Document of

The World Bank

Report No: 2359 4-BD

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED CREDIT

IN THE AMOUNT OF SDR 96.4 MILLION(US$120.9 MILLION EQUIVALENT)

TO

THE PEOPLE'S REPUBLIC OF BANGLADESH

FOR A

FEMALE SECONDARY SCHOOL ASSISTANCE PROJECT-II

Febniary 7, 2002

Humani Deveiopment Sector UnitBangladesh Country U nitSouth Asia Regional Office

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 EQUIVALENTS

(Exchange Rate Effective July 2001)

Currency Unit = Taka1.00 = US$0.0175

US$ 1.00 = Taka 57.10

FISCAL YEARJuly 1 -- June 30

ABBREVIATIONS AND ACRONYMS

AD Assistant DirectorADB Asian Development BankAPO Assistant Project OfficerADP Annual Development ProgramBANBEIS Bangladesh Bureau of Education Information and StatisticsBBS Bangladesh Bureau of StatisticsB. Ed Bachelor of EducationBISE Board of Intermediate and Secondary EducationCA Chart of AccountsDD Deputy DirectorDEO District Education OfficerDSHE Directorate of Secondary and Higher EducationDG Director GeneralEC European CommissionFEAP Female Education Awareness ProgramFMM Financial Management ManualFMS Financial Management SystemFSP Female Stipend ProgramFSSAP Female Secondary School Assistance ProjectFY Fiscal YearGDP Gross Domestic ProductGO Government OrganizationGOB Government of BangladeshHSC Higher Secondary CertificateIDA International Development AssociationIDP Institutional Development ProgramM&E Monitoring and EvaluationMIS Management Information SystemMOE Ministry of EducationMOF Ministry of FinanceMPO Monthly Payment OrderMTRT Mobile Training Resource TeamNCTB National Curriculum and Textbook BoardNGO Non-Governmental OrganizationNORAD Royal Norwegian Agency for Development Co-operation

NSC National Steering Committee

OSDP Occupational Skills Development ProgramPAD Project Appraisal DocumentPC Planning CommissionPCP Project Concept PaperPCT Procurement Core TeamPEDP Primary Education Development ProgramPIP Project Implementation PlanPIU Project Implementation UnitPMR Project Management ReportPMU Program Monitoring UnitPOU Project Operations UnitPP Project Pro-formaPPT Project Preparation TeamPTA Parent-Teacher AssociationPROMOTE Program for Motivation, Training and Employ Female TeachersSESDP Secondary Education Sector Development PlanSESIP Secondary Education Sector Improvement ProjectSMC School Management CommitteeSSC Secondary School CertificateTEP Teacher Enhancement ProgramUPO Upazila Project OfficeUPOM Upazila Project Office Manager

Vice President: Mieko NishimizuCountry Manager/Director: Frederick Thomas Temple

Sector Manager/Director: Charles C. GriffinTask Team Leader/Task Manager: Ana Maria Jeria

BANGLADESHFEMALE SECONDARY SCHOOL ASSISTANCE PROJECT-II

CONTENTS

A. Project Development Objective Page

1. Project development objective 22. Key perfornance indicators 2

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 22. Main sector issues and Government strategy 33. Sector issues to be addressed by the project and strategic choices 7

C. Project Description Summnary

1. Project components 92. Key policy and institutional reforms supported by the project 103. Benefits and target population 104. Institutional and implementation arrangements 11

D. Project Rationale

1. Project alternatives considered and reasons for rejection 142. Major related projects financed by the Bank and other development agencies 163. Lessons learned and reflected in the project design 174. Indications of borrower comnmitment and ownership 185. Value added of Bank support in this project 18

E. Summary Project Analysis

1. Economic 192. Financial 203. Technical 214. Institutional 225. Environmental 236. Social 257. Safeguard Policies 28

F. Sustainability and Risks

1. Sustainability 28

2. Critical risks 283. Possible controversial aspects 30

G. Main Conditions

1. Effectiveness Condition 302. Other 31

H. Readiness for Implementation 32

I. Compliance with Bank Policies 33

Annexes

Annex 1: Project Design Summary 34Annex 2: Detailed Project Description 37Annex 3: Estimated Project Costs 43Annex 4: Financial and Economic Impact 45Annex 5: Financial Summary 57Annex 6: Procurement and Disbursement Arrangements 59Annex 7: Project Processing Schedule 87Annex 8: Documents in the Project File 89Annex 9: Statement of Loans and Credits 90Annex 10: Country at a Glance 93

MAP(S)IBRD 31635

BANGLADESHFemale Secondary School Assistance Project-LI

Project Appraisal Document

South Asia Regional OfficeSASHD

Date: February 7, 2002 Team Leader: Ana Maria JeriaCountry Manager/Director: Frederick Thomas Temple Sector Manager/Director: Charles C. GriffinProject ID: P044876 Sector(s): ES - Secondary EducationLending Instrument: Specific Investment Loan (SIL) Theme(s):

Poverty Targeted Intervention: N

Program Financing Data[ ] Loan [X] Credit [ ] Grant [ ] Guarantee [ ] Other:

For Loans/Credits/Others:Amount (US$m): 120.9

Proposed Terms (IDA): Standard CreditCommitment fee: 0.5%

Financing Plan (US$m): Source Local Foreign TotalBORROWER 23.37 0.12 23.49IDA 116.90 4.00 120.90LOCAL COMMUNITIES 0.24 0.00 0.24Total: 140.50 4.12 144.62

Borrower: GOBResponsible agency: DIRECTORATE OF SECONDARY & HIGHER EDUCATION OF THE MOEAddress: Directorate of Secondary and Higher Education (DSHE)

Ministry of EducationShikkah Bhavan16, Abdul Ghani Road,Dhaka

Contact Person: Mr. Abdur Rashid, Director General, DSHETel: 9563390/9553542 Fax: 9564098 Email: fssap@citechco.net

Estimated disbursements ( Bank FY/US$m):FY 2002 2003 2004 2005 2006 2007

Annual 12.00 18.00 22.00 26.00 28.00 14.90Cumulative 12.00 30.00 52.00 78.00 106.00 120.90

Project implementation period: June 2002-December 2006Expected effectiveness date: 06/30/2002 Expected closing date: 12/31/2006

OCS PAD Fn -r -al -0

A. Project Development Objective

1. Project development objective: (see Annex 1)

The project development objective is to improve the quality of, and girls access to, secondary education inrural areas of Bangladesh. The proposed project is a sequel to the IDA-financed Female Secondary SchoolAssistance Project (FSSAP) (1993-2001), and responds to the Government request for IDA assistance to buildupon the successes of that project. The FSSAP II project sustains improved gender equity, and adds activities andincentives to improve the quality of education in participating schools and to improve both the managementcapacity of the Ministry of Education and monitoring and accountability mechanisms at the community level.

The FSSAP was a ground-breaking program which provided incentives to keep girls in schools and resultedin large increase in enrollments, delays in the age of marriage, higher number of single-child families, improvedbirth spacing, more females employed with higher incomes, decrease in the amount of dowries, and more confidentand aware females who are involved in their children's education. FSSAP II extends the focus beyond access toquality by linking quality outcomes with stipends and tuition support. The stipends program has been a testingground for innovations, where approaches and instruments pioneered under FSSAP have tended to find their wayinto other Government and donor-funded projects, including primary school initiatives, in Bangladesh andelsewhere. The project does not attempt to tackle wholesale reform; rather it is a piece within the larger effortschampioned by the Government of Bangladesh in partnership with other donors, including the Asian DevelopmentBank (ADB), the Norwegian Agency for Development Cooperation (NORAD) and the European Union (EU).

2. Key performance indicators: (see Annex 1)

Progress towards the project objective will be monitored and assessed according to the key performanceindicators outlined in Annex 1.

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)Document number: IDA/R2000-204[IFC/R2000-216] Date of latest CAS discussion: 12/12/2000

The overarching objective of the CAS is to help Bangladesh realize its aspiration of reducing povertysubstantially within one generation (CAS 02/08/2001, para. 54. The CAS supports Government plans and policiesreflected in the Fifth Five Year Plan (1997-2002), which envisaged poverty alleviation as its overriding objective).To attain this objective, the CAS outlines a three-prong strategy: (i) consolidating gains in human development andsupporting initiatives to address the next generation of development challenges in education, health and nutrition;(ii) implementing an integrated approach to rural development, including making opportunities and assets availableto the poor; and (iii) accelerating and broadening private sector led growth. The CAS further states thatcross-cutting issues of institutional capacity building, governance, macro-economic stability, social concems suchas gender equity, empowerment, and environmental protection will be treated as integral elements within thesestrategic objectives.

In the education sector, the CAS discussion of developmental priorities notes that the impressive gainsrecorded in education, especially in access to primary education, in the past decade notwithstanding, improvingquality remains a principal challenge (CAS, para. 28). Reduction in gender discrimination in education is also citedas a major accomplishment that needs to be sustained. These themes echo the findings in IDA's most recentanalytical work on the Bangladesh education sector (World Bank, Bangladesh Education Sector Review, 2000). Inthe secondary education sub-sector, the principal goals identified include: (i) reorienting content, so that what is

- 2 -

taught reflects the skills and knowledge the bulk of graduates will need in entering the workforce; (ii) reducinginequities in access to, and quality of, education, primarily between genders and regions; and (iii) raising incentivesfor quality and accountability within the system.

The proposed project is in line with both CAS and sectoral goals. It includes activities and incentives toimprove the quality of education in participating schools; it sustains improved gender equity at the secondary schoollevel by continuing the FSSAP girls' stipend and tuition assistance programs; it further addresses inequities throughadditional outreach in rural areas; and it seeks to improve both the management capacity of the Ministry ofEducation (MOE) and monitoring and accountability mechanisms at the community level. In line with the CASconcern that IDA assistance be selective, the proposed project does not attempt to tackle wholesale secondaryeducation reform; rather it is a piece within the larger reform efforts championed by the Government of Bangladeshin partnership with the four main donors (ADB, NORAD, EU and IDA).

2. Main sector issues and Government strategy:

Bangladesh's education system comprises five years of primary education (classes I-V for six to ten-yearold students), three years ofjunior secondary education (classes VI-VIII for 11-13 year olds), two years ofsecondary education (classes IX-X for 13-15 year olds) and two years of higher secondary education (classes XIand XII for 16-18 year olds). Except when noted, "secondary education" is used in this document to refer to juniorsecondary and secondary levels - the project will not address higher secondary education.

The main issues in the secondary education sub-sector in Bangladesh are as follows:

Low internal efficiency. As it currently operates, secondary education mainly serves as a screening device forentry into higher education - it has no independent purpose of its own. In fact, only a fraction of the students whoenter into secondary education complete class X and pass the SSC examination, and even fewer complete class XIIand pass the Higher Secondary Certificate (HSC) exam, a requirement for entry into higher education. Out of 100students entering class VI, fewer than 60 eventually complete class X. Of 100 girls enrolled in class VI, only 45complete class X, and, with an SSC pass rate of 42.6 percent, only 19 pass. Therefore, only one in five girls whoenroll in class VI pass the SSC.

Relevance of Curriculum. High dropout rates throughout secondary education are related to issues of schoolquality, curricular relevance, and opportunity costs for students and their families. As noted above, the curriculumis geared toward preparation for higher education. Curriculum and certificate exams emphasize factual knowledgeand memorization over critical thinking and life-skills. Significantly, not even the HSC certificate is a guarantee ofemployment, raising important questions about the value and relevance of the secondary school curriculum in theBangladesh labor market (World Bank, Bangladesh Education Sector Review 2000, p. 13).

Declines in Learning Achievement. Bangladesh's SSC (given at the end of class X) and HSC examinations,imperfect as they are, do provide a proxy measure for quality of educational outcomes. Despite problems withthese examinations (students assessment and public examinations are currently being reformed and strengthened),they are administered effectively, and it is commonly acknowledged that the results are generally reliable --in thesense that the most meritorious students tend to pass the tests. In the 1990s the number of candidates for the HSCincreased almost three-fold, from about 240,000 in 1992 to 650,000 in 1997. Pass rates were low and generallydeclined during the 1 990s (a fairly predictable outcome given the increased numbers of students taking the test).Results from the SSC have also declined, although test revisions in the late 1 990s make comparisons difficult. In2000, only 42 percent of boys and 40 percent of girls taking the test passed it. In 1997, 37 percent of studentssitting for the HSC passed it, while 52 percent passed the SSC.

- 3 -

Shortages of Facilities. Bangladesh's success in getting children into school at the primary level has createdenormous pressure on the secondary system to absorb their school graduates. Classroom overcrowding is acommon phenomenon; in 1997, the student-teacher ratio was 38, while the average classroom (built for 40 students)held 56 (Bangladesh Education Sector Review 2000 - Background Paper 4). Average number of students perclass have been reported as 33 for junior secondary schools and 36 for secondary schools in the BangladeshNational Education Survey - 1999. Most classrooms have no teaching aids and no prospect of getting them;students purchase their own books and supplies. Lack of latrines and requisite privacy for adolescent girls is awidespread constraint to female participation.

Absence of Teacher Training and Academic Supervision. One of the main problems with teaching quality at thesecondary level is the low percentage of teachers (although possessing relatively high educational qualifications)who have received teacher training. In addition to the general lack of teacher training, teachers who receivein-service training often are not taught techniques for dealing with the prevailing large class sizes. Although thereis a formal "inspection" system, true academic supervision is weak or nonexistent in Bangladesh secondaryeducation.

Geographic and Gender Inequities. Most children in Bangladesh today attend primary school (classes I-V); thegross enrollment rate (GER) is close to 100 percent of which about 47 percent is female (the net enrollment rate is85 percent). Despite the increase in access to basic education, the majority of rural girls from impoverishedhouseholds do not complete primary school. The low rate of female primary school completion in rural areas is anobstacle to increasing the participation of rural girls in secondary school. Govemment and donor efforts to improverural girls' access to secondary school (including the FSSAP project) have done much to improve the situation, butrural girls are still less likely than their urban sisters to go to secondary school. The gross enrollment ratio for girlsin secondary school currently stands at 44.6 percent. Geographic and income considerations also affect theoutcome of schooling: better teachers tend to seek out better schools in urban areas, while most children who passthe HSC exam have parents who can afford private tutoring. Private providers of secondary education also havelittle incentive to establish schools in poorer areas.

There are also gender inequities in the teaching force. Female teachers as role models for girls in secondaryschool are scarce, and the situation seems to be deteriorating at upper secondary level. Although the statedGovernment goal is that at least 30 percent of the secondary teaching force should be female, currently less than 14percent of secondary teachers are female and they are concentrated in urban areas. In rural areas qualified womenare uncommon and posting of urban women to villages far away from their families is unappealing and evendangerous. In 1999 one female teacher was posted for every 122 girls enrolled in junior secondary. Thecorresponding ratio for upper secondary schools in 1999 was one female teacher for 151 girls (1: 151) as comparedwith a ratio of 1:128 in 1997 (BANBEIS 1997/1999). This situation is a cause for concern on two counts. First,the absence of female teachers has been shown to be a barrier to access - parents are less likely to send theirdaughters to school. Second, there is evidence that the presence of female teachers can have a positive effect on girlstudents' performance.

Weak Management, Lack of Accountability, and Distorted Incentives. Bangladesh's secondary school system isoverwhelmingly private. About 95 percent of the secondary education institutions are non-government schools,with oversight provided in the majority of schools by school management committees (SMCs). The SMCs havebroad local power over school affairs, headmasters/mistresses, and teachers - whom they alone can dismiss.Although the Government accredits schools and pays 80 percent or more of teacher salaries through subventions,SMCs do not answer to Ministry of Education's District Education Officers.

Ideally, community-based and managed schools should be responsive to local demand, but once asecondary school is recognized by the Government, subvention of teacher salaries and payment of tuition for girls

- 4 -

(under Government and donor-supported stipend programs) to the school generally proceed regardless ofperformance or community satisfaction. The Government has little leverage beyond periodic non-renewal ofaccreditation and discontinuation of subventions, measures it rarely employs. SMCs are comprised predominantlyof male elites, and are not always representative of their communities. Their performance is varied; some aremodels of dedication and ingenuity, others are fraught with irregularities and local power struggles. In somecommunities SMCs are impediments to improving the quality and inclusiveness of the schools they oversee.Although SMCs have significant responsibilities and authorities in non-government schools, they get no training orsupport for their roles in school planning, administration, or academic oversight. Parent Teacher Associations(PTAs) function in only a minority of non-government schools due in part to lack of awareness and informationabout their roles. Owners of schools also have few incentives to improve quality. Examination results by schoolare rarely publicized so that the public has access to information about comparative performance. Teachers alsohave little incentive to maximize student learning during normal class hours. The financial incentive is to maximizepersonal income from private tuition by teaching the same students for the examinations outside the classroom.

Muslim religious schools (normally referred as Madrasahs) operate under their own separate managementwith their own curriculum and examinations. The quality of education is unknown for this significant group of thesecondary system, which operates one quarter of all secondary schools and enrolls more than 15 percent(BANBEIS 1999) of all female students at the secondary level. Muslim secondary schools, by agreement with theGovernment, now teach core subjects of the national general curriculum. However, the madrasahs have their ownpedagogy, their own instructional materials, their own teacher training, their own examinations and their ownexamination board. Their students do not sit for the general SSC, which, however flawed, is the only indicator ofstudent achievement. It is widely believed that the majority of madrasahs do not effectively teach the nationalcurriculum, and that many of their students do not master the core competencies of secondary schooling.

At the central level, the Ministry of Education (MOE) and Directorate of Secondary and Higher Education(DSHE) are in many ways ill-equipped to perform their limited oversight role. DSHE has only minimal capacity toconduct policy research, do planning and budgeting, monitor and evaluate programs, and assess schoolperformance. The MOE does not have sufficient staff to monitor even the financial aspects of the subventionsystem, let alone the quality of instruction. DSHE also has little control over the collection of inforrnation fromschools, which results in substantial delays in the production of even basic statistics. Information about student andschool performance and about finance is not always reliable, nor is it available to those who could use it. In manyinstances, useful data are located in donor-funded project databases, but these are not integrated, nor readilyaccessed by DSHE staff outside the project. The DSHE currently serves as the executing agency for severaldonor-funded projects, but coordination between them could be improved to achieve better information for planningand decision making. Until recently, constraints within the MOE and DSHE were exacerbated by a hiring andpromotion freeze. High staff turnover is also an issue.

Government Strategy

As noted in the CAS, Bangladesh has achieved outstanding progress in basic education. As a result of thecountry's sustained commitment to primary education, most children now attend primary school. Progress in girlseducation stands out: the proportion of girls enrolled at the primary level increased from 37 percent in 1980 tovirtual parity with boys in 1995. Bangladesh also does much better than other countries in South Asia in enrollingstudents from poor families. About 70 percent of the eligible children from poor families enroll in primaryeducation. Having achieved close to universal access, the Government has focussed increasingly on improving thequality of education at the primary level. The IDA-supported Primary Education Development Project (PEDP) iscurrently assisting in this effort.

-5-

As in primary education, Governnent efforts at the secondary level have focussed overwhelmingly onimproving access. The Government's main strategy has been collaboration with the private sector through the useof subvention. This has been a successful strategy in terms of facilitating the rapid expansion of the system at areduced cost, though it has also created accountability problems, as noted above. The percentage of school-agechildren enrolled in lower secondary school climbed from 32 in 1991 to 44 in 1997, while the correspondingnumbers for secondary were 21 in 1991 and 27 in 1997. Girls' enrollment as a percentage of total secondaryenrollment has also increased dramatically: from 34 percent in 1990 to 48 percent in 1997 (Bangladesh EducationSector Review - Background Paper 4).

Here too, these improvements reflect conscious efforts on the part of the Government to address gender andgeographic discrimination. One of the main strategies has been the use of financial incentives. In 1993, with theassistance of IDA, the Government launched the FSSAP project, which was conceived as an integrated package ofinterventions designed to help close the gender gap in secondary education and raise female status in the economyand society. A key element of that project has been the Female Stipend Program (FSP), which was modeled in parton an earlier Female Scholarship Program started by a local NGO and later supported by the Government, USAIDand NORAD.

The FSP distributes tuition to rural schools for enrolled girls and gives stipends to eligible femalesecondary students in FSSAP's 118 upazilas. To be eligible for a stipend from FSP a girl must attend school for atleast 75 percent of the days of the school year, she must achieve at least 45 percent marks on her evaluations andexaminations, and she must remain unmarried. The qualification requirements for participation in the FSPreinforce the Government's strategic goals in the sector. The first priority, to increase girls' participation insecondary education, is achieved by paying girls' families to cover a portion of the costs of their attendance, and bypaying privately run schools to accept them as students. Setting high performance standards (45 percent marks) forFSP stipend recipients was expected to encourage high achievement by girls and exert pressure on schools toimprove the quality of education. Finally, by requiring that stipend recipients delay marriage, social anddemographic goals were targeted while increasing the number of girls who could stay in school. The Governmentexpanded the FSP to remaining rural areas of the country in 1994, and other donors (NORAD and the ADB) arealso supporting the program.

More recently, Bangladesh's National Education Policy (NEP) adopted in January 2001, has outlinedadditional strategies aimed at improving quality and rationalizing the provision and management of education at thesecondary level. A restructuring of the system to include eight years of basic education and four years ofsecondary has been planned, and will be implemented as part of the Secondary Education Sector ImprovementProject (SESIP), as well as the proposed second Primary Education Development Project, supported by the ADB.The SESIP will also assist the Government with strengthening policy and planning capacity, improvingeffectiveness in the use of resources, enhancing the quality of education, and increasing access for girls and studentsin under served areas. The Government's Fifth Five Year Plan (1997-2002) calls for improving teacher trainingfacilities, increased training of teachers (both pre-service and in-service), updating of curricula and improving thequality of textbooks. Many of these initiatives are also supported by the SESIP project. The Government has alsoset a target for increasing the number of women teachers (at least 60 percent at the primary level, and 30 percent atthe secondary level).

Finally, the Government has supported increasing the number of trained female teachers in the secondarysector. The PROMOTE project will provide B.Ed. training to 5,800 serving female teachers and potential femalegraduates, give temporary employment to 3,200 female graduates as substitute teachers/additional teachers andpermanent employment for up to 2,800 female B.Ed. graduates. Through the construction of women's hostels forfemale teachers, the project is expected to enhance migration and mobility of female teachers to the rural areas andsolve long pressing problems of acconunodation and safety.

- 6 -

3. Sector issues to be addressed by the project and strategic choices:

The main sector issues to be addressed by the proposed project are: (a) improving learning achievementand attainment through improvements in school quality; (b) reducing gender inequities through improved access tosecondary education for girls in rural areas; and (c) improving management capacity and accountability at thecentral and local levels. It should be noted that the project will focus on a discrete geographic area (other areas arebeing covered by Government and other donor-funded programs). In addition, many of the overarching quality andmanagerial issues in the secondary system are to be addressed in the context of the ADB-funded SESIP project.Coordination between SESIP, FSSAP II and other donor projects in the secondary sector is thus critical. Table Ibelow illustrates the sector issues being addressed by various actors.

Quality

Strategies to improve the quality of education under the project will include: teacher education, training,and support; school improvements and incentives; support/incentives for student achievement; and greatercommunity involvement in school quality issues. One of the lessons from the implementation of FSSAP was thatthe eligibility requirement of a 45 percent passing grade proved an insufficient incentive for schools to improvequality outcomes. There is scope and need for a limited number of new program activities or approaches to qualityimprovement in the proposed FSSAP II. The project will support in-service teacher education, as well as headteacher training in academic supervision and management, to improve the classroom effectiveness of secondaryteachers. Training for local government, school system, and school community members will also be provided toenhance their understanding of how to support girls' achievement and the improvement of school quality.

Quality improvement incentives will focus on leaming outcomes and include programs to: (a) give awardsfor and publicize improvements in school achievement; (b) award additional funds or school materials to qualifyingschools that submit a school improvement proposal endorsed jointly by school management and parents; and (c)award students for individual academic achievement. Improved water and sanitation facilities will also be providedat selected schools, giving particular attention to those schools with an arsenic contaminated water supply.

Substantial improvements in educational quality will require more strategic planning, more investment, andclose coordination with complementary Government and donor initiatives. Revisions to the curriculum, monitoringleaming achievement and examinations, for example, should help drive quality improvements within the system;these are not being addressed under this project because they are contemplated as part of the SESIP project.Innovations in areas like teacher training, however, will strengthen the impact of FSSAP II on the overall quality ofsecondary education if done well and early in project implementation.

Expanding Access for Rural Girls

The positive impact of the tuition and incentive programs on gender and geographic equity in secondaryeducation is a compelling rationale for sustaining these programs during FSSAP II. Overall, stipend programs havebeen enormously popular, and have more than achieved their goals in terms of getting girls into school and delayingmarriage. The growth in girls secondary school enrollment in stipend programs is far above the most optimisticprojections - in project upazilas, it more than doubled, from 462,000 in 1994 to slightly above I million in 2000.Comparing data before and after the program went into effect suggests that it had an immediate and significanteffect in delaying marriage. The overall proportion of females who married declined between 1992 and 1995, from29 to 14 percent for 13-15 year olds, and from 72 to 64 percent for 16-19 year olds.

- 7 -

Stipend programs are, however, expensive. Government expenditure for stipend programs, including donorsupport, accounted for 13.3 percent of the secondary budget and 5.5 percent of the total education budget in1999/00. Given the need for other investments in the education sector, the high cost of these initiatives warrantsconsideration of strategies for cost reduction. During the first two years of this project, the stipend component willcontinue with minor adjustments. At the Mid-Term Review the stipend and tuition elements of the project will bereviewed for possible modification, including more focussed geographic targeting or linking stipend amounts tofamily need. The probability of significant change will be linked to decisions by the Government and other donorssince IDA sponsors tuition and stipend programs in only I 19 upazilas. The Government is rightfully intent onmaximizing the similarity of all of the tuition and stipend programs, so reform will need to be a coordinated effortof the four sponsors (GOB, ADB, NORAD and IDA).

The Government also recognizes that other obstacles to girls' participation, besides cost constraints, mustbe examined and addressed to sustain the rate of growth in secondary school enrollments among rural girls.Community-based studies will identify the reasons for non-enrollment among a substantial number of poorerfamilies in the project catchment areas. Outreach programs to eliminate obstacles to school participation for girlsfrom poorer communities will be initiated. Data collected as part of studies and outreach programs will be helpfulin the reformulation of some elements of the project at the Mid-Term Review.

There are also still remote, economically disadvantaged areas in the covered upazilas that do not have asecondary institution for female students. Disadvantaged union parishads or mouzas will become the focal pointsfor recruitment efforts to help new schools get started or get registered so that they are qualified to enter theprogram (about 300 schools per year join the FSSAP program).

Improving Management, Monitoring and Accountability

The Government's secondary education reform initiative includes an ambitious plan for improving systemaccountability and management. The SESIP project will provide resources and technical assistance to DSHE toestablish a 'Policy Support and Planning Unit' in the Planning and Development Wing of DSHE. This unit willassist pilot activities for decentralizing supervision and EMIS activities to the district level. To complement thisinvestment, the proposed FSSAP II project will establish a Program Monitoring Unit (PMU) within DSHE. Thisunit will take the lead in coordinating initiatives in female education, and serve as an institutional base forimproving DSHE's information management and monitoring capacity.

Other strategies to help strengthen DSHE will include: (a) gradual building capacities for introducingperformance management and accountability through improved monitoring; (b) support for the addition and trainingof key personnel; (c) establishment of a cell for oversight of female education projects, including IDA, ADB,NORAD and Government stipend programs and the EU PROMOTE project; (d) integration of information bases;(e) technical assistance to strengthen monitoring and evaluation functions; (f) periodic independent random audits ofoperations, to strengthen the DSHE monitoring function and help ensure accountability of institutions, upazilaproject offices and District Education Officers (DEOs); and (g) funding of operational research.

