48849 DATASHEET Ghana-EducationSector Project Environmental category: B Revisedestimateddisbursements (Bank FY/SDRm) FY 2008 2009 2010 2011 date: October 31 2009 dicate ifthe restructuring is: Boardapproved- Does the restructured project require any exceptions to Bank policies? No Have these been approved by Bank management? NIA I s approval for any policy exception sought from the Board? No Reviseduroiect develoument obiective/outcomes: The revisedProject Development Objectives are to (i) improve equitable accessto and completion o fbasic education indeprived districts; and (ii) improve quality o f teaching and learning, management efficiency and relevance o fpost-basic education Outcomes: Performance and access will be measured by: (i)PrimaryGrossEnrolmentRateindepriveddistrictsincreases (ii)GenderParityIndexatPrimaryLevelindepriveddistrictsimproves (iii)PrimaryCompletionRateindepriveddistrictsincreases. (iv) SupportedPrograms underTALE show improvementsinteaching, management efficiency or learning outcomes (v) 75 % o fnew polytechnic andpost graduate programs assessedas satisfactory. (vi) Skills Development Fund(SDF)mechanism is hnctional 0.00 iv Restructuringofthe Ghana-EducationSector Project Project Paper A. Introduction 1. This Project Paper seeks the approval o f the Executive Directors to introduce the following changes in the Ghana Education Sector Project (EdSeP), Credit No. 3865-GH (Project ID P050620) o f SDR 52.7 million and accompanying amendments to the project's legal documents. 2. Theproposed changes include: (i) revisions to the project development objectives; (ii) introduction o f new activities and improved alignment o f planned activities with the national sector strategy; (iii) revisions to outcome and output indicators and targets; (iv) a reallocationo f Credit proceeds; and (v) a two-year extension o f the project's closing date from October 31,2009 to October 31,201 1. 3. The revisions inthe development objectives are more consistent with the original project design and more relevant interms o f the Government's evolving sector priorities. The reallocation o f funds responds to emerging needs including the need to reconstruct schools destroyed by floods in2007 and to develop capacities in skills development. The extension would allow the project to implement some activities that were hinderedby the slow implementation o f the overall decentralization o f public services, to firm up efforts in deprived districts and also to better monitor the outcomes of other activities that are initiatedto achieve the revisedProject Development Objectives (PDOs). B. BackgroundandRationalefor Restructuring Sector Context 4. Since appraisal, Ghana has enjoyed fast economic growth, and improvements in accessing basic educational services. As a result, demand for post-basic education has increased and so has the need to improve links between the world o f work and the world o f education. The new National Education Reform Program (NERP) attempts to tackle these challenges in the context o f the decentralization process o f public services taking place in the broader framework of public administration. Although this process has not progressed as fast as it had been expected at project appraisal, some new Government priorities have emergedinthe process, including the needto strengthen fiuther the capacity at the district levels. This is warranted inview o f the importance o f their role inachieving more equitable access andalso efficiencies in education 5. Over the last five years, Ghana has progressed in improving higher education. This includes increasesin enrollment and private financing o f education as well as innovations such as the Students' Loan Trust, increase inthe internally generated revenues especially through user fees. Despite these successes, a widely adopted medium term higher education financing strategy that focuses on outcomes i s still not formulated for it would have created undue tensions inthe sector. 6. On September 11, 2007, the implementation o f the NEW started. The Program calls for changes in the higher education system to make it more relevant to the key economic and employment priorities o f the country. Therefore, higher education finance needs to bedevelopedwithinthis broader policy context. 7. The economic growth also ledto increaseddemand for skilled professionals which the existing technical and vocational education institutions cannot fully supply because of management efficiency short comings and dissociation from market requirements. The Government i s committed to expand technical and vocational education and skills training (TVET). This expansion also needs to make vocational and technical skills training morerelevant andbetter aligned with the requirementso fthejob market. 8. Following the August 2007 floods, the emergency situation in Northern Ghana required the fast action o f the Government to focus on the livelihood and access to services by the affected population. The region also represents the poorest part o f Ghana. Consequently, the Government initiated several steps, includingrefocusingits own resources and engaging the development partners to target external funding towards the Northernregions. 9. Finally, the Government initiated the revision o f the Education Strategic Plan that requires new policies and new forms o f financing for all levels, especially for post-basic and tertiary education. ProjectBackground 10. The IDA Executive Directors approved the project on March 9, 2004, and it became effective on March 25, 2004. The original objectives were to: (i)promote equitable access to, and efficient delivery o f quality services in pre-tertiary education; and (ii) innovation, relevance, quality and efficiency in tertiary education. Inthe foster original design the target groups o f the interventions were: (i) and local agencies central o f education administration and management; (ii) district education offices, and primary andjunior secondary schools in 53 deprived districts; and (iii) tertiary institutions o f all the country. It included three main components (respectively Parts A, B and C in Schedule 2 to the Development Credit Agreement): (i) capacity buildingpartly for sector the central agencies o f education management, partly for the 53 deprived districts; (ii) a pilot programmatic scheme to provide programmatic funding to the 53 deprived districts to implement activities planned in their Annual Program o f Work; and (iii) a tertiary education innovation scheme involving demand driven grants to universities, polytechnics and private higher education institutions to support institutional initiatives 2 improving teaching, learning and management as well as to start new polytechnics as well as post-graduate programs. 11. The project i s in compliance with the key covenants agreed upon in the Development Credit Agreement, and there are no outstanding audits, although there have been some delays incompleting some audits and management letters. IDA, however, has addressed these delays through regular supervision. Schedule 4, Section 2 o f the Agreement required that by June 1, 2005 the Borrower submit to IDA a sustainable and equitable financial strategy for the tertiary education sub-sector and implement this strategy taking into account IDA'Scomments. Some elements o f a financial strategy have been introduced, but the development o f a comprehensive strategy was postponed. The Government proposed this postponement so that the financial strategy i s better aligned with its NEW andhumanresource development strategy. Accordingly, the Government requested that a new intermediary outcome indicator will target the adoption o f a higher education policy with targets on equity, efficiency, quality, relevance, and accountability. 12. The project has performedwell interms o f achieving the key objectives related to basic education, although it had slow disbursement in the Pilot Programmatic Scheme component o f the project. This i s largely due to the slower than expected overall decentralization process of public services in the broader framework o f public administration reform agenda. The activities piloted by the project underlined the importance o f the role o f districts inachievingmore equitable access and also efficiencies in education. Consequently, improving the capabilities of the deprived districts has proven to be more important inachieving the PDO. 13. Education was clearly ahead o f the rest o f the public sectors by defining sector- specific roles and responsibilities for central, regional and district level governmental agencies, by decentralizing the Education Management Information System, by carrying out regional sector performance reviews and by empowering the District Education Offices to define and implement their Annual Programs o f Work. Many o f these were strongly assisted by EdSeP financed activities. However, other key steps in the decentralization that were beyond education were constrained by Governmental inaction, such as the division o f work between District Assemblies and District level administrative units, the larger scale devolution o f financial resources or regulations for local level revenue generation. In all, the EdSeP has been instrumental in preparing the various sector agencies to an eventual overall decentralization program, consequently, the sector expects less disruptions in service delivery when all hurdles in front o f decentralization are removed. 14. Inlinewithits generalpolicyto providefocused support to therehabilitationofthe Northern regions, the Government requested that districts affected by the floods receive more support to reconstruct schools damagedbythe floods through their Annual Programs o f Work. Action to refocus IDA to attend rebuilding destroyed schools is not only a sensible approach to achievethe PDO but is also clearly pro-poor. 3 15. At tertiarylevel, the establishment ofthe Teaching andLearning InnovationFund (TALIF) contributed to the improved policy environment by introducing demand-side financing. Its implementation progressed well. However, measuring the expected outcomes on tertiary education has remained challenging. The key reasons have included the fact that the TALIF design entailed a demand-drivenapproach in which institutions themselves define their own strategic objectives and central priorities play less important roles in the institutional proposals. Secondly, the originally agreed outcome indicators required a lag-time between investments and results that would be longer thanthe EdSeP implementation period itself. Thirdly, some o f the original indicators lacked realism, as they targeted improved employment at times when there are factors beyond tertiary education constraining employment opportunities. 16. At mid-tern review', the Government decided to set up a more rigorous implementation schedule for pre-tertiary education, concentrate capacity building on 53 deprived districts and strengthen monitoring and evaluation for the tertiary education component. The impact o f these changes has started to show during the second half o f 2007 as disbursement has accelerated and the implementation o f capacity building has speededup. Based on the experience o f four years of implementation, the elaborate and complex monitoring system that was built on the original results framework calls for a simplifiedandmore focused outcome-oriented results framework.2 17. As at December 2008, total disbursement was SDR 27.7 million, representing 52.6 percent o f the total Credit proceeds o f SDR 52.7 million with commitments amounting to SDR 6.9 million, leaving an uncommitted but planned balance o f SDR 18 million. At the component level, disbursements were 65%, 26%, and 70% for the Capacity Building, Pilot Programmatic Scheme and Tertiary Education Innovation components, respectively. C. ProposedChanges 18. Outline below i s a summary o f the changes proposed inthe restructuring: (a) The revisedProject DevelopmentObjectivesare to (i) equitable improve access to and completion o f basic education in deprived districts; and (ii) to improve quality o f teaching and learning, management efficiency and relevance ofpost-basic ed~cation.~ (b) The Results Framework is revised to support and measure progress towards achieving the PDO. The Results Framework reflects the adherence to three key principles: (1) they represent a subset o f indicators 1The Implementation Status Reportrating at mid-term and the previous reportingperiodwas Marginally Unsatisfactory. Followingthe implementation o f key changes agreed at the mid-term review, the project rating was upgraded to Marginally Satisfactory. Especially tertiary education and technical and vocational education and training. 4 defined in the Education Strategic Plan, which are reviewed annually during the Sector Performance Review; (2) they are more consistent with the project's scope and targeting; and (3) they are harmonized with the NEW. See Annex 1 for a complete Results Framework. The revised Results Framework will be also incorporated into the updated Project Operational Manual. (c) A new Skills DevelopmentFund (SDF) sub-componentis introduced. The Government is committed to expand technical, vocational education and skills training (TVET). This expansion also needs to make skills training more relevant and better aligned with the requirementso f the job market. To achieve these goals, the Skills Development Fund, a demand- driven and performance-based funding mechanism for TVET institutions i s being developed and adopted by the Government. Training providers including institutes and centers will be eligible to access the Fund according to proposals that are evaluated based on set criteria by a committee. The Fund will be a subcomponent within the Sector Capacity BuildingComponent. The Council of Technical Vocational Educationand Training (COTVET) under the Ministry o f Education (MoE) will be responsible to manage the Fund. Responsibilities for financial management, including managing the flow o f hnds and in fiduciary oversight will be given to the Financial and Procurement Management Unit under the MoE which has beenresponsible for the SCB component since project effectiveness. Details about the Skills Development Fund mechanism will be presented to IDA for approval and will be integrated in an updated Project Operational Manual satisfactory to IDA, as a condition o f disbursement o f IDA-financed grants under the SDFa4 (d) A legal covenant on Higher Education Finance Strategy is dropped. Paragraph 2 o f Schedule 4 to the Development Credit Agreement required the Borrower to submit to the Bank by June 1, 2005, a sustainable and equitable strategy for the tertiary education sub-sector and thereafter implement such strategy. Subsequently, the Bank team agreed with the Government's request that tertiary education financing should be aligned with its tertiary education policy and with the country's general economic and social priorities with the key objectives o f the NERP. The tertiary education strategy will thus be developed and monitored as an intermediary outcome o f the project and the dated legal covenant containingthis requirement will be dropped. (e) Funds are reallocated between and the disbursement categories to support the proposed changes. A reallocation across categories is DANIDAis also planning the creation o f a funding mechanism for skills development within its overall business development support to Ghana; the plannedcreation of the Fundis expected to lead to ajoint DANIDNWorldBank support either throughjoint or parallel co-financing. 5 requiredfor the new skills training activities, includingdeveloping, testing and piloting the Skills Development Fund mechanism estimated at US$ 0.8 million, and for the reconstruction o f the schools destroyed by the flood estimated at US$7.5 million equivalent.' Annex 2 provides a summary o f the original versus the proposed project costs by category and bycomponent. The project closing date is extended from October 31,2009 to October 31, 2011. The full completion of the school rebuildingand re-equipment as well as the full completion o f the skills training pilot (including assessing the early impact on the propensity o f increased enrollment) require that the project implementation be extended by 24 months. A detailed implementation schedule will be developed and integrated in the updated Project Operation Manual. The extension requires a new time- based results matrix, agreed with the Government. The time-based results matrix i s attached inAnnex 3. D. Analysis 19. The restructured project would be consistent with the strategic priorities of the current Joint Assistance Strategy, Ghana's Growth and Povedy Reduction Strategy, and the revisedNational EducationReformProgram. 20. The environment category would remain "B". The project restructuringwould not entail a change in the scope o f the project in terms o f its procurement categories and priorities. Rather, it would incur greater emphasis on the reconstruction o f schools that were destroyed by the flood. The Ministry o f Education, Youth and Sports issued a detailed Environmental and Social Management Framework (ESMF) for the EdSeP in December 2003. The ESMF analyzed the areas targeted for interventions and possible construction activities, made recommendations for project site selections, resettlement issues, sources and quality o f raw materials, operations and waste management. Based on the recommendations, the MoE set standards for schools and for district education offices as well as for the Environmental Impact Assessment procedure for each sites. The recipient will review the effectiveness o f the ESMF and updates and discloses as necessary. 21. The proposed changes would not have any major impacts in the original economic, financial, technical, institutional or social aspects o f the project. The restructuring would not involve any exceptions to Bankpolicies. The estimated allocation for the Skills Development Fundwillprovide funding to pilot the mechanism with a few training institutes. Inthe meantime, the Government is considering providing parallel financing to other institutions through the same Fundmechanism. 6 22. The proposed changes will improve the Project's relevance in the context o f the NEW. Especially the fundingmechanism for skills development will allow a potential scale-up to cover a large section o f TVET programs. 23. The proposed Skills Development Fundwill also allow harmonization with other donor partners, including possibly DANIDA, the African Development Bank and the Japanese International Cooperation Agency, all o f whom have interest in supporting skills development. E. ExpectedOutcomes 24. The purpose o f revising the existing outcome indicators i s to better align them with the corresponding activities and to simplify the results matrix. As a result of the simplification, some indicators have been eliminated from the results matrix. The revised indicators are sufficient indeterminingeffectiveness and efficiency o f project effort. The modifications to the key performance indicators are attached in Annex 4 o f this Project Paper. F. BenefitsandRisks 25. By focusing on 53 deprived districts, the direct benefits will go to the people living in these districts, however, since these districts are lagging behind the national average, the nation as a whole will benefit from raising the overall performance o f the education sector. 26. It is expected that during the pilot phase up to 5 technical training institutes and up to 5,000 trainees will benefit from the newly established Skills Development Fund. However, the funding mechanism would facilitate the support to many more institutes andtrainees as more Governmental and external fundingwould be channeled through the Fundand the Fundwould have a significantly larger number of institutions and trainees benefitting still before EdSeP i s beingclosed. 27. Most risks identified during appraisal have turned out to be less significant than anticipated. However, as in other countries, decentralization process i s slower than expected and particularly information systems to provide timely information for management decisions remain slow and inadequate. There i s a strong cooperation between the GoG and the Development Partners around ajoint Education Sector Group which i s committed to addressthis problem. G. Procurement 28. The proposed changes in restructuring the project will not affect the established processes and procedures which are currently in use for implementing the main project. 7 The existing procurement arrangements assessed remain adequate and acceptable and will continue to beusedafter the restructuring. 29. The new Skills Development Fund sub-component which is being introduced aims at expanding technical, vocational education and skills training (TVET). It i s a demand-driven program to be implementedby selected technical training institutions and identified private sector bodies. Procurement under this new sub-component will be managed by the GESFinancial Procurement Management Unit, the selected institutions and identified private sector institutions. Depending on agreed needs, it i s expected that procurement packages under ICB and all consultancy service contracts will be managed centrally by the GES/FPMU. Other procurement will be processed by the TVET institutions. Under the provisions o f the Ghana Public Procurement Act, these institutions have inplace procurement units and Entity Tender Committees and will be supported by the GESFPMU. 30. Procurement will continue to be guided by the Bank's procurement guidelines for all contracts as follows: "Guidelines: Procurement under BRD Loans and IDA Credits" dated May 2004, revised October 2006; and "Guidelines: Selection and Employment o f Consultants by World Bank Borrowers" dated May 2004, revisedOctober 2006. 31. Procurement expected to be processed by private sector entities benefiting from this sub-componentwill be guidedbyCommercialPractices acceptable to the Bank. 32. Insummary the assessment of the procurement management arrangements under the project concludes that there are systems in place that satisfy the Bank's minimum requirement. Overallprocurement management arrangement i s ratedas Satisfactory. H. FinancialManagement 33. The changes proposed for the restructuring will not affect the established processes and procedures which are currently in use for implementingthe main project. The existing financial management systems were assessed and found to be adequate. Responsibilities for financial management, including managing the flow o f funds and in fiduciary oversight will be given to the Financial and Procurement Management Unit under the MoE which has been responsible for the SCB component since project effectiveness. Details about the Skills DevelopmentFundmechanism will be presented to IDA for approval and will be integrated in an updated Project Operational Manual satisfactory to IDA, as a condition o f disbursement o f IDA-financed grants under the SDF. The SDF sub-projects will be treated like any other subproject inthe sense that the expenditure i s not the lump sum transfer a sub-project grant but its end use for subproject activities and costs as definedinthe approved subproject proