

(d) the salary budget for primary and secondary education is driven by the recruitment of1,000 additional teachers net every year and is indexed on inflation (assumed to be 4percent throughout the period);

(e) the salary budget for technical and higher education is maintained at the 1998 level,indexing for inflation; and

(f) the non-salary budgets for each education sub-sector are computed as residuals (expectedspending minus salary budget).

Project Appraisal Document Annex 4Madagascar - Education Sector Development Project Page 13

Table 4 A: Derivin exvected budget allocations for the education sector(billion FMG) 1998 1999 2000 1 2001 2002 1 2003G D P_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

HIGH 23,741 26,115 28,725 31,599 34,758 38,234BASE 21,541 22,618 23,749 24,936 26,183 27,492CORE 20,925 21,344 21,771 22,206 22,650 21,103

Education Expenditureas % of GDP (hyp) 1. 7% 1.9% 2.0% 2.0% 2.0% J 2.0%

HIGH 413 496 575 664 765 879BASE 375 430 475 524 576 632CORE 364 406 435 466 498 531

of which Prim + Secas % of Educ. Expend. (hyp) 83.6% 83.6% 83.6% 83.6% 83.6% 83.6%

HIGH 346 415 480 528 581 639BASE 346 359 397 417 438 460CORE 346 339 364 371 379 386

of which Tertiaryas %ofEduc. Expend (hyp) 12.4% 12.4% 12.4% 12.4% 12.4% 12.4%

HIGH 51 62 71 78 86 95BASE 51 53 59 62 65 68CORE 51 50 54 55 56 57

of which Technicalas % of Educ. Expend (hyp) 4.0% 4.0% 4.0% 4.0% 4.0% | 4.0%

HIGH 17 20 23 25 28 j 31BASE 17 17 19 20 21 22CORE 17 16 17 18 1 18 T 19

Table 4 B: Deriving expected budget allocations for the education sector_(billion FMG) 1998 1999 2000 2001 2002 2003Prim + Sec salary Exp. 292 306 321 336 352 368Prim + Sec non-salary Exp. |

|HGH 54 109 160 193 229 271BASE 54 54 77 81 186 91CORE 54 33 44 36 27 18

Higher salary Exp. 17 18 18 19 20 21Higher non-salary Exp. r

HIGH 34 44 53 59 | 66 74BASE 34 36 41 43 45 48CORE 34 33 36 36 36 37

Technical salaryExp. 10 9 9 9 10 10

Technical non-salary Exp. | _ __ |__ |_T_1

1HIGH 6 1 1 14 16 1 8 20

BASE 6 9 10 11 11 12

CORE 6 8 8 8 8 8

Project Appraisal Document Annex 4Madagascar - Education Sector Development Project Page 14

The cost of implementing the Education Sector Development Program which IDAwould finance in part, was estimated as follows:

Table 5: Cost of the Education Sector Development Program(billion FMG) 1998 1999 2000 2001 2002 TotalInstitutional Development 10.6 16.0 21.3 26.6 31.9 106.5Investment 10.4 15.6 20.9 26.1 31.3 104.3Incremental Recurrent Costs 0.2 0.3 0.4 0.5 0.7 2.2Public Primary Schools 54.6 81.9 109.2 136.5 163.8 546.0Investment 39.3 58.9 78.5 98.1 117.8 392.5Incremental Recurrent Costs 15.3 23.0 30.7 38.4 46.0 153.5Lower Secondary Schools 11.0 16.4 21.9 27.4 32.9 109.6Investment 8.5 12.7 16.9 21.1 25.4 84.5Incremental Recurrent Costs 2.5 3.8 5.0 6.3 7.5 25.1Upper Secondary Schools 6.8 10.2 13.6 17.0 20.3 67.8Investment 5.3 8.0 10.7 13.3 16.0 53.3Incremental Recurrent Costs 1.5 2.2 2.9 3.6 4.4 14.6Higher Education 8.6 12.9 17.3 21.6 25.9 67.8Investment 7.5 11.3 15.0 18.8 22.5 75.0Incremental Recurrent Costs 1.1 1.7 2.3 2.8 3.4 11.3Technical Education 5.8 11.5 28.8 34.5 34.5 67.8Investment 5.0 10.0 25.0 30.0 30.0 100.0Incremental Recurrent Costs 0.8 1.5 3.8 4.5 4.5 15.0Total 97.4 148.9 212.0 263.5 309.4 965.6Investment 76.0 116.4 166.9 207.4 242.9 809.6IncrementalRecurrentCosts 21.4 32.5 45.1 56.1 66.5 221.5olw salary 8.9 13.4 17.8 22.3 26.7 89.0o0v non-salary 12.5 19.1 27.3 33.9 39.8 132.5

Cumulative salary 8.9 22.3 40.1 62.3 89.0 178.0Cumulative non-salary 12.5 31.6 58.9 92.8 132.5 265.1

Table 6 below checks the Education Sector Development Program for realismagainst the macroeconomic framework; i.e., it verifies whether the incremental recurrentcosts associated with the program added to the "without program" recurrent budgetremain within the expected envelopes for the sector assuming that the base case scenarioof Table 4 applies.

Project Appraisal Document Annex 4Madagasar - Education Sector Development Project Page 15

Table 6: Scenario 1 - Checking expected allocations to the education sectoragainst recurrent costs following program implementation

(billion 1995 FMG) 1997 1998 1999 2000 2001 2002Expected aflocations to the sector 336 413 430 475 499 524o1w salary 256 319 332 348 364 381o1w non-salary 80 95 98 127 135 1421997 budget + incremental costs 336 358 390 435 491 558o/w salary 256 265 279 297 319 345ohw non-salary 80 92 116 139 173 212Financial Margin 0 56 40 40 7 -34olw salary 0 54 53 52 46 36olw non-salary 0 2 -14 -12 -38 -70

Table 6 indicates that if the base case of the scenario detailed in Table 4 applies, (i)there would be no overall financial problems during the first four years of the program, butthat the recurrent budget might not be sufficient to maintain the investments in the sectorfrom the fifth year onwards; and (ii) that the particular scenario studied here is toogenerous with salary allocations, but allocates insufficient funds to the non-salary budget.

Scenario 2 described below ensures that the program is globally sustainable, butdoes involve proactive intervention to ensure that both the salary and non-salarycomponents of recurrent costs are adequately funded. In scenario 2: (a) Program costsare similar to those used in Scenario 1; (b) GDP grows at the CAS base case rate; (b) theshare of the budget allocated to the education sector is made to increase to 2 percent ofGDP in year 2000 and by 0.1 percent per year thereafter; (c) the share of primary andsecondary education is increased from 83.6 percent to 84 percent of the education budget;that of higher education is kept at 12.4 percent; and that of technical education is reducedfrom 4 percent to 3.6 percent of the education budget throughout the life of the program;(d) the salary budget for all three sub-sectors is made to increase by 1 percent per yearfrom 1998 onwards (the existing personnel is utilized more efficiently); and (e) the non-salary budgets for each education sub-sector are computed as residuals (expectedspending minus salary budget). Results are illustrated in Table 7 below:

Project Appraisal Docunent Annex 4Madagascar -Education Sector Development Project Page 16

Table 7: Scenario 2(billion 1995 FMG) 1997 1998 1999 2000 2001 2002Expected allocations to the sector 336 413 430 475 524 576oAw salary 256 319 321 325 330 333o/w non-salary 80 95 109 150 195 2431997 budget + incremental costs 336 358 390 435 491 558o/w salary 256 265 279 297 319 345oAw non-salary 80 92 116 139 173 212Financial Margin 0 56 40 40 32 18olw salary 0 54 42 28 10 -13o/w non-salary 0 2 -3 11 22 31

In scenario 2, the Program is globally sustainable. Within the envelope, there is aneed for marginal reallocations -- towards the non-salary budget in 1999 (3 billion FMG)and towards the salary budget in 2002 (13 billion FMG).

However, the Program becomes unsustainable after Year 3 if GDP grows at orbelow 2% p.a. -- the core case in the CAS. If this were to be the case, Government wouldneed to downsize its Program, and postpone and/or revise investments which have arelatively lower priority.

This type of exercise is not aimed at providing a basis for budget allocations.However, it does highlight the necessity for a close monitoring of the Program costs andof the evolving macroeconomic conditions, and above all for a proactive budgetmanagement. The ministries in charge of education have to take the lead in (i) prioritizingtheir investment program so that "bad" projects do not crowd out projects that do a betterjob assisting the country in implementing its sector strategy; (ii) managing more efficientlythe annual budget preparation process to make sure that required resources are madeavailable to maintain investments in the sector; and (iii) making trade-offs with the sectorand within each sub-sector as needed. There is no a priori budget allocation that willensure the sustainability of the program, but the program is sustainable provided theministries of education monitor the situation and make the appropriate trade-offs.

Public Expenditure Review. The recently completed (November 1997) PublicExpenditure Review (PER) incorporates the main recommendations highlighted above tosupport the Government's Program and to ensure its sustainability. Agreements reachedin the course of the PER include:

(a) the incorporation of all projected investments (on-going as well as proposedinvestment projects) within the framework of the Program;

(b) an increase in the share of public resources to the education sector, from 1.5% ofGDP in FY997 to 1.8% in 1998, which is expected to be followed by a gradualincrease to 2.0% by the year 2000;

Project Appraisal Document Annex 4Madagahscar-Education Setor Development Project Page 17

(c) within the proposed budget for education, an increase in the share of publicresources allocated to primary education (from 38.8% of all non-salary recurrentexpenditure to primary and secondary education in FY1997 to 40.6% in FY1998),while at the same time maintaining the current non-salary budget for highereducation to its FY1997 level (thus reducing its share within the sector from44.90/o in FY1997 to 44.1% in FY1998);

(d) within the proposed budget for non-salary expenditure for primary and secondaryeducation, a reallocation of expenditure from central and regional administration tooperating expenditure at the primary school level. For example, the amount ofdirect transfers to primary schools would increase from FMG 5.6 billion inFY1997 (or 14% of the FMG 39.8 billion non-salary budget) to FMG 24 billion inFY1998 (or 44% of the budgeted FMG 54 billion). These additional resourceswould be earmarked for provision of school implements (exercise books, pens,chalk), school-level administrative expenditure (e.g. student and staff records),replacement of essential furniture (benches), and maintenance of physical facilities;

(e) a series of measures to ensure timely availability of financial resources (earlier inthe fiscal year) and to improve the rate of disbursements (historically, more than95% of budget was spent compared to an estimated 70-80% in FY1997 which isdue to recent decisions to decentralize commitment authority to local level that hasled to delays in committing budgetary resources); and

(f) a strict application of budget procedures in higher education in order to avoidover-spending (public higher education institutions have committed an amount ofFMG 8.5 billion in FY1996 over the allocated budget) and a series of measures tostop accumulation and absorb past arrears (estimated at about FMG 27 billion overthe period 1992-93 to 1995-96) over a period of 3 years.

Project Apprais_ Document AMnex 5Madagascar - Educaton Sector Development Project Page 1

Financial Summary for the Education Sector iv(expressed in US$ million, except otherwise noted)

Implementation Period Opeational Period1998| 19991 2000i 20011 20021 20031 Tota 20041 20051 2006 200

Proam CostsInvestment Costb 12.0 25.0 32.0 32.0 32.0 20.0 153.0 0.0 0.0 0.0 0.0Recurrent Costs 2/ 1.7 2.2 2.7 3.2 3.7 3.7 17.2 3.7 3.7 3.7 3.7

Total 13.7 27.2 34.7 35.2 35.7 23.7 170.2 3.7 3.7 3.7 3.7

Flnancing Sources (%of Total Program Costs)IDA 44% 33% 32% 37% 42% 46% 0% 0% 00/, 0%-Govemnment 22% 26% 28% 30% 30% 30% 90% 90% 90f% 90%Communities / Beneficiaries 8% 8% 8% 8% 8% 10% 10% 10%/ 10% 10'/!Other Donors / Cofinanciers 26% 33% 32% 25% 20% 14% 0% 0% 0% 0'/.

Total 100%/ 100% 100% 100% 100% 100% 100'/. 100% 100% 100%f

1/ Inchldes only puimazy, secondary and higher education.2 lcemental recurat costs include salaries of additional stag quality inputs and maintenance of facilities.

Page 1

Project Appraisal Document Annex 6Madagascar -Education Sector Development Project Page I

Republic of MadagascarEducation Sector Development Project

Procurement and Disbursement Arrangements

A. Procurement Arrangements

General. All Bank-financed procurement of works, goods and services under the Projectwill be in accordance with Bank Guidelines. The Borrower's procurement regulations andprocedures were reviewed during Appraisal and found satisfactory. Model bidding documents forlocal procurement will be reviewed before the first local competitive bidding for works and goods.ICB procurement for goods and works will use the Bank's relevant Standard Bidding Documents.Procurement for goods and works will follow the Bank Guidelines: Procurement under IBRDLoans and IDA Credits issued in January 1995 and revised in August 1996. Recruitment ofconsultants will use the Bank's standard documents for Requests for Proposals (RFPs) and modelcontracts. Selection of consultants will be done on the basis of the Bankls Guidelines: Selectionand Employment of Consultants by World Bank Borrowers issued in January 1997.

Table 6-A below summarizes the project elements as well as their estimated costs andproposed methods of procurement.

Table 6-A: Summary of Procurement Arrangements(expressed in US$ million, including taxes and duties)

Project Elements Procuremnent Method TotalICB I NCB Other (a) NIF (b) d (o/w IDA)

Civil Works 0.0 15.0 15.0 38.5 68.5(12.0) (12.0) (24.0)

Furniture, Equipment and Vehicles 3.4 3.4 2.4 7.8 17.0(3.4) (3.0) (2.0) (8.4)

Textbooks and Learning Materials 10.1 1.3 1.3 7.3 20.0(10.1) (1.0) (1.0) (12.1)

Training 0.0 0.0 6.0 6.0 12.0(5.5) (5.5)

Consultancies (c) 0.0 0.0 4.0 5.0 9.0(4.0) (4.0)

Operating Costs (d) 0.0 0.0 7.5 8.0 15.5(6.0) (6.0)

FDES (e) 0.0 0.0 5.0 3.0 8.0(5.0) (5.0)

Total 13.5 19.7 41.2 75.6 150.0(13.5) (16.0) (35.5) 0.00 (65.0)

Notes:

Project Appraisal Document Annex 6Madascar - Education Sector Development Project Page 2

Slight differences in amounts may occur due to rounding of figures.Figures in parenthesis are the amounts financed by IDA.(a) "Other" procurement methods include award of civil works contracts on the basis of at least 3quotations, national and international shopping of goods, selection of consultants, operatingexpenditures, training, and FDES.(b) NIF means "Not IDA Financed".(c) Consulting services include professional services for supervision of civil works, contracting ofNGOs for district and local levels implementation, and specialized studies.(d) Operating Costs include the incremental operating costs incurred under the Project by theProject Management Unit on account of local contractual staff salaries, travel costs andallowances of Project staff, maintenance of vehicles and equipment, banking charges, and officerent, supplies and utilities. However, operating costs exclude salaries and benefits to Governmentofficials in the conduct of their duties as members of the civil service.(e) Higher Education Grants financed under the Fund for the Development of Higher Education(FDES) include sub-project or a feasibility study to finance preparatory activities relating to a sub-project in one of the following areas: development of new training programs; support to appliedresearch projects; and institutional development initiatives. Higher Education Grants will beprovided in accordance with rules and procedures specified in the Procedures Manual for theFDES.

Procurement Methods

Civil works financed by the IDA Credit include mostly small rehabilitation worksdispersed over 4,100 primary schools located in about 41 school districts, and 50 secondaryschools (of which 40 lower and 10 upper secondary schools) located in about 10 districts, allinvolving the participation of local communities and the use of local construction materials andtechniques. It is anticipated that approximately 50 percent of civil works (or US$12.0 millionequivalent, each contract estimated to cost US$30,000 or more) will be carried out by smallenterprises that already exist in Madagascar, and procured on the basis of national competitivebidding procedures. No contracts are expected to cost more than US$100,000. The remaining50 percent of civil works (or US$12.0 million equivalent, each estimated to cost less thanUS$30,000) will be carried out by local communities, based on quotations, according toprocedures specified in the Project Implementation Manual acceptable to IDA. All workssupervision will be monitored by contracted firms (AGETIPA, NGO management contractor orprivate firms). Architectural designs will use the norms currently applied in Madagascar andagreed by IDA, including the use of local designs and materials when and where appropriate.

Furniture, equipment and vehicles financed by the IDA Credit include: (a) officeequipment and furniture, and vehicles; and (b) equipment and furniture for classrooms -- for atotal amount of US$8.4 million equivalent. To the extent possible, goods will be grouped intopackages of US$100,000 or more, and procured through ICB (for a total of US$3.4 million) inaccordance with Bank Guidelines, and will consist mostly of vehicles and large office equipment.Goods consisting mostly of school furniture which cannot be grouped into these packages wouldbe grouped to the extent possible in packages of US$30,000 or more, but less than US$100,000per contract, and procured through NCB, provided that the aggregate amount of such

Project Appraisal Document Annex 6Madagascar -Education Sector Development Project Page 3

procurement does not exceed US$3.0 million. Goods of US$30,000 or less per contract alsoconsisting mostly of school furniture would be procured through national shopping, based onquotations obtained from at least three reliable suppliers, provided the aggregate amount of suchprocurement does not exceed US$2.0 million. Procurement of school furniture will involve theparticipation of communities.

Textbooks and Teaching / Learning Materials. To the extent possible, textbooks andteaching / leaming materials will be grouped into packages of US$100,000 or more, and procuredthrough ICB (for a total amount of US$10.1 million equivalent) in accordance with BankGuidelines. Textbooks, teaching-learning materials and distribution of textbooks and materials toschools which cannot be grouped into these packages and which are estimated to cost less thanUS$100.000 per contract would be procured through NCB, provided that the aggregate amountof such procurement does not exceed US$1.0 million. Reference books and library booksestimated to cost less than US$30,000 equivalent per contract up to an aggregate amount not toexceed US$1.0 million would be procured through international shopping.

Consultants Services and Training. Recruitment of consultant services formanagement, procurement, auditing and various sectoral and technical services, including training,totaling the amount of US$9.5 million equivalent, would be made on the basis of the quality andcost based method of selection. Services for institutional studies estimated to cost less thanUS$100,000 per contract and US$2.0 million in aggregate, would be procured on the basis of thequality based method. Audit services estimated to cost less than US$25,000 per contract andUS$0.5 million in aggregate, would be procured using the least cost method. Individualconsultants will be recruited on the basis of qualification and experience. Detailed plans forconsultancies and training activities financed under the project were reviewed during Appraisaland agreed upon during Negotiations.

FDES Fund. The FDES Fund (US$5.0 million equivalent) will finance a maximum of 75percent of the costs of feasibility studies and sub-projects. Feasibility studies and sub-projectsunder FDES would be eligible for a maximum reimbursement of US$20,000 and US$100,000,respectively. Implementation and financing of each sub-project will be governed by a tripartitecontract between the Administrator of the Fund, the Malagasy institution(s) initiating the sub-project and associate institutions, according to procurement procedures specified in theProcedures Manual acceptable to IDA. Goods, services and civil works required for the purposesof sub-projects or feasibility studies will be procured in accordance with procedures acceptable tothe IDA and specified in the Procedures Manual.

Review by IDA. The Project Management Unit (Bureau of Project Coordination) willensure that Bank guidelines are followed for procurement of goods and services, and will maintainprocurement documents and contracts required for ex-post reviews. Prior to the issuance of anyinvitation to bid for contracts, the PMU will submit to IDA, for its review and approval, theproposed procurement plan for the Project and consultant selection. During project execution,the first five civil works contracts for in each region will be subject to IDA's prior review at thebeginning of each year. Contracts for packages of goods above the threshold of US$100,000 andthe first NCB contract will be subject to IDA's prior review. The threshold for prior review ofconsultant services will be US$100,000 for contracts with consulting firms and US$200,000 whenthe technical evaluation report is required for no-objection, and US$25,000 for contracts with

Project Appraisal Document Annex 6Madgasar - Education Sector Development Project Page 4

individual consultants. All other contracts wili be subject to selective post review during thesupervision missions. Contracts for FDES sub-projects financed by the Fund amounting toUS$20,000 or more, as well as the first three applications to be submitted by FDES for approval,irrespective of amounts involved, will be subject to prior review by IDA. The thresholds forprocurement methods and prior review arrangements are illustrated in Table 6-B below.

Project Appraisal Document Annex 6Madagscar - Education Sector Development Project Page 5

Table 6-B: Procurement Methods and Prior Review Arrangements

Categories Procurement Method PriorReview by

IDAICB NCB Other

Civil Works NA Over US$ 30,000. Below USS First five30,000. contracts for

each newDistrict.

Furniture, Equipment and Over US$ Over US$30,000 and Below + USS 100,000Vehicles 100,000 below US$100,000. USS30,000. Aggregate

US$3.0million

Textbooks and Leaming Over US$ Over US$30,000 and Below + USS 100,000Materials 100,000 below US$100,000. US$30,000. Aggregate

US$12.1million

Training NA NA QCBS, QBS, Firms: +US$LCS 100,000;

Individuals+USS 25,000.

AggregateUSS5.5milUion

Technical Assistance, NA NA QCBS, QBS, Firms: +USSConsultancies LCS 100,000;

Individuals+US$ 25,000.

AggregateUS$4.0nmillion

Operating Costs NA NA Small supplies NApurchased on

basis of 3quotations

Fund for Higher Education NA NA Specified in the According toManual of Manual ofProcedures Procedures.

First threeapplications;sub-projects+US$20,000

each.

Procurement Schedule. Procurement arrangements and a detailed procurement schedulehave been prepared for the duration of the Program, and the first year schedule was reviewedduring Negotiations.

Project Appraisal Document Annex 6Madagascar - Education Sector Development Project Page 6

B. Disbursements, Accounts and Audit

Disbursements will be in accordance with guidelines set out in the DisbursementHandbook. The project is expected to be completed over a five-year period, by June 30, 2003,and the Credit is expected to be closed by October 31, 2003. The proposed allocation of the IDACredit is shown in Table 6-C below. All applications to withdraw proceeds from the Credit willbe fully documented, except for expenditures for goods, works and consultants' services (firms)under contracts not exceeding US$100,000 equivalent, consultants' services (individuals) undercontracts not exceeding US$25,000 equivalent, Higher Education Grants not exceedingUS$20,000 equivalent, operating costs and training, for which reimbursement may be madeagainst certified statements of expenditures (SOEs). The PMU will be responsible for preparingwithdrawal applications and SOEs to be submitted to IDA, and will indicate on the SOEs thenature and origin of any goods' and the payment date. These will be retained along with all othersupporting documentation for review by Bank supervision missions and independent auditors.

Table 6-C: Allocation of Credit Proceeds

Expenditure Category Amount Financing Percentagein US$ million T

Civil Works 25.0 80%Furniture, Equipment and 6.0 100% Foreign; 80% LocalVehiclesTextbooks and Learning 12.5 100% Foreign; 80% LocalMaterialsTraining 4.0 100% Foreign; 80% LocalTechnical Assistance, 2.8 100%Consultants' Services andAuditsOperating Costs 4.3 80%Higher Education Grants 5.0 100%Unallocated 5.4

Total (Financed by IDA) 65.0

Special Accounts. To ensure that funds will be available when needed, two SpecialAccounts (SA) in US$ will be established in a local commercial bank under conditions satisfactoryto IDA. One, in the amount of US$4.0 million, will be opened in the name of the ProjectManagement Unit (Bureau of Project Coordination), and the other, in the amount of US$0.5million, will be in the name of FDES. Fifty percent (50%) of these amounts will be withdrawn onthe Credit account after effectiveness; the remainder will be withdrawn as and when dictated byproject activities. The amounts have been estimated to cover about four months of expenditures,and would be withdrawn form the Credit account after effectiveness. PMU and FDES wouldhave the right to draw directly on these accounts for project expenditures without prior approval

Project Appraisal Document Annex 6Madagascar -Education Sector Development Project Page 7

by the Ministry of Finance. The Special Accounts would be replenished on the basis ofdocumentary evidence, provided to IDA by PMU and FDES, of payments made from theaccounts for goods and services required for the project that are eligible for financing under theCredit. All supporting documents will be retained by PMU and FDES, and made available forreview by periodic Bank supervision missions and external auditors.

Project Accounts. The Government of Madagascar would open two project accounts inFrancs Malagasy in a local commercial bank, on terms and conditions satisfactory to IDA. One,referred to as the BPC Project Account, would be operated and maintained by the ProjectManagement Unit, and the other, referred to as the FDES Project Account, would be operatedand maintained by FDES. The Government would make an initial deposit of FMG 2.0 billion intothe BPC Project Account, and FMG 500 million into the FDES Project Account, to cover theGovernment's initial contribution to project expenditures. Evidence of the initial deposits is acondition of credit effectiveness. Thereafter, the Government will deposit each semester anamount equal to the amount of the initial deposits to replenish the project accounts to their initiallevel.

Auditing. A computerized accounting system for financial management and reportingpurposes and an internal control system will be developed and implemented prior to projecteffectiveness in the PMU and the FDES. PMU and FDES will maintain separate accounts for allproject activities, in conformity with international accounting practices, to record all projectexpenditures, commitments and reimbursements. Specifically, the implementing agencies willprepare the following documents: a balance sheet; a statement of source and application of funds;and a statement of fixed assets. The appointment of an independent auditor under a contractacceptable to IDA will be a condition of effectiveness. The auditor will be requested to auditthese financial statements and express an opinion with respect to project accounts, SOEs, theSpecial Accounts, and a statement of the adequacy or otherwise of the accounting system andinternal audit controls. Audit reports will be submitted to IDA within six months after the end ofeach fiscal year. During Negotiations, detailed terms of reference were reviewed for therecruitment of a management consulting / accounting firm that would assist the ProjectManagement Unit and the FDES in setting up appropriate financial management systems,including internal control, accounting, and financial and budgeting systems.

Project Appraisal Document Annex 7Madagascar - Education Sector Development Project Page 1

Republic of MadagascarEducation Sector Development Program

Project Processing Budget and Schedule

A. Project Processing Budget

Phase BudgetPlanned vs. Actual

Staff- US$ 000 Trips Travel$ |Consultant SourcesWeeks Fees of Funds

LENP Planned: 26 Planned: 123 Planned: 5.4 Planned: 67.1 Planned: 32.3 BB budget;and Japan

Actual: 21.3 Actual: 95 Actual: 3.9 Actual: 42.4 Actual: 40.4 PHRDGrant

LENA Planned: 30 Planned: 88 Planned: 5 Planned: 74 Planned: BB budget;and Japan

Actual: Actual: Actual: Actual: Actual: PHRDGrant

LENN Planned: 9 Planned: 32 Planned: 0 Planned: Planned: BB budget.

Actual: Actual: Actual: Actual: Actual:

B. Project Processing Schedule

Timetable Step Key Date

Planned ActualDeparture Identification 02/01/95 02/01/95Agreed Preparation Plan 04/15/97 04/15/97Final Project Concept Document 05/11/97 05/11/97Departure Pre-Appraisal 03/31/97 03/31/97Draft PAD to ROC 06/04/97 06/05/97EA Received 06/16/97 06/16/97Departure Appraisal 06/26/97 06/26/97Completion of Appraisal 11/07/97 11/07/97Updated PAD to RVP 09/18/97 12/02/97Invitation to Negotiate 09/24/97 12/03/97Start Negotiations 10/06/97 12/15/97Board Approval 03/17/98Credit Effectiveness 06/26/98

Project Appraisal Document Annex 7Madagascar - Education Sector Development Project Page 2

Prepared by: an inter-ministerial team comprising representatives from the ministries of Primaryand Secondary Education (MINESEB), Higher Education (MINESUP) and VocationalTraining (METFP).

Bank staff who worked on the project included:Core task team: Daniel Viens (education specialist, AFTH4, task team leader); Girindre Beeharry

(economist, AFTH4); Sakhevar Diop (textbook specialist, AFTH3); James Lynch (highereducation specialist, consultant), Pierre Mersier (implementation specialist and vocationaltraining specialist, consultant); Jean-Paul Peresson (Management Specialist); Abdelwahed Zhiri(education specialist, consultant); and Hilda Emeruwa and Anne-Sophie Ville (task teamassistants, AFTH4).

Extended team: Ward Heneveld (education specialist, LASHD, lead advisor); William Saint(higher education specialist, AFTH3, peer reviewer). Messsieurs Bertrand Ah-Sue,Procurement Specialist, AFTS2, and Siaka Bakayoko, Financial Analyst, AFTS2, havecontributed to relevant sections on procurement and financial management systems. The teamalso benefited from technical advice of Jamil Salmi (education specialist, LASHD), andChristian Rey (implementation specialist, resident mission in Madagascar).

The technical manager is Nicholas Burnett (AFTH2), the Country Director is Michael Sarris(AFC08), and the Vice President is Callisto Madavo (AFRVP).

Project Appraisal Document Annex 8Madagascar -Education Sector Development Project Page 1

Republic of MadagascarEducation Sector Development Program

Documents in the Project File

A. Project Implementation Plan

1. Government of Madagascar. "La Politique du secteur de l 'education et de laformation -Programme National d'amelioration de 1 'enseignement - Document de synthese ",

December 1997.2. Government of Madagascar. "Programme National d'Amelioration de I'Enseignement

(PNAE II) du Ministere de l 'Enseignement Secondaire et de l 'Education de Base(MINESEB) ". November 1997.

3. Government of Madagascar. "Programme National d 'Amelioration de l 'Enseignement(PNAE II) - La politique sous-sectorielle de laformation technique etprofessionnelle ".

November 1997.4. Government of Madagascar. "Programme National d 'Amelioration de I 'Enseignement

(PNAE II) - La politique sous-sectorielle de I 'Enseignement superieur". November 1997.5. Implementation Manual (reviewed during Negotiations). December 1997.6. Manual of Procedures for the Fund for the Development of Higher Education (FDES)

(reviewed during Negotiations). December 1997.

B. Bank Staff Assessments and Other Documents

1. World Bank. Madagascar - Towards a School-Based Strategy for Improving Primary andSecondary Education. Report No. 13450-MAG. April 7, 1995.

2. Government of Madagascar. "Le Programme des Depenses Publiques - PDP 1998-2000 -Ministere de l 'Enseignement Secondaire et de l '&ucation de Base ". December 1997.

3. Government of Madagascar. "tlaboration d'un kit pedagogique". MIlNESEB, March1996.

4. Government of Madagascar. "Programme de Renforcement et d'Amelioration de la GestionAdministrative et Pdagogique" (Progress Reports). M1NESEB, various dates from early1994 to early 1997.

5. Government of Madagascar. " Etude sur la Redynamisation de l'Education a Madagascar."MINESEB, March 1996.

6. Government of Madagascar. "Contribution a la mise en oeuvre d'un projet piloted'evaluation de l'enseignement des disciplines dans le secondaire". MINESEB, October1996.

7. Government of Madagascar. "Etudes sur la mise en place d'un reseau permament dedistribution d'ouvrages scolaires et materiels didactiques". OPPS MI1ESEB, October1995.

8. Robin, Daniel and others. "Evaluation du systeme educatif malgache". Compl6ments.Sevres, France: Centre International d'EtudesPdagogiques, 1992.

9. CRC/SOGEMA. "Etude de gestion du systeme educatif." Mars 1992.

Project Appraisal Document Annex 8Madagascar -Education Sector Development Project Page 2

10. Government of Madagascar. "Les determinants du parcours scolaire (enseignementprimaire)". MINESEB, MAGPLANED, November 1994.

11. Government of Madagascar. "L'acces et la retention dans l'enseignement primaire".MINESEB, MAGPLANED, Octobre 1995.

12. Government of Madagascar. "Le diagnostic et les scenarios de developpement de1'enseignement prrimaire et secondaire general du premier et du second cycle". MINESEB,MAGPLANED, November 1995.

13. Government of Madagascar. "Les couts et financements de l'enseignement primaire etsecondaire gendral du premier et du second cycle". MINESEB, MAGPLANED, November1995.

14. Government of Madagascar. "La disponibilite et l'utilisation des materiels didactiques".MINESEB, MAGPLANED, December 1995.

15. Government of Madagascar. "Plan Directeur de developpement de l'enseignementsuperieur et de la recherche scientifique". MI4NSUP, January 1997.

16. Government of Madagascar. "Orientation pour un manuel de procedures. Elaboration desregles de repartition. Calcul des normes et des cofits unitaires". M1NSUP, November1996.

17. Government of Madagascar. "Mise en place de structures de contrBle et d'audit ".

MINSWP, November 1996.18. Government of Madagascar. "Informatisation de la gestion financiere". MINSUP, May

1996.19. Government of Madagascar. "Utilisation rationnelle des infrastructures. Les solutions

sugger6es pour une meilleure gestion des infrastructures". MINSUP, July 1996.20. Government of Madagascar. "Conception des dispositifs de maintenance". MNNSUP, July

1996.21. Government of Madagascar. "Organisation g6nerale de la comptabilite des matieres et de

l'amortissement. Manuel de procedures sur la comptabilite des matieres". MINSUP,October 1996.

22. Government of Madagascar. "Pour une qualite, une efficacite et une efficience du personnelenseignant et du personnel non-enseignant". MINSUP, October 1996.

23. Government of Madagascar. "Reorganisation de la gestion de la scolarite - Systeme desuivi des diplomes". MINSUP, November 1996.

24. Government of Madagascar. "Informatisation du service de la scolarit6". MINSUP,November 1996.

25. Government of Madagascar. "Extension et renforcement des formations de courte dur6e".MINSUP, September 1996.

26. Government of Madagascar. "Evaluation des Instituts Superieurs de Technologie".MINSUP, September 1996.

27. Government of Madagascar. "Evaluation de la cooperation entre institutions de formationet secteur prive depuis 1992". MINSUP, October 1996.

28. Government of Madagascar. "Etude sur le financement de l'enseignement sup6rieur".MiNSUP, May 1996.

29. Government of Madagascar. "Cr6ation d'une commission independante pour l'enseignementsuperieur et la recherche, et d'un cornite national d'evaluation". MINSUP, October 1996.

Project Apraisa Document Annex 8Madagascar Education Sector Development Project Page 3

30. Cabinet Miara-MITA. "Evaluation du programme de renforcement et d'amdlioration de lagestion administrative et p6dagogique". Septembre 1997.

Annex 9Madagascar Page 1 of 2

STATEMENT OF IFC'sCommitted and Disbursed Portfolio

As of 30-Nov-97(In US Dollar .Millions)

Committed DisbursedIFC IFC

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic1983/89 Nossi-Be 1.74 .24 0.00 0.00 1.74 .24 0.00 0.001985/89 COTONA .41 0.00 0.00 0.00 .41 0.00 0.00 0.001990/91 AEF FIARO 0.00 .47 0.00 0.00 0.00 .47 0.00 0.001991 BNI 0.00 2.61 0.00 0.00 0.00 2.61 0.00 0.001992/93/95 AQUALMIA 5.04 .61 0.00 0.00 5.04 .61 0.00 0.001995 AEF Karibotel .32 0.00 0.00 0.00 .32 0.00 0.00 0.001996 AEF Indosuma .90 0.00 0.00 0.00 * 0.00 0.00 0.00 0.001997 AEF GHM '.07 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total Portfolio: 9.48 3.93 0.00 0.00 7.51 3.93 0.00 0.00

Approvals Pending Commitment

Loa Equlitv Ouasi Partic1997 AEF JUS .96 0.00 0.00 0.001998 BANQUE SBM 0.00 .75 0.00 0.00

Total Pending Commitment: .96 .75 0.00 0.00

Gcnerated by cht Operations information System (OTS) on January I5. i 998

Annex 9Page 2 of 2

Statius o(f Rank Group Operations in MatdagascarIlD1tI) Loans aint Il)A Cretlits in flie O).erafions Portfolio

i ifference Betweenexpected

Original Amount in US$ Millions and actualLoan or fiscal disbursements a/

Project ID Credit Year Borrower PurposeNo. IORD IDA Cancellations Uindisbursed Orig Pro Rev'd

Number of Closed Loans/credits: 71

MG-Pe-1S64 IDA30250 1998 GOVERNMENT RURAL WATER SEC.PIIO 0.00 17.30 0.00 17.01 0.00 0.00MG-PE-1537 IDAM0090L 1997 REPUBLIC OF MADAGASCAR ENVIRON. 11 0.00 30.00 0.00 26.48 -1.97 0.00t4S-PE-1555 IDA29560 1997 GOVERNMENT PRIV SFCT DEV R C.B. 0.00 23.80 0.00 23.31 -.10 0.00MG-PE-40019 IDA29110 1997 GOVERNMENT CAPACIJ'Y BIUlLDING 0.00 11.o3 0.00 9.80 1.21 0.00MW-PE-48697 IDA29680 1997 GOVERNMENrr OF MADAGASCAR URBAN INFRASTRCtCrURE 0.00 3S.00 0.00 34.15 -. I5 0.00HG-Pg-1S33 IDA28440 1996 GOVT OF MADAGASCAR SCAR ENERGY SECTOR 53EV PR 0.00 46.00 0.00 40.22 2.93 0.00MG-PE-35669 IDA27780 1996 at)vr MADACAS/FONI) wiNTER SOcIAL. FUND) 2 0.00 40.00 0.00 21.72 1.59 0.00MS-PE-1522 IDA26440 1995 GOVI'. OF MADAGASCAR IRRIGATION It 0.00 21.20 0.00 15.49 1.59 0.00MG-PE- 1563 111A27290 1995 GOVERNMENr AG.EXTEMSION PROJECT 0.00 25.20 0.00 15.91 3.11 0.00MC-PE- 158 IIIA25380 1994 GOVERNMENT PH'7 SEC REFORM 0.00 51.90 1.1.26 34.70 40.73 0.00MG-PE-1581 1A25910 1994 Kill/Hmtr URIIAN WORKS Pll.OT 0.00 18.30 0.00 .04 -1.97 0.00Mu-PE-l50 IDA2457J0 1991 GOV`'I OF MAiDAGASCAR FINANCIAI. INSTITUriO 0.00 6.Jo 0.00 3.31 2.72 0.00Mi;-PEl9%5I ItA2474U 1991 GOVERNMEN'- FOOlU SECURITY & NMT'R 0.00 21.10 0.00 4.19 2.29 0.00MS PE*15'2 ID3A23820 1992 GOVERNMENr VOC. EDUCATION 0.00 22.80 0.00 7.43 4.84 0.00Mo PE6 1520 IDA22$10 1991 GOVERNMENI NATr HEALTH SECTOR 0.00 31.00 0.00 9.10 7.54 0.00MO ;-lE 13,49 ID)A224J30 I991 GoVEuRNMetr LIVESTOCK 0.00 19.80 0.00 6.74 5.88 0.00M.;-PE 1512 IVA21170 1990 GOV.OF MADAGASCAR 1ANA PLAIN DEV 0.00 30.50 0.00 19.53 18.22 0.00MG-PE-I1IS IUA20940 1990 GOVT. EtlUC SECT R61Ni 0.00 39.00 .64 2.05 -1.83 -1.80MG-PE-1540 IDA21040 1990 GOVT. FIN SECTOR/APEX 0.00 48.00 0.00 17.39 13.90 0.00

Total 0.00 541.23 13.90 308.63 99.iS -1.80

Acctive LQans tloed Lana TQLITotal Disbursed (IBRD and IDA): 215.03 1,070.21 1.285.24

of whicib has been repaid: , 0.00 §4.78 94.78Total now held by IORD and IDA: 527.33 925.93 1,453.26Amount sold ; 0.00 6.86 6.86

Of which repaid : 0.00 6.86 6.86Total Undisbureed 308.63 4.31 312.94

a. Intesded disbursements to date 3is3us actual disbursemenks to date as projected at appraisal.b. Rating of 1-4: see OD 13.05. Annex 112. Preparation of lmplementatioll Summary (Form 590). Followiig thte FY94 Anntual Review of Porttolio performance (ARPP), a

letter based system will be used (IIS - htigttly Satisfactory, S * satistactory. U - unsatisfactory. IIU - highly umisatisfactory): see proposed lmprovemests inProject and Portfolio Performance Rating MLethodology ISecM94-9011, AuguSt 23. 1994.

Note:ilolt ,;.i.e:mentl adtd iS 1hia.tled dl thIe 0811 411 t tit ' i0f wiek of t he k,3jtI.

Annex 10Page 1 of 2

Madagascar at a glance 8/28/97

Sub-POVERTY and SOCIAL Saharn Low-

Madgasper Africa Income Develepmentdltmnond'

Population mid-1996 (mnliors) 14.1 600 3,229 Life expectaryGNP per caprit 1996 (US$) 240 490 500GNP 1996 (bUns US$) 3.4 294 1 601

Average annual growth, 1990-S6

Populabtion (%) 3.1 2.7 1.7 GNP GrossLabor force f) 3.1 2.6 1.7 per prmary

Most r cant estimate (tatest year avalabb sk 19e9) capIta enrollment

Poverty: headcount index 0' ofpdatop. . .Urban population 09 of tota/pcpuafor) 27 31 29Life expectancy at birth (years) 52 52 63Infant morality (per 1400 Ae bits) 89 92 69 Acces to safe waterChild malnutrition ' cf otdit* wir @ 32u..r..Access to safe water % of populatO 32 47 53Illiteracy (X ofpcpubUon age 15*) 20 43 34 -MadagascarGross primary enrollment (% osadl-e poial 73 72 105 L- tn- g-jp

Male 75 78 112 .icegLFemale 72 65 98 I

KEY ECONOHIC RATIOS and LONG-TERM TRENDS

1976 1586 1996 1990Economc nflos

GDP (biNiIans US$) 2.3 2.9 3.2 4.1Gross domestic investment/GDP 8.1 8.5 10.8 10.0 Openness of economyExports of goodsandservices/GDP 15.9 11.6 23.3 18.2Gross domestic savings/GDP 3.1 1.3 2.7 4.0Gross national savings/GDP 5.0 0.2 0.4 3.1

Current account balancelGDP -2.4 *8.7 -9.9 -5.8Interest payments/GDP 1.3 1.4 0.7 1.4 Savings InvestmentTotal debt/GDP 39.7 88.1 134.5Total debt servIe/exports 19.6 42.5 9.2Present value of debt/GDP 0.0 0.0 99.7Present value of debt/exports 0.0 0.0 420.9 Indebtedness

1576-6 186-46 Is6 1996 18745(averg arrxmid gm"h) - Auad laGDP -0.3 0.9 1.8 2.0 .. tinroGNP per capita -3.3 -1.9 -1.4 0.4Exports of goods and services -5.0 5.8 3.2 9.7 .. _-

STRUCTURE of the ECONOMY

0' o1G9P) 1986 1906 1 Growth rbats of output and nv.snnt(%Agriculture 34.0 35.1 33.8 34.7 oIndustry 15.8 13.3 13.5 13.1 o

Manufacturinog 11.5 12.5 12.3 02 ' _ Services 50.1 51.5 52.7 52.1 40-

Private consumption 86.1 89.0 90.6 89.6 -100General govemment consumption 10.8 9.8 6.6 6.4 - GDl GI6DPImpors of goods and services 20.9 18.9 31.4 24.2 2

1976-85 16-6 16 15(aveage wvxiag-Mh) Orawil rates of exports and mipeds (%IAgrculture 0.8 2.2 2.7 3.8 40Industry -2.7 0.6 1.3 0.8

Manufacturing 1.5 18.3 17 20service -0.4 0.9 1.4 1.2

Private consumption -0.5 0.8 1.4 -0.3 eGeneralgovenrmwntconsumption 2.8 -1.7 2.2 -3.6 U/ U es iGross domesc Investment -2.0 0.1 0.8 5.5 -WImports of goods and services -4.1 2.7 1.1 -1.9 _ oGroa natonel product -0.7 1.2 1.6 3.5 5 ____________

Note: 1996 data am preliminary esimates.

^The diamonds show four ksv Indicators in the country (in bold) compamd with it Inome-group average. If date are mIsn, the diamond winbe Incomplete.

Annex 10Page 2 of 2

Madagascar

PRICES and GOVERNMENT FINANCE

Domztlept1c" 1976 1086 1996 1996 Intbactn %)

(9 change) soConsumer prices 8.3 10.6 49.0 19.8 o0ImplrcitGDPdeflator 4.7 10.4 46.8 21.1

20*ovemmew,t finance(96 of GDP) oCurrent revenue .. 13.3 8.6 9.0 91 92 93 94 es 96Current budget balance .. 2.1 -2.5 -1.1 GOP det. -I cpOverall surplus/deficit .. -3.9 -6.1 -4.7

TRADE

(millions USS) 1976 1986 1996 1996 Export and Import levels ImiNl. USS)Total exports (fob) .. 291 502 513 soo

Coffee .. 103 93 69Food Z .. 35 11 7 SOoManufactures .. 37 132 161

Total imports(cifl .. 466 739 740 40Food .. 50 67 45 20 1__ ii iFuel and energy .. 85 81 97Capital goods . 98 141 174 o _ _ _ ___ _

Export price Index (1967=100) .. 94 105 92 go 9t 92 93 4 95 96Import price index (1987=100) .. 86 122 121 mExports mimportaTermsoftrade(1987=100) .. 110 86 76

BALANCE of PAYMENTS

1076 1S86 1996 1096(milions USs9 Current account balance to ODP ratio (%IExports of goods and services 382 350 746 79 _________________

Imports of goods and services 480 569 987 1,002Resource balance -98 -219 -241 -205 * --

Net income -17 -129 -167 -155Net current transfers 60 98 92 120 -'liii'.Current account balance, -10

before official capital transfers -56 -250 -316 -240

Financing items (net) 24 234 376 375Changes in net reserves 31 16 -60 -134 -15

Memo:,Reserves including gold (mill. USS) ..

Conversion rate (1oca1AUS$) 214.3 662.5 4,265.6 4,061.3

EXTERNAL DEBT and RESOURCE FLOWS

(mirficns USS) Composelon of ttal debt, 1995 (milL US$)Total debt outstanding and disbursed 906 2,518 4,302

IBRD 24 28 12 7 G AIDA 54 316 1,110 1,147 F s 12 B

Total debt service 76 150 70 77 _ 110IBRD 1 3 5 5IDA 0 3 15 17

Composition of net resource flows cOfficial grants 34 0 0 73OCficial creditors 128 128 61 38Private creditors -1 5 -6 E . 564Foreign direct investmnent 5 0 10 .e92Portfolio equity 0 0 0

World Bank pro,ramComiNtmrent 6 73 65 60 A- IaRD E- BlbteraDisbursements 27 58 76 78 8-IDA D - Oeter muUeIral F - PrWeAtPrincipalrepayments 0 2 11 13 C-IMF G-Short-brmNet flows 27 56 65 65

Interest payments 1 4 9 9Net transfer 26 52 56 55

Development Economics 8/28197

Project Appraisal Document Annex 11Madagascar - Education Sector Development Project Page 1

Technical Note on the Methodology forMinistry of Education-Community Collaboration

for School Improvement

Introduction

1. Since early 1994, the Ministry of Education (MINESEB) has been experimenting withmethods for Ministry-Community collaboration in improving primary education. Twoexperiments have been going on. With financing from the on-going IDA-financed CRESED(Credit 2094-MAG), the Provincial Department for Education (DEPESEB) in Mahajangainitiated school-level projects in two school districts (CiSco), and the success of this first attemptled to the expansion of this Programme de Renforcement et de l'Amelioration de la GestionAdministrative et Pedagogique (PRAGAP) to eight other CiScos in Mahajanga and to theapproach's introduction in two CiScos in each of the other five provinces. At the same time, theMinistry has been trying out a similar approach in about fifty communities with assistance fromUNICEF. A supervision mission reviewed these programs in November, 1996. This technicalnote reports the mission's observations, conclusions and suggestions on this important initiative.

2. The mission met with the Central Management Team (ECG) for PRAGAP, UNICEF, andstaff in the DEPESEBs of Antananarivo and Toamasina. The mission visited five schools inCiSco Tsiroanomandidy in Antananarivo, four in CiSco Brickaville in Toamasina, and twoschools in Toamasina which are participating in the project sponsored by UNICEF. The missionalso examined reports from the ECG and examples of the planning and implementationdocuments, including community-school-MNNESEB contracts, from Antananarivo andToamasina. School visits, interviews and materials from Mahajanga were reviewed during earliermissions.

Observations

3. The results of the programs, in terms of both implementation and impact, have been good.In general, the preparations for implementation have been thorough, and the sensitization andparticipation of the communities seem genuine, though the amount of communities' participationand their level of "ownership" seem to vary among schools. MNNESEB has delivered materials toschools, and the teachers and communities have used them to rehabilitate classrooms and toconstruct new ones, as agreed in the contracts that have been signed. Also, a start has been madeat deploying teachers according to schools' needs. Summary data on the projects activities andresults to date are attached to this note in Attachments 1 and 2. Highlights of the mission'sobservations are:

* At least 80 percent of the schools, both functioning and "closed", in every PRAGAPCiSco have participated in the program;

* In the 20 PRAGAP CiScos, Grade 1 enrollment increased by 28 percent between 1993-94and 1995-96, and overall enrollment increased by 15 percent; corresponding increases in

Project Appraisal Document Annex IIMadagascar -Education Sector Development Project Page 2

the communities served by the other program, on a school-by-school basis, have been evenhigher for most schools. These increases compare with a national increase in Grade 1enrollment over the same period of 15 percent in Grade 1 and 7 percent in totalenrollment;

* Contracted materials have been delivered to 71 percent of the PRAGAP schools, andabout half of the school communities in the one province for which data is available havecompleted the work. In three of the five schools that the mission visited in CiScoTsiroanomandidy the community has started or completed construction of otherclassrooms or teachers' houses beyond those in the contract;

* Although complete data is not yet available, anecdotal evidence from some of theprovinces suggests that transfers of teachers (affectations) have formally increased teacheravailability by around one additional teacher for each two schools in participatingPRAGAP CiScos. However, verbal reports from provincial staff indicate that no morethan 25 percent of the teachers have actually taken up their new posts because many arestill able to circumvent their transfer orders;

3 A total of about US$2.0 million has been spent on materials for the 2,528 schools in thetwenty CiScos, averaging around $800 per school.

4. In addition, the DEPESEBs have implemented the programs effectively, even if thedialogues with the communities have been brief and probably somewhat directive in this firstattempt. There is extensive planning, monitoring, and control documentation at each DEPESEBvisited, and the ECG has prepared monitoring reports, and it has published extensive data on theprogram. However, the MINESEB has not summarized or analyzed the program's strengths,weaknesses, and impact as fully as the data would allow. Staff at all levels are able to explain theprocess that was undertaken and to describe how the work has been completed. On the otherhand, the mission's conversations with school heads, sub-district officers (the "Chef de la ZoneAdmiistrative et PNdagogique" or ZAP), and staff in the CiScos suggested that they have notwell understood the program's objectives of increased enrollment and retention and improvedinstruction, nor do they yet view themselves as the responsible permanent intermediary betweenthe community and the Ministry. There seems to be a tendency to focus on the physicalimprovements that the program has invested in during this first phase, without yet committing tothis process as a way to achieve ongoing school improvement. Given the brief orientation andtraining that have been provided, the mission is not surprised nor discouraged at the lack ofownership after this pilot stage, and it notes that additional sensitization and training is needed inthe next phases of the program's development.

Major Condusions

5. The mission has drawn the following major conclusions about the programs:

* Impacts The programs have improved physical schools facilities and increased communitymembers' interest in supporting their primary school, and this has produced a significantincrease in enrolLments, particularly in grade 1;

Project Appraisal Document Annex 11Madagascar -Education Sector Development Project Page 3

* Process and Management. The mechanisms of school-level consultations, a writtencontract, and significant contributions from both Government and communities haveproduced the results so far, confirming both MlNESEB's capacity to use this approachand the communities' commitment to contributing to their children's education.MINESEB has provided "animation", and the DEPESEBs, CiScos and ZAPs havecoordinated implementation. Success, in its turn, has given rise to new problems andissues that need to be resolved as the approach increases its coverage and moves towardsinstitutionalization;

* Information Dissemination. Conversations with MINESEB staff not directly involved inthe program and with donor organizations which are currently contributing to Educationin Madagascar suggest that people who are not involved in implementing this approach donot know much about how it works nor what impact it has already had.

Problems, Issues and Suggestions for Further Development

6. The mission's observations and major conclusions confirm the potential for the PRAGAPapproach to become the MINESEB's instrument for implementing, at least at the primary level,the "Programme National d'Amilioration de l'Education" (PNAE II) that is being prepared andproposed as Government policy. Therefore, the mission recommends that experimentation withthe program continue and that it be included in the PNAE II document as the proposedmechanism for implementing the strategy's bottom-up approach ("demarche ascendante").Experimentation should continue immediately with the recommendations presented below beingincluded in another round of PRAGAP contracts in 1997, contracts being prepared andimplemented in the CiScos that are already participating and in one or two additional CiScos ineach province. Subject to the availability of funding from CRESED as it nears completion, itwould be appropriate to use these funds to support this next round of contracts. The MINESEBshould also consider the design and implementation of experiments to apply the approach to theimprovement of secondary education.

7. Besides identifying the positive aspects of the program, the mission's visits and discussionshave identified areas in the process's design, implementation, and management that can beimproved upon. Also, there are issues around the program components of building rehabilitationand teacher supply. The paragraphs that follow analyze these points and offer suggestions for thefuture.

8. Design of the Process. To date, the MINESEB has only given general guidelines for thePRAGAP program's design, and the provinces have adapted the basic three-step process that waspiloted in Mahajanga (a sensitization and contract visit, a visit to monitor the community'spreparation, and a visit to monitor the actual work). The project supported by UNICEF has hadits own approach (see Attachment 3). The mission found during its visits that people explainedthis process differently and that some people, particularly school heads and community members,could not give a general overview of the program. Also, the documentation used in the programis not entirely uniform and not always available at all levels in the system. This flexible programdesign has allowed for local experimentation and adaptations, but it has also probably allowedsome neglect of careful analyses of specific local needs and of genuine dialogues before the

Project Appraisal Document Annex IIMadagascar - Education Sector Development Project Page 4

contract is signed. There is now enough experience with different variations on the basicapproach to suggest that the following improvements in design:

* MINESEB should draft a clear, detailed description of the preferred process ofcollaboration between MINESEB and each community;

* The program design should be extended to include a broader range of factors effectingschool quality than just buildings and teacher availability;

The roles and functions of MINESEB staff at each level, but especially for schooldirectors, should be made explicit, drawing on the newly-prepared "attributions et r6ledes di(ferents intervenants au niveau de l'ecole, de la ZAP, et de la CiSco."

Based on experience to date and these agreed-upon improvements, the M1NESEB agreed toprepare a draft Implementation Manual (Manuel de Procedures) that: (a) describes in detail theprogram's preferred design for implementation; (b) provides draft formats to be used in theplanning and contracting process; (c) outlines the factors (teachers, buildings, teaching skills,pedagogic materials, health and nutrition, etc.) that can negotiated in the contracts; and (d)defines the different actors' roles and responsibilities and the interpersonal skills expected of themin working at the school and community level.

9. The Implementation Process. The implementation process has succeeded in achievingagreements, in the form of a written contract, between the communities and the MINESEB, andthe contracts are being implemented well. However, as mentioned above, the mission noted thatmany of the actors do not understand the process or the spirit expected of them in itsimplementation. In addition, many of the contracts examined by the mission lack sufficientspecificity about quantities to be supplied by both parties, and in some the community membershave not signed the agreement. It appears that the DEPESEBs have made estimates of quantitiesbased on measurements of classrooms, and they have prepared tables specifying how much ofeach material each school will receive before contracting centrally for their supply. Also, at theschool level, the communities have been particularly conscientious in providing their inputs, butthere have been delays in the delivery of materials by the Government; and, as already noted, thenumber of transferred teachers who actually moved has been much less than those who weregiven transfer notices. Regulations regarding the release of funds and the reporting on their usebefore the next release and the inaccessibility of most rural sites contributed to delays in thedelivery of materials; and the teachers who have not moved have been able to obtain from othersources within the MINESEB official "stays" that have put off their transfers. Solutions to mostof these implementation issues can be included in the Manuel de Procidures, and the solutionscan then be implemented and evaluated in the next cycle of PRAGAP.

10. Management Capacity. The mission's meetings with staff who have been implementingthese programs at all levels suggest that these people have the confidence, skills, and autonomy tomake the program work. Also, the DEPESEBs appear to be managing implementation carefullyand keeping full records. The mission was impressed by the amount of "report" material that waspresented to it. However, as noted above, the DEPESEBs have encountered delays in the release

Project Appraisal Document Annex 11Madagascar -Education Sector Development Project Page 5

of funds and in servicing the most isolated communities, and these problems will probably remain.There are, however, management problems that deserve resolution. These include: teachertransfers, devolution of responsibility to local MINESEB staff, ownership by the community, anddata collection.

11. First and most important, the teachers' ability to subvert their transfer orders must bereduced. The means for doing this are to tie the deployment of teachers to budgetary posts thatbecome vacant at a school or administrative unit whenever a teacher moves. The mission notedwith appreciation that the MINESEB intends to create this structure for teacher assignments byassigning posts to CiScos, thus making this the level at which teachers are assigned.Consideration should be given to applying the budgetary post approach down to the school level,at least as a pilot reform in a sample of areas.

12. The implementation of the two programs has required, to date, the regular participation ofMINESEB and DEPESEB staff in the case of PRAGAP and UNICEF personnel in the case of theother approach. Higher level staff participation has probably been necessary when piloting theseapproaches, but MINESEB cannot adopt a general approach for all schools if the more distantpersonnel have to participate in all school visits. The MINESEB should explicitly work to reducethe number of DEPESEB staff participating directly with communities, eventually evolving asystem that allows the CiScos and Chef ZAPs to work on their own with communities. TheDEPESEB and MINESEB roles would then be primarily for coordinating the process, monitoringimplementation, providing financial control, and evaluating the impact on student access, internalefficiency and academic achievement.

13. The sensitization and training sessions at the start of the program were very brief andmany staff in the DEPESEBs, CiScos and ZAPs and the school directors do not seem tounderstand the principles of listening and responding to local needs upon which the program isbased. Significantly, school directors do not feel responsibility as the MINESEB's localanimateur for school improvement. The lack of program "ownership" is not surprising since inthe two provinces in which schools were visited during this mission the only introduction to theprogram that staff had were half-day meetings, and school heads only learned formally about theprogram's design during the DEPESEB-led meetings with their school community. More timefor training for all actors is needed. This training should focus on: (a) the material in the Manuelde Procedures; the interpersonal skills the DEPESEB, CiSco and ZAP staff need to have to worksuccessfully with community members; the factors that determine school quality; and the roles andresponsibilities of each actor, including relevant planning, monitoring and administrative skills.The mission discussed the form and content of this training with the Central Management Team(ECG), and the niission recommends that the MINESEB plan a more comprehensive training andsensitization program using ECG materials and the Unite dVitudes et de RechercheP&dagogique's (UERP) school quality training model that are already available. This trainingshould be offered at the beginning of the next implementation cycle of the revised program. Atthe same time that existing experience is being used to regularize the program, the missioncommends continuing experimentation, as in the small in-service training pilot projects for whichCiSco Antsirabe II and DEPESEB Mahajanga are planning to submit requests.

Project Appraisal Document Annex 11Madagascar - Education Sector Development Project Page 6

14. While lots data on enrollments, program implementation, and finance are being generated,there has been very little analysis of the data to date. Also, staff preparing data have not providedsufficient short summaries for it to be useful to program leaders and for sharing with others.There is therefore not yet persuasive proof that the program has been working, and it is difficultto use the data to identify areas of the program that need attention. It was agreed that theMfNESEB would (a) sponsor a beneficiary assessment of the program and an operational andfinancial audit of its performance to date and (b) strengthen its regular data collection by refiningand extending the reporting tables drafted during the mission, and preparing quarterly statusreports on program implementation and impact.

15. Information Dissemination. The mission observed support at all levels of the system forthe approaches that are being used. Community members that the mission met spoke proudly ofwhat they have done with assistance from the Government (even while lamenting tardy deliveriesand the need for teachers) and many express renewed confidence that MINESEB can help themeducate their children. Chef ZAPs, Chef CiScos, and DEPESEB staff describe their collaborationwith communities as satisfying; and MIINESEB personnel have begun to realize that amethodology for the practical and effective implementation of decentralized management isemerging. On the other hand, this experience has not yet been successfully shared with staff inMINESEB who are not involved, nor with the donors who support education. This is due in partto the newness of the program, but steps are being taken to improve dissemination about theprogram. The regular reports on implementation and impact and the results of the beneficiaryassessment and the audits that are recommended above will help increase partners' knowledge ifthey are disseminated effectively. Also, using the data available and a clear description of theapproach, the MINESEB should mount an information campaign within its own ranks, with thepublic and governmental leadership, and with donors. This campaign could include the writtenreports, a popularly-written short brochure (in both Malagasy and French), media materials, fieldvisits, and meetings to share information.

16. Teacher Demand and Supply. As noted above, there is a need to strengthen the realcapacity of local authorities to deploy teachers where they are needed. It also appears that thelarger problem of whether there are enough teachers deserves additional attention. Additionalteachers will certainly be needed before long if the enrollment growth stimulated by PRAGAP andthe UNICEF-sponsored project continues. Therefore, the mission recommends that MINESEBexamine closely the demand for teachers and their potential supply, by province, using existingdata and that, depending on the findings, alternative ways to increase the number of primaryschool teachers inexpensively be explored. Solutions envisaged include the redeployment of somesecondary school teachers, establishment of a fund to pay supplementary teachers (possibly withthe community providing some support to teachers as well), incentives (monetary and non-monetary) for newly appointed teachers to locate in isolated schools, and to establish thebudgetary post policy noted above (para. 11).

17. Building Construction. As would be expected in a locally-driven program, the missionsaw significant variety in the durability, and thus cost, of the school buildings that have beenrehabilitated or constructed under both projects, and the work has been done very cost-effectivelywith significant community participation, especially in the PRAGAP communities. In particular,

Project Appraisal Document Annex 11Madagascar - Education Sector Development Project Page 7

the PRAGAP schools in CiSco Brickaville, a cyclone area, have been constructed so simply thatthe next cyclone will probably destroy them, but they have been done at one-seventh to one-tenthof the cost of the durable buildings provided through other programs. This situation raisesquestions about the trade-off between cost and durability and between community participation inwork using simple local construction standards versus more permanent methods and materialsrequiring contractors. The mission recommends that MINESEB consider alternative constructionpossibilities to derive a policy that will maximize the permanence of new construction and stillguarantee a significant role for the community. The idea was broached of having differentclassroom structural designs at alternative levels of investment with community contributionsbecoming greater for more expensive construction. The communities could then play animportant vested role in choosing a design for their school, and the probability of their effectiveparticipation and future responsibility for the buildings would be enhanced.

Conclusion18. Through successful implementation of MlNESEB-community collaboration programs, theMINESEB and the DEPESEBs have given proof to the possibility of defining practicalprocedures for decentralized educational development. The programs reviewed by the missionare involving communities directly in efforts to improve the education of Madagascar's children,and they are giving proof to the Government's capacity to deliver support at the school level.Everyone involved is contributing to creating this unique approach for Government's investmentand leadership in education in the context of a general strategy to reinvigorate education. Theresults to date -- in terms of enrollment increases, community involvement, and the definition ofthe approach -- are striking.

Project Appraisal Document Annex 12Madagasar - Education Sector Development Project Page 1

Program and Project Implementation Arrangements

1. Introduction. The Government's Program (PNAE II) has set down not only theobjectives and content of a fully integrated strategy, but also the means by which that strategy willbe implemented. Inherent in the strategy of implementation is a two-fold approach involvingpartnership between communities and schools, on the one hand, on the other the improvement ofmanagement at district, regional and national levels to assist schools in the more effective deliveryof educational services. The proposed Sector Investment Program in common with thecontribution of other donors will adopt the same implementation strategies and arrangements.

2. In order to coordinate the contributions of all donors in the sector in a context where eachdonor has different regulations and internal procedures (procurement, disbursement, etc.) theGovernment intends to take two major initiatives. Firstly, a management information system willbe established to collect, collate, process and make available to managers at all levels and donorsalike detailed information as a basis for implementation. Secondly, Government will institute anannual cycle of activities to confront the needs expressed at school and district levels with theresources available, and to finalize with donors an annual investment program at various levels.

3. The Functions and the Information Flow. There are five different levels and each ofthese levels has defined functions in the above process, some of which are discrete and some ofwhich interlock with the adjacent levels. Information flow will take place between and throughthese levels:

* the school;

* the office of the administrative and educational sub-district officer -- ZAP or ZoneAdministrative et Pedagogique;

* the District Office - CiSco or Circonscription Scolaire; and

* the provincial and/or regional office -- DEPESEB or Direction Provinciale del'nseignement Secondaire et de lEAducation de Base; and

* the central level -- the Ministry of Education.

4. At the school level, the major activities will comprise the conduct of an inventory with theassistance of the ZAP which will provide the basis for the assessment of need and the estimate ofthe financial resources which will be necessary to respond to those needs. In this process theHead Teacher has a crucial role of motivating the community and organizing the establishment ofa School Committee which in turn will assist in definition of a school-based project. The SchoolCommittee will take the responsibility for the negotiation and signature of the School Contractand for the monitoring of its inputs including the contributions of both community andGovernment.

5. The main facilitator of this process at school level is the ZAP Officer. The Officer willvisit and sensitize the school communities about the contractual school-based projects. In the first

Project Appraisal Document Annex 12Madagascar -Education Sector Development Project Page 2

instance, the Officer will assist the school community to carry out a school inventory and preparea costed draft of the school project. The information from all the schools in the ZAP (on average10 schools) will be consolidated and expressed in the form of a sub-district plan which will betransmitted to district level (CiSco). Conversely, the Officer will receive the details from districtlevel of resources which will be available to the sub-district for each financial year. The officerwill then have the responsibility, on the basis of clearly defined criteria, for determining resourcesthat' will be made available to each school. Further, the Officer will have the responsibility forsigning school contracts on behalf of the MINESEB and assisting the School Council in definingthe types of inputs which will be required. The Officer will also assist the school community inmonitoring the outcomes and in transmitting this information to the district level.

6. At the CiSco level, the District Officer and his assistants have the task of assisting boththe ZAP Officer and the schools in their tasks, collecting the data from all schools and schooldistricts which are necessary for the formulation of a coherent district rolling program anddelivering major services as part of the overall "package of inputs" (see para. 14) which is to bemade available to primary schools.

7. At the regional / provincial level, the tasks are three-fold. Firstly, to collect the statisticsfrom the districts and assemble them into a coherent regional program. Secondly, to providedirectly or indirectly the services which have been requested as part of their package by individualSchool Councils. Thirdly, to control and regulate the budget which has been allocated at regionallevel from the various sources (Government, donors, NGOs, private, etc.) in order to provide theresources to support the delivery of services at the school level.

8. At the central level, the Ministry of Education has the responsibility for steering andcoordinating the whole program and for evaluating both outcomes and resource needs. Itachieves these functions either directly through the Provincial and District offices or as in the caseof the collection of data by means of the management information system. More specifically atthe central level, the functions associated with implementing the Government's program are: (a) inconjunction with donors, to identify a two-year rolling program for activities and an annualresource allocation to support those activities; (b) to liaise with donors with regard to theirresource inputs on an annual basis; (c) to deliver parts of the package of services to regional,district and school level; (d) to allocate the necessary resources in the form of finances and /orentitlement to services to the regional level; (e) to collect and collate the necessary statisticsthrough the management information system for the appropriate deployment of financial resourcesto districts and to schools; (f) to monitor, evaluate and produce regular reports for donors on theprogress of the implementation of the Government's program. This latter function implies theconduct, at all four levels, of a continuous process of formative and annual summative evaluationof all inputs, financial and educational.

9. Implementation Structure. For the implementation of its overall program as well as thenecessary liaison with donors, the Government envisages a strengthening of managerial capacityat all levels.

10. At the school level, the School Committee, comprising representatives of the villagecommunity, the Head Teacher and the teachers has premier responsibility for the preparation,

Project Appraisal Document Annex 12Madascar - Education Sector Development Project Page 3

negotiation and implementation of the school project and the monitoring of its progress with theaim of improving pupil learning and access to education. The coordination of the various inputsto results in these objectives is the major responsibility of the school under the supervision of theSchool Committee. The School Committee also has the responsibility for the formulation ofrequests for additional inputs or for inputs for subsequent years.

11. As the major facilitator, the sub-district ZAP Officer is at the center of activities whichresult in the members of community preparing their school project and negotiating and concludingtheir school contract with their ministry. Equally, it is at this level that responsibility rests forsupport to the community in the form of workshops, follow-up activities in terms ofimplementation of the terms of the contract, not least concerning the obligations of theGovernment, the production and compilation into report form of information concerned withprogress achieved, as well as statistical reports for transmission to the district level. Theformulation of operational recommendations to the district with regard to resource needs orrequests for additional action, including of a corrective nature, also take place at this level.

12. Each of the 112 CiScos will have the mandate of defining, preparing, and monitoringimplementation of the Government's program in their area, on which all parties have agreed with aview to improving the quality of learning and access to primary school in collaboration with thesub-district ZAP Officer, the Head teachers, the teachers and communities. These teams willcomprise 3 to 5 members of the District Office which will in turn be supported by the central unitand by the Provincial team with the services of the Ministry available to them. Their work will beconducted in close collaboration with the ZAP Officer who, supported by the resources of theDistrict, is the main facilitator of the process of collaboration between the community and theministry.

13. At the regional / provincial level, there would be a small team of 3 to 4 staff selected onthe basis of their qualifications and professional experience which will have the responsibility forthe relay of information and resources between central and district levels. They will also have theresponsibility for the facilitation of the work of their colleagues at district level, and for thedelivery of certain services of professional development.

14. At central level, a small group of about 8 civil servants chosen of the basis of theirprofessional experience and qualification profile will be engaged for a period of 2 to 4 yearsaccording to Terms of Reference which derive from the functions to be fulfilled in theimplementation of the Government's program. It will be this central unit which will have thedirect and day-to-day responsibility for managing and coordinating the implementation of thenational program, including overall control of financial and other resources inputs, delegation ofresponsibility to other levels of management, definition of two-year programs of implementationand of annual financial plans, definition of expected outcomes and the monitoring and evaluationof the progress of the implementation of the Governments program, as well as the preparation ofon-going evaluative reports.

15. Package of Inputs. The package of inputs which will be made available to all schools willbe defined at central level, but the take-up of the elements which comprise the package will be aresult of the needs assessment conducted by the School Council with the assistance of the Sub-

Project Appraisal Document Annex 12ada a - Education Sector Development Project Page 4

district team at local level. The elements of the package could comprise: (a) assistance with civilworks in the form of materials, technical assistance and transfer of know-how and quality control;(b) textbooks and educational materials, including information on the care of these items in orderto maximize their useful life; (c) furniture and other necessary equipment; (d) professional servicesof supervision, training, and facilitation for the school committee, the Head Teacher and the staffof the school; and (e) deployment and presence of teaching staff according to the schoolestablishment defined on the basis of the school mapping exercise. Some of these elements will bedelivered directly from central or regional levels. Others will be delivered at district and/or sub-district level in the form of entitlements to goods and services (see Annex 6 on ProcurementArrangements).

16. Budgetary Planning and Implementation. The govermnent's program implies resourceinputs from a number of different sources: Government, donors and NGOs, in a mixture whichwill be defined at central, regional and district levels. This mixture will necessitate the preparationof detailed annual work and financing plans which will need to be prepared in consultation withschools and shared with donors prior to the commencement of each financial year. Because notail donors will be working in all areas and all schools, nor will all of them be providing all of thecomponents of a package, the planning of the financing of inputs will need to be the subject of aseries of arbitration agreements at those levels. In cases where donors are financing developmentsin a given district or region, but are not providing all elements of a package, a government fund ofapproximately US$5.0 million a year will be established in order to equalize the package availableto all schools and all districts in all regions. For the purposes of IDAts contribution, as donor oflast resort, a central special account will be established with six regional special accounts.Disbursements from these special accounts may take place directly or in the form of drawingrights by districts. Schools will have access to drawing rights only in the form of goods orservices (and not cash).

17. Sustainability. Based on the experience of the implementation of community-basedprimary school projects (e.g. PRAGAP, UNICEF, FID, NGOs), the Government envisagesmeasures to secure sustainability at three major levels: school, district and national. At the schoollevel, the contract will ensure that, after construction, communities will continue to providematching services and local materials to maintain their school every year. At primary school level,local communities will also be responsible for taking appropriate measures to increase the life oftextbooks and to safeguard their educational materials. Their requests for recurrent support willbe transmitted through the ZAP officer to the district. At district level, the CiSco officer will beresponsible for securing sustainability by evaluating the requests for recurrent expenditure in theform of finance or other inputs from school communities and arbitrating amongst them in order toreconcile the demands with the budget that has been allocated from regional level. The districtwill then transmit the allocated budget to the ZAP.

18. At national level, the Government will earmark 3 percent of the non-salary recurrentbudget for maintenance (an average of FMGl .2 billion) per year. This will be allocated to theCiScos for further distribution on the basis of expressed needs by the school communities, theevaluation of the ZAP officer and matched with the provision of local materials and services. Asum will be earmarked by Government for the regular renewal of the stock of textbooks andeducational materials in each primary school. In order to ensure the stability of administrative and

Project Appraisal Document Annex 12Madagascar - Education Sector Development Project Page 5

teaching staff which will be a crucial element in sustainability, the Government will undertakemeasures to deploy teachers on the basis of a teaching establishment for each school. Thesemeasures will include at primary and secondary levels: (i) a fund at district level to assist theredeployment of staff; (ii) community recruitment and training of primary school teachers; (iii)severance packages for staff who are surplus to establishment; (iv) time limits for staff who aresurplus to find an alternative position with another institutional establishment; (v) payment of staffby number of hours taught. At higher education level, measures would include: (i) increase in themandatory workload; and (ii) increase in the proportion of fixed term appointments.

19. In order to guarantee the long-term sustainability of the Government's program ineducational and financial terms, a careful accounting will be undertaken of the incrementalrecurrent costs associated with the program and any investment in the form of support forrecurrent costs, e.g. European Union which is on a declining basis. During Appraisal, a five-yearestimate of the long term implications of the implementation of the program will be reviewed withGovernment. In order to ensure educational sustainability, the program of continual professionaldevelopment at all levels will gradually be intensified, as will the quantity and quality ofsupervisory and advisory visits to schools, so that improving standards can be delivered even afterthe completion of the program. To this end, careful monitoring of the major program indicators,such as improvement in learning and increase in access, will take place of specific educationalindicators outlined in Annex 1, as well as the norrnal processes of financial monitoring andauditing.

MAP SECTION

IBRD 29353

44' 46°' 5C° 12°½~ cANTSIRANANA

MADAGASCAR

EDUCATION SECTOR J ,DEVELOPMENT PROJECT

140 (CRESED II) ~~~ANTSIRANANA 14_ ,4: ~~(CRESED 11) N4NN ~~~~~x.,14,

o 50 1OO lsOKil,metrs .

O- 50 'tOOMkies 'F,/

-@MAHAJANGA

MAHAJANGA

®TOAMASINA

ANTANANARIVO,

ANTANANARIVO/

20. 0,

TOLIARA FIANARANTSOA ,'CHEF-lEU DE FARI ANY220 NATIONAL CAPITAL. 22'-

CA Pt TALEDETAT

NTNAAARTAVO WOUNDARIESLUMTWS DES FARIfANY

so,

TOLIARA

.' { ~ ~~/ ,S - -

This -opws produced

at The Wol t00 . The 24baundarins,colors, AF~~~RICA

deoiatoad any AF

an tis map do ntmpyonthe part oF

tb orl Bank Group,

or.- na ,1sn,n '

acceop.tance of ouch -- MADAGASCA

JANUARY 1998