Given the largely private and decentralized nature of secondary education provision, there are significantstructural challenges to improving management and accountability at the school level. The proposed FSSAP IIproject will address these issues in several ways. For example, the contractual responsibilities of schoolmanagement and SMCs under the stipend program agreement will be more clearly defined, with performancestandards and the penalties associated with failure to maintain standards, both fiscal and academic, clearly stated.Greater community involvement in school management and monitoring will be encouraged through informationdissemination, community empowerment, and training programs at the local level. The project will include regular

- 8 -

random audits of fiscal and academic performance and local offices will be responsible and be held accountable forincreased monitoring activities and timely and accurate reports.

Table 1: Issues and Actors in Secondary Education in Bangladesh

Issue/Activity GOB FESP PROMOTE SESIP FSSAP 11(NORAD) (EU) (ADB) (IDA)

Stipends for female secondary x x x xstudents

Training and employment of female x x x xteachers

Reforms to teacher education x x x

Curriculum reform x x

Examination system reform x x

Privatization of textbook production x x

School repair and construction x x

Strengthening school management x x xand supervision

Incentives for improving school x x xquality (improvement fund) I I

Strengthening of DSHE x x x

C. Project Description Summary

1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed costbreakdown):

PROJECT COSTS BY COMPONENT

Indicative Bank- % ofComponent Sector Costs % of financing Bank-

(US$M) Total (US$M) financing1. Improving the Quality of Secondary Girls' Education 12.66 8.8 12.12 10.0Education2. IncreasingAccess andRetentionof Girls' Education 118.72 82.1 98.90 81.8Girls3. Strengthening Management, System Reform & 13.24 9.2 9.88 8.2Accountability and Monitoring Capacity Building

Total Project Costs 144.62 100.0 120.90 100.0

Total Financing Required 144.62 100.0 120.90 100.0

-9-

2. Key policy and institutional reforms supported by the project:

As a follow-on project that rests squarely within the GOB's stated priorities in secondary education, theproposed FSSAP II will not require major policy reforms for its approval or implementation. That said, policyreforms undertaken by the Government either independently or as part of other donor-funded projects are likely tohave an impact on the project. For example, reforms to the curriculum and examination system could be anenormous boon to the project's efforts to improve educational quality. They are, however, beyond the scope of thisproject.

Similarly, the proposed project does seek to influence the ongoing process of policy and institutionalreform. As mentioned earlier, the creation of a successful model for teacher in-service training under FSSAP II hasthe potential for contributing to the formation of a national policy on teacher training and reforms undertaken aspart of the SESIP. Additional studies and information on how best to attract and sustain the poorest girls in schoolare also likely to influence future Government and donor policies and programs in this area, including targeting.

With regard to institutional reform, the project seeks to gradually shift development initiatives from thecurrent fragrnented, project approach to a more integrated approach under the leadership of the Director General forSecondary and Higher Education. Under FSSAP II, most of the operations that were carried out by the FSSAPPIU will be shifted to the DSHE as its capacity is strengthened. To effect this change, the project will establish aProgram Monitoring Unit in the DHSE. The project has also chosen an incremental approach with regard toimproved accountability of educational institutions - clarifying contractual responsibilities, broadening membershipin SMCs (through the inclusion of women) and strengthening community monitoring and access to information.Local MOE supervision capacity will also be strengthened over the life of the project.

3. Benefits and target population:

The expected benefits from the project are continued increases in girls' enrollments in and completion ofsecondary school, resulting in a more productive workforce and declining family size; increased numbers of femalesecondary teachers; improvements in the quality of secondary education offered to all students; greatertransparency, improved accountability, reduced irregularities, and more broad participation in the affairs of localschools; and more efficient, effective, and accountable management by the MOE/DSHE.

Very importantly, the education of girls contributes to reduce poverty by alleviating the worst problems ofpoverty and malnutrition such as high birth rates, poor health practices, high infant mortality rates, and inability tofunction effectively in the labor market. The wage disparities between men and women are also reduced. Analysisof poverty levels in Bangladesh shows that more than half of the people live below the upper poverty line (WorldBank, From counting the poor to making the poor count, Dhaka, 1998). Education has been found tosubstantially reduce poverty levels; the incidence of poverty is higher among rural households, and heads ofhousehold who have no schooling (among the heads of households who have completed secondary education, only 7percent were very poor and 15 percent poor). In addition, per capita consumption gains in rural areas range from 6percent for households whose heads have completed some primary education, to 17 percent for households whoseheads have completed secondary education. Consumption gains are augmented further with the educationalattainment of the spouse: the higher the educational level the greater the gains in per capita consumption. Forexample, a rural household whose spouse has completed secondary school would gain 39 percent per capitaconsumption compared to only 4 percent per capita gain to a similar household whose spouse has some primaryschooling.

Secondary School Age Girls and their Families: The principal beneficiaries of the proposed program are girls inrural Bangladesh who want to enroll in secondary school and their families. The tuition assistance for female

- 10-

students encourages education institutions to enroll female students. The small stipend paid directly to girls easesthe burden on poor rural families that lack the financial resources (especially cash) to cover the education-relatedcosts of sending their daughters to school. The combination of these incentives has effectively closed the gendergap in the 118 participating upazilas during the FSSAP project. Up to 1.45 million girls are expected toparticipate in FSSAP II assisted schools by project-end.

Young Women and Society: An additional benefit of the FSSAP stipend and tuition program has been a reductionin the number of young women below the age of 18 who are married. The program has a stipulation thatremaining unmarried is a criteria for participation. The delay in marriage impacts on fertility rates. Intemationalresearch has also indicated that educated mothers tend to have healthier, more productive families and experiencereduced matemal and child mortality.

All Participating Secondary School Students: The proposed FSSAP II includes an education quality componentthat will improve the quality of education in more than 5,000 participating schools. The benefits of bettereducation will accrue not only to the female students but also to boys in these schools, resulting in lower dropoutrate and improved pass rates on the SSC examination.

Communities: Both the Quality and the Management, Accountability and Monitoring components of the proposedproject include activities that will encourage parents and communities to take a more active role in ensuring bettereducational programs, school management and outreach. Inclusion of two women in SMCs of newly participatingschools is expected to have a ripple effect on social norms and expand the roles that women can assume.Communities will also be provided relevant information and training to assist them with these functions. Althoughdifficult to measure, it is expected that empowerment through a strengthened role in education could transfer toother services areas, such as health and social services.

Female Education Professionals: The MOE has indicated that they intend to increase the number of womenworking in upazila offices and within the DSHE. FSSAP II will award fellowships to continue their education toFSSAP II girl graduates who commit to becoming primary or secondary school teachers. An increase in nurnber ofwomen in teaching and administrative positions has a major impact on girls' education. Additionally, these womenare income generators who are perceived in a more positive way by families and communities, contributing tochange in traditional social practices that include negative views of women.

Education Officers and The Ministry: There are a number of committed officers in the Ministry of Education.Recent legal restrictions on promotion and hiring, political interference in the decision making process, lack oftraining and other factors have tended to discourage them. Recognizing the role of DSHE as having a broaderresponsibility for secondary education, providing focused training and support for accountability and monitoringfunctions should provide incentive and encouragement to education officers to improve their performance andultimately improve their stature among the professional community.

Bangladesh: An improved education system and a significantly increased pool of educated workers (male andfemale) should benefit the country economically as well as help ensure social stability.

4. Institutional and implementation arrangements:

The project will be implemented over a five-year period (2002-2006) in 119 rural upazilas. TheDirectorate of Secondary and Higher Education of the Ministry of Education will be responsible for theimplementation of FSSAP II. As under the current FSSAP, an Inter-ministerial Steering Committee chaired by theSecretary MOE will facilitate project imnplementation and provide policy and decision-making guidance.

- 11 -

The DSHE will establish (a) a Program Monitoring Unit (DSHE/PMU) within the Planning andDevelopment wing of DSHE; and (b) a Project Operations Unit (DSHE/POU). The DSHE/PMU will beresponsible for overall coordination among female education projects and related secondary education activities, aswell as the maintenance of an integrated MIS database and monitoring and evaluation of the FSSAP II project. TheDSHE/PMU will also be responsible for providing an independent report on FSSAP II activities to the MOE. TheDSHE/PMU will consist of the Female Education Cell and the Monitoring and Evaluation Cell. The DSHE/POUwill have three sections: the Operations Section will be responsible for implementation of the quality, stipend andtuition (including outreach) and school management and accountability component activities. The Finance andAdministration Section will be responsible for finance, procurement, audit and monitoring and evaluation functions,as well as supervision of the disbursement bank (Agrani Bank). The Data Processing Center will be responsible forprocessing and disseminating school and participants data and prescribed reports. An Implementation MonitoringOfficer will report directly to the Ministry about project progress.

Agrani Bank will disburse stipends to FSSAP II students and tuition to participating schools as per theParticipation Agreement with MOE. Upazila Project Offices (UPOs) will be responsible for assuring the timelyand accurate processing of the forms required for stipend and tuition payment, facilitating and timely payment ofstipends by Agrani branch offices, working with SMCs, school management and PTAs to implement the quality,outreach and school management and accountability component activities. School Management Committees(SMCs) will be responsible for ensuring school performance consistent with the agreed criteria and reporting.DSHE District and Zonal Education Offices (DEOs and DDs) will provide assistance to Upazila Project Offices forresolving problems at the school level.

Monitoring and evaluation are an essential underlying and cross-cutting element of the Project, not leastbecause there are a number of new and innovative activities that will require careful monitoring and assessmentprior to scaling up. Improved accountability and school management, and ultimately school and studentperformance, require an institutionalized monitoring capacity in the Project at all levels. The Project has built inseveral mechanisms to ensure that systematic monitoring systems are created that lead to coordinated efforts. TheDSHE/PMU has specific monitoring responsibilities - that of creating a database of female stipend programs, andusing this database for analytical work that feeds into improved programming. The female education cell of theDSHE/PMU will also undertake studies that would further enhance the evaluative nature of studies required underthe project. The DSHE/POU also has responsibilities for carrying out monitoring and evaluation work at thecentral level. The operations section of the DSHE/POU is the center of monitoring of field operations. Both theDSHE/POU and DSHE/PMU will be supported by the Data Processing Center in the DSHE/POU in their efforts toundertake monitoring by providing the data generated from operations.

In addition to the specific responsibilities of the DSHE/POU and DSHE/PMU, there are a number ofinstruments that will be used to undertake performance-based monitoring - such as the random independentprogram audits, the performance audits, the annual tuition/stipend audits, and other research that will inform theProject about performance, progress, and lessons leamed. To ensure that accurate data and information arecollected routinely, monitoring instruments such as the FSP forms have been revised. These, together with reportsof the UPO resulting from their field and school visits, will serve to inform the wider evaluation efforts in theProject.

Essential to project monitoring are input, process, output and outcome indicators for all the componentsand activities, allowing the implementation team to monitor performance against targets. In order to monitoragainst the indicators, field monitoring will be strenghtened through routine, regular and spot visits, as part ofregular UPO operations by forming strong team efforts with field staff, Division teams, the DSHE/POU, withSMCs/head teachers. In sum, the Project places a lot of emphasis on monitoring and evaluation and recognizes thatonly coordinated systems and shared responsibility of monitoring will bring about the desired outcome - better

- 12 -

accountability in the Project, improved performance of the schools, and ultimately the students. Working togetherwith the Borrower, IDA will conduct project supervision throughout the life of the project.

Procurement: Procurement under the project will involve small quantities of goods, some civil works atthe community level and services. Equipment, computers, vehicles, furniture and training materials are the majorcomponents for goods. Civil works for sanitation facilities at the community level under the "Improving theQuality of Secondary Education" component will be small and spread over widely dispersed geographical areasthroughout the country. Services will include selected innovative sub-components, for instance, monitoring andevaluation program management studies, outreach-family attractiveness program, community mobilization, arsenicawareness, project management and audits.

Procurement under the project will be handled by DSHE/POU with the support of DSHE. In themeantime, DSHE has formed a Procurement Core Team (PCT) entrusted with the responsibility of all procurementmatters. Project-related procurement of goods and works will follow procedures outlined in the Bank'sProcurement Guidelines. Consultants will be recruited according to the Bank's Consultants' Guidelines.Procurement of goods, works and services will follow the Bank's approved/standard documents.

Goods estimated to cost the equivalent of US$200,000 or more per contract will be procured throughintemational competitive bidding (ICB) procedure. Any goods estimated to cost less than US$200,000 equivalentper contract may be procured using national competitive bidding (NCB) procedure. Up to an aggregate amount ofUS$500,000 equivalent, goods estimated to cost less than US$20,000 equivalent per contract may be procuredthrough national/international shopping procedure (NS/IS) by soliciting price quotations from at least three eligiblebidders. Goods estimated to cost less than US$2,000 per contract may be procured through direct contracting.

Consultants' services through firms estimated to cost US$200,000 equivalent or more per contract shall beprocured on the basis of Quality- and Cost-Based Selection (QCBS) method. Services through firms estimated tocost less than US$200,000 per contract may be procured following the Fixed Budget Selection (FBS) method.Other individual consultants will be hired on the basis of qualifications and experience in accordance with SectionV of the Consultants Guidelines. Appropriate consulting services with costs less than US$50,000 per contract andtraining activities will be on the basis of Single Source Selection subject to prior agreement by IDA.

IDA will carry out prior review of the following contracts: (a) for Goods, all contracts estimated to costUS$200,000 equivalent or more irrespective of procedures and the first one contract for procurement under NCBregardless of value. All other contracts including small works contracts to be implemented by the communities willbe subject to selective post review by IDA; and (b) for Services, IDA's prior review will be required forconsultants' services contracts estimated to cost US$100,000 equivalent or more for firms and US$50,000equivalent or more for individuals. All single source contracts will be subject to prior agreement by IDA.

Financial Management: Institutional Capacity Building in DSHE: The DSHE is currentlyimplementing nearly 33 projects, both GOB and donor-funded. There has been no financial management capacitydeveloped in the DSHE over the years to support new projects. The DSHE lacks financial powers to handleprojects under its implementation. The lack of financial management capacity at DSHE has in turn caused delaysin project implementation.

DSHE's experience in implementing FSSAP lie with the former Project Implementation Unit establishedunder that project. Thus, the current Finance Unit in FSSAP will continue in FSSAP II under the overallsupervision of the Finance and Administration Unit of POU. Agrani Bank, through a Participation Agreement withMOE, will execute Stipend and Tuition funds of the Project.

- 13-

Disbursement: Disbursement of IDA funds will be channeled mainly through a Convertible Taka SpecialAccount to be opened at the Agrani Bank Principal Branch, in accordance with the Participation Agreement.GOB's share of expenditure should also be made available in a separate account with the Agrani Bank. The fundsflow process for the project will be as follows:

- IDA funds will be channeled through a special account.- The GOB will allocate counterpart funds for the project on the basis of the annual development plan

(ADP) and Ministry of Finance will release funds to MOE in four tranches against approved ProjectProforma. The Chief Accounts Officer (CAO) of MOE will reimburse actual project expenditures uponreceiving the statement of expenditure.

- The DSHE/POU Project Director will be authorized to issue payments through checks, request paymentsto CAO for counterpart funds and withdrawal of funds from IDA Credit.

- Agrani Bank will disburse stipend and tuition funds to students and schools through its branches on thebasis of instructions received from DSHE/POU.

To be eligible for disbursements of stipends and tuition, DSHE/POU will: (a) by April 1 of each year,commencing in Calendar Year (CY) 2002 (same as Academic Year: January through December), carry out acomprehensive review of the progress of the project during the preceding Academic Year; and (b) promptly fwunishIDA with the findings and recommendations of such a review, as well as a work program for the ongoing AcademicYear. This will be a condition of disbursement for the stipends and tuition category.

Retroactive Financing: The project will finance expenditures incurred in the stipends and tuition programduring Academic Year 2001 through retroactive financing. Documentation requirements for retroactive financingwill be the same as those needed for disbursement against payments made under the proposed FSSAP II Credit.IDA agreement to provide retroactive financing in the amount of US$11.49 million equivalent was confirmed atNegotiations.

D. Project Rationale

1. Project alternatives considered and reasons for rejection:

Targeting of tuition and stipends. The high cost and specified impact desired from the tuition and stipendprograms make them obvious candidates for targeting strategies. Therefore, increased targeting will be tried andevaluated during project implementation. However, in view of the high administrative and political costs totargeting in Bangladesh, the option of modifying the program from the outset was rejected. First, it is unacceptablefor the Government, which has, in fact, promoted the success of the program and has a commitment to itscontinuation. Second, research will be conducted on demand and constraints to access among un-enrolled girls, infar-flung communities, and in the poorest households. Third, although primary school enrollment rates have risendramatically, for total enrollment from 45.9 percent in 1991 to 70.3 percent in 1998, and 47 percent of primaryschool students are female, only two thirds of girls finish class V and are eligible for class VI. The distribution ofdropouts and the significance of primary participation on secondary enrollment is important to understand beforetargeting begins. Finally, the early experience of USAID when it instituted targeting suggested that it was veryproblematic to institute targeting once the program had been offered to all.

During project implementation, FSSAP II will review the possibilities for additional targeting in the light ofevaluation studies and outreach experience. Targeting will be tried and evaluated since a large part of the projectwill in fact be a "research lab". The Outreach sub-component could be characterized as "action research", designednot only to provide secondary education to those girls not enrolled and help new schools in poor areas, but alsodraw lessons/guidelines for future targeting (it should be noted that the ongoing project upazilas were selected basedon a combination of their economic impoverishment levels --the "distress level" used by the GOB, low female

- 14 -

literacy levels, and low female attendance levels). The activities under the sub-component have been designed toanswer questions such as: What are the factors that determine un-enrollment/existence of underserved girls? Whatare the determinants for the establishment of school in poor/remote areas? Why some schools do not participate inthe program? How can SMCs/PTAs in existing schools encourage girls to attend?

Expansion of stipend recipients. Paradoxically, while IDA debated the merits of targeting, Bangladeshiconcerns focused on whether the stipend should be extended to boys, and to students in classes XI and XII.Extension of the stipend to boys was based on equity arguments and the remarkable success of the stipendprograms to date. In 1999 the gross enrollment rate for girls in secondary school was 44.57 percent, higher thanthe total gross enrollment rate of 41.26 percent for boys. Although boys are now relatively disadvantaged thereremain several rationales for continuing to focus the stipend and tuition on girls at lower levels of secondaryeducation. First, investments in girls' education are still believed to have high long-term payoff. Second, there arenot enough qualitative studies on what has brought girls in to secondary school and what keeps them, nor on what istaking boys out. However, research shows that boys consistently benefit from programs that target girls even ifresources are not directly channeled to them. FSSAP project findings suggest that boys continue to fare well inschool, even though they are not eligible for stipends. Third, girls' enrollment at the higher secondary level hasbeen rising in the absence of stipends, and it is not clear that the provision of stipends would have as dramatic aneffect on access as at the secondary level. And finally, the defining consideration, the Government cannot afford toexpand the programs. Giving stipends to boys and girls (in fact doubling the costs) is financially unsustainable.Also, girls' numbers should not be reduced by half to give equally to girls and boys. In sum, girls must continue tobe supported in supplemental ways in their aspirations and their achievements, or the country may end up goingback on the gains made so far.

Increase of stipend amounts. The value of the stipends is too low to cover all costs of sending a girl toschool. These stipends do not enable very poor families to send their daughters to secondary school. Thus there isa desire to raise the value of the stipend for the very poor. This is a form of targeting, while holding the broadeligibility in place. Again, the constraints of cost and an inadequate research base for decision-making rule this outas a strategic option at this time. In addition, the majority of reports in the international literature on targetingsuggest that targeting of individual girls or families is simply not cost effective. Since the stipend amount providedis not adequate to meet the SSC board exam fee, however, the project will increase the provision for theexamination fee from Tk. 250 to Tk. 550.

Reinforcement of current teacher training. Reinforcement of the current training scheme in Bangladesh(a year-long course of study leading to a B.Ed.) was rejected in light of research findings over the last two decadesin many countries. The conclusion from research is that the current design of teacher training in Bangladesh isunlikely to be either effective or efficient. In Bangladesh there is no follow-up to training in the school orclassroom. Research has shown that application of learning in the near-term following training, with support,guidance, and feedback linked to the training received, is critical to the development of skills and practice.Research also suggests that the most effective training is delivered in relatively short doses with an emphasis onmentored practice and supervision that reflects the principles and skills learned. Since the current scheme reflectsnone of these principles, the decision was taken instead to design a program of in-service training courses for allteachers. In addition, the ADB will contribute to improvements in the B.Ed. program, so IDA investment was not apriority.

Curriculum and examination reform. The importance of a well-designed and administered examinationsystem cannot be overstated. Teachers in Bangladesh, like teachers everywhere, tend generally to "teach to thetest". Thus improving the examinations has tremendous potential for improving the quality of education. When theSSC tests reliably what the students know; tests the same content that is in the curriculum; tests the same contentthat the teachers teach; and is administered fairly to everyone, the SSC will be a strong force for better quality ofeducation. If the exam is good and the curriculum is also strong, i.e., relevant to the needs of students and thesociety, quality will be markedly improved. Working to achieve this was rejected for two reasons. First, the

- 15-

Government would be carrying out examinations reform and ADB has made this a top priority of the SESIPprogram. Second, not only scoring, but also writing of the exams was recently decentralized to the BISEs.

2. Major related projects financed by the Bank and/or other development agencies (completed,ongoing and planned).

Latest SupervisionSector Issue Project (PSR) Ratings

(Bank-financed projects only)Implementation Development

Bank-financed Progress (IP) Objective (DO)

Improve and expand non-formal Bangladesh - Non-Formal S Seducation; strengthen capacity to Educationdeliver programs through NGOs and (Credit 2822-BD) (Closed Junedistrict administration. 30, 2001)

Increase equitable access to primary Bangladesh - General S Sand secondary schooling; improve Education (Credit 211 8-BD) -quality of education; strengthen Closed (OED: evaluation:management capacity; and prepare Satisfactory)future policies and programs for highersecondary and post-secondaryeducation reforms.

Improve school quality and system Bangladesh - Primary S Sefficiency; establish a sustainable, Education Development (Creditcost-effective and better managed 0380-BD)education system; and ensure universalcoverage and equitable access to qualityprimary schooling.

Improve access to secondary education Bangladesh - Female S Sand improve opportunities for rural Secondary School Assistancegirls. Project (Credit 2469-BD)

Improve and expand non-formal Bangladesh - Post Literacy and S Seducation; strengthen capacity to Continuing Education fordeliver programs through NGOs and Human Development Projectdistrict administration and improve (Board date of 2/27/2001)links to labor market opportunities.Other development agenciesSecondary education reforms Secondary Education Sector

Improvement Project (SESIP)(ADB)

Stipends for girls Female Education SupportProgram (FESP) (NORAD)

Program to Motivate, Train and PROMOTEEmploy Female Secondary Teachers for (Ei)Rural Schools

IPIDO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)

- 16 -

3. Lessons learned and reflected in the project design:

Value of Educating Girls. Educating girls is an outstanding investment, because it yields high social aswell as private returns. Evidence from many countries suggests that the GOB investment in rural girls' educationshould result in better health for women and children; later marriage and smaller families; greater community andpolitical participation by women; decreased income inequality associated with gender and residence; increasedproductivity and a reduction in poverty.

A recent impact study conducted by NORAD covered 780 girls who received stipends in the 1986-1992pilot programs. Results on the girls and their families show, inter alia, delays of up to 25 percent in the age ofmarriage, higher number of single child families, improved birth spacing, more females employed with higherincomes, decrease in the amount of dowries, and more confident and aware females who are involved in theirchildren's education.

Removing Gender Barriers. The project's emphasis on improving recruitment and placement of femaleteachers is grounded in research showing that parents are less willing to send their daughters to a school where allthe teachers are male. Similarly, studies have shown that girls are sensitive to the physical quality of schoolfacilities and are less likely to attend schools that lack the privacy of a latrine.

Stimulating Demand for Education. The Bangladesh supply-side strategy of tuition and stipends to givegirls access to secondary school was a ground-breaking program and has been the longest and most ambitious of itskind. It has been very successful. All indications are that a profound revolution has occurred in Bangladeshisociety and that incentives to keep girls in school were a critical feature of that revolution. This result is the basisfor sustaining the Female Stipend Program as the weightiest element of FSSAP II.

The unanswered riddle is whether the effects of the stipend and tuition program are sufficiently profound toremain cultural norms even if the financial incentives are withdrawn. Because this program is in a sense, theworld's vanguard program of its type, there are no obvious lessons to apply in answering this riddle. Experienceswith incentive programs in other social sectors, for example health and population, show that interventions need tobe sustained over long periods to effect lasting change, and that demand for social services among impoverishedclients is very sensitive to price. The Government and donors need a much better understanding of demand,especially among families at the low end of the income spectrum to make informed decisions about continuation andpossible targeting.

There is also a need for much better understanding of the critical features of supply. Would demand bestrong even without subsidies if the quality of education were better? Experiences elsewhere suggest this could bethe case, and that furthermore poor quality of education eventually results in rising dropout and falling enrollmentrates. Quality and efficiency considerations affect households very directly. If expectations for quality secondaryeducation and employment for graduates are misunderstood and unfulfilled, the gains made in enrollments mayerode. Additional analytical work on these issues is contemplated under FSSAP II.

Quality of Education. One of the main lessons from the implementation of the FSSAP was that theproject design did not, in fact, go far enough in improving the quality of education. Beyond the building of latrinesand tubewells, FSSAP relied mainly on the requirement that girls in the stipend and tuition programs maintain apassing grade of 45 percent as an incentive for higher achievement. For those girls that dropped out, FSSAPprovided occupational training in areas such as crafts and animal husbandry. In the design of FSSAP II, theoccupational training component has been dropped -- it was felt that there were sufficient training programs of this

-17 -

nature already being provided by NGOs, and the project did not want to run the risk of providing a perverseincentive for girls to drop out of school. Instead, more focus has been given to core educational issues - teachertraining, and providing books and materials to schools through incentive programs.

Teacher Training. As noted in the discussion of alternatives under the Project Rationale, the choice tofocus on in-service courses for teachers is grounded in research on teacher effectiveness. Research has shown thatapplication of learning in the near-term following training, with support, guidance, and feedback linked to thetraining received, is critical to the development of skills and practice. Finally, research also suggests that the mosteffective training is delivered in relatively short doses with an emphasis on mentored practice and supervision thatreflects the principles and skills learned. These findings are being taken into account in the design of the proposedteacher training programs.

Institutional Development. It has become a truism in development over the last twenty years that manyof the potential benefits of projects - management skills, increased access to data - are lost at project closing if notintegrated into the daily life of existing institutions. The design of FSSAP II reflects this lesson in the proposal toestablish, in addition to the Project Olperations Unit, a Program Monitoring Unit (DSHE/PMU) as an institutionalbase for capacity building within the MOE/DHSE. The project's emphasis on a gradual transition ofresponsibilities from the previous FSSAP PIU, however, is also based on Bangladesh-specific projectimplementation lessons. Within the Bangladesh portfolio, the implementation record of FSSAP stands out asexcellent; it would be risky to integrate project implementation functions too quickly given current capacity withinthe DSHE.

Community Involvement Community involvement is essential for improving the quality and coverage ofservices in remote areas, as well as for program sustainability. Community awareness of the benefits of girls'education is already adequate in Bangladesh. Active community engagement with schools can now be promoted.International experience suggests that communities become actively engaged when they have meaningfulresponsibilities, control of resources, and accountability. These, along with good quality education for theirchildren, are the incentives for community participation. FSSAP II reflects these lessons in seeking to improve theinclusiveness of SMCs (through requiring the participation of women members); providing local communities withtraining on school quality and management roles; and providing concrete incentives for community participation(school improvement proposals will have to involve parental participation).

4. Indications of borrower commitment and ownership:

As discussed more fully under Section B.2 (Government Strategy), the Government has demonstrated along-standing commitment to improving educational opportunities for girls and for more disadvantaged areas of thecountry. This commitment is reflected both in policy statements (such as the Fifth Five Year Plan - 1997-2002)and actions (such as the decision to expand the FSP program to all rural areas of Bangladesh in 1994 withsubstantial additional Government funding). Commitment to the FSSAP is evident in its good implementationrecord, and the fact that many of the implementation arrangements and monitoring instruments developed under theproject have in fact been adopted by the Government and other donors for use in the FSP program overall. Supportfor a follow-on project (the proposed FSSAP II) has been one of the Government's top priorities in sectoraldiscussions with IDA.

5. Value added of Bank support in this project:

The value added of Bank support for the proposed FSSAP II project is more technical than monetary.Ongoing support for stipend and tuition programs is currently being provided by the Government, ADB andNORAD in addition to IDA, although certainly the Government would have trouble making up the difference wereIDA to discontinue financing. The real value of FSSAP, however, has been as a testing ground for innovations.

- 18 -

This is the typical case of a "demonstration project". Approaches and instruments pioneered under FSSAP havetended to find their way into other Government and donor-funded programs and projects, including primary schoolinitiatives. Given that it is unlikely that the Government will be able to continue to fund the stipend and tuitionprogram in its current form indefinitely, FSSAP II will provide a very useful forum for exploring options for thefuture. Lessons learned here will also be applied elsewhere in Bank work, as the successes of FSSAP havespawned a second generation of stipend/scholarship projects that may face similar challenges as programs mature.

In addition, the proposed FSSAP II includes not only support for the stipend and tuition programs but alsoattention to several quality and institutional issues. Here too, an attempt has been made to choose areas whereinnovative approaches will be tried and have the potential of influencing ongoing practice outside the project.Because the proposed FSSAP II straddles both supply and demand side issues, it places IDA in a good position tohelp bring various actors together --as the FSSAP II in fact tries to do in supporting better project coordinationthrough helping to establish a Project Monitoring Unit within the DSHE. Moreover, as a lender with more thantwenty years experience in the education sector in Bangladesh, it is important that IDA have a "seat at the table" indiscussions of ongoing reform of secondary education.

E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)

1. Economic (see Annex 4):o Cost benefit NPV=US$ million; ERR = % (see Annex 4)

o Cost effectiveness* Other (specify)

The economic justification of the project rests on strong evidence that education, particularly for rural girls,substantially reduces poverty in Bangladesh. Analysis of poverty levels in Bangladesh shows that more than halfthe population lives below the (upper) poverty line. The incidence of poverty is higher among rural households, andthose in which the head of household has no schooling. Among heads of the household who had completedsecondary education, only 7 percent were very poor and 15 percent poor.

Recent findings indicate that per capita consumption gains in rural areas range from 6 percent forhouseholds whose heads have completed some primary education to 17 percent for household heads who havecompleted secondary education. Consumption gains are augmented further with the educational attainment of thespouse: the higher the educational level the greater the gains in per capita consumption. For example, a ruralhousehold whose spouse has completed secondary school would gain 39 percent per capita consumption comparedto only four percent per capita gain to a similar household whose spouse has only some primary schooling. Thehighest education attainment level of a population greatly depends on the education of parents, especially mothers.If both parents are educated, the probability that their children attain SSC/HSC and above increases substantially.

Private retums to households to female secondary education are well established. In addition to monetarybenefits to the families, investment in the education of girls yields social benefits especially in the areas of familyhealth, education and population control. An analysis of the Bangladesh Demographic Health Survey, 1996/97 and1999/2000 (preliminary) data shows a strong positive relationship between women's education and quality of lifeindicators. The higher a woman climbs on the educational ladder, the better off she and her family score on mosthealth and family welfare indicators. Women with no education have a fertility rate of 3.93, compared to 3.27 forwomen with some primary education, 3.0 for women who complete primary education, and 2.1 for women whocomplete secondary education or beyond. Education delays childbearing especially for young women between theages of 15 and 19. For example, the percentage of young women 15-19 without education who have begunchildbearing is 54 percent compared to 39 percent for women with some or completed primary education, and 19percent for women with secondary education or beyond. Similarly, the under five-mortality rate (per thousand

- 19-

population) for children born to women with no education is almost twice (144) that of women with secondaryeducation or more (78). The percentage of fully vaccinated children born to women with no education is 50 percentcompared to 57 percent for children whose mothers have some primary education and 70 percent for children whosemothers have secondary or higher education. The percentage of women with no education who have ever heard ofHIV/AIDS is 6 percent compared to 13 percent for women with some primary education, and 58 percent for womenwith secondary education or more.

Social cost-benefit analysis represents an important tool for analyzing the desirability of social investments.The main computational difference between private and social rates of return is that, for a social rate of returncalculation, the costs include the state's or society's at large spending on education. Hence, costs include the rentalof buildings and professional salaries. Gross earnings (i.e. before taxes and other deductions) should be used in asocial rate of return calculation, and such earnings should also include income in kind where this information isavailable. A key assumption in a social rate of return calculation is that observed wages are a good proxy for themarginal product of labor, especially in a competitive economy using data from the private sector of the economy.Civil service pay scales are irrelevant for a social rate of return calculation, although they may be used in a privateone.

The "social" attribute of the estimated rate of return refers to the inclusion of the full resource cost of theinvestment (direct cost and foregone earnings). Ideally, the social benefits should include non-monetary or externaleffects of education (e.g. lower fertility or lives saved because of improved sanitation conditions followed by a moreeducated women who never participates in the formal labor market).

Since the costs are higher in a social rate of return calculation relative to the one from the private point ofview, social rates of return are typically lower than private rates of return. The difference between private andsocial rate of return reflects the degree of public subsidization of education. The discounting of actual net earningsprofiles is the most appropriate method of estimating the returns to education because it takes into account the mostimportant part of the early earning history of the individual. However, this method requires comprehensive data--one must have a sufficient number of observations in a given age-educational level for constructing 'wellbehaved" age-earnings profiles (i.e. not intersecting each other).

The major non-monetary benefits to be captured in the social cost benefit analysis for FSSAP II are: (a)reduction of dropouts and repetition rates; and (b) improved health and nutritional status due to delayed marriageand empowerment of women. In order to measure the effects of reduction in dropout rates, the flow students indifferent grades with and without the project could be estimated. Given these differences in flows, the out-of schoolbenefits are calculated by using both the private rate of return to each grade of education. The monetary values ofthe improved health status could be calculated based on expert judged assumptions.

2. Financial (see Annex 4 and Annex 5):NPV=US$ million; FRR = % (see Annex 4)

The main financial issues for the project relate to: (a) the adequacy of the overall Government expenditurein education, and within that, projected allocations to secondary and higher education and the stipend programs; (b)the equity of Government expenditure on education; (c) efficiency and wastage, particularly related to high dropoutsand low SSC completion rates; (d) sustainability of recurrent costs of the stipend program; (e) the possibility ofintroducing targeting policies and mechanisms under the project; and (f) adequate accounting, financial andprocurement staff in FSSAP II to ensure sound financial and procurement management systems, financial controls,and accountability for project finances.

- 20 -

The project will significantly contribute to the sustainability of benefits from FSSAP activities by reducingdropouts, increasing SSC completion rate and improving the learning achievements. The project will alsocontribute to sustain the momentum gained in expanding the girls' enrollment at the secondary level.

The present system provides free tuition and stipend to all secondary education girls eligible for the stipend.The stipend amount meets only a part of the direct cost and is the same for all. This scheme is simple and easy toimplement, as it does not involve any selection of girls. It will be justified to continue the present system for someyears on the assumption that it will help to sustain the momentum for girl's education in the country. Since thissystem does not take merit and need into consideration, it may not attract girls from the poorest families who cannotmeet the partial cost of schooling.

The most important issue relating to sustainability is of continuance of the stipend program after thecompletion of the project in 2006. There is a general consensus among both the donor community and governmentofficials in Bangladesh that female stipend programs have been very beneficial, but are not sustainable in theirpresent form. As the number of female students continues to increase with the improvement in primary education,there will be less government funds available to invest in efforts to improve the quality of education. Thegovernment would like to continue the program in its present form and review possible strategies for reducing thecosts of the program during MTR. The feasibility of introducing the targeted interventions including the financialand management costs of such strategies will be analyzed during project implementation.

Fiscal Impact:

Projections of availability of resources to the secondary education subsector and its funding requirementsare provided in Annex 4. GOB plans to restructure the education system and to improve access and quality ofprimary and secondary education will possibly lead to increased resource allocations to the primary and secondarysubsectors in the years to come, particularly if the Government is successful in addressing the governance issues inthe education sector. The fiscal impact and sustainability aspects of the female stipend program will bere-examined during the project Mid-Term Review, taking into account the reform steps contemplated by theGovernment and the availability of resources.

3. Technical:Technical issues relate to lack of information in a number of important areas and possible delays and

difficulties in technical areas outside the scope of the project.

With regard to the first issue, and as stipends are not sustainable in the longer-term, the project has beendesigned to ensure that research and monitoring and evaluation are specifically targeted to generate cost-effectiveand sustainable solutions. While supporting the stipends and tuition program to keep the momentum of girlsenrollment for a while longer and sustain the level of awareness, research and monitoring and evaluation activitieshave been designed to find alternative solutions to get away from supply-driven behavior. As stated before (see D. 1above), a large part of the project can be viewed as a "research laboratory". Indeed a full subcomponent (theOutreach Program) could be characterized as action research, since it will not only provide secondary education tothose girls not enrolled, but will help schools in poor areas and draw lessons for future targeting. The activitiesunder the subcomponent have been designed to answer questions such as: What are the factors that determineun-enrollment/existence of underserved girls? What are the determinants for the establishment of school inpoor/remote areas? Why some schools do not participate in the program? How can SMCs/PTAs in existingschools encourage girls to attend? There are two main activities under this subcomponent: the FamilyAttractiveness Program (FAP) will pilot the identification of about 600 girls who are not in school, find out why,what needs they have and how can they be supported. The project will do a participatory evaluation of FAP beforethe Mid-Term Review towards identifying strategies for targeting individuals, communities and areas. The other

- 21 -

activity deals with New schools, and will be a living experiment which will support the establishment of 60 juniorsecondary schools where none exist. Finally, the project is designed to inform sectoral policy reform on girlseducation, teacher training and community participation. The project will support a new Program Monitoring Unitwithin the DSHE Planning and Development Wing designed to coordinate all secondary female education programsand work on monitoring and evaluation. Its terms of reference are to: share information; learn lessons; plan allfemale education programs; do periodic studies on female education issues; be a consultative/advisory body toDSHE; help with implementation of the Outreach Program; and be in charge of assessments and documentation forthe Mid-Term Review. In sum, the lessons learned are to be channeled directly to policy decisions.

With regard to issues outside the scope of the project, one of the most important concerns is curriculum andexamination reform. Although the need for curriculum and examination reform is widely accepted, consensus onwhat should be done and why still appears elusive. Under the best of circumstances, curriculum and examinationreforms are politically loaded and thus very difficult to achieve quickly and comprehensively. However, withoutthem, and without better professional support for teachers, improvements of education and learning on a nationalscale are likely to be uneven at best. Although project activities could proceed in the absence of progress in thisarea, they would greatly benefit from such progress. Fortunately, the Government has issued and approved a newNational Education Policy in 2000 which provides a reasonable framework for creating a plan to raise quality andefficiency at all levels, including the post-primary sector.

4. Institutional:

4.1 Executing agencies:

The Directorate of Secondary and Higher Education of the Ministry of Education will be the agencyresponsible for the execution of the project.

4.2 Project management:

The project will support the strengthening of the management of the female secondary education assistanceprograms in Bangladesh. The establishment of the Program Monitoring Unit within the Planning and DevelopmentWing is aimed at improving DSHE's capacity to provide the leadership and management needed to ensure adequateaccountability and monitoring of the several female education projects, to coordinate project implementation units,and to address issues of sustainability of the female stipend program. As DSHE's capacity is strengthened, most ofthe operations activities will be the responsibility of a Project Operations Unit that will function as an integratedpart of DSHE operations. The DSHE/POU will work closely with the rest of the DSHE wings and involve them inimplementation with the goal of gradually shifting responsibilities (for example, the increased emphasis on qualityand management accountability in participating schools necessitates improved coordination with the Training andSecondary Education wings within DSHE). This improved collaboration, in combination with the strengthening ofthe above Planning and Development Wing, is consistent with the Government's secondary education reforminitiative that will strengthen DSHE and introduce performance management and monitoring to improveaccountability. In particular, the DSHE/POU will work closely with the DSHE/PMU in order to ensure thatcoordinated efforts in planning and implementing monitoring and evaluation activities lead to better results inproject operations.

4.3 Procurement issues:

The Country Procurement Assessment Report (CPAR), broadly accepted by the Government, stated thatprocurement is a generic problem in Bangladesh. The CPAR identified a series of factors accounting forprocurement problems in the country that include: absence of procurement law, poor advertisement, short biddingperiod, poor bidding documents, multiple evaluation committees, award of contract through lottery, negotiation,lack of professional competence, corrupt practices and pressure from special interest groups and collective

- 22 -

bargaining agencies.

All procurement under the project will be handled by DSHE/POU, with support from DSHE. Theprocurement management capacity of DSHE/POU is not adequate although it has acquired some experience in IDAprocurement procedures by implementing the IDA-financed FSSAP. There is no specific position in theDSHE/POU to deal with procurement. Based on the review, there are high risks associated with procurement. Itneeds strengthening. To mitigate these risks, DSHE has formed a Procurement Core Team (PCT) headed by theProject Director and charged with all procurement related tasks; designated a senior staff (Director Planning) tooversee all its procurement actions during preparation; have been using the services of a Procurement Consultant;conducted in collaboration with IDA a short training workshop on procurement (for goods and consultants'services) for the PCT and DSHE staff; and made provision under the project for one procurement position inDSHE/POU for the entire project period, and one Procurement Consultant for 12 person-months spreading overfour years of the project.

Annex 6 describes actions for strengthening the procurement management capacity.

4.4 Financial management issues:

The FSSAP II will have a financial management system which is adequate to cater to minimum financialmanagement requirements by Credit Effectiveness, after the appointment of a qualified Deputy Director (Finance)and an Assistant Director (Finance). The experience gathered from the previous project will greatly contribute tothe implementation of the follow-on project under the DSHE. The DSHE has experience in managing FSSAPsatisfactorily and has restructured implementation arrangements for FSSAP II for further improvements in theoverall financial management system. The recently introduced Project Accounting Manual of the Government willalso provide a framework for ensuring basic financial management system in FSSAP II.

During the initial stages of project implementation, the key task is to further improve the financialmanagement system in the project and the DSHE, and to address the current weaknesses. These tasks are: (a)appointment of a Chartered Accountant in the position of Financial Management consultant to facilitate theimplementation of the computerized system; (b) finalization and adoption of the project Financial ManagementManual; and (c) adoption of the computerized financial management system for the project. Although the projectis already working on these three actions and expects to complete them soon, agreement has been reached thatactions will be completed by August 31, 2002.

The audit covenants of FSSAP have been complied with. Audit reports were received timely, and repliesand remedial measures were taken on observations needing such actions. The MOE and the Comptroller andAuditor General (C&AG) are in the process of resolving minor audit observations.

The annual financial statement of FSSAP II will be audited by the C&AG and will be submitted to theBank within six months of the end of each fiscal year. In addition, a private audit firm will carry out annual auditsof disbursement of stipends and tuition funds under terms of reference and selection method acceptable to IDA.The cost of such audits will be eligible for disbursement under the Credit.

There is no substantial risk affecting the project financial management system. The risk is rated asmedium/low and their mitigation measures are manageable and will be monitored closely during projectsupervision.

5. Environmental: Environmental Category: B (Partial Assessment)5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (includingconsultation and disclosure) and the significant issues and their treatment emerging from this analysis.

- 23 -

The principal environmental concerns of the project relate to the need to ensure the provision of safe drinkingwater at schools, and the provision and maintenance of adequate sanitation. To address these issues, arrangementsto guard against the arsenic contamination of drinking water have been agreed, and guidelines have been developedto inform the design, maintenance and use of latrines under FSSAP II. These arrangements and guidelines havebeen discussed with the Government and made publicly available prior to appraisal.

5.2 What are the main features of the EMP and are they adequate?

1. Provision of Arsenic-Safe Drinking WaterDecisions regarding the installation of shallow tubewells (STW) will be governed by the protocol

established by the Department of Public Health Engineering (DPHE). Under this protocol, a STW can be installedin an area where less than 20 percent of STWs are arsenic-contaminated, provided there is no contaminated STWwithin 500 meters of the proposed site. Once installed, the STW must be tested for arsenic, and it can be used fordrinking water only if the level is found to be below the national standard for drinking water (50 parts per billion-ppb).

In areas where STWs cannot be installed under this protocol, or where an installed STW is found to bearsenic-contaminated, other options approved by the Government under the national arsenic mitigation program willbe considered. These may include alternative sources such as deep tubewells, rain-water harvesting, dug-wells orpond-sand filters, or arsenic removal technologies.

2. Testing of TubewellsIn addition to the testing at installation of new STWs, testing will be completed of the remaining untested

tubewells installed under the first FSSAP, and all tubewells installed under both FSSAP projects will be testedtwice yearly to safeguard against future arsenic contamination as a result of changing groundwater conditions. Forquality assurance purposes, 5 percent of randomly selected samples will be analyzed in an independent laboratorywith proven credentials.

DSHE will be responsible for contracting all testing services, and UPOs will be responsible forcoordinating the process locally, recording results and informing SMCs. SMCs will ensure that allarsenic-contaminated tubewells are painted red, following national practice, and will instruct students and staff notto use water from these tubewells for drinking or cooking. SMCs will be encouraged to assume responsibility forregular testing, using local NGO and private sector service providers.

3. Provision of latrinesLatrines will provided based on designs agreed by the Facilities Department, MoE, and IDA. These

designs will include the twin double-pit, six-ring latrines provided under FSSAP, but a broader menu of options willbe developed, to include lower-cost alternatives. The Guidelines for Improvement of School Sanitation will be usedto help develop the menu of design options, and to guide the maintenance and use of latrines supported by FSSAPII. In all cases, latrines for girls will be provided separate to those for boys.

4. Awareness ProgramThe project will support a school awareness program in the management of arsenic risks, hygiene and

sanitation. The concept of User Groups (UGs) to maintain the latrines and the tubewells introduced in FSSAP willbe strengthened. UGs provide girls with leadership opportunities and help ensure that awareness of arsenic issues,proper use and maintenance of water and sanitation facilities, and other hygiene concerns are regularly presentedand discussed at school, home, and in the community. Topics related to hygiene and sanitation, especially toarsenic problems, will also be integrated into in-service training for teachers and stakeholders.

- 24 -

5.3 For Category A and B projects, timeline and status of EA:Date of receipt of final draft: 06/21/2001

An Environmental Analysis and Guidelines for Improvement of School Sanitation have beensubmitted on June 21, 2001, covering issues outlined under 5.2 above.

5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EAreport on the environmental impacts and proposed environment management plan? Describe mechanismsof consultation that were used and which groups were consulted?

SMCs were consulted during the preparation of the Guidelines for Improvement of School Sanitation, andDPHE was consulted in the development of procedures for provision of arsenic-safe water supplies.

5.5 What mechanisms have been established to monitor and evaluate the impact of the project on theenvironment? Do the indicators reflect the objectives and results of the EMP?

Monitoring and evaluation activities under this sub-component will help ensure the quality of facilitiesinstalled, the quality of services delivered, their effective use, the functionality of tubewells/water systems andlatrines, and the status of their operation and maintenance. Systematic leaming and adaptation (new technologies,lower cost inputs) as well as documentation of lessons will also be included.

The SMC and its Project Implementation Committee (PIC) will supervise the construction works andmaintenance of water supply and sanitation facilities, in conjunction with engineers from either the FacilitiesDepartment or DPHE. Communities will contribute 20 percent of the cost of water and sanitation facilities. In thecase of deep tubewells, the communities' contribution will be 10 percent.

On the basis of reports submitted by SMCs, UPOs will be responsible for recording the installation of newtubewells, the dates and outcomes of arsenic testing, the construction of latrines, and their operating and hygieniccondition. DSHE will compile UPO records and will also contract annual audits of arsenic testing. The recordscompiled by DSHE and the independent verification of arsenic testing will be submitted for review by IDA duringsupervision missions.

6. Social:6.1 Summarize key social issues relevant to the project objectives, and specify the project's socialdevelopment outcomes.

As described under the economic analysis section, education of rural girls contributes positively toincreases in household income, decreased fertility, and better health and schooling outcomes for children.Education also helps to improve girls' and women's employment prospects and status in the community. Theproject will thus substantially contribute to reducing poverty in Bangladesh. Participation of the communities is aproject goal expected to strengthen school quality, management and accountability, encourage girls to attendschools and support awareness and the maintenance of schools facilities.

There are a number of locally-based school-specific actions that will be implemented to strengthen schoolquality, management and accountability. For example, School Management Committees are responsible forensuring improved school management and accountability. The agreement to participate in the female stipendprogram signed by the SMCs has been revised and strengthened by specifying measures that further ensureaccountability and that indicate steps to enforce these measures. Enforcement procedures were added asconsequential action if irregularities and non-compliance are found and the agreement was made annuallyrenewable. To increase female participation in the SMC, it was agreed that the MOE/DSHE will initiate the

- 25 -

necessary measures to issue a Notification that calls for SMCs to enhance female participation in schoolmanagement by including at least two additional female guardians/parents on the SMC. This will be consistentwith a similar Notification issued by the Primary and Mass Education Division (PMED) with reference to femalemembers on primary schools SMCs. This Notification will be issued before the revised Cooperation Agreementswith the schools are signed. Finally, to ensure better accountability and adherence to standards at the school leveland for community management of schools, awareness raising programs (training, orientation, workshops) thatfocus on improving record maintenance, Head Teacher performance, and increased parents' participation in schoolmanagement, have been agreed.

In its effort to provide secondary education opportunity to secondary education age girls who are currentlynot enrolled, the project will support a program involving schools and community to encourage girls to attendschool. The Family Attractiveness Program (FAP) will identify out-of-secondary-school girls from very poorfamilies living in geographically remote and economically disadvantaged areas, identify the reasons why they arenot in school, and address their needs for the five years of secondary school. A participatory evaluation of the FAPprogram will be conducted before the Mid-Term Review. In the case of remote and economically disadvantagedareas that do not have a secondary school for girls, the project will target some of the most depressed communitiesand assist in the establishment/recognition of a lower secondary school. An assessment of the implementationprocess and lessons leamed, supported by case study documentation, will be prepared by the DSHE/PMU forconsideration at the Mid-Term Review.

The project will also support an awareness program in hygiene and sanitation. User Groups will beinvolved in maintaining the latrines and the tubewells introduced by the project. User Groups will provide girlswith leadership opportunities. User groups will ensure that awareness on arsenic issues, proper use andmaintenance of water and sanitation facilities, and other hygiene concems are regularly presented and discussed atschool, at home, and in the community. Topics related to hygiene and sanitation, especially to arsenic problems,will also be integrated into in-service training for teachers and stakeholders. All students, boys and girls, willbenefit from these activities.

6.2 Participatory Approach: How are key stakeholders participating in the project?

The primary beneficiaries of the project will be rural girls aged 11-15 years. These beneficiaries will be involvedprimarily as learners. Additional beneficiaries include MOE/DSHE staff, headmasters, headmistresses andteachers. Some of these beneficiaries will get salary support, others training. Other key stakeholders includeparents; upazilla, district, and division personnel; teacher training institutions; SMCs; parent-teacher associations,and other community members. These stakeholders will participate in the project through outreach and trainingopportunities, involvement in designing school quality improvement proposals, consultation on development ofmaterials, maintenance activities, outreach programs and increased monitoring responsibilities.

6.3 How does the project involve consultations or collaboration with NGOs or other civil societyorganizations?

The FSSAP II will support new, second generation-type information, education and communicationactivities designed to make communities buy in the issues of quality, accountability and sustainability. Some of theexamples on how consultation and collaboration will be conducted are as follows: (a) FSSAP II will provide agrant to selected schools that have deficiencies and seek to make improvements based on proposals prepared by theinstitutions and endorsed by at least 75 percent of the parents of female students; (b) in addition to the maintenanceof water and sanitation facilities described in 6.1 above, the SMCs will monitor and supervise the constructionworks in conjunction with trained engineers. The SMCs will be provided with adequate training and resources toeffectively monitor and supervise construction works; (c) communities will contribute approximately 20 percent ofthe costs of water and sanitation facilities and in the case of deep tubewells, communities' contribution will be 10

- 26 -

percent; and (d) in the case of the outreach program that will assist in the establishment and recognition of newschools in remote areas, the final selection of potential participating villages will be a function of communitycommitment, i.e. parents signing agreements to send their daughters to school, establish an effective SMC, andprovide resources to establish a school. In the case of the outreach program activities, a community mobilizationspecialist will be supported by the project to conduct surveys, and help design criteria and programs.

6.4 What institutional arrangements have been provided to ensure the project achieves its socialdevelopment outcomes?

Various institutional arrangements will secure the achievement of social development outcomes. Examplesinclude: School Improvement Plans endorsed by parents; Cooperation Agreement signed annually by MOE andSMCs; Water Supply and Sanitation Agreement signed by the MOE and relevant SMCs; annual award ceremoniesorganized by the school community designed to encourage all parents to support greater achievement in school andto disseminate information regarding quality education to all community members.

6.5 How will the project monitor performance in terms of social development outcomes?

Monitoring of performance of social development outcomes has been built into the project activities. Inaddition to the development and monitoring indicators (some of which relate directly to social developmentobjectives), the Project will monitor as follows:

- the Female Education Cell of the DSHE/PMU will be responsible for facilitating the sharing of information,lessons learned and planning of female education programs by conducting periodic studies of female educationissues.

- the Monitoring and Evaluation Cell of the DSHE/PMU, in coordination with the Data Processing Center at theDSHE/POU, will be responsible for (a) preparing annual statistical reports and comparative analyses of projectperformance supplemented by field research, and (b) providing third party oversight of the FSSAP II projectstipend and tuition activities through the conduct of periodic random rapid studies (two per year), some of whichwill assess communities, parents and schools participation in improving school quality, management andaccountability, girls enrollment and schools facilities. A team of international and national consultants will assist inthe design of impact of program activities.

- the Stipend and Tuition Cell of the DSHE/POU will conduct performance audits of 5 percent of schools, undercontract to independent firms, to establish, inter alia, composition of the SMCs, activities of the parent-teacherorganizations, and so on. These performance audits will be completed and analyzed before the Mid-Term Review,and will again be repeated just prior to the end of the project.

- training activities for community and parents will monitor community responses and assess whether parents andlocal officials are well informed as to what to expect from the school and what their options are if the school doesnot meet these expectations. A program of orienting and training all concemed, including school officials, SMCs,head teachers, and parents, as well as union parishads and upazila officials will introduce some transparency andhelp re-establish community based accountability.

- UPO and UAPOs will be more proactive in carrying out their monitoring responsibilities. With clear divisions ofresponsibilities and shared work burdens, a program of regular random visits to schools (ten or more per month) toreview enrollment situation, follow up on agreed activities and discuss problems that concem schools, includingcommunity participation, will be introduced.

- the project will complete a tracer study of girls participating in FSSAP to evaluate their overall educational,economic, and social outcomes.

- 27 -

7. Safeguard Policies:7.1 Do any of the following safeguard policies apply to the project?

Policy ApplicabilityEnvironmental Assessment (OP 4.01, BP 4.01, GP 4.01) * Yes 0 NoNatural Habitats (OP 4.04, BP 4.04, GP 4.04) 0 Yes * NoForestry (OP 4.36, GP 4.36) C Yes * NoPest Management (OP 4.09) 0 Yes * NoCultural Property (OPN 11.03) 0 Yes * NoIndigenous Peoples (OD 4.20) 0 Yes * NoInvoluntary Resettlement (OP/BP 4.12) 0 Yes * NoSafety of Dams (OP 4.37, BP 4.37) 0 Yes * NoProjects in International Waters (OP 7.50, BP 7.50, GP 7.50) 0 Yes 0 NoProjects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)* 0 Yes * No

7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.

No land acquisition is intended so OD 4.30 is complied with. OD 4.20 on Indigenous Peoples is not applicablesince indigenous peoples will not be affected by the project.

F. Sustainability and Risks

1. Sustainability:

The proposed project will significantly contribute to the sustainability of benefits achieved during FSSAPby improving quality of teaching, increasing the participation of parents and communities, improving studentlearning, reducing dropouts, increasing SSC completion rates, and sustaining the momentum of girls' enrollment atthe secondary level.

An important sustainability issue is the continuity of the stipend program after the completion of the projectin 2006. There is general consensus among both the donor community and Government officials in Bangladesh thatfemale stipend programs have been very beneficial, but are not affordable and sustainable in their present form forthe longer terrn. As the number of primary and secondary students increase, budget pressures will intensify.Government funds to expand schools and invest in improvements to the quality of education will be urgentlyneeded. With this in mind, FSSAP II includes funds for additional research on the feasibility of targeting only thepoorest students and/or the remote areas. Strategies for reducing the costs of stipend and tuition programs will beexamined as part of the Mid-Term Review.

2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1):

Risk Risk Rating Risk Mitigation MeasureFrom Outputs to ObjectiveTeacher training proves ineffective N New teacher training programs will aim at

proven in-service practice with feedback,extensive professional support and supervision.This will be further reinforced with headteachers training as well as other stakeholderstraining and awareness programs on theimportance of quality secondary education.

- 28 -

Improvements in facilities prove too M Research shows that school attendance andmarginal to affect access and retention quality are positively correlated with the

provision of safe water and sanitation facilitiesin the previous project.

Stipend program fails to provide sufficient M The stipend program has proven extremelyincentive for poorest girls and their effective in increasing girls' enrollment. Thefamilies outreach sub-component has been designed to

address additional barriers for girls and schoolsin remote areas.

Donor coordination among projects is M An additional impetus to donor coordination willineffective be given through the DSHE/PMU. Also, EU,

NORAD and ADB have been consulted duringproject preparation. The forthcomingNORAD-financed project will have similarquality enhancement and accountabilitycomponents.

DSHE lacks political support from MOE, S Accountability in secondary education is aGovernment, and/or communities for systemic problem. The FSSAP II designincreased accountability measures provides for an incremental approach that will

clarify contractual agreements, provideinformation and training to SMCs, broaden itsmembership and strengthen overall monitoring.Parallel programs to improve accountability arebeing supported by ADB's SESIP project.

From Components to OutputsDSHE/MOE commitment to project N Both major political parties and Governmentwanes and there are problems with staff have shown to be fully behind secondarycounterpart funds female education and have so far provided

counterpart funds. In addition, GOB financeshalf of the country's upazilas on its own.

Integration of project management M Project transfer of responsibilities in stages fromactivities into DSHE causes disruption of current PIU to DSHE units, backed by trainingproject implementation support, implementation manual, technical

assistance and effective financial management,procurement and M&E system, will alleviatethis risk.

There is insufficient interest on part of M Incentives and awards for schools and studentsschools and communities in incentive and will be widely publicized. Female SMCtraining programs members are expected to enhance communities'

interest. Cash and school materials areconsidered adequate incentives.

No agreement is reached among N GOB and donors are keenly aware of pastparticipating stipend projects and banks delays in disbursement procedures. An

- 29 -

regarding streamlined procedures for improved Participation Agreement with thestipend disbursement Agrani Bank has been signed.

Selection of candidates for overseas and N IDA will continue its practice of requiringin-country training is inappropriate no-objection for lists of staff undertaking

overseas training and ensuring relevant andexperienced agencies are involved.

SMCs and local level elites do not support M Participation and community involvementoutreach programs and attempt to block strategies change the distribution of power andefforts to broaden participation in school decision-making and thus, do face resistance.management and monitoring Increased awareness, stakeholders training and

improved consultation, collaboration andresponsibilities are recognized incentives toprevent irregularities and to balanceundemocratic practices by local elites.

DSHE/POU may not able to attract and M The network to hire qualified staff will beretain qualified financial staff expanded beyond Government source with

attractive pay and job profile. PIP includedTORs for key finance staff and supportcompensation package.

Delay in timely submission of statement N Time bound action plan has been reached withof expenditure from Agrani Bank to Agrani Bank for timely submission of SOE.DSHE/POU, DSHE/POU to Chief Steps taken to improve Project FinancialAccounts Officer (CAO)/MOE, which in management system for ensuring timelytum would delay the release of submission of SOE to CAO/MOE.counterpart fund; project implementationwould suffer due to this problem

Overall Risk Rating M Given the good implementation record of theFSSAP and GOB's strong support for afollow-on project, the overall risk rating cansafely be assessed as "Modest".

Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)

3. Possible Controversial Aspects:

G. Main Loan Conditions

1. Effectiveness Condition

The following are conditions for Credit Effectiveness:

1. The Project Proforma (PP) for carrying out the project has been approved by GOB.

2. Key staff for the Project Operations Unit have been appointed, all with job descriptions and qualifications

- 30 -

satisfactory to the Association. Key staff are the: (1) Deputy Director for Finance and Administration; (2)Assistant Director for Financial Management; and (3) Procurement Officer.

2. Other [classify according to covenant types used in the Legal Agreements.]

Disbursement Condition

To be eligible for disbursements of stipends and tuition, DSHE/POU will: (a) by April 1st. of each year,commencing in 2002, carry out a comprehensive review of the progress of the project during the precedingacademic year; and (b) promptly furnish IDA with the findings and recommendations of such review, as well as awork program for the ongoing academic year.

Other agreements reached at Negotiations:

The project will be carried out in accordance with the Implementation Program in Schedule 4 to theDevelopment Credit Agreement.

MOE will establish and maintain at the DSHE: (a) a Project Operations Unit (POU) responsible forimplementing the Project, and to be headed by a Project Director who will be accountable to the Director General,DSHE; (b) a Program Monitoring Unit (PMU) responsible for coordinating female education projects and relatedsecondary education activities, as well as maintaining an integrated MIS database and monitoring and evaluation ofthe Project.

GOB has appointed Agrani Bank to be responsible for Project-related banking activities. DSHE enteredinto a Participation Agreement with Agrani Bank satisfactory to IDA, which includes procedures for stipendsdistribution, Agrani's Bank's responsibilities for maintaining records, and auditing of Agrani Bank activities underthe Project.

DSHE will maintain a financial management system, including records and accounts, and financialstatements, adequate to reflect the operations, resources and expenditures related to the Project, prepared in aformat acceptable to IDA. DSHEIPOU will maintain throughout the Project's implementation period acomputerized financial management system acceptable to IDA.

DSHE will, by August 31, 2002: (a) have completed, installed, tested and implemented the computerizedfinancial management system, and related training of staff; (b) have completed and implemented a financialmanagement manual; and (c) have appointed a financial management expert consultant to facilitate theimplementation of the computerized system.

DSHE will no later than October 31, 2002, start preparing and submitting to IDA quarterly ProjectManagement Reports.

DSHE will furnish to IDA no later than six months from the end of the fiscal year, audited financialstatements from an independent auditor acceptable to IDA.

DSHE will appoint private audit firms to audit annually the disbursement of stipends and tuition fundsunder the Project.

DSHE will carry out two performance audits of the Project through appointed auditors, the first one,covering two and half years from the Effective Date, and the second one, covering the following period endingDecember 31, 2005.

- 31 -

DSHE will open and maintain a separate Convertible Taka Special Account.

DSHE/POU will handle procurement under the Project. For procurement of goods, financed in part or inwhole from IDA funds, the Bank's Procurement Guidelines will apply. For consultants' services financed in partor in whole from IDA funds, the Consultants Guidelines will apply.

DSHE will maintain adequate policies and procedures to enable the project to be monitored on an ongoingbasis, in accordance with indicators satisfactory to IDA, the carrying out of the Project and the achievement of itsobjectives.

DSHE will implement the Project in accordance with the Project Implementation Plan and the StipendsOperations Resource Manual, as revised and agreed with IDA.

DSHE will cause every Project Educational Institution to establish and maintain until the completion of theProject, a School Management Committee, with tenns of reference acceptable to IDA.

DSHE will enter into an annually renewable Cooperation Agreement with each Project EducationalInstitution satisfactory to IDA. The Cooperation Agreement will specify the purposes, major activities andexpected duties to be carried out by DSHE and the Project Educational Institution and the eligibility criteria forparticipating under the Project. The Cooperation Agreement will be signed by each Project Educational Institutionby December 31 for that Project Educational Institution to be eligible for the subsequent Academic Year.

Prior to carrying out the Improved School Facilities Sub-component under Component One of the Project,DSHE/POU will enter into a Water Supply and Sanitation Facilities Agreement with each Project EducationalInstitution satisfactory to IDA. The Water Supply and Sanitation Facilities Agreement will specify the purposes,major activities, and financing mechanisms of the activities to be carried out by the Project Educational Institution.

DSHE will maintain a Management Information System (MIS) under terms and conditions satisfactory toIDA. DSHE will use the MIS for, inter alia, tracking key Project indicators relative to the stipend program, and formonitoring and evaluating the progress of Project implementation.

MOE/DSHE will maintain Upazila Project Offices in the Upazilas in the Project Area, and adequately staffthem with personnel having qualifications and experience satisfactory to IDA.

DSHE will: (a) prepare, under terms of reference satisfactory to IDA, and fumish to IDA, on or aboutMay 31, 2004, a report integrating the results of the monitoring and evaluation activities on the progress achievedin the carrying out of the Project; and (b) carry out a Mid-Term Review with IDA, by July 1, 2004, or such laterdate as IDA will request.

H. Readiness for Implementation

D 1. a) The engineering design documents for the first year's activities are complete and ready for the startof project implementation.

1 I. b) Not applicable.

1 2. The procurement documents for the first year's activities are complete and ready for the start ofproject implementation.

1 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory

- 32 -

quality.C: 4. The following items are lacking and are discussed under loan conditions (Section G):

1. Compliance with Bank Policies

Z1 1. This project complies with all applicable Bank policies.D 2. The following exceptions to Bank policies are recommended for approval. The project complies with

all other applicable Bank policies.

Ana Mara Jeria Charles C. Griffin rederick Tho s TempleTeam Leade J Sector Manager/Director Country Manager/Director

- 33 -

Annex 1: Project Design SummaryBANGLADESH: Female Secondary School Assistance Project-lI

Key Performance Data Collection StrategyHierarchy of Objectives Indicators Critical Assumptions

Sector-related CAS Goal: Sector Indicators: Sectorl country reports: (from Goal to Bank Mission)Consolidate gains in Improvements in gross and * Educational statistics 0 GOB commitment toeducational access and net enrollment rates, and from BANBEIS improvements inequity and support efforts to educational attainment: * Household surveys education and equityimprove educational quality overall, and considering remains high

equity improvements by 0 Macroeconomicgender, by region and by performance does notincome quintiles. deteriorate

0 Investments ineducation are wellchosen and contributeto economic growthand poverty reduction

Project Development Outcome / Impact Project reports: (from Objective to Goal)Objective: Indicators:Improve the quality of, and 0 Increase in * Education Statistics * Governmentgirls access to, secondary percentages of girls based on BANBEIS effectively implementseducation in rural areas of and boys taking and and project data secondary educationBangladesh. passing SSC exam * Annual project reports sector reforms and

* Increase in percentage * Mid-Term Review projectsof teachers who evaluation * Budgetary allocationsreceive in-service * Periodic program to secondary educationtraining audits and special do not fall

* Increase in number of studies * Community supportschools qualifying for * Implementation for girls' educationincentive awards Completion Report deepens, and pressure

* Increase in net for qualityenrollment rates for improvements buildsgirls in classes VI-X * Relevance and market

* Increase in transition value of secondaryrates for girls between education andclasses V and VI and certification improvesVII and IX

- 34 -

Key Performance Data Collection Strategy Hierarchy of Objectives Indicators _Critical Assumptions

Output from each Output Indicators: Project reports: (from Outputs to Objective)Component:

Quality of education *Number of teachers * MOE/DSHE report on * Training providedimproved receiving in-service results of training results improves teacher practice

training (26,800) under the (at Mid-Term Review)project

*Number of * Training plans and * Even small improvementslatrines/tubewells (4,000) outcome reports in school facilities willconstructed in and schools *Annual project progress attract more girls to

reports school, encourage schoolretention, and higherachievement

Access and retention of girls * Simplified procedures for * Revised stipend operations *Stipends combined withincreased stipend and tuition manual; including other measures will

authorization and agreement for schools and continue to spur demanddisbursement implemented for Agrani Bank for girls' education

*Increases in girls' * Financial and performanceenrollment (to 1,450,000) audits

* Girls supported by Family * MOE/DSHE report onAttractiveness Program effectiveness of procedures(2,400) implemented and

recommendations fortargeting stipend (atMid-Term Review)

* Supervision missionobservation and reports

* Program Monitoring Unit * MOE/DSHE reports a DSHE has politicalin DSHE created and staff * Annual Progress Reports support from GOB as welltrained as communities for

increased accountabilitymeasures

*Cooperation agreements * Mid-Term Review * Donor coordination isfor education institutions * Random rapid studies effective to ensureclearly state conditions and * School performance audits complementarity betweenoutcome objectives and * Cooperation Agreements projects and policiespenalties

*Number of SMCsreceiving training (23,310)

- 35 -

Key Performnance Data Collection StrategllHierarchy of Objectives Indicators Do Critical Assumptions

Project Components I Inputs: (budget for each Project reports: (from Components toSub-components: component) Outputs)1. Improving the Quality $12.67 million For all sub-components: For all components:of Secondary Education *Annual Project Progress

(i) Teacher Education, Reports * MOE/DSHE commitmentTraining and Support Supervision Mission to project remains strong

observation and reports and counterpart funds are(ii) Incentive Awards for * Government and adequate and timelySchool Performance and Independent Evaluation of *Project managementImprovement progress (at midterm continues to be effective

(iii) Incentive Awards for review) with gradual transfer ofStudent Achievement responsibilities to DSHE

(iv) Improved SchoolFacilities

2. Increasing Access and $118.72 million Component-specificRetention of Girls assumptions:

(i) Stipends and Tuition

(ii) Outreach Program

3. Strengthening $13.23 million *Incentive and schoolManagement, management trainingAccountability and programs are wellMonitoring publicized and there is

(i) DSHE Program sufficient interest on theManagement part of schools and

communities(ii) DSHE Project *Agreement is reachedOperations among all participating

(iii) School Management stipend projects and banksandi) Scchooluantagemen regarding streamlined

procedures for stipend(iv) Staff Development disbursement

* Appropriate candidatesarea selected for overseasand in-country training.

* SMCs and local elitessupport outreach strategiesand can be persuaded notto block attempts tobroaden participation inschool management andmonitoring

- 36 -

Annex 2: Detailed Project Description

BANGLADESH: Female Secondary School Assistance Project-l1

The main development objective of the project is to improve the quality of, and girls access to,secondary education in rural areas of Bangladesh. The FSSAP II project sustains improved gender equity,and adds activities and incentives to improve the quality of education in participating schools and toimprove both the management capacity of the Ministry of Education and monitoring and accountabilitymechanisms at the community level. FSSAP II extends the focus beyond access to quality by linkingquality outcomes with stipends and tuition support.

By Component:

Project Component 1 - US$12.67 million

Project Component 1: Improving the Quality of Secondary Education

FSSAP II will support activities to improve the quality of education in classes VI to X. Goals andexpected outcomes are improving student learning, attracting more girls to school, and increasing juniorsecondary school completion and SSC pass rates. The project will support teacher education, training andprofessional support, as well as community mobilization activities aimed at improving quality andclassroom effectiveness of secondary teachers. The project will also provide incentives to schools andstudents for quality outcomes, and assist schools to improve their facilities. Sub-components are: (1.1)Teacher education, training and support for stakeholders; (1.2) Incentive awards for schools' performanceand improvement; (1.3) Incentive awards for student achievement; and (1.4) Improved school facilities.

Sub-component 1.1: Teacher Education, Training and Supportfor Stakeholders

The FSSAP II project will support a more extensive system of in-service training for secondaryschool teachers. The project will provide: a) in-service training for teachers on lesson development,student-centered pedagogy, and gender awareness; (b) academic supervision and management training forhead teachers to support the improved effectiveness of secondary teachers and a gender sensitive schoolenvironment; and (c) sustained in-service training for select schools and professional developmentopportunities for a group of expert teachers through the development of Mobile Training Resource Teams(MTRTs). The management and supervision training for head teachers will be developed and implementedby DSHE, adapting the modules currently under development in the Secondary Education SectorImprovement Program (SESIP), if possible. FSSAP II will also pilot and develop an in-service trainingprogram for all practicing teachers. The aim of all teacher education will be to develop a professionalcadre of teachers who can skillfully reflect on their teaching practice and capably discuss pedagogy,content, assessment and learners' needs with fellow professionals. To further advance a collaborative andcollegial model of professional development that has proven to increase student achievement, severalupazilas will pilot the concept of the MTRT. Four master teachers of the MTRT will provide additionalsupport to teachers in two area schools in four subjects in which girls are reported to have done poorly (andare weighted most heavily) on the SSC: Bengali, English, Mathematics, and science. If the innovativeconcepts make a demonstrable impact on educational quality, they will be scaled up after the Mid-TermReview.

Other FSSAP II training will involve quality awareness training for: (a) Upazila Program Officersand Assistant Program Officers (UAPOs), who will be responsible for facilitating quality education

- 37 -

programs; (b) government officials at the field level who can influence quality improvement, such as theUpazila Nirbahi Officer, the District Education Officer and the Assistant District Education Officer; and(c) School Management Committees/Parent-Teachers Associations (SMC/PTA) members in FSSAP IIparticipating institutions who can directly support improved school quality. FSSAP II will also awardfellowships to continue their education to FSSAP II graduates who commit to becoming primary orsecondary school teachers in rural areas.

Sub-component 1.2: Incentive Awards for Schools' Performance and Improvement

An excellence award will be introduced for schools that strive diligently to improve educationalquality. It will be presented annually to one school in each "cluster" (clusters in this project are groups ofapproximately 35 schools in the larger upazilas) that demonstrates the greatest improvement in SSC passrates and retention rates in classes VI through X. These indicators of quality are objective and verifiable atthe central level and upazila level. Based on a proposal from the high achieving school, the school willreceive an award that will benefit the entire school, e.g. a computer, science kits, library books, or othermaterials.

A second award to schools that have deficiencies and seek to make quality improvements will besupported through the process of a School Improvement Planning (SIP) exercise. The SIP grant will beawarded to one institution in each training cluster over the life of the project. FSSAP II will provide thegrant to the selected institution based on the proposal prepared by the institution and endorsed by at least75 percent of the parents (mother or father) of female students eligible for stipends. Half of the grant willbe disbursed on approval of the SIP plan and the other half when the school has achieved its SIP goals.

Sub-component 1.3: Incentive Awards for Student Achievement

FSSAP II will provide annual incentive awards to four girls in each school to encourage greaterlevels of student achievement. Girls in class VIII and class X who achieve the highest scores and whoseend-of-year marks show the most improvement overall, will receive special recognition and a prize. Theschool PTA will organize an annual award ceremony, and will encourage all parents to participate in thefunction. This will provide the opportunity to disseminate information regarding quality education to allcommunity members.

Sub-component 1.4: Improved school facilities

This sub-Component will provide safe drinking water and twin latrine facilities to ensure that allstudents in FSSAP schools have access to clean drinking water and all girls to safe, private sanitationfacilities. To this end, actions designed under FSSAP II will address the following: (a) testing of FSSAPand FSSAP II tubewells for arsenic contamination; (b) provision of safe drinking water at schools withouttubewells; (c) provision of alternative safe drinking water at schools with arsenic contaminated tubewells;and (d) provision of latrines. The project will support a school awareness program and monitoring andevaluation activities.

Project Component 2 - US$118.72 million

Component 2: Increasing Access and Retention of Girls

FSSAP II will support activities to increase access and retention of female students in secondaryeducation. The stipend and tuition program has proved to be an effective incentive to attract girls to

- 38 -

secondary schooling and therefore FSSAP II will continue providing stipend and tuition assistance to alleligible girls in 119 rural upazilas of Bangladesh. This program will be re-examined for possiblemodifications, including targeting, during the project's Mid-Term Review. The expected outcomes of thiscomponent are increased enrolment of girls in secondary schools, increased retention, SSC pass andsecondary education completion rate, and reduction of early marriage. There are two sub-components thatfocus on access and retention: (2.1) Stipends and Tuition, and (2.2) Outreach.

Sub-component 2.1: Stipends and Tuition

The project will support about 6.3 million girl-years of education in classes VI - X during theproject period, which covers 5 academic years starting from the year 2002. It is estimated that the numberof girls to be supported by the project will increase from almost 1.0 million in 2000 to 1.4 million by 2006.More than 667,000 girls will complete class X and sit for the SSC examination during the project period.

FSSAP II will continue to provide stipends and tuition to girls and schools at the existing ratestwice a year, by the months of May (Jan-June semester) and November (July-Dec semester) of each year.Stipends and tuition consist of small grants, with extra funds to partially cover books in class IX and partof the costs for the preparation of SSC examination after completion of class X tests.

The eligibility criteria for participation of girls and institutions in the program currently being usedin the FSSAP will be enhanced. The eligibility criteria for the participation of institutions will be extendedto include the past financial performance/record of the school and the commitment to recruit femaleteachers in the vacant posts. FSSAP II additional conditions will include: (a) the eligibility for new entrywill be limited to classes VI and IX; (b) the inclusion in the eligibility criteria of the registration at theBoard of Intermediate and Secondary Education (BISE) or the Bangladesh Madrasah Education Board(BMEB) for girls studying in class X; and (c) the 45 percent mark criterion will be based on thetrimester/half-yearly examinations. In order to further ensure accountability, FSSAP II will introduce asystem of random sampling inspection or performance auditing by surveying at least 5% of the institutionsand assess to what extent the stipulated eligibility criteria are met by the FSSAP institutions.

The modality of processing information and disbursing stipends by old and new cohorts will becontinued. The stipends and tuition amounts will be disbursed to girls and schools through a revisedParticipatory Agreement with Agrani Bank. A unified student ID coding system will be followed to reducethe burden on data collection and processing, and to minimize irregularities.

Sub-component 2.2: Outreach

The objective of this sub-component will be to provide secondary education opportunity tosecondary education age girls who are currently not enrolled. The process of implementing activities in thissub-component will be documented and evaluated in order to develop guidelines that the Goverunent mightuse for future targeting of unserved/underserved youth, both in areas where there are schools, and ineconomically depressed remote areas. There will be two main activities in this sub-component: (i)extending support to unserved girls in existing school catchment areas, and (ii) providing help towards theestablishment/recognition of new schools (lower secondary schools with classes VI to VIII) in areas wherethere is no secondary education facility for girls.

Existing Schools: Despite the high level of awareness of the value of girls' education inBangladesh, there is a substantial number of girls in FSSAP II catchment areas that are not attendingschools. A program involving schools and comrnmunities will encourage girls to attend school. Girls from

- 39 -

poor families who pass the class V exam but do not enroll in class VI stay away from secondary school fora variety of reasons. The project will support a Family Attractiveness Program (FAP) to: identifyout-of-secondary-school girls from very poor families living in geographically remote and economicallydisadvantaged areas, identify the reasons why they are not in school, and address their needs for the fiveyears of secondary school. Support for girls identified to participate in the program will aim at meeting thedirect costs of schooling and may include: (a) individual student support, such as, textbooks and learningaids, workbooks, school dress, and tiffin (food); and/or (b) transportation support to individual students. Aparticipatory evaluation of the FAP program will be conducted before the Mid-Term Review. This smallpilot program will test strategies for targeting individuals and underserved areas during the initial two yearsof the project and will provide useful experience and data to help Government focus on the stipends andtuition program at the Mid-Term Review.

New Schools: There are a number of remote, economically disadvantaged unions that do not havea secondary school facility for girls. Disadvantaged union parishads in selected project upazilas willbecome the focal points for new schools entering the program. An outreach program, with limited one timefinancial assistance, will target up to 60 of the most depressed communities and assist in theestablishment/recognition of a junior secondary school. Villages in the participating upazilas will beidentified based upon having sufficient number of secondary school age girls and existence of a primaryschool, but no secondary school facility for girls. Final selection of the villages will be a function ofcommunity commitment. An assessment of the lessons learned will be considered at the MTR.

Project Component 3 - US$ 13.23 million

Component 3: Strengthening Management, Accountability and Monitoring

The FSSAP II will support activities to strengthen management, accountability and monitoring ofthe female secondary education assistance programs in Bangladesh. The expected outcomes of thiscomponent are improved capacity to plan, manage and monitor quality female education programs, reducedirregularities and wastage, and decreased fragmentation of donor assistance. This component has foursub-components: (3.1) DSHE Program Management, (3.2) DSHE Project Operations, (3.3) SchoolManagement and Accountability, and (3.4) Staff Development.

Sub-component 3.1: DSHE Program Management

The FSSAP II will help improve DSHE's capacity to provide the leadership and managementneeded to ensure adequate accountability and monitoring of the several female education projects, tocoordinate project implementation units, and to address issues of sustainability of the female stipendprogram. The proposed project will help improve accountability and monitoring through the ProgramMonitoring Unit (DSHE/PMU) within the Planning and Development Wing (PDW).

The proposed DSHE/PMU will have two operational sections: (i) one that will focus oncoordination of female education programs, and (ii) one that will undertake monitoring and evaluationfunctions for DSHE. Thus the DSHE/PMUfemale education cell will be responsible for facilitating thesharing of information, lessons learned and planning of female education programs, including all femalestipend projects, in order to minimize duplication of investment efforts and to help ensure that outcomes ofone project benefit another. This cell will also conduct periodic studies of female education issues andcould also serve as part of the consultative body to the Director General DSHE for planning futureinvestments in female education. The DSHE/PMU monitoring and evaluation cell will be responsible forestablishing an integrated MIS database which includes all female education programs, conducting periodic

- 40 -

comparative analyses based upon the information in the database, supplemented as needed by fieldresearch, and providing oversight of the FSSAP II project (and possibly others) stipend and tuitionactivities through the conduct of periodic independent program audits (two per year).

Sub-component 3.2: DSHE Project Operations

Under FSSAP II, most of the operations will be the responsibility of the DSHE/POU that willfunction as an integrated part of DSHE. The DSHE/POU will work closely with other DSHE wings andinvolve them in implementation. This improved collaboration, in combination with the strengthening of thePlanning and Development Wing, is consistent with the Government's secondary education reform initiativethat will strengthen DSHE and introduce performance management and monitoring to improveaccountability. In particular, the DSHE/POU will work closely with the DSHE/PMU in order to ensurethat coordinated efforts in planning and implementing monitoring and evaluation activities lead to betterresults in project operations.

The DSHE Project Operations Unit (DSHE/POU) will have the following three sections: (i) theOperations Section; (ii) the Finance and Administration Section (FAS); and (iii) the Data ProcessingCenter (DPC). The Operations Section will be responsible for overseeing the quality, stipends and tuition,and the outreach activities, and will also have administrative responsibility for overseeing UPO operations.The FAS will be responsible for financial management, procurement and quality assurance throughmonitoring and evaluation. The DPC will be responsible for processing and disseminating FSSAP II data,as well as informing about the process of disbursement of stipends and tuition. The DPC will also workclosely with the DSHE/PMU on establishing and maintaining the integrated female education MISdatabase.

The Upazila Program Offices will be improved through implementation of a better ratio ofprofessional staff to schools (which will result in improved monitoring in large upazilas), provision ofcomputers (to improve accountability monitoring, timely processing of forms and reports and coordinationwith Agrani branch offices), increased number of female professional and support staff.

Sub-component 3.3: School Management and Accountability

Quality assurance and financial accountability begins at the school level. The Project will supportimproved monitoring by DSHE, as well the following specific actions to strengthen school management andaccountability:

(i) Monitoring of the school as per the SMC/Head Teacher responsibilities agreed to in theannually renewable Cooperation Agreement between the school and the Project. The UPO will beprimarily responsible for ensuring that standards and accountability, including accurate maintenance ofschool records, are maintained at the school level through regular field/school visits;

(ii) Training of SMCs/PTAs/others in School Management, Standards, and Accountability. Toensure better accountability and adherence to standards at the school level and for community managementof schools, awareness training for that focuses on improving record maintenance, head teacherperformance, and increased participation of parents in school management will be organized at the national,divisional, upazila and school levels. These trainings will have a strong emphasis on ensuring betterperformance at the school level, both by promoting SMC participation in management and by overseeingHead Master's performance in keeping accurate records;

- 41 -

(iii) Improving the monitoring responsibilities of UPOs. UPOs will be held accountable for timelyand accurate school reports. A program of regular random visits to schools to review the enrollmentsituation, follow up on agreed activities and discuss problems that concem school management will beestablished, together with a monthly report to be submitted by the UPOs . The UPOs will publish locallythe number of FSSAP II participating girls for each school to improve monitoring by PTA and othersconcerned; and

(iv) Increasing awareness among field level government officers about the status of schoolsparticipating in the program. Since it may be a difficult task for the UPOs to deal with management andaccountability issues that involve schools, a transparent and regular process of informing the upazilaadministration and local union parishad government about the program and status of school participationwill broaden awareness and facilitate relationships that could be useful if there is a problem with an SMCor school.

Sub-component 3.4: Staff Development

Staff Development will be an essential part of capacity-building, especially for a project that hasmany new and innovative initiatives that require careful monitoring for program learning. The objective ofthis component will be to improve accountability and monitoring; as well as quality, by providing targettraining to key personnel in MOE/DSHE, including the DSHE/PMU and DSHE/POU. Several types oftraining, both domestic and international will be supported by the project. International training will takeplace at established institutions recognized institutions and universities. Domestic training may be providedby NAEM and/or other private sector organizations with demonstrated specialized expertise, or on the jobat DSHE by qualified expert technical assistance. A staff development/training plan will be prepared, withthe assistance of a staff development consultant, during the first six months of the Project to ensurethorough training needs assessment and matching them with appropriate learning and exposureopportunities. In addition to a plan that consists of domestic and international training, staff developmentalso includes on-the-job-learning and skills transfer from the technical assistance in the Project.

- 42 -

Annex 3: Estimated Project Costs

BANGLADESH: Female Secondary School Assistance Project-Il

Project Cost Summary

% % Total

(Local Million) (US$ Million) Foreign Base

Local Foreign Total Local Foreign Total Exchange Costs

A. Improving Quality of Secondary Education

Teacher Education, Training and Support 293.3 15.9 309.3 5.1 0.3 5.4 5 4

School Performance Awards 143.4 4.2 147.6 2.5 0.1 2.6 3 2

Student Achievement Awards 45.9 0.2 46.0 0.8 0.0 0.8 - I

Water & Sanitation Facilities 84.1 32.0 116.1 1.5 0.6 2.0 28 2

Sub-total 566.7 52.3 619.0 9.9 0.9 10.8 8 9

B. Increasing Access and Girls' Retention

Tuition 1,518.8 - 1,518.8 26.6 - 26.6 - 21

Stipend 4,340.0 - 4,340.0 76.0 - 76.0 - 60

Outreach 81.7 4.9 86.6 1.4 0.1 1.5 6 1

Sub-total 5,940.4 4.9 5,945.3 104.0 0.1 104.1 - 82

C. Strengthening Management,Accountability and Monitoring

DSHE Program Management 23.6 22.7 46.2 0.4 0.4 0.8 49 1

DSHE Project Operations 396.3 101.1 497.3 6.9 1.8 8.7 20 7

School Management & Accountability 82.5 5.8 88.4 1.4 0.1 1.5 7 1

Staff Development 8.3 22.6 30.9 0.1 04 0.5 73 -

Sub-total 510.6 152.2 662.8 8.9 2.7 11.6 23 9

Total Base Costs 7,017.7 209.3 7,227.1 122.9 3.7 126.6 3 100

Physical Contingencies 9.4 10.8 20.2 0.2 0.2 0.4 53 -

Price Contingencies 995.7 15.0 1,010.7 17.4 0.3 17.7 1 14

TOTAL PROJECT COSTS 8,022.8 235.2 8,258.0 140.5 4.1 144.6 3 114

-43 -

Disbursement by Financiers

(US$ Million)

Govt. of Community Local

Bangladesh IDA Participation Total Foreign (Excl. Duties &

Amount % Amount % Amount % Amount % Exchange Taxes) Taxes

1. Civil Works 0.3 11.4 1.7 77.9 0.2 10.7 2.2 1.5 0.6 1.3 0.2

2. Vehicles 0.3 25.0 0.8 75.0 - - 1.0 0.7 0.8 -0.0 0.3

3. Equipment 0.2 20.5 0.7 79.5 - - 0.9 0.6 0.8 0.0 0.1

4. Furniture 0.0 27.0 0.0 73.0 - 0.0 - 0.0 0.0 -

5. Books and Materials 0.1 27.1 0.1 72.9 - - 0.2 0.1 0.0 0.2

6. Local Training - - 7.1 100.0 - - 7.1 4.9 - 7.1

7. International Consultants 0.0 - 0.9 100.0 - - 0.9 0.6 0.8 0.1

8. National Consultants 0.0 - 1.3 100.0 - - 1.3 0.9 0.1 1.2

9. Awards - - 2.9 100.0 - - 2.9 2.0 - 2.9

10. Int'l Fellowships 0.0 - 0.8 100.0 - - 0.8 0.6 0.5 0.4

I 1. Grant facility - - 2.1 100.0 - - 2.1 1.4 - 2.1

12. Stipends and Tuition 17.1 15.0 97.1 85.0 - - 114.3 79.0 - 114.3

13. Incremental Salaries 2.0 35.1 3.7 64.9 - - 5.7 4.0 - 5.7

14. TADA Allowances 0.1 35.1 0.3 64.9 - - 0.4 0.3 - 0.4

15.OperationalCosts 3.4 73.9 1.2 26.1 - - 4.7 3.2 0.5 4.1 -

Total 23.5 16.2 120.9 83.6 0.2 0.2 144.6 100.0 4.1 140.0 0.5

- 44 -

Annex 4 Financial and Economic Impact

BANGLADESH: Female Secondary School Assistance Project-lf

I. Introduction

This assessment of the financial and economic impact of FSSAP II examines economic and fiscal trends,education expenditure trends and allocation of government education expenditure by sub-sectors. It alsoprovides an estimate of the resource envelope for the female stipend programs and an overall financialfeasibility assessment of FSSAP II. In addition, private and social rates of return are estimated underdifferent assumptions.

II. Economic and Fiscal Trends

The performance of the Bangladesh's economy remained satisfactory in the 1990s with generally soundmacroeconomic management and significant economic liberalization. The average annual real GDP growthrate rose to 5 % during the last half of the 1990s and inflation remained modest throughout. GDP inconstant price grew at the rate of 6% in 2000/01. During the last 5 years, per capita income in constantprice grew at the rate of Tk.48 per month. During the last 5 years, agriculture registered a growth rate of4.2% per annum and Bangladesh made a remarkable success in raising food grain production. Foodproduction is expected to reach another record level of 26.4 million tons in 2000/01. The GDP wasTk.2413 billion in 1999/00. The per capita income was US$386 in 1999/00.

An analysis of the distribution of GDP by sectors indicates a gradual shift of the economy from theagriculture sector to the manufacturing and service sectors. For example, the share of agriculture declinedfrom 49.7% in 1972/73 to 26.8% in 1999/2000 and the services sector accounted for nearly 49 of GDP.Similarly, the Labor Force Survey 1995/96 indicates a slight decline in the share of agriculturalemployment in economically active population from 68.5% to 63.2% during 1990/91 to 1995/96. Sharpfluctuations in the agriculture annual growth rate are not uncommon in Bangladesh. Natural hazards,droughts, floods and cyclones usually generate pronounced fluctuations in Bangladesh.

Investment in Bangladesh has increased over the last few years. In 1990/91, Bangladesh invested 18.7% ofGDP (private: 12% and public: 6.7%). In 1999/2000 the percentage had increased to 22.4 % (private:15.7% and public: 6.7%). With the opening of Bangladesh economy to global competition in recent years,the merchandise trade sector has shown an increasing trend. The share of merchandise trade in GDPincreased from 17.6% in 1990 to 30% in 1998. Foreign direct investments (FDI) also increasedsubstantially from US$30 million in 1993 to US$320 million during 1994-97. The sub-sectors that haveattracted the bulk of foreign investment in Bangladesh are gas, power and telecommunication.

In the 1990s, the size of government expenditure as a proportion of GDP remained between 13% and 14%of GDP. The share of the ADP and revenue budget in GDP was 7.7% and 6.4% respectively in 1998 and1999. Of the total government expenditure, the share of ADP was 37% in 1990/91. Bangladesh's currentdebt-to-GDP ratio is moderate. Total external debt in December 1998 was US$15.9 billion. The extemaland internal debt as a ratio of GDP is estimated at 38% and 12% respectively.

Since 1998/99, there has been deterioration in macroeconomic management with significantincreases in fiscal deficits, rising domestic financing of the fiscal deficit and its magnetization; andinadequate administered price and exchange rate adjustments.

- 45 -

The overall budget deficit averaged around 4.7 % of GDP during 1990-98, with domestic financingaveraging a modest 1.1 % of GDP during the same period. Since 1998/99, fiscal expansion has picked uppace, while donor assistance has leveled off and the tax effort has continued to be very low at around 7 %of GDP. The Government revised upwards the size of the FY2000/01 ADP, from the original Tk. 175billion to Tk. 182 billion. The ratio of Government expenditure in GDP rose from 14.7 % in FYl999/00 to15.4 % in FY2000/0 1. The ratio of government expenditure-in GDP is estimated to decline from 15.5% in2000/01 to 15.2% in 2001/02. Domestic deficit financing has increased from less than 2.5% of GDP in1998/99 and 3.7% in 1999/00 to further (3.5%) in 2000/01. In the FY2001/02 Budget, the overall centralgovernment fiscal deficit is targeted to decline to 5.4 % of GDP and domestic financing to 2.6 % of GDP.FY2001/02 revenue growth assumed is about 13 %, which could be achieved with revenue enhancingmeasures and decent nominal GDP growth.

The Real Effective Exchange Rate remains appreciated (over 5 % relative to 1997). Gross official foreignexchange reserves were at a historic low of $1.3-$1.4 billion level (less than two months import cover)through the third week of March 2001.

III. Education Expenditure Trends

GOB's commitment to education is reflected in the increasing allocations of budgetary resources toeducation. The ratio of government education expenditure to GDP increased from 0.9% in 1973-80 to2.1% in 1998/99 and remained at this level since then. The share of education in total governmentexpenditure has increased from 8.8% in 1990/91 to almost 15% in 1999/00. Of the total governmentexpenditure in education, ADP accounted 37.8% in 1999/00. Foreign assistance financed 12.7% of totaleducation expenditure and 50% of ADP education expenditure in 1998/99.

The share of education in total expenditure declined from 15.3% in 1998/99 to 14.7% in 1999/00. Thebudgeted share of education is estimated to be 14.9% for 2000/01 and 14.7 % for 2001/02. Total 2000/01allocation to education constitutes 2.1 % of the estimated GDP-still low by developing country standards.Moreover, the proportion proposed to be spent for improving the quality of education (teaching-learninginputs for schools), relative to amounts proposed to be spent for expansion of salary subventions and newschool constructions (both at the primary and secondary level) is relatively low (World Bank, 2000).

IV. Household Expenditure on Education

Apart from the opportunity cost, households contribute to education spending through payment of schoolfees, students' subsistence expenses, and purchase of textbooks, stationary and uniforms. Householdexpenditure on education is significant in Bangladesh. According to the Bangladesh HouseholdExpenditure Survey 1995/96 (BHES), it is estimated that households spend Tk. 20.8 billion on primary andsecondary education-the equivalent to about 2.1% of GDP.

Since government primary schools and registered non-governmental schools do not charge tuition andprovide free textbooks, per student household expenditure at this level is lower than at other levels (Tk.502for males and Tk.540 for females). Household expenditure increases as students reach higher levels ofeducation. For example, at the junior secondary level households spend twice that of primary level(Tk. 1483 for males and Tk. 1464 for females) and at the senior secondary level it is more than 4.5 times(Tk. 2451 for males and Tk. 2503 for females) that of the primary level. The cost items on whichhouseholds spend for education are uniforms, books, exam fees, tuition, transport, private tutoring, hosteland others (Table 1). Spending on private tutoring accounts for the bulk of household spending

- 46 -

irrespective of the level of education.

Table 1: Annual per student household expenditure (Tk.)Primary Junior Secondary Secondary Higher secondary

Boys 948.5 2297.6 3343. 4677.8Girls 1043.9 2211.5 3415.4 5067.9

Source: World Bank (2000), Education Sector Review

V. Government Education Expenditure by Sub-sectors

Primary and Mass Education (PME) and secondary education have been receiving priority in the allocationof resources. In 1998/99 almost 90% of government education expenditure was allocated to PME andsecondary education leaving less than 10% to TEVT, higher education and other activities. The PMEsub-sector received the top most priority in the allocation of resources within the education sector showinggovernment commitment in providing primary education and adult literacy. Most of the revenueexpenditure in primary education is used to finance staff salaries. Salaries account for over 96% ofprimary education expenditure. Government salary support accounted 64% of total school expenditure atthe secondary level.

The share of secondary sub-sector remained around 41 % in 1999/00. Most of the revenue expenditure insecondary is used to finance staff salaries. Staff compensation account for over 79% of revenueexpenditure.

VI. Expenditure in Female Stipend Program (FSP)

Government expenditure on stipend programs is financed through the ADP budget. Governmentexpenditure for stipend program including donor supports accounted for 14.5% of secondary budget and6.0% of total education budget in 1998/99. Of the total amount spent on the stipend and tuition programs(Tk. 2847.6 million) in 1998/99, GOB funded stipend project (FSSP) accounted for 59% indicating itsstrong commitment and ownership to the stipend program (Table 2).

Table 2: Allocation to fem le stipend projects (in. million)Programs 19994/95 3 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01

FSSAP (IDA) 380.0 409.9 584.0 697.1 811.2 868.1 555FSSP (GOB) 642.4 950.4 1401.4 1535.0 1690.0 1799.0 178FESP (Norad) 45.5 47.5 46.6 160.0 100.0 165.0SEDP (ADB) 44. 100.7 170.3 207.7 246.4 277.0Total 11128 1508.11 2202.3 2599.8 2847.4 3109.1

Source: DSHE records and ADP

VII. Access to Education and Equity of Public Spending

At the primary level, the distribution of public spending on education is fairly equitable with a Ginicoefficient of 0.02. This is more equitable than the distribution of public spending on adult literacy, whichhas a Gini coefficient of 0.13. The even distribution of benefits at the primary level demonstrates the effortthat GOB has placed in primary education over the last decade. It is clear that primary education isreaching most children.

- 47 -

Most children are not reaching higher educational levels, especially the poor. As students move up theeducational ladder the distribution of benefits becomes inequitable. For exarnple, the Gini coefficient is0.30 at the secondary level and 0.49 at the tertiary level. Secondary students who are at the top 50% of theincome distribution receive 73% of the education benefits, and the top 20% of higher education studentsreceives almost 50% of the benefits. Cost recovery at tertiary level is low and declining. It is estimatedthat poor households who make up 54% of total households receive only 15% of public spending in highereducation, the remaining 85% being allocated to the non-poor household. The overall Gini coefficient forthe distribution of public spending between different levels of education system is estimated to be 0.42,which is higher than for the overall income distribution in Bangladesh (0.31).

VIII. Financial and Economic Impact

Financial sustainability of the expenditure in female secondary education stipend programs depends on thecapacity of the government to allocate required resources to the secondary education sub-sector, which inturn depends on the performance of the economy as a whole. In order to analyze financial sustainability ofthe proposed project during and after the project, the availability of resources to education, secondaryeducation and female stipend programs (FSP) have been estimated. Incremental recurrent costs of thecurrent and proposed projects except the stipend program are analyzed. The feasibility of allocating therequired budget to the proposed project by the Government has been assessed.

IX. Recurrent cost implications

The ongoing FSSAP project financed the salary of the PIU personnel (72), UOPM staff (7 persons in eachof 118 upazila) and salary of new teachers (800) and operating costs. The annual recurrent cost of theFSSAP is estimated to be Tk.108.7 million (Table 3):

Table 3: Recurrent cost estimate of the current FSSAP (Tk. millionCost item Description Annual liability1. PIU salary 72 posts 8.09

2. UPO staff salary 826 posts 58.953. Fuel and maintenance 2.204. Office accommodation 118 upazila project offices 1.504, Union office consumables 4.205. TA/DA supervision 5.066. Teachers salary 800 secondary teachers 26.206. Miscellaneous/contingencies 2.50Total 108.70

Source: Project Pro-forma (third revision)

The FSSAP ended on June 30, 2001. The 800 new teachers hired under the project are to be financedunder the regular subvention system of the government. DSHE/MOE has shown its commitment totransfer the new teacher under the revenue budget and regularize the upazila level staff hired under theongoing FSSAP. However, a strategic plan for the regularization of FSSAP staff is not available. Thecost of stipends and tuition is also a kind of recurrent cost if the GOB is unwilling to phase out or introducesome targeting strategies. This component is planned to be financed under the FSSAP II on the assumptionthat GOB will introduce some kind of targeting measures to make the program sustainable after 2006.Generally it is difficult to include recurrent expenditures of development programs in the revenue budgetsince the Resource Committee headed by the Minister of Finance scrutinizes the need for regularization

- 48 -

As shown in Table 4, the recurrent cost liability of FSSAP II is estimated to be Tk.612.6 million, whichaccounts 7.4% of the preliminary project cost (Tk.8258.5 million). This amount represents a negligibleproportion of education budget (0.11 %) or total government expenditure or GDP.

Table 4: Recurrent cost estimate of the FSSAP II (Tk. million)Cost item Description Total 2005/061. Incremental salaries 327.1 70.0

a PMU 12 post 7.4 1.6b. POU 60 posts 31.9 6.8c. UPO 833 posts 287.8 61.6

2. Other recurrent costs 285.5 60.0Total recurrent cost 612.6 130.0% of FSSAP II 7.4 7.9Total Education 579,307 113,979expenditure 0.11 0.11Liability %

Source: Project Pro-forma (third revision)

X. Government Expenditure Required for Education

More public resources will be required to increase the quality and efficiency of education at all levels. Along run perspective study (Bangladesh 2020) conducted by the World Bank and the Bangladesh Center forAdvanced Studies (1998) recognized the need for increasing public spending on schooling to a level of 3%of GDP by 2000. The Report of the National Education Policy Committee recommended to raise theproportion of government education expenditure in GDP to 5% by 2000 and 7% by 2010. Between theNational Education Policy Committee's recommendation of 5% and the actual allocation level of about 2.0%, public expenditure on education faces a gap of 3 % of GDP.

The Bangladesh Education Sector Review (World Bank, 2000) identified public resources requirements forexpanding coverage and improving quality under 8 alternative scenarios:V/ Scenario 1: Current coverage and Qualityv Scenario 2: Universal five years at existing quality by 2003V/ Scenario 3: Universal 8 years by 2008 at existing quality and trends/ Scenario 4: Universal five years by 2008 with investment in improving primary quality/ Scenario 5: Universal 8 years by 2008 with investment in primary quality/ Scenario 6: Universal 8 years by 2008 with investment in primary and lower secondary qualityV/ Scenario 7: Universal 8 years and 50% coverage of secondary age cohort by 2008 with

investment in primary and lower secondary quality$ Scenario 8: Universal 8 years and 50% coverage of secondary age cohort by 2008 with investment

in primary and lower secondary quality, and trend growth of other sectors

The review pointed out that there is no need to increase the share of government education expenditure inGDP to maintain the existing coverage with low quality of education system (Scenario-I); universal 5 yearsor 8 years with existing quality level (Scenario 2 and 3); and universal five years of primary education withinvestments in improving primary quality (Scenario 4). However, in order to improve the quality ofprimary education with universal 8 years by 2008 and maintain existing enrollment rates at otherlevels (Scenario 5), the proportion of expenditure has to be raised to 2.9% of GDP or 18.6% of totalgovernment expenditure by 2008. Government budget allocation to education has to be increased to4.1% of GDP or 27% of total government expenditure by 2008 to improve quality as well as expand

- 49 -

the coverage of secondary, higher secondary, TEVT and tertiary levels (Scenario 8).

XI. Government Expenditure Requirement for Female Stipend Program

It is estimated that female stipend projects would require US$539 million during 2001- 07(six fiscal years)or US$90 million per annum on average. (Table 5).

Table 5: Estimates of Resources Required for FSP (2001-07) (Tk. Million)1998/ 1999/ 2000 2001/ 2002/ 2003/ 12004/0S 2005/ 2006/ 2001-07

99 00 01 02 /a 03 04 06 07 Total

Total requirement for FSP 2848 3109 3302 3698 4165 4673 5248 6071 6936 30793539

FSSAP cost estimates 1309 1332 1436 1618 1647 917 8259144.6% of FSSAP 35.4 32.0 30.7 30.6 27.1 13.2 26.826.8

Source: Mission estimatesa! Project start up year

Assumptions made to estimate financial requirements for female stipend programs, are given in Table 6:

Table 6: Assumptions used for Projection of FSP budget requirements1998/99 2006/07

1. Secondary GER 50% 70%2. Share of Girls in secondary enrollment 50% 54%3. Percentage of secondary girls receiving stipend 87% 87%4. Average stipend/tuition costs (US$) per girl 15 215. Total secondary education girls (Million) 4.38 5.486. Number of secondary education girls who receive stipend 3.79 4.74

As shown in Table 6, girls' secondary education enrollment will increase from 4.38 million in 1998/99 to5.48 million in 2006/07 as both the GER at the secondary level and the proportion of girls in secondaryenrollment are assumed to increase during the project period. The average unit cost of stipend/tuition pergirl is expected to increase, as all female stipend programs would focus on quality during the projectperiod.

XII. Availability of Resources to Secondary Educafion Sub-sector

The availability of Government resources for the female secondary stipend projects is estimated underalternative scenarios based on the assumptions regarding growth of GDP and revenue, proportion offoreign assistance and internal borrowing in GDP, government expenditure allocation to education and itssub-sectors. Table 7 presents a summary of the assumptions used for the estimation of budget availabilityfor education sector and secondary sub-sector including FSP under three scenarios (base case, optimisticcase and plausible case). The base case assumptions are based on the existing situation where as plausiblecase assumptions denote what would possibly happen during the project period. The assumptions usedunder the plausible scenario are: nominal GDP will grow at a rate of 11.0% per annum and real GDP by6% per annum, GOB revenue will grow at the same rate as GDP, the proportion of GOB expenditure to befinanced from foreign assistance and domestic borrowing will be 3.2% and 3.0% of GDP, the overall sizeof the education budget will be 16.5% of GOB's expenditure, allocations to secondary education sector willbe 45% of GOB's education expenditure, and the FSP will receive, on average, 6.2% of GOB's educationexpenditure.

- 50 -

Table 7: Summary of AssumptionsBase Case Optimistic Case Plausible Case

1. GDP growth rate %Constant price 5.0 7.5 6.0Current price 10.0 12.5 11.0

2. Revenue growth rate % 10.0 12.5 11.03. % of GDP

Foreign assistance 2.8 3.5 3.2Internal borrowing 3.5 2.5 3.0

4. % of Ed in total Govt. Exp. 14.5 18.0 16.55 % Secondary in Ed. Exp. 41.6 50.0 45.06 % of FSP in Govt. Ed. Exp. 5.9 6.5 6.2

The projections of budget availability are given in Table 8. Under the plausible scenario, it is estimatedthat during 2001-07, the education sector could receive US$10.9 billion of which the share of secondarysub-sector would be US$4.9 billion (FSP: US$0.7 billion and others: US$4.2 billion).

Table 8: Availability of Budget for FSP (2001-07) Tk. million

Scenario 1 Base Case 1998199 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2001-07

I. GDP(Takabillion) 2197.0 2412.7 2654.0 2919.4 3211.3 3532.5 3865.7 4274.3 4701.7 Total us

mil

2. Govt Expenditure 303700 361000 396470 423060 501943 552138 607352 668087 734895 3487475 61077

4. Govt Ed Expenditure 47190 52380 58420 60280 72782 80060 88066 96873 106560 504620 8837

5. Govt Secondary 3714Expenditure 19628 21790 23279 27224 30277 33305 36635 40299 44329 2120696. Govt FSP Expenditure 2848 3109 3302 3698 4294 4724 5196 5715 6287 299141 524

Scenario 2: Optimistic Case 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2001-07

1. GDP (Taka billion) Total US $2197.0 2412.7 2654.0 2985.8 3359.0 3778.8 4251.2 4782.6 5380.4 mil

2. Govt Expenditure 303700 361000 396470 423060 507977 571474 642908 723272 813681 3682372 64490

4. Govt Ed Expenditure 47190 52380 58420 60280 91436 102865 115723 130189 146463 646956 113305. Govt Secondary 5614Expenditure 19628 26190 23279 27224 45718 51433 57862 65094 73231 3205626. Govt FSP Expenditure 2848 3109 3302 3698 5943 6686 7522 8462 9520 418321 733Scenario 3: Plausible Case 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2001-07

1. GDP (Taka billion) Total US S2197.0 2412.7 2654.0 2945.9 3270.0 3629.7 4029.0 4472.1 4964.1 mil

2. Govt Expenditure 303700 361000 396470 423060 505092 560653 622324 690780 766766 3568676 62499

4.GovtEdExpenditure 47190 52380 58420 60280 83340 92508 102684 113979 126516 579307 101455. Govt Secondary 4567Expenditure 19628 23571 23279 27224 37503 41628 46208 51290 56932 260786 _6. Govt FSP Expenditure 2848 3109 3302 3698 5167 5735 6366 7067 7844 35878 628

Source: Mission estimates

XIII. Overall Feasibility Assessment

Based on the projection of availability of resources for FSP (under plausible scenario), the resourceenvelope for FSP during the project period (2001-07) is estimated to be Tk. 35,878 million (US$628million). The funding requirement of the FSP sub-sector is estimated at US$539 million, which falls withinthe projected limits. The size of the proposed project (US$144.6 million) is about 27% of the estimatedavailable budget for the sub-sector. If the economy grows at an annual rate of 6% in real terms and

- 51 -

government allocates 16.5% of the total government expenditure, including those funded via externaldonors, to education and 6.2% of education allocations to FSP, the overall sustainability of the sub-sectorwill be ensured. However, resource requirements for the secondary sub-sector would increase if thegovernment implements the policy of universal access at the lower secondary level (class VI-VIII) withoutallocating additional resources and this would have adverse implications for resource availability for theFSP. The stipend and tuition unit cost per girl takes account of the need to spend additional funds forenhancing quality, but any efforts to implement aggressive quality improvement programs withoutadditional funds for the secondary sub-sector would have adverse effects on the proposed qualityenhancements.

On the other hand, GOB plans to restructure the education system and to improve access and quality ofprimary and secondary education may possibly lead to increased resource allocations to the primary andsecondary subsectors in the years to come, particularly if the Government is successful in addressing thegovernance issues in the education sector. The overall feasibility, fiscal impact and sustainability aspectsof the female stipend program will be re-examined during the project Mid-Term Review, taking intoaccount the reform steps contemplated by the Govermment and the availability of resources.

XIV. Sustainability of FSSAP II

The project will significantly contribute to the sustainability of benefits from FSSAP activities by reducingdropouts, increasing SSC completion rate and improving the learning achievements. The project will alsocontribute to sustain the momentum gained in expanding the girls' enrollment at the secondary level.

The present system provides tuition and stipends assistance to all eligible secondary education girls in ruralupazilas. The stipends amount meets only a part of the direct cost and is the same for all. This scheme issimple and easy to implement, as it does not involve any targeting of girls in the locality. It would bejustified to continue the present system for some years on the assumption that it would help to sustain themomentum for girl's education in the country. Since this system does not take merit and need intoconsideration, it may not attract girls from the poorest families who cannot meet the partial cost ofschooling.

The most important issue relating to sustainability is of continuance of the stipend program after thecompletion of the project in 2006. There is a general consensus among both the donor community andgovernment officials in Bangladesh that female stipend programs have been very beneficial, but are notsustainable in their present form. As the number of female students continues to increase with theimprovement in primary education, there would be less government funds available to invest in efforts toimprove the quality of education. The government would like to continue the program in its present formand review possible strategies for reducing the costs of the program during MTR. The feasibility ofintroducing the targeted interventions including the financial and management costs of such strategies willbe analyzed during project implementation.

XV. Private Rate of Return

The standard rate of return analysis was applied to the 1995/96 Household Expenditure Survey data toestimate the private returns to schooling in Bangladesh. Findings showed that each additional year ofschooling yields about a 10 % return on the earnings forgone by the household (Table 9).

- 52 -

Table 9: Annual Rate of Retum by Level of Education (%) a/Additional year Primary Junior Sec Secondary Higher Higherof schooling b/ Secondary

Male 9.2 9.04 7.27 10.72 5.52 10.42Female 16.5 18.54 11.79 19.05 -3.93 9.75Rural 9.5 10.30 8.7 3.7 6.5 4.9Urban 1.0 10.38 7.9 16.9T 1.4 17.3Total 10.0 10.52 7.4 10.8 4.9 16.2

Source: World Bank (2000), Volume I (pp 88-94), Bangladesh Education Sector Review, DhakaNotes:

a' Based on extended Mincerian Regressionsb/ Based on standard Mincerian Human Capital Function Regressions

The estimated private rate of return is much higher for the female household heads (16.5 %) than themale heads (9.2 %). The rate of return for the household heads in the rural area was 9.5 %, whereas therate for those in urban areas was 10 %. The earnings of a primary school completer is on average 52.6 %higher (annual rate of return of 10.5 %) than those who have no schooling and those who have someprimary schooling but did not complete it. The additional annual rate of return after completing juniorsecondary and secondary education is 7.4 % and 10.8 % respectively. The marginal annual rate of returndrops to a meager 4.9 % for the higher secondary school completers and increases to 16.2 % for thebachelor's degree holders.

XVI. Social Rate of Return

The private returns based on estimated Mincerian regressions, take into account only the forgone earnings(indirect costs) as the cost of education. Estimates of high cost private rates of retum, social rates of returnand public subsidy index take into account the individual and government cost of educational investmentassociated with moving an individual from one education category to the next (Table 10). The estimateswere obtained using a short-cut method given by the formula below. Alain Mingat and Jee-Peng Tan(1988, ppl 17-118) have argued that the short-cut method can be a useful tool for estimating the rates ofreturn in situations where only limited information is available, as this method provides estimates of thesame order of magnitude as those obtained using the complete method:

R=(Ess - Eps)/(n*Eps + n*Css)

where R = rate of return; Ess = average earnings of secondary school graduate; Eps = average earnings ofprimary school graduate; n = duration of secondary education; Css = average annual cost of secondaryeducation (direct cost); and n*Eps = earnings forgone due to secondary schooling. The numeratorestimates net earnings due to secondary schooling, that is average earnings of secondary school graduatesminus earnings forgone because of secondary schooling. The denominator estimates total cost whichequals forgone earnings plus direct cost.

The first three rows in Table 10 are estimates of private rates of return: the first based on the Mincerianregressions, the second measuring costs as forgone earnings only, and the third, adding the householdexpenditures on fees and other school related items (for example, transportation, books and required schooluniforms). The fourth row is based on the estimates of the full resource costs (equivalent to private costsand all subsidized costs) and reports social rates of return. The estimates suggest that the social rate of

- 53 -

return for secondary education for females was 16.2 %, which is almost double the estimated returnsfor males (8.6 %). The returns to junior secondary and secondary education for females inBangladesh are not only positive but also are above the good investment threshold.

Table 10: Private and Social Returns (Low Benefit Scenario) a/In annual percent Junior Secondary | Secondary1. Private Rate of Return Male Female Total Male Female Total

• Mincerian estimate b/ 7.3 11.8 7.4 10.7 19.1 10.8* Low cost estimate c/ 9.1 9.9 8.9 9.3 17.2 9.4. High cost estimate d/ 8.6 9.6 8.5 8.8 16.8 9.0

L2.Social Rate of return e/ 8.4 9.3 8.3 8.6 16.2 8.73. Public Subsidy Index f/ 2.8 3.2 3.3 2.0 3.6 3.2

a/ Only monetary benefits measured in terns of increased earnings are considered. It is assumed that an averagestudentrequires 3.8 years to complete a 3-year cycle of junior secondary level and 2.6 years to complete a 2-year secondarycycle.b/ Costs = forgone earnings only (Mincerian)c/ Costs = forgone earnings only (short cut method)d/ Costs = forgone earnings plus household expenditurese/ Costs = full resource costs including public expendituresfl Public Subsidy Index is the % by which high cost private return exceeds social return

Since the costs are higher in a social rate of return calculation relative to the one from the private point ofview, social rates of return are typically lower than private rates of return if non-monetary private gainsand external benefits are ignored. The difference between private and social rate of return reflects thedegree of public subsidization of education. The estimates of public subsidy index show that Governmentsubsidy to junior secondary and secondary education is low (around 3 %) and it is higher for females thanfor males, which reflects the high priority given to female education through the implementation of femalestipends program in rural Bangladesh.

XVII. Social Rate of Return with non-monetary benefits

The estimates in Table 10 were obtained by ignoring non-monetary gains and external benefits and hencethe social returns are lower than private returns. Theoretically, the social rate of return should includenon-monetary benefits or other external benefits - benefits not captured by the individual student or ifeducation is treated as a family investment, by the individual student and his/her family. Non-monetarybenefits that are considered while estimating social rates of return with non-monetary benefits are (a) gainsdue to improvements in family and health indicators and (b) reductions of wastage in terms of dropouts andrepetitions, thereby increasing the internal efficiency of the education system.

Improvements infamily and health indicators: In addition to monetary benefits to the families,investment in the education of girls yields social benefits especially in the areas of family health, educationand population control. Education can play a substantial role in improving quality of life of the population.An analysis of the Bangladesh Demographic Health Survey, 1996/97 and 1999/2000 (preliminary) datashows a strong positive relationship between women's education and quality of life indicators (Table 11).

Table 11: Family and health indicators by level of women's education

- 54 -

No Primary Primary Junior Secondary Weighteducation incomplete complete sec a/ + b/

Total fertility rate 3.93 3.27 3.00 2.50 2.10 20Ideal number of children 2.6 2.5 2.4 2.3 2.2 20Under 5 mortality (per 1000 population) 144.5 118.4 100.0 87.0 78.3 20Children not receiving full set of vaccines 50.3 43.4 50.9 38.3 29.9 20(percent)Children malnourished- height/age 60.8 58.7 52.5 39.5 30.9 10(percent)Children malnourished -weight (percent) 63.2 55.0 50.9 43.3 38.3 10Family and health Index 100 87.9 84.5 70.7 61.5 100Percent decrease 12 4 16 13 -

Source: Bangladesh Demographic and Health Survey, 1996/97a/ estimated b/ assumed

The higher a woman goes in the educational ladder, the better off she and her family scores in most healthand family welfare indicators. A weighted index has been prepared to assess the contribution of each levelof education in improving the health and family indicators. Based on the weighted index, it can be observedthat junior secondary and secondary education of females contributes to improvements in the familyand health index by 16 % and 13 % respectively.

Increase in efficiency of the system: The FSSAP II aims at increasing the quality of secondary educationwith emphasis on retention of girls in schools. This would contribute to reductions in educational wastagein terms of dropouts and repetitions. These reductions of wastage are reflected in terms of decreasedaverage number of years required to complete the junior secondary and secondary education cycle. Thismeans that both the opportunity cost of forgone eamings and direct cost of schooling will be reducedleading to positive contributions in increasing both the private and social rates of return estimates. Table12 presents the numbers of years required to complete the cycle in 2001 and the proposed target for 2006for both males and females.

Table 12: Numbers of years required to complete thecycleJunior Secondary Secondary

2001 3.8 2.72006 3.6 2.4

Table 13 shows the estimates of rates of return taking into account both monetary andnon-monetary benefits. In order to quantify non-monetary benefits of junior secondary and secondaryeducation, it is assumed that improvements in family, health and other social indicators account for anincrease in the net monetary earnings of 25 % (junior secondary) and 20 % (secondary) for females and 15% (junior secondary) and 10 % (secondary) for males. It is also assumed that an average student requires3.6 years to complete a 3-year cycle of junior secondary level and 2.4 years to complete a 2-year secondarycycle. Since these assumptions are best judgments based on the observed socio-economic indicators, theresults have to be interpreted with caution.

The results given in Table 13 again confirm that social rates of return for both junior secondary(10.5 %) and secondary (I I %) education are high to justify government investment in the sub-sector. Inparticular, secondary education for females is the best investment from both the individual andsociety's point of view as shown by the private and social rate of return of about 22 % and 21 %

- 55 -

respectively.

Table 13: Private and Social Returns High Benefit Scenario) in annual %Alternative I a/ Junior Secondar Secondary1. Private Rate of Return Male Female Total Male Female Total

* Mincerian estimate b/ 7.3 11.8 7.4 10.7 19.1 10.8* Low cost estimate c/ 11.0 13.1 11.3 11.5 22.2 11.9* Highcostestimated/ 10.5 12.7 10.8 10.9 21.7 11.4

2. Social Rate of Return e/ 10.2 12.3 10.5 10.6 20.9 11.0

a/ It is assumed that due to improvements in family and health indicators, net monetary earnings will increase by15 % (junior secondary) and 10 % (secondary) for males, and by 25 % (junior secondary) and 20 % (secondaryeducation) for females. It is assumed that an average student requires 3.6 years to complete a 3-year cycle of juniorsecondary level and 2.4 years to complete a 2-year secondary cycleb/ Costs = forgone earnings only (Mincerian)c/ Costs = forgone earnings only (short cut method)d/ Costs = forgone earnings plus household expenditurese/ Costs = full resource costs including public expenditures

Private and social rate of return estimates have also been calculated under alternative assumptions(pessimistic) regarding the percentage increase in the net monetary benefits of junior secondary andsecondary education when the monetary values of non-monetary benefits are included. The estimates givenin Table 14 show that the social rate of return for female education was high for both junior secondary(above 11 %) and secondary (20 %) levels.

Table 14: Private and Social Returns (High Be nefit Scenario) in annual %Altemative 2 a/ Junior Second Second1. Private Rate of Return Male Female Total Male Female Total

* Mincerian estimate 7.3 11.8 7.4 10.7 19.1 10.8* Low cost estimate 10.6 12.0 10.6 10.9 21.3 11.3* High cost estimate 10.0 11.7 10.1 10.4 20.7 10.9

2. Social Rate of Return 9.8 11.3 9.8 10.2 20.0 10.5

a/ It is assumed that due to improvements in family and health indicators, net monetary eamings will increase by10 % (junior secondary) and 5 % (secondary) for males and by 15 % (junior secondary) and 10% (secondary education) for females. The other assumptions are the same as in Table 5.

XVIII. Social Rate of Return with external benefits

The social rate of return estimated in the previous sections considered mainly the monetary andnon-monetary benefits accruing to the individual households. The external benefits of female education,particularly in terms of a better society for all is not easily measurable but has potentially tremendousimpact on social transformation. Some education economists have therefore argued that adding externalbenefits to estimates of social rates of return would result in estimates about twice as large as thosemeasured according to the standard method (World Bank, 1997).

- 56 -

Annex 5: Financial Summary

BANGLADESH: Female Secondary School Assistance Project-lI

Years Ending

-I . - W L.MEN-FA JJPERl-O| Year I Year 2 Year 3 Year 4 Year 5| Year 6 Year 7

Total FinancingRequiredProject CostsInvestment Costs 13.3 19.9 24.4 28.8 31.0 16.5 0.0

Recurrent Costs 1.1 1.6 1.9 2.3 2.5 1.3 0.0Total Project Costs 14.4 21.5 26.3 31.1 33.5 17.8 0.0Total Financing 14.4 21.5 26.3 31.1 33.5 17.8 0.0

FinancingIBRDIIDA 12.0 18.0 22.0 26.0 28.0 14.9 0.0Government 2.4 3.5 4.2 5.0 5.5 2.9 0.0

Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0User FeesiBeneficiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0Others 0.0 0.0 0.1 0.1 0.0 0.0 0.0

Total Project Financing 14.4 21.5 26.3 31.1 33.5 17.8 0.0

Main assumptions:(a) Disbursements of Retroactive Financing in Year 1 of about US$13.5 million equivalent.(b) Others - Community participation (US$ 235,000 total); annual breakdown differs due to rounding.

- 57 -

STIPENDS AND TUITION - IDA FINANCING BY FISCAL AND ACADEMIC YEAR(US$ '000)

IDA Financing (Fiscal Year)01/02 02/03 03/04 04/05 05/06 06/07 Total

A. First Semester (Jan-Jun)Grade 6 1,032.4 1,154.0 1,277.8 1,402.6 1,525.7 - 6,392.5Grade 7 1,010.9 1,152.8 1,302.2 1,458.3 1,618.4 - 6,542.6Grade 8 974.5 1,079.3 1,243.8 1,421.0 1,608.8 - 6,327.4Grade 9 2,321.4 2,345.7 2,625.3 3,060.1 3,534.5 - 13,887.0

Grade 10 1,230.4 1,367.3 1,410.0 1,611.9 1,918.2 - 7,537.8

Subtotal First Semester (Jan-Jun) 6,569.5 7,099.1 7,859.1 8,953.9 10,205.7 - 40,687.3

B. Second Semester (Jul-Dec)Grade 6 - 1,023.9 1,150.8 1,282.4 1,416.1 1,548.8 6,422.0Grade 7 1,009.7 1,157.8 1,316.2 1,482.8 1,654.6 6,621.1Grade 8 - 955.1 1,063.6 1,233.6 1,417.8 1,614.0 6,284.2Grade 9 - 1,469.1 1,492.7 1,681.4 1,971.4 2,289.6 8,904.2Grade 10 - 1,192.9 1,333.0 1,383.4 1,590.9 1,903.6 7,403.8Grade 10 Pass - 417.5 485.2 523.7 626.4 779.4 2,832.2

Subtotal Second Semester (Jul-Dec) 6,068.1 6,683.1 7,420.7 8,505.5 9,790.0 38,467.5

C.SSCBoardExamfee 956.8 1,111.9 1,200.1 1,435.4 1,786.2 6,490.5

D. Retro. Fin - First Sem. (Jan-Jun)Grade 6 955.9 - - - - 955.9

Grade 7 963.8 - - - - 963.8

Grade 8 1,018.3 - - - - - 1,018.3

Grade 9 2,227.6 - - - - 2,227.6

Grade 10 988.1 - - - - - 988.1

Subtotal Retro. Fin -First Sem. (Jan-Jun) 6,153.6 - - - - - 6,153.6

E. Retro. Fin -2nd Sem. (Jul-Dec)Grade 6 902.3 - - - - 902.3

Grade 7 916.2 - - - - 916.2

Grade 8 949.9 949.9

Grade 9 1,341.7 1,341.7Grade 10 911.7 911.7Grade 10 Pass 309.6 - - - - - 309.6

Subtotal Retro. Fin - 2nd Sem. (Jul-Dec) 5,331.3 5,331.3

Total Investment Costs 18,054.4 14,124.0 15,654.1 17,574.8 20,146.6 11,576.3 97,130.2

IDA Financing (Academic Year)

CY2002 CY2003 CY2004 CY2005 CY2006 Total

Academic Year 2002 (incl. Retroactive Fin.) 25,079.3 25,079.3

Academic Year 2003 14,894.2 14,894.2Academic Year 2004 16,479.9 16,479.9Academic Year 2005 18,894.9 18,894.9

Academic Year 2006 21,781.9 21,781.9

97,130.2

- 58 -

Annex 6: Procurement and Disbursement Arrangements

BANGLADESH: Female Secondary School Assistance Project-lI

Procurement

General Description

1 . The total value of the Project is US$ 144.62 million, of which the IDA Credit will finance US$120.90 million equivalent. Procurement under the project will involve small quantities of goods, some civilworks at the community level and consultants' services. Civil works for sanitation facilities at thecommunity level under the "Improving Quality of Secondary education" component will be small andspread over widely dispersed geographical areas throughout the country. Services will include, amongothers, firms and individual consultants' services for selected innovative sub-components, as well as forproject management, operations, monitoring and impact evaluations.

2. All IDA-financed procurement of goods and works will follow procedures outlined in the Bank's"Guidelines for Procurement under IBRD Loans and IDA Credits ", published in January 1995, andrevised in January and August 1996, September 1997, and January 1999. Consulting services and trainingwill be procured in accordance with the Bank's "Guidelines: Selection and Employment of Consultantsby World Bank Borrowers, " published in January 1997, and revised in September 1997 and January 1999.Procurement of goods, works and services will follow the Bank's approved/standard documents.

Goods (US$2.15 million)

3. Goods to be financed under the Credit include: computers, vehicles, fumiture, audio-visualequipment, office equipment, off-the-shelf software, training material, photocopiers, air coolers, etc. Mostprocurement, except a few, under the project is expected to involve small contracts. The nature of suchsmall contracts is unlikely to attract the interest of foreign bidders.

(i) International Competitive Bidding (ICB): Goods and equipment contracts estimated to costUS$200,000 equivalent or more, with a cumulative value of approximately US$1.5 million equivalent, willbe procured using ICB. Procurement of vehicles and computers will follow ICB.

(ii) National Competitive Bidding (NCB): Goods and equipment contracts estimated to cost less thanUS$200,000 equivalent, up to an aggregate limit of US$500,000 equivalent, may be procured using NCB.Procurement of fumiture, air coolers, digital photocopiers, program management manuals, etc. will followNCB.

(iii) National/International Shopping (NS/IS): Individual of off-the-shelf items with an estimatedvalue less than US$20,000 equivalent per contract, up to an aggregate limit of US$500,000 equivalent,may be procured through shopping procedures by soliciting three price quotations from eligible suppliers.Procurement of teaching kits, training materials, audio-visual equipment, office equipment, computer desks,etc. will follow NS/IS.

(iv) Direct Contracting (DC): Computer software, books, materials with individual contract costs ofless than US$2,000 equivalent, up to an aggregate limit of US$100,000 equivalent, may be procuredfollowing DC.

- 59 -

Works (US$2.20 million)

4. All works to be financed under the Credit are water and sanitation facilities, involving deeptube-wells, shallow tube-wells and latrines at the community level to ensure that all students in FSSAPschools have access to clean drinking water and all girls to safe, private sanitation facilities. These workswill be spread over widely dispersed geographical areas across the country and will be implementedthroughout the project period through Community Participation (CP). Similar to FSSAP (Credit2469-BD), the sanitation works with individual contract of very small amount, estimated to cost less thanUS$2,000 equivalent, will be carried out by the community through a School Managing Committee (SMC)in accordance with agreement between the Project Authority and the SMC, described in Attachment 1. AProject Committee at the community level will plan and implement the actual construction works under theoverall supervision and monitoring by SMC. Communities will contribute 20 percent of the cost of waterand sanitation facilities. In the case of deep tube-wells, communities' contribution will be 10 percent.

Consultants' Services and Training (US$10.24 million)

5. Major consulting services include: monitoring and evaluation program management studies,training and materials development, outreach/family attractiveness program (FAP), communitymobilization, arsenic awareness program, project management and operations, school management training,system management and audits. The aggregate value of consulting services to be procured is estimated toUS$2.25 million.

(i) Quality- and Cost- Based Selecton (QCBS): Consulting services through firms estimated to costUS$200,000 or more per contract will be procured following QCBS. Contracts include: monitoring andevaluation program management studies and school management training.

(i) Fixed Budget Selection (FBS): Services through firms estimated to cost less than US$200,000 percontract may be procured following FBS. Contracts include: outreach (FAP), community mobilization,project management, arsenic awareness, and audits contracts.

(iii) Single Source Selecton (SSS): Services for assigmuents that meet the requirement of paragraph 3.9of the Consultants Guidelines may be procured following SSS, subject to IDA's prior agreement.Contracts include: mid-term review, random rapid and tracer studies, impact studies, external evaluationfor outreach, testing of tube-wells and quality assurance of arsenic test.

(iv) Individual Consultants (IC): Services for assignments for which teams of personnel are not requiredand the experience and qualifications of the individual are the paramount requirement will be procuredthrough individuals in accordance with Section V of the Consultants Guidelines. Individuals will beselected on the basis of their qualifications for the assignment. Contracts for specialists include: systemmanagement, training materials development, school improvement, and female education.

6. FSSAP II will provide: a short management training to Head Teachers; pre-service teachertraining on gender awareness; an in-service teacher training; and a sustained in-service training andprofessional support to teachers at selected FSSAP schools. Local training focusing on improving recordmaintenance, Head Teacher performance, and increased participation of parents in school management willbe organized to ensure better accountability and adherence to standards at the school level and forcommunity management of schools. Such training will be in different phases, starting with national levelworkshops down to the divisional, upazila and school levels. Also, training will include staff developmentby providing targeted training to key personnel in the Ministry of Education, Directorate of Secondary and

- 60 -

Higher Education, including the Program Monitoring Unit (DSHE/PMU) and Project Operations Unit(DSHE/POU). This staff development training will be at selected international and domestic institutionswith demonstrated specialized expertise. All training activities will be through single source selection.Local training, estimated to cost US$7 million, will be provided by Government institutions, for instance,Teachers Training College (TTC), National Academy for Education and Management (NAEM), etc. Theaggregate value of training and fellowship activities is estimated at US$7.98 million.

Awards, Stipends and Tuition (US$121.92 million)

7. The project will support about 6.3 million girl-years of education in classes VI-X during theproject period. FSSAP-II will continue to provide stipends and tuition to girls and schools at the existingrates, following the eligibility criteria being used in the FSSAP. Also, there will be provision for excellenceaward to schools and annual incentive awards to girls. This component does not entail procurement.

Incremental Operating Costs (US$8.12 million)

8. The incremental operating costs of the implementing agencies, including staff salaries, rent,utilities, etc. will be covered under the project on a declining basis.

Procurement and Selection Planning

9. The final draft Procurement Plan for goods and works and the Selection Plan for services havebeen prepared and attached to the PIP. Prior to issuance of any invitation for bids for procurement ofgoods and works and selection of services, the proposed Plan shall be furnished to IDA for its review andapproval, in accordance with the provisions of paragraph I of Appendix I to the respective Guidelines.Procurement of goods and selection of all consultants will be undertaken in accordance with Plansapproved by IDA and with the provisions of said paragraph 1 of Appendix I of the respective Guidelines.

Use of Standard Documents

10. For ICB procurement of goods, the use of IDA's Standard Bidding Documents (SBD) ismandatory. For NCB procurement, DSHE/POU will use the SBDs for Goods approved by IDA. Forsmall sanitation works undertaken by the community, the contract formnat in Attachment 1 will be used.For selection of consulting firms, the Bank's Standard Request for Proposals (RFP) including standardcontract form will be used. The Bank's Standard Bid Evaluation Form for goods and Sample Form ofEvaluation for consultants' services will be followed for submission of evaluation reports to IDA.

Prior Review Thresholds

11. Goods and Works: IDA will carry out prior review of the following contracts: all contractsestimated to cost US$200,000 equivalent or more irrespective of procedures and the first one contract forprocurement under NCB regardless of value. All other contracts including small works contracts to beimplemented by the communities will be subject to selective post review by IDA.

12. Consultants' Services: IDA's prior review will be required for consultants' services contractsestimated to cost US$100,000 equivalent or more for firms and US$50,000 equivalent or more forindividuals. All single source contracts will be subject to prior review by IDA. Training activities on singlesource basis will be with IDA's prior agreement.

- 61 -

Post Review

13. For compliance with the Bank's procurement procedures, IDA will carry out sample post review ofcontracts that are below its prior review threshold. Such post review of contracts below the thresholds willbe carried out for approximately up to twenty percent of the contracts awarded, using a three-prongedapproach: (a) desk reviews of selected contracts forwarded by the borrower to IDA at its request; (b)on-site reviews during the supervision missions; and (c) reviews by external consultants.

Review of Procurement Performance

14. IDA will monitor the compliance with the requirements of Bank's different procurement methodsand performance standards on a continuous basis. As part of the project's planned Mid-Term Review, acomprehensive assessment of procurement performance will also be carried out. Based on the review, inconsultation with the Government, IDA may revise the prior review threshold including the procurementand selection methods.

Acceptability of NCB

15. In order to ensure economy, efficiency, transparency and broad consistency with the provisions ofSection I of the Procurement Guidelines:

(i) standard bidding documents approved by the Association shall be used;

(ii) invitations to bids shall be advertised in at least one widely circulated national dailynewspaper and bidding documents shall be made available to prospective bidders, at least 28days prior to the deadline for the submission of bids;

(iii) bids shall not be invited on the basis of percentage premium or discount over the estimatedcost;

(iv) bidding documents shall be made available, by mail or in person, to all who are willing to paythe required fee;

(v) foreign bidders shall not be precluded from bidding and no preference of any kind shall begiven to national bidders;

(vi) qualification criteria (in case pre-qualifications were not carried out) shall be stated in thebidding documents, and if a registration process is required, a foreign firm determined to bethe lowest evaluated bidder shall be given reasonable opportunity of registering, without anylet or hindrance;

(vii) bidders may deliver bids, at their option, either in person or by courier service or by mail;

(viii) all bidders shall provide bid security as indicated in the bidding documents. A bidder's bidsecurity shall apply only to a specific bid;

(ix) bids shall be opened in public in one place immediately, but no later than one hour, after thedeadline for submission of bids;

- 62 -

(x) evaluation of bids shall be made in strict adherence to the criteria disclosed in the biddingdocuments, in a format and specified period agreed with the Association;

(xi) bid shall not be rejected merely on the basis of a comparison with an official estimate withoutthe prior concurrence of the Association;

(xii) split award or lottery in award of contracts shall not be carried out. When two or morebidders quote the same lowest price, an investigation shall be made to determine any evidenceof collusion, following which (A) if collusion is determined, the parties involved shall bedisqualified and the award shall then be made to the next lowest evaluated and qualifiedbidder and (B) if no evidence of collusion can be confirmed, then fresh bids shall be invitedafter receiving the concurrence of the Association;

(xiii) contracts shall be awarded to the lowest evaluated bidders within the initial period of bidvalidity so that extensions are not necessary. Extension of bid validity may be sought onlyunder exceptional circumstances;

(xiv) extension of bid validity shall not be allowed without the prior concurrence of the Association(A) for the first request for extension if it is longer than eight weeks and (B) for all subsequentrequests for extensions irrespective of the period;

(xv) negotiations shall not be allowed with the lowest evaluated or any other bidders;

(xvi) re-bidding shall not be carried out without the Association's prior concurrence; and

(xvii) all contractors or suppliers shall provide performance security as indicated in the contractdocuments. A contractor's or a supplier's performance security shall apply to a specificcontract under which it was furnished.

Reporting

16. The DSHE/POU will prepare quarterly Procurement Monitoring Report (PROCMOR) as perspecific formats agreed with GOB.

Procurement Management Capacity

17. Procurement Issues: The Country Procurement Assessment Report (CPAR), broadly accepted bythe Government in February 2001, stated procurement as a generic problem in Bangladesh. The CPARidentified a series of factors accounting for procurement problems in the country that, among others,include absence of procurement law, poor advertisement, short bidding period, poor bidding documents,multiple evaluation committees, award of contract through lottery, negotiations, lack of professionalcompetence, corrupt practices, political influence and pressure from special interest groups and collectivebargaining agencies. In order to implement the CPAR recommendations, the Government is preparing atechnical assistance project "Public Procurement Reform Project ' to be financed by IDA.

18. Procurement Capacity: Carrying out of procurement in a timely and efficient manner is theessence of prudent project implementation. As a part of comprehensive and tightened project preparation,all procurement arrangements will be well defined and sufficient progress be made so that disbursement canstart immediately upon Effectiveness. This implies that, for at least the first year's procurement program,

- 63 -

the bidding documents for goods and works will be issued, and the consultants' selection processsufficiently advanced so as to permit contract signature immediately after Credit Effectiveness.

19. Capacity Review and Risk Assessment: As the project will involve small quantity ofprocurement, the team reviewed the procurement management capacity of the implementing agency(DSHE/POU) with a view to: evaluate the capability of the implementing agency and of the adequacy ofprocurement systems in place to administer Bank-financed procurement, assess the risks that maynegatively affect ability of the agency to carry out the procurement process and develop an action plan tobe implemented as part of the project to address the deficiencies. The assessment included organizationalaspects, skills of staff, and suitability of rules and regulations applicable to the agency. For assessment theteam used the Bank's questionnaire partly and reviewed the record of the institution in handlingprocurement with specific relevance to the application of the Bank's written rules and procedures inpractice. At that stage, the team shared views with the agency personnel.

20. The procurement management capacity of DSHE is inadequate, although it has some experience inIDA procurement procedures. For the IDA-financed FSSAP, a PIU, under the Director General of DSHEwithin MOE, was responsible for procurement. The amount of procurement in FSSAP was insignificantand so there was no specific position in the PIU to deal with procurement. The Assistant Director (FieldAdministration) had this responsibility, and he has some knowledge of the Bank's procurement procedures.However, specific experience and skills in using Bank's Procurement Guidelines, Bidding Documents, etc.and executing actual procurement following the Bank's procedure are lacking. Based on the review, thereare high risks associated with procurement.

21. Strengthening Procurement Capacity: To mitigate the procurement associated risks and tostrengthen procurement management capacity, the Government has taken following actions in agreementwith IDA:

(i) formed a Procurement Core Team (PCT) comprising five members with the DSHE/POU ProjectDirector as head, including a mid-level procurement position with technical, financial andcommercial capability. The TOR of the PCT include: preparation of procurement plan, biddingdocuments for goods, request for proposals for consultants, inviting bids, short-listingconsultants, evaluating bids/proposals and awarding contracts;

(ii) designated a senior staff (Director, Planning) to oversee all its procurement actions during thepreparation of the project;

(iii) used the services of a Procurement Consultant under PHRD grant who assisted DSHE in projectpreparation work related to procurement;

(iv) conducted, in collaboration with IDA, a short training workshop on procurement (for goods andConsultants' services) for the PCT and DSHE staff;

(v) prepared the procurement plan, issued general procurement notice, invited bids for the first yearprocurement (vehicles), and is preparing a shortlist of individual consultants; and

(vi) made provision under the project for one procurement position in DSHE/POU for the entireproject period, and one Procurement Consultant for 12 person-months spreading over four yearsof the project.

22. Action Plan: In addition to the above, the following time-bound action plan for strengtheningmanagement capacity and for completing tasks as readiness for implementation of the project has beenagreed with IDA:

Time Bound Action Plan

- 64 -

Actions Time Bound

(a) Procurement Capacity Improvement:1. Appoint Procurement Officer Before Credit Effectiveness2. Appoint Procurement Consultant Immediately after Credit

Effectiveness

(b) Goods: Contract Packages for First Year (Vehicles)1. Send bid evaluation reports to IDA February 20, 20022. IDA clears bid evaluation reports March 7, 20023. Issue notification of awards March 10, 20024. Sign contracts April 10, 2002 or Credit

Effectiveness, whichever is later.

(c) Consultants Service (First Year - individual consultants)1. Finalize selection of individuals March 20, 20022. Obtain clearance of IDA (if US$50,000 or more) April 21, 20023. Sign contracts with individual consultants May 8, 2002 or Credit Effectiveness,

whichever comes later.

- 65 -

Procurement methods (Table A)

Procurement Arrangements(US$ o000)

Procurement MethodInternational NationalCompetitive Competitive

Bidding Bidding Other/a Total

1. WORKS

Civil Works - - 2,200.19 2,200.19

(1,713.32) (1,713.32)

2. GOODS

A. Vehicles 1,028.36 - - 1,028.36(771.27) (771.27)

B. Equipment 428.52 96.20 349.81 874.53(340.71) (76.49) (278.13) (695.33)

C. Furniture - 48.16 - 48.16(35.13) (35.13)

D. Books and Materials - 69.46 129.00 198.47(50.67) (94.09) (144.76)

3. SERVICES

A. Consultants - 2,259.50 2,259.50(2,259.50) (2,259.50)

B. Training & Fellowships - - 7,975.70 7,975.70(7,975.70) (7,975.70)

4. AWARDS, GRANTS, STIPENDS & TUITION

A. Awards and Grants - - 4,983.83 4,983.83(4,983.83) (4,983.83)

B. Stipends and Tuition - - 116,936.69 116,936.69(97,130.19) (97,130.19)

5. OPERATIONAL COSTS

A. Incremental Salaries - - 5,728.03 5,728.03(3,714.64) (3,714.64)

B. Operating Costs - - 2,389.66 2,389.66(1,477.18) (1,477.18)

Total 1,456.88 213.82 142,952.42 144,623.12(1,111.98) (162.28) (119,626.58) (120,900.85)

Note: Figures in parenthesis are the respective amounts financed by IDA. All costs include contingencies.

a/ Includes: (i) civil works to be procured through community participation; (ii) goods to be procured throughinternational and national shopping and direct contracting; (iii) consultants' services to be procured throughquality- and cost- based selection, fixed-budget selection, single source selection and individual selection;(iv) training to be provided by selected organizations; and (v) operational costs for the implementing agency.

N.B.F. - Not Bank-Financed.

- 66 -

Table Al: Consultant Selection Arrangements (Optional)(US$ thousand)

Consultant Services Selection Method Total Cost'Expenditure Category QCBS FBS sss IC N.B.F.

A. Firms 667.53 698.47 156.95 .... 1,522.95~~~~~~~~~~(...) ( (....)()()()

B. Individuals 736.55 (.).736.55

Total 667.53 698.47 156.95 736.55 ...... 2,259.50( ) () L: ) i W )f(. ) .(.)

I\ Including contingencies

Note: QCBS = Quality - and Cost - Based SelectionFBS = Selection under a Fixed BudgetIC - Individual Consultant

N.B.F. = Not Bank-FinancedFigures in parenthesis are the amounts to be financed by the Bank Credit

Prior review thresholds (Table B)

Table B: Thresholds for Procurement Methods and Prior Review

Expenditure Contract Value (Threshold) Procurement Method Contracts Subject to Prior ReviewCategory

Goods

(a) Vehicles US$200,000 or more ICB Prior review

(b) Equipment US$200,000 or more ICB Prior review

Less than US$200,000 NCB First one contract regardless ofvalue.

Less than US$20,000 NS/IS Post review

(c) Furniture Less than $200,000 NCB Post review

Less than US$20,000 NS/IS Post review

(d) Books, Less than US$200,000 NCB Post reviewmaterials andsoftware Less than US$20,000 NS/IS Post review

Less than US$2,000 DC Post reviewWorks Less than US$2,000 CP Post review

Services

Consultants' US$200,000 or more Quality- and Prior review

- 67 -

Services (firms) Cost-Based Selection

Less than US$200,000 but US$ 100,000 Fixed Budget Prior reviewor more

Less than US$100,000 Fixed Budget Post review

Less than US$50,000 Single Source Prior reviewSelection

Individual US$50,000 or more Qualifications Prior reviewConsultants

Training & Single Source Prior agreementfellowships

Overall Procurement Risk Assessment

23. Overall procurement risk assessment and mitigation measures are described in Paragraphs 17-21.

High XAverage

Low

24. Frequency of procurement supervision missions proposed: One in every six months. Besides,as part of the fiduciary control, post review of contracts will be carried out by Bank's staff, and auditors ifrequired.

- 68 -

Disbursement

Allocation of credit proceeds (Table C)25. Table C shows the allocation of IDA proceeds and the financing for the various categories ofexpenditures. DSHE/POU will be responsible for preparing withdrawal applications. To be eligible fordisbursements of stipends and tuition, DSHE/POU will: (a) by April 1st. of each year, commencing inCY2002, carry out a comprehensive review of the progress of the project during the preceding academicyear; and (b) promptly fumish IDA with the findings and recommendations of such review, as well as awork program for the ongoing academic year. The closing date of the proposed project is December 31,2006.

Table C: Allocation of Credit Proceeds

Amount of theIDA CreditAllocated

Category (Expressed % of Expendituresin US Dollars) to be Financed

1. Works 1,540,000 80%

2. Goods 1,480,000 100% of foreign expenditures100% of local expenditures (ex-factory cost) and70% of local expenditures for other items

procured locally

3. Consultants Services andTraining 9,200,000 100%

4. Awards and Grants 4,480,000 100%

5. Stipends and Tuition 85%

(a) Until the end of Academic Year 2002 22,570,000(b) Academic Year 2003 13,400,000(c) Academic Year 2004 14,840,000(d) Academic Year 2005 17,000,000(e) Academic Year 2006 19,600,000

6. Incremental Staff Salaries and 4,680,000 100% for FY2002 and FY2003Operating Costs 65% for FY2004 and FY2005, and

35% thereafter

7. Unallocated 12,110,894

Total 120,900,894

- 69 -

Statement of Expenditures (SOEs)

26. Until PMR-based disbursement is agreed upon, the traditional disbursement procedures will beapplicable for withdrawal of funds from the Credit. With each withdrawal application, IDA will requirefull documentation where contracts for: (i) goods exceed US$200,000 equivalent, (ii) consulting firmsexceed US$100,000 equivalent, and (iii) individual consultant exceed US$50,000. Expenditures below theabove thresholds and expenditures for stipend, tuition, local training carried out through TTC and NAEM,awards and grants, staff salaries and maintenance and operating costs will be claimed through SOEs.

Special Account (SA)

27. To ensure timely payment to project girls, project institutions, suppliers, contractors, consultants, aConvertible Taka Special Account (SA), will be established in the Agrani Bank Principal Branch inaccordance with the Participation Agreement dated August 23, 2001 between MOE and Agrani Bank, onterms and conditions acceptable to IDA. The DSHE/POU will be responsible for accessing the SpecialAccount, including submitting withdrawal applications to IDA. The authorized allocation of the SpecialAccount will be equivalent to six-month estimated expenditures, which is estimated to be Tk.627 million. Ifagreement is reached on PMR-based disbursement the authorized allocations to the Special Account willremain the same since, as an exception, IDA has already agreed to provide six months advance. The sixmonths estimated advance is required considering the fact about 80 percent of IDA Credit is for stipend andtuition and the disbursement of this component is on a semi-anual basis.

Retroactive Financing

28. The project will finance expenditures incurred in the stipends and tuition program during academicyear 2001 through retroactive financing. The estimated project cost at appraisal, includes the costsrequired to finance IDA share of the tuition and stipends expenditure for the Academic Year 2001. Theretroactive financing is estimated at US$11.49 million (see Annex 5). Documentation requirements forretroactive financing will be the same as those needed for disbursement against payments made under theproposed FSSAP II Credit. IDA agreement to provide retroactive financing was confirmed at Negotiationsbased on the progress made in the disbursement of stipends to girls.

Financial Management

29. Country Issues: Timely release of Government counterpart funds is an issue relevant to thisproject. Delays releasing Government counterpart funds are commonly experienced by IDA-assistedprojects, which in tum, slow down project implementation. To overcome this problem and ensure timelydisbursement of stipends and tuition to girls and institutions, an agreement has been reached between MOEand MOF that will ensure timely submission of SOE from DSHE/POU to MOE and from concernedagencies to DSHE/POU.

30. Strengths: The project has the following strengths in the area of financial management: (a) theproject is a follow on project and hence key staff who will be retained in the project have adequate skills inBank's disbursement procedures; (b) a generic Project Accounting Manual is in place that provides aGovernment control framework for donor assisted projects; (c) a Project Financial Management Manualwhich will include an integrated framework on the project intemal control system will be used; (d) acomputerized accounting system replacing the existing manual system will be ready soon after CreditEffectiveness (the manual system is adequate until the computerized system is in place); and (e) a system offlow of information from various cost centers to DSHE/POU and at central level exits.

- 70 -

31. Weaknesses and Resolutions:

Weaknesses ResolutionsAccounting System: The current accounting The DSHE/POU, with the help of consultants is

system in the FSSAP is not computerized and is not developing a financial management manualsupported by a comprehensive manual of policies incorporating existing and new accountingand procedures. The GOB chart of accounts is policies/procedures. This manual will befollowed to prepare financial statements, which completed and implemented by August 31, 2002does not allow effective monitoring and reportingby disbursement categories or project components. The project will appoint a Chartered Accountant

as a short-tern consultant to facilitate theHand-written accounting books and loose sheets implementation of the computerized system; this

are commonly used for record keeping. There is person will be appointed no later than August 31,little use of computers. 2002

The current manual system will be replaced by acomputerized system by August 31, 2002.

Staffing: Some key positions in the FSSAP will be Agreement has been reached on appointment ofretained in FSSAP 11. Key staff do not possess the Chartered Accountants or other professionallyrequired qualifications and skills to operate a qualified staff in the positions of DD and AD; thecomputerized financial management system appointrnent of the individuals for these positions is aefficiently and effectively. Credit Effectiveness condition.

Reporting and Monitoring: The reporting and Finance and Administration Section (FAS) hasmonitoring system is weak. The disbursement of been made responsible for financial reporting andproject funds on tuition and stipend activities, their monitoring with adequate co-ordination with otheraccounting and monitoring are currently split sections, so that there is no un-reconciled financialamong three units: Finance, Tuition and Stipend data in the DSHE/POU.and MIS units. As a result, no effectivc monitoringof actual disbursement against target and thecorresponding adjustment to fund or Bank balancein the field exist.

Implementing Entity

32. The Directorate of Secondary and Higher Education under the overall supervision of the Ministryof Education will have the overall responsibility for implementation of the project. The DSHE hasextensive experience in implementing FSSAP through a PIU. To implement FSSAP II, DSHE isestablishing the DSHE/POU and the DSHE/PMU, one being responsible for project implementation andthe other for developing institutional capacity at DSHE.

Funds Flow

33. The Agrani Bank through a Participation Agreement with MOE will execute the stipend and tuitionfunds of the project. The funds flow process for the project will be as follows:

* IDA funds will be channeled through a convertible taka special account.* The GOB will allocate counterpart funds for the project on the basis of annual development plan

(ADP) and the Ministry of Finance will release funds to MOE in four tranches against approvedproject proforma (PP). The CAO/MOE will reimburse actual project expenditure upon receiving

- 71 -

statement of expenditure.* The DSHE/POU head will be the authorized person for issuing payments through checks, payment

request to CAO for counterpart funds and withdrawal of funds from the IDA Credit.* Agrani Bank will disburse stipend and tuition to student and schools through its branches on the basis

of instruction received from the DSHE/POU.

Accounting policies and procedures

34. The overall accounting framework will be as follows:

* The financial management system will cover all project related transactions i.e. all sources and uses offunds will be accounted for and reflected in the financial statements.

* A Chart of Accounts has been developed which enables expenditure data to be captured and classifiedby project activities, component and disbursement categories. It also conforms to GOB expenditureheads/categories.

* A Computerized Accounting System will be installed and operated at the Finance Unit of DSHE/POUby August 31, 2002. The system will provide information on the receipts and use of funds and will beable to produce financial reports comparing budget with actual expenditure at any given time. Thesystem will be able to provide financial data to measure performance when linked to the outputs of theproject.

* As per standard practice, books of accounts will be maintained on a cash basis and using double-entrybookkeeping principles. Standard books/records (cash and bank-book, ledger, trial balance, etc.) willbe maintained at the DSHE/POU using an integrated computerized accounting system.

* A Financial Management Manual incorporating applicable accounting policies and procedures and aSoftware Operational Manual will be implemented by August 31, 2002. The DSHE/POU is preparingthe Manuals and the computerization of the current manual system.

Staffing

35. A new project organigram in FSSAP II has been drawn up indicating new finance positions andreporting mechanisms, which is adequate for the project. Job descriptions of key positions are clearlyindicated in the PIP. There is adequate segregation of duties within and outside the Finance Unit. The newpositions are designed to: (i) meet new organizational structure under FSSAP II; (ii) avoid a large numberof short term staff doing financial management work; and (iii) carry out improved FM activities efficientlyand effectively. A Deputy Director will head the Finance and Administration section with overallresponsibilities relating to Administration, Financial Management and Monitoring and Evaluation units,while three Assistant Directors will be in charge of Administration, Financial Management and Monitoring& Evaluation units, respectively. It has been agreed that finance staff at senior levels (DD and AD) willhave professional qualifications and sufficient information technology background. The support staff willhave commerce and accounting background as well as computer literacy. In addition, a consultant will beappointed (Financial Management Expert) for a period of six months and will be responsible for theefficient and effective operation of the computerized financial management system and developing thefinancial management capacity. The PIP includes TORs and the requisite qualifications for the position.The consultant will report functionally and administratively to the DD (FAS) and Project Director.Training on the operation of computerized financial management system to the finance and accounting staffwill be imparted by the consultants appointed for design and development of the computerized financialmanagement system in the project.

Internal Audit

- 72 -

36. Staff responsible for reporting and monitoring will carry periodic intemal audit function underspecific audit plan and submit reports to the DSHE/POU.

External Audit

37. The audit covenants of FSSAP, Cr. 2469-BD have been complied with. Replies have been givenand necessary actions taken on observations which needed clarifications from the Bank's perspective. TheMOE and the C&AG are in the process of resolving audit observations relating to Government policy andprocedures through an action plan covering year-wise number of unsettled observations and tripartitemeeting schedules with FAPAD. The annual financial statement of FSSAP II will be audited by theC&AG and will be submitted to IDA within six months of the end of each fiscal year. The audit report willinclude a separate opinion on Project Financial Statements, the Special Account and SOE. Audit opinionwill be given on PMRs in case of PMRs-based disbursements. In addition, private audit firms will carryout annual audits of disbursement of stipends and tuition funds and two performance audits (the firstcovering two and a half years from the Effectiveness date, and the second one, covering the followingperiod ending December 31, 2005), with TORs and selection methods acceptable to IDA. The cost of suchaudits will be eligible for disbursement under the Credit. Thus, the following audit report will be monitoredin the Audit Report Compliance system (ARCS):

Implementing Agency Audit AuditorsDHSE Project Account/SOE C & AGDSHE Special Account C & AG

Financial Reporting and Monitoring

38. The mechanism for reporting and monitoring will be as follows:

* The Finance and Administration Section will be responsible for consolidation of financial informationfrom various cost centers and preparing timely consolidated Financial Statements on a monthly basis.

* Financial Reporting from Agrani Bank to DSHE/POU will be on the basis of benchmarks set out in theParticipation Agreement.

* FAS is also responsible for preparing Project Management Reports (PMRs) on a quarterly basis,monitoring actual expenditure against forecast, co-coordinating with other units to reconcile timelyfinancial information and preparing the annual financial statements. A set of customized formats ofPMRs and the annual financial statement is included in the PIP and is part of Financial ManagementManual. Quarterly PMRs will be submitted to the Bank regardless of traditional or PMR-basedDisbursement Procedures.

Information System

39. DSHE is developing an integrated computerized Financial Management System for the project.The finalization of the software is being completed and the installation, testing on live data and training ofproject staff will be completed by August 31, 2002. Through the proposed integrated system in FSSAP II,the monitoring system in various units will be further strengthened. The system will provide timely andreliable financial management information to IDA and the DSHE/POU, as well as other stakeholders ofMOE for monitoring financial and physical progress of project implementation and taking appropriate

- 73 -

decisions.

Action Plan

40.Actions Responsible Completion Date

person/agencyActions requiredfor adequate financialmanagement:.- Appointment of key staff (AD and DD).as MOE Appointment before Creditper qualification and job description Effectivenessindicated in the Staffing Plan (PIP).Actions requiredfor enhancement offinancial management:- Appointment of a Financial Management MOE August 31, 2002Consultant

- Completion and installation of software,training of staff, testing andimplementation of computerized financial MOE August 31, 2002management system

- Completion and implementation offinancial management manual MOE August 31, 2002

Supervision Plan

41. The project will need intensive supervision which will be conducted twice a year. The initialsupervision focus will be on the implementation progress of agreed actions and the operation of thecomputerized financial management system.

- 74 -

Attachment I

SampleWater Supply and Sanitation Agreement

Second Female Secondary School Assistance ProjectOn Behalf of

Government of the Peoples Republic of Bangladesh

and

School/Madrasah

Address: Village Post

Upazila District

- 75 -

Water Supply and Sanitation Facilities Agreement

Agreement Dated 200_ between the Government of the People's Republic ofBangladesh represented by the Project Director, Female Secondary School Assistance Project II (here inafter represented by the Project Director as the First Party).

and

The School Managing Committee for a Non-government School or Headmaster for aGovernment School of the UpazilaDistrict , Division (herein after referred to as the School ofthe Second Party).

Where as the Government of Bangladesh is desirous of implementing the project in 119 upazilasthroughout the country under Second Female Secondary School Assistance Project (FSSAP II) which willhave the following Component:

Water Supply and Sanitation Facilities (WSSF);

And whereas the School Managing Committee/Authority has expressed willingness to cooperate andrender necessary services and assistance for implementing the project mentioned above and the Governmenthere agrees to provide necessary financial and implementation assistance subjected to the followingconditions and stipulations herein.

ARTICLE I

General Definitions

Section 1.01. Wherever used in this agreement, unless otherwise stated, the terms shall have thefollowing meanings:

a) Users Group means a unit formed by the fixed number of students, teacher ofinstitution and related local people, who (i) are responsible for proper utilization, maintenanceand repairing of tube-well and twin latrine; (ii) formr a fund by the institution for maintenanceand repairing of the tube-well and latrine; (iii) create awareness among students of theinstitutions, parents and family members along with local people about necessity and utility ofhaving pure water and using latrine.

b) UPO means Upazila Project Officer of the FSSAP II.

c) Project Committee means a committee consisting of 5 (five) members formed by the managingcommittee of the project institution, who initiate plan and implement the construction of twin latrine andinstallation of tube-well;

- 76 -

d) Managing Committee means the regular or Adhoc Committee of the Secondary level educationalinstitutions.

e) DSHE/POU means the Project Operations Unit of FSSAP II, Dhaka.

Section 1.02. Service means imparting service and Assistance means confer assistance by the Secondparty for proper implementation of the Program.

ARTICLE II

Obligation of the First Party

Section - 2.01.The First Party will be responsible for overall implementation of the WSSF program underthe project and in this respect will:

a) bear 80% (90% in the case of deep tube-wells) of the total estimated cost for installation oftube-wells and constructing twine latrines and installing tub-well according to the actual demand,necessity and agreement of the project institution.b) supply the design for construction to the institution.c) allot estimated cost (by govt.) in two installments according to the demand of requirement of theproject institution.d) be the caretaker, through UPO, in all respects to guide and advice the institutionAuthority/Managing Committee, local branch of Agrani Bank, Project Committee of institutions and UsersGroup.e) pay the 80% (90% in the case of deep tube-wells) of the total estimated cost, which isTk . in two installments: 1st installment- 50% as advance; and 2nd installment- 50% uponcompletion of construction and installation work (after sending the report with Statement of Expenditure(SoE) to DSHE/POU through UPO).

Obligation of the Second Party

Section 2.02. The Institution Authority shall cooperate fully with Managing Committee members andstudents, teachers and their parents in project activities and in particular, shall:

a) submit the statement of action and accepted approval after addressing meeting about utility oftube-well and twine latrine according to the conditions of the project.b) arrange 20% (IO% in the case of deep tube-wells) of the total estimated cost of constructinglatrine/tube-well. That 20% (10% in the case of deep tube-wells) cost may be paid by cash or supplyingmaterials or by physical labor.c) form a Project Committee of 5 members for proper implementation of the program. Thatcommittee will complete the construction work and hand over to the institution authority and SoE alongwith report will be submitted to the Managing Committee.d) arrange arsenic testing of tube-wells by the Department of Public Health Engineering or othersuitable institution acceptable to the First Party. The test report willform part of the completion report.e) form a Users Group by the students, teachers and related people in order to ensure properutilization, maintenance and repairing. The Users Group will create awareness among students, familymembers and local people about drinking pure and safe water and using latrine. Furthermore, the groupwill make its own fund for maintenance and repairing.

- 77 -

f) provide all assistance to the UPO/APO, officials of Facilities Department, Officials of World Bankand Officials of DSHE/POU during their visit for inspection of WSSF Program.

ARTICLE III

Duration and Termination of the Agreement

Section 3. 01. This Agreement shall come into force on the date it is signed by both the parties and shallremain valid until completion of the Project.

Section 3. 02. Should the Second party fail to perform any of the obligations specified herein, the firstparty shall have the option, after giving 30 days written notice of terminating this Agreement.

(Name and Signature) (Name and Signature)Project Director 1. ChairpersonSecond Female Secondary School Assistance Project School Managing CommitteeDhaka, Bangladesh.

School

2. Head teacherSchool Managing Committee

Date School

Date

Name and Signature Witness Name and Signature Witness

- 78 -

Attachment II

PARTICIPATION AGREEMENT

Government of the People's Republic of Bangladesh

Female Secondary School Assistance Project (FSSAP-II)

Directorate of Secondary & Higher Education

Ministry of Education

PARTICIPATION AGREEMENT

BETWEEN

Government of the People's Republic of Bangladesh

Represented by

FEMALE SECONDARY SCHOOL ASSISTANCE PROJECT ( FSSAP -II)

AND

AGRANI BANK

- 79 -

PARTICIPATION AGREEMENT

BETWEEN

Government of the People's Republic of Bangladesh

Represented by

FEMALE SECONDARY SCHOOL ASSISTANCE PROJECT ( FSSAP -11)

AND

AGRANI BANK

This PARTICIPATION AGREEMENT dated ..................... 2001 between the GOVERNMENT OF THEPEOPLE'S REPUBLIC OF BANGLADESH , acting through its Ministry of Education (hereinafter called MOE) orthe Government as one part and AGRANI BANK , a banking company established by the Bangladesh Bank's(Nationalization) Order, 1972, having its Head Office at Agrani Bank Bhaban 9-D, Dilkusha Commercial Area,Dhaka (hereinafter called "Agrani Bank" ) which expression shall include its successors or assignees of the otherpart .

WHEREAS by a Development Credit Agreement ( hereinafter called "the DCA") between the InternationalDevelopment Association ( hereinafter called " the Association " ) and the Government, the Association has agreedto provide a credit to support the Government's efforts in the implementation of the Female Secondary SchoolAssistance Project - 11 (hereafter called "The Project") starting from 01 July 2001 ending in 30 June 2007, or suchother date when the Project closes.

WHEREAS the Project will provide a package of incentives addressing constraints at the household and schoollevel which will include stipends for girls in Grade 6-10 and tuition subsidy to the institutions against stipendrecipient girls payable semi-annually,

WHEREAS AGRANI BANK has agreed to handle all project-related banking activities for which purpose aConvertible Taka Special Account ( CONTASA) (hereinafter called "Special Account") will be opened with theAGRANI BANK. Project-related banking activities will include: disbursement of stipends to girls, tuition subsidy toProject institutions and other project related disbursement functions through its branches and units in ProjectUpazilas (in Upazilas without Agrani Bank branches disbursement will be made through nearest branches). Thedisbursement of stipends to girls will be carried out in accordance with special operational procedures mentioned inArticle-Il of this Agreement. A time schedule of the flow of fund and disbursement (Annex-4(i) will be the part ofthis Agreement.

AND WHEREAS the parties hereto have agreed to enter This Agreement, which will be referred toParticipation Agreement in the DCA.

Now THEREFORE the parties hereto hereby agree as follows:

ARTICLE I: DEFINITIONS

Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms to be

- 80 -

defined in the DCA shall have the respective meanings therein set forth.

Section 1.02. Head of the institution shall mean Head Master/Head Mistress of schools and Principal/Superintendentof Madrashas.

Section 1.03. The term "IBCA" shall mean the Inter Branch Credit Advice.

Section 1.04. The term "DSHE/POU" shall mean the Project Operation Unit.

Section 1.05. The term "PD" shall mean the Project Director of the FSSAP-II.

Section 1.06. The term "tag list" shall mean the names of schools attached to each upazila bank branch.

Section 1.07. The SMC shall mean School/Madrasah Management Committee.

Section 1.08. The term " Account Number" means Bank Account Number.

Section 1.09. The term "ID Number" means Identification Numbers of girls.

ARTICLE 11: OPERATIONAL PROCEDURES

Section 2.01. The Project Director will open a Convertible Taka Special Account (CONTASA) with Agrani Bank,Principal Branch, Dhaka.

Section 2.02. Girls will be allowed to open/operate a special type of Account of their own at the time of admission.The DSHE/POU will provide Roster Books containing ID and Account Numbers of girls before admission.

Section 2.03. The Head of the concerned participating institution will introduce the girls with their official seal andsignature.

Section 2.04. The Agrani Bank will supply two specimen signature (SS) cards to every student. The SS cards dulyfilled in and signed by the girls along with their two photographs will have to be submitted to the concerned AgraniBank branches. The SS cards and Photographs must be duly attested by the Head of the concerned Institution.Agrani Bank will also supply Withdrawal Slip/Cheque Book to the girls to withdraw stipend money from theiraccounts. One copy of the photograph will be affixed to one of the specimen signature card to be maintained in theAgrani Bank branch and the second one to the specimen signature card for record in the Upazila ProjectOffice(UPO).

Section 2.05. The Agrani Bank will ensure timely supply of account opening/operating materials(e.g. SS card,cheque book, withdrawal slip etc.) to bank branches by December of each year.

Section 2.06. The PD will send payment advice to Agrani Bank, Principal Branch, Dhaka and Award Statement toHead Office, as per Annex-4(ii) of this Agreement

Section 2.07. On receiving the above payment advice, Agrani Bank, Principal Branch, will remit the funds to theconcerned branches by means of IBCA. The IBCA along with the Award must be sent by Agrani Bank, Head Officeto the concerned branches within the shortest possible time but not exceeding 07 (seven) working days from the dateof receipt of the advice from PD.

Section 2.08. On receiving the above IBCA and Award Statement, the receiving bank branch will credit the amountto girls account and inform the participating institutions and the Project Office within 07 (seven) working days.

Section 2.09. For withdrawal of money from the accounts, each girl will go to the bank branch on the scheduled datewith cheque book/withdrawal slip if the bank branch is within 5 (five) km of the institution. In case, the distance ismore than 5 (five) km, the bank will open temporary booths at a pre-determined date in the institution premises todisburse stipends among the girls.

Section 2.10. On presentation of the cheque/withdrawal slip by a girl student, the bank officials will verify the same

- 81 -

and on full satisfaction will make payment to her in cash.

Section 2.11. In the case of the Project Upazila without branches of Agrani Bank, arrangements will be made todisburse stipends through the nearest branch of Agrani Bank in the adjoining Upazila. Agrani Bank officials willmake necessary arrangements in consultation with the participating institutions and the Project Office, taking intoaccount the provisions of Section 2.07 to Section 2.10 of this Agreement.

Section 2.12. The Agrani Bank branch shall complete stipend disbursement within 25 (twenty five) working days onreceipt of IBCA from Principal Branch. DSHE/POU, in consultation with Agrani Bank Head Office will prepare adisbursement schedule for each upazila which will be communicated to the Agrani Bank branches by UPO andDSHE/POU.

Section 2.13. The participating institution shall open a Current Deposit (CD) Account following normal bankingformalities to receive tuition money against stipend recipients.

Section 2.14. The CD Account should be operated by joint signatures of concemed Head Master and Chairman ofSMC. The resolution of the SMC in this regard should be submitted to the bank branch at the time of opening ofbank account. In case of Government institutions the Head teacher will operate the Account.

Section 2.15. In upazilas where there is no Agrani Bank Branch the institutions shall open CD account in thenearest Agrani Bank branch in the neighboring upazila.

Section 2.16. A Sundry Creditors Account shall be maintained as a stopgap arrangement in the Agrani Bank,Principal Branch at Dhaka as well as local branches. Undisbursed money in a local bank branch shall be refunded tothe Principal Branch which will be kept in the Sundry Creditors Account for a maximum of 7 (seven) days.Thereafter this money shall be transferred proportionately to the respective Project Accounts (CONTASA & GOB).Agrani Bank shall inform the Project Director immediately after each refund.

Section 2.17. Agrani Bank will arrange additional staff for quick remittance of funds from its Principal Branch,Dhaka, to the concemed payee branches. The concemed payee branches will also be provided with sufficient numberof additional staff, transport and security arrangements will be made for cash remittance.

Section 2.18. Should at subsequent stages any material change, additions or alterations be deemed necessary whichwill improve these special operational procedures, such changes will be considered during the project's biennialreview conducted by the Association and if agreed, by MOE, Agrani Bank and the Association, the ParticipationAgreement will be amended accordingly.

Section 2.19. Inter-branch transfer of girl students' accounts will only be allowed in the special circumstances,approved by the Project Director.

ARTICLE III: REPORTING

Section 3.01. Agrani bank shall prepare a progress report of disbursement in FSP-6 form and send it to DSHE/POUat the end of each disbursement within 60 days after the last disbursement date.

Section 3.02. All supporting documents relating to the disbursement of stipends to students and tuition toparticipating institutions, salaries to teachers and other activities related to the Project will be retained at AgraniBank, Principal Branch, as well as local branches for review by IDA supervision missions and Project auditors.

Section 3.03. The audit of the Project will be carried out by the Foreign Aided Project Audit Directorate of theAccountant General's Office, Govemment of the People's Republic of Bangladesh. In addition annual audit ofstipends, tuition subsidy and teachers salaries accounts will be audited by reputed Chartered Accountant Firmacceptable to the Association. This audit report shall be submitted to the Govemment and to the Association withinsix months after the closing of each calendar year.

- 82 -

ARTICLE IV: SERVICE CHARGE AND INTEREST PAYMENTS

Section 4.01. Agrani Bank will render these services mentioned in the Article II of this agreement against servicecharges to be paid at the rate of 2.50% on actual disbursement by concerned upazila bank branches. However,Agrani Bank will be allowed to take advance for the service charge at the rate of 2.50% at source from the GOBaccount. The advance shall be adjusted at the time of final accounting of each semester stipend and tuitiondisbursement. The Agrani Bank, Principal Branch, will provide 80% of the share of service charge to the concernedupazila bank branches.The Agrani Bank, Principal Branch, will send the service charge amount along with theIBCA to respective upazila branches.

Section 4.02. CONTASA will earn interest as per the rule of the Bangladesh Bank. The interest earned inCONTASA shall be deposited to Government's account as per circular of the Ministry of Finance dated 24.12.92.

ARTICLE V MISCELLANEOUS

Section 5.01. This Agreement shall come into force and effect from I July 2001.

Section 5.02. This Agreement and all obligations thereunder shall terminate if the entire amount allocated forthe Project has been disbursed or earlier in the event of any situation necessitating such termination agreed upon bythe association and MOE or upon the Project closing date.

Section 5.03. (a) Any notice, demand or request required or permitted to be given under this Agreement shallbe written at least 60 days prior to the event and shall be deemed to have been duly given or made when it shall bedelivered, in the case of Government at its Ministry of Education, and in the case of the Agrani Bank at its PrincipalBranch at Dhaka or at such other addresses which the Government or Agrani Bank may from time to time specify inwriting to the other party.

(b) Any action required or permitted to be taken and any document required or permitted to be executed under thisAgreement on behalf of the Government may be taken or executed by the Secretary, Ministry of Education, or suchperson or persons, as he/she shall be designated in writing.

(c) Any action required or permitted to be taken and document required or permitted to be executed under thisAgreement on behalf of Agrani Bank may be taken or executed by the Managing Director or such person or personsas he/she shall be designated in writing.

Section 5.04. This Agreement shall be binding on all successors of Agrani Bank and MOE.

Section 5.05. This Agreement may be executed in several original versions.

- 83 -

IN WITNESS WHEREOF, the parties hereto, action through their representatives hereunto duly authorized,have caused this Agreement to be signed in their respective names and delivered in Dhaka as of the day and yearfirst above written.

WITNESSES: PEOPLE'S REPUBLIC OF BANGLADESH

1.

B y - - - - - - - - - - - - - - - -

Joint SecretaryMinistry of EducationGovernment of the People's Republic of Bangladesh.

2. B y - - - - - - - - - - - - - - - - -Managing DirectorAgrani Bank.

- 84 -

Annex (i)

Female Secondary School Assistance Project -II

Time Schedule for Stipend and Tuition Disbursement

Si Steps Duration July-Dec Jan.-JunNo Semester Semester

I PD/FSSAP writes to MOE for Advance 01 day September 14 March 12

2 MOE writes to MOF budget section-3(dev) 05 Days September 19 March 17

3 MOF approves 05 Days September 24 March 22

4 MOF approval letter comes to MOE 01 Days September 25 March 23

5 MOE writes to MOF for endorsement of Govemment order for advance 02 Days September 27 March 25withdrawal

6 MOF endorses 02 Days September 29 March 27

7 CAO/MOE receives MOF endorsement 01 Days September 30 March 28

8 CAO/MOE sends the letter to MOE/bill section 01 Days October I March 29

9 Bill section/MOE approves the bill 03 Days October 4 April 2

10 Bill section/MOE issuse the check of advance to PD/FSSAP 01 Days October 5 April 3

1 IPD, FSSAP receives the check 01 Days October 6 April 4

12 PD/FSSAP deposits the check in Agrani Bank 01 Day October 7 April 5

13 FSSAP hands over the Award list of girls to Agrani Bank Including 01 Day October 8 April 22Payment Authorization

14 Agrani Bank collects fund from Bangladesh Bank against GOB cheques 02 Days October 10 April 24

15 RPA and GOB fund are put together in Sundry account 01 Day October 11 April 25

16 DSHE/POU & Agrani Bank Head Office prepare disbursement schedule 05 days October 12 April 30for each Upazila

17 Agrani bank sends IBCA and disbursement schedule to regional bank 03 Days October 14 May 3branch

18 Agrani Bank regional branch sends IBCA and disbursement schedule to 02 Days October 16 May 5local branch

19 Local branch informs UPOs 01 Day October 17 May 6

20 UPOs organize meeting to prepare for disbursement as per schedule 03 Days October 20 May 9

21 Local branch/UPOs disburse stipend to girls 35 Days November 25 June 13

22 Local branches allow girls to draw undisbursed stipend 15 Days December 10 June 28

23 Local branch disburse tuition fund to institutions 05 Days December 15 July 3

24 Local branch prepare actual disbursement statement to be signed by both 30 Days January 15 August 2bank and UPO after last disbursement

25 Head Office prepares the actual disbursement statement 25 Days February 10 August 27

26 PD, FSSAP receives the actual disbursement statement 05 Days February 15 September 1

27 PD, FSSAP sends the statement to CAO/MOE for adjustment 05 Days March 2 September 6

28 CAO / MOE recommends for the advance withdrawal 05 Days March 7 September 11

- 85 -

Annex (ii)T- Date:____

FEMALE SECONDARY SCHOOL ASSISTANCE PROJECT-2 (FSSAP-2) PAGE NO.:

AWARD CONFIRMATION AND TUITION STATEMENT, ___PAYMENT - ,Year) (Cohort: ______

FSPB -4

Branch Code: BranCb N.me: Zone Name: Th.na: Dist-it:Institution ID :InStitUtion Name : Location Code:

BANK A/C NO. IST-mID Student Name I Father'S Name I STIPEND) AMOUNT IRECORD NoI REMARKS

Class __

Signature of the Head of the Institution Signature of UPO/AUPOI I

I I~~~~~~~~~~-8

Annex 7: Project Processing Schedule

BANGLADESH: Female Secondary School Assistance Project-lI

Project Schedule Planned ActualTime taken to prepare the project (months) 14First Bank mission (identification) 11/29/2000 11/29/2000

Appraisal mission departure 06/25/2001 06/25/2001Negotiations 10/15/2001 01/31/2002

Planned Date of Effectiveness 06/30/2002

Prepared by:

Prepared by the Project Preparation Team (PPT) of the Directorate of Higher and Secondary Education(DSHE) of the Ministry of Education (MOE), Government of Bangladesh.

Preparation assistance:

PHRD Grant Fund

Bank staff who worked on the project included:

Name SpecialityAna Maria Jeria Task Team Leader / Senior Human Development SpecialistIrajen Appasamy Operations AnalystZafrul Islam Sr. Procurement SpecialistSuraiya Zannath Sr. Financial Management SpecialistMohammad Sayeed Disbursement OfficerDeborah Ricks Program AssistantNazma Sultana Program AssistantBertha Mburugu Program AssistantKishor Uprety Senior CounselHena Mukherjee Bangladesh Education Team LeaderSumaiya Andaleeb Research AnalystPaul Martin Sr. Environmental SpecialistK.M. Minnatullah Sr. Water and Sanitation SpecialistShahpar Selim Research AnalystRosalynn Khan Research AssistantIvonna Kratynski Sr. Financial Management SpecialistKevin W. Casey Lead Procurement SpecialistSubrata Dhar Sr. Operations Officer

The following persons also contributed to the project:

Peer Reviewers:Ruth Kagia, Director, HDNEDElizabeth King, Lead Economist, DECRG

- 87 -

Michael Barnberger, Sr. Sociologist, PRMGE

Consultants:Chloe O'Gara, Girls EducationWilliam Darnell, ImplementationShirley Miske, EducationHabibur Rahman, EducationShiva Raj Lohani, EconomistMokhlesur Ralman, ProcurementRahman Rahman, Financial ManagementM. Khaliquzzaman, Water and Sanitation

- 88 -

Annex 8: Documents in the Project File*BANGLADESH: Female Secondary School Assistance Project-lI

A. Project Implementation Plan

Governnent of the People's Republic of Bangladesh, Ministry of Education, Directorate of Secondary andHigher Education. Female Secondary School Assistance Project II (FSSAP II) - PROJECTIMPLEMENTATIONPLAN (Main Report). Dhaka: October 15, 2001.

B. Bank Staff Assessments

Damell, William G. Bangladesh - Female Secondary School Assistance Project (FSSAP) - ImplementationConsiderations (Lessons Learned From FSSAP With Implications For A Possible FSSAP-II). AcademyFor Educational Development. Washington DC: October 2000.

Miske, Shirley, with Audrey Schuh Moore and Joan De Jaeghere. Beyond Access: ImprovingEducational Quality in FSSAP Schools of Bangladesh. Washington DC: October 25, 2000.

O'Gara, Chloe and Shilpa Jain. Once Incentives, Now Entitlements: Examining Household andCommunity Factors in the ESSAP Program in Bangladesh. Academy for Educational Development.Washington DC: October 2000.

World Bank - Draft Technical Papers: Project Preparation (March 21 - April 8, 2001). Washington DC.

World Bank - Draft Technical Papers: Project Appraisal (June 25 - July 11, 2001). Washington DC.

C. Other

Ministry of Education, Directorate of Secondary and Higher Education. Secondary Education SectorDevelopment Plan (2000-2010). Dhaka: 1998.

Ministry of Education. Secondary Education Sector Development Plan (1999-2000). Dhaka.

World Bank. Periodic Economic Update. Dhaka: April 2001

World Bank. Bangladesh Education Sector Review. Dhaka: 2000.

*Including electronic files

- 89 -

Annex 9: Statement of Loans and Credits

BANGLADESH: Female Secondary School Assistance Project-lI03-Jan-2002

Difference between expectedand actual

Original Amount in US$ Millions disbursements

Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd

P044810 2001 Legal & Judicial Capacity Building 0.00 30.60 0.00 0.04 28.56 3.12 0.00

P059143 2001 Microfinancell 0.00 151.00 0.00 0.00 113.30 6.55 0.00

P050752 2001 Post-Literacy & Conbnuing Education 0.00 53.30 0.00 0.00 49.87 -2.89 0.00

P057833 2001 Air Quality Management Project 0.00 4.71 0.00 0.00 3.91 0.66 0.00

P069933 2001 HIV/AIDS Prevention 0.00 40.00 0 00 0.00 36.17 3.99 0.00

P050751 2000 National Nutrition Program 0.00 92.00 0.00 0.00 82.64 10.48 0.00

P009468 2000 Fourth Fisheries 0.00 28.00 5.00 0.00 22.84 15.81 0.00

P044811 2000 FRnandal Institutions Development 0.00 46.90 0.00 0.00 21.27 11.92 0.00

P058468 2000 Agricultural Serv. Innovation & Refom, 0.00 5.00 0.00 0.00 2.02 1.13 0.00

P049587 2000 AquatIc Blodiversity Conservation 0.00 0.00 5.00 0.00 4.50 2.66 0.00

P009524 1999 Dhaka Urban Transport 0.00 177.00 0.00 0.00 139.36 86.33 0.00

P049790 1999 Export Diversificaton 0.00 32.00 0.00 0.00 13.97 9.07 0.00

P037294 1999 Third Road Rehabilitation & Maintenance 0.00 273.00 0.00 0.00 186.30 180.67 0.00

P041887 1999 Munidpal Services 0.00 138.60 0.00 0.00 99.37 111.18 0.00

P050745 1999 Arsenic Mitigation Water Supply 0.00 32.40 0.00 0.00 25.51 27.00 0.00

P044789 1998 Pnvate Sector Infrastructure Dev 0.00 235.00 0.00 0.00 177.40 174.70 0.00

P037857 1998 Health and Populabon Program 0.00 250.00 0.00 0.00 86.78 17.53 0.00

P040713 1998 SilkDevelopmentPilotProject 0.00 11.40 0.00 1.50 6.22 7.20 0.10

P009550 1998 Primary Education Development 0.00 150.00 0.00 25.07 63.70 47.16 -1.36

P009482 1997 Dhaka Water & Sanitation IV 0.00 80.30 0.00 0.26 28.47 40.47 0.00

P009518 1997 Second Rural Roads & Markets Improvement 0.00 133.00 0.00 0.00 6.94 -6.51 14.82

P009549 1996 Coastal Embankment Rehabilitation 0.00 53.00 0.00 0.00 3.21 -6.22 11.51

P009496 1995 Bangladesh Integrated Nutriton 0.00 59.80 0.00 0.58 7.47 15.21 0.00

Total: 0.00 2077.01 10.00 27.45 1209.81 757.21 25.07

- 90 -

BANGLADESHSTATEMENT OF IFC's

Held and Disbursed PortfolioOCT-200 1

In Millions US Dollars

Committed DisbursedIFC IFC

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic

1997 DBH 0.00 0.65 0.00 0.00 0.00 0.65 0.00 0.001991 Dynamic Textile 1.86 0.00 0.00 1.48 1.86 0.00 0.00 1.481998 Grameen Phone 15.00 1.58 0.00 0.00 15.00 1.58 0.00 0.001985/95 [DLC 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001980/98 IPDC 9.38 0.00 0.00 0.00 9.38 0.00 0.00 0.001998 Khulna 19.07 0.00 0.00 0.00 19.07 0.00 0.00 0.001998 Lafarge/Surma 35.00 10.00 0.00 0.00 0.00 0.00 0.00 0.002000 Scancem 10.00 0.00 0.00 0.00 5.00 0.00 0.00 0.00

Total Portfolio: 90.31 12.23 0.00 1.48 50.31 2.23 0.00 1.48

Approvals Pending Commitment

FY Approval Company Loan Equity Quasi Partic

2001 BRAC Bank 0.00 0.00 3.00 0.002001 Dhaka Westin 8.75 0.00 0.00 0.002000 Jalalabad 11 30.00 10.00 0.00 30.001998 Khulna 0.00 0.00 3.30 0.002000 ULC - Bangladesh 5.00 0.00 0.00 0.002000 USPCL 0.00 4.00 3.00 0.00

Total Pending Commitment: 43.75 14.00 9.30 30.00

- 91 -

Annex 10: Country at a Glance

BANGLADESH: Female Secondary School Assistance Project-lI

POVERTY and SOCIAL South Low-Bangladesh Asia Income Development diamond'

2000Population, mid-year (millions) 129.8 1,355 2.459 Life expectancyGNI per caPita (Atlas method, US$) 370 460 420GNI (Atlas method, US$ billions) 47.9 617 1,030

Average annual growth, 1994-00

Population (%) 1.6 1.9 1.9Labor force (%) 2.9 2.4 2.4 GNI Grosa

per primaryMost recent estimate (latest year available, 1994-00) capita \. - enrollment

Poverty (% of population below national poverty line) 36Urban DoPulation (% of total population) 25 28 32Life exoectancv at birth (vears) 61 63 59Infant mortalitY (per 1,000 live births) 61 74 77Child malnutrition (% of children under 5) 56 47 .. Access to improved water sourceAccess to an improved water source (% of population) 97 87 76Illiteracy (% of population ape 15-) 59 45 38Gross primary enrollment (% of school-ape PoPulation) 96 100 96 Banglades

Male 96 110 102 Low-income groupFemale 96 90 86

KEY ECONOMIC RATIOS and LONG-TERM TRENDS1980 1990 1999 2000

Economic ratlosGDP (USS billions) 17.6 30.1 46.0 47.1Gross domestic investment/GDP 19.8 17.1 22.2 23.0Exports of qoods and services/GDP 4.2 6.2 13.2 14.0 TradeGross domestic savinqs/GDP 8.2 9.7 16.7 17.8Gross national savinqs/GDP 12.8 11.9 21.3 23.0

Current account balance/GDP -4.8 -5.2 -0.9 0.0 Domestic _e.Interest Dayments/GDP 0.3 0.6 0.4 0.4 savings InvestmentTotal debUGDP 24.0 42.4 37.9 35,2Total debt service/exports 23.7 28.9 9.5 8.8Present value of debt/GDP .. .. 23.9Present value of debUexports .. .. 140.4

Indebtedness1980-90 1990-00 1999 2000 2000-04

(average annual qrowth)GDP 4.3 4.8 4.9 5.9 4.7 --- BangladeshGOP per capita 1.8 3.1 3.2 4.2 2.8 Low-income groupExports of goods and services 7.7 12.8 2.3 8.6 6.4

STRUCTURE of the ECONOMY1980 1990 1999 2000 Growth of Investment and GDP (%)

(% of GDP)Agriculture .. 30.3 26.2 25.5 TIndustry .. 21.5 25.2 25.3 10.

Manufacturing .. 13.1 15.5 15.2 n _Services .. 48.3 48.7 49.2 .

Private consumption 89.9 86.1 78.7 77.7 95 96 97 ga 99 o0General government consumption 1.9 4.2 4.6 4.6 G DI e GDPImports of goods and services 15.8 13.6 18.7 19.2

(average annual growth) 1980-90 1990-00 1999 2000 Growth of exports and Imports (%)

Aericulture 2.7 2.9 4.8 7.4 60-.

Industry 4.9 7.3 4.9 6.2 40n.P'AManufacturing 3.0 7.2 3.2 4.8 2

Services 4.4 4.5 5.2 5.5 2

Private consumption 4.5 3.4 1.3 4.1 v 95 96 97 98 99 0O

General qovernment consumption 5.0 4.7 0.6 0.9 20 -Gross domestic investment 1.4 9.2 9.9 7.3 - Exportns ImportsImports of aoods and services 5.6 9.5 2.3 5.7

Note: 2000 data are preliminary estimates.

The diamonds show four kev indicators in the country (in bold) compared with its income-group averaqe. If data are missing. the diamond willbe incomplete

- 92 -

Bangladesh

PRICES and GOVERNMENT FINANCE1980 1990 1999 2000 Inflation (%)

Domestic prices 10(% change) FConsumer prices 3.9 8.9 3.6 6Implicit GDP deflator 13.4 4.9 4.7 1.9 45

Government finance 2 -(% of GDP, includes current grants) D

Current revenue 6.9 9.0 B.5 95 96 97 98 99 OD

Current budqet balance . 0.4 1.4 0.7 -- "-GDP deflator CCPIOverall surplus/deficit . -5.8 -4.8 -6.2

TRADE1980 1990 1999 2000 Export and Import levels (US$ mill.)

(USS millions)

Total exports (fob) .. 1,624 5,324 5,762 10 000TRaw iute - 163 72 71 8000Leather and leather products .. 176 168 194Manufactures .. 1,008 4,770 5.137 6,000 -

Total imPorts (ci) 3,791 8.017 8,403 4,00'

Food .. 343 997 250Fuel and enerqv 174 388 489 - ' ''rCapital qoods .. 1,296 1,684 2,515

94 95 96 97 9a 99 00Export price index (1995=100) .. 67 103 103import Drice index (1995=10) .. 96 97 99 rEEports mImports

Terms of trade (1995=100) .. 70 106 103

BALANCE of PAYMENTS1980 1990 1999 2000 Current account balance to GDP (%)

(US$ millions)

Exports of qoods and services 885 1,903 6,031 6.611 1

Imoorts of qoods and services 2.545 4.156 8.527 9.060 Resource balance -1,660 -2.253 -2.496 -2.449 _ e ||

Net income 14 -122 -135 -221 . . - iNet current transfers 802 802 2,237 2.672 - .

Current account balance -844 -1,573 -394 2

Financinq items (net) 640 1,196 189 77Chanqes in net reserves 204 377 205 -79 4

Memo:

Reserves includino qold (US$ millions) .. 520 1.513 1,596Conversion rate (DEC. localUS$) 15.5 33.3 47.8 50.3

EXTERNAL DEBT and RESOURCE FLOWS1980 1990 1999 2000

(US$ millions) Composition of 2000 debt (USS mill.)Total debt outstandinc and disbursed 4,230 12.768 17.422 16,589

IBRD 55 64 31 24 F A 24

IDA 926 4,095 6.428 6.431

Total debt service 278 791 746 762IBRD 3 5 78 4,705 603IDA 6 41 119 129

Composition of net resource flowsOfficial grants 0 766 345 283Official creditors 667 878 377 355 . 5- i

Private creditors 11 67 -12 16

Foreiqn direct investment 0 3 198 194 ---.---Portfolio equitY 0 -194 -6 0 D. 4.737

World Bank programCommitments 331 572 595 198 A - IBRD E -BilateralDisbursements 156 484 413 357 B- IDA 0- Other rnultflateral F- PrivatePrincipal repayments 0 14 78 87 C - IMF G -Short-termNet flows 156 470 335 270

Interest pavments 9 32 48 49Net transfers 147 438 286 221

Development Economics 9/5/01

- 93 -

r88 s89 90 91 92

BANGLADESH

FEMALE SECONDARY SCHOOLASSISTANCE PROJECT 11

26- J

_ t * _ s; ~~~~~~~~~~~~~~~~~~If I ,1;<i , I *I _I - II ''I 'I '- I .'

- -. I-- 9'^W''P? 7

. ~~~~~~~~~~~~~~~it 4. 1gj:,;> ! i -- ;

j '' -'F ¢ 9 t a r¼ G-t L

to\E't-'rA1~~~~~- 4.:

VnA< t,--- ., P. S -.

N LI ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4.11

N~~~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~ C) s j ,I<

I \ \4E'.'Ss . - .,' '' II~L®

2.~~~~~~~~~~~~8

ao ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~t

NEPAL - \- J~ -I -,

t~~~~~~~~~~~~~~~~~~~~~~~~~A

>. ,,- Ba of Bengal -1 ,' -

1. l' ]- - '.''', ~~~~a '- ' l

f ~I I II-

-I I 1.80~~~~~~~~~~~~~~~~~~~~~~~~~~~~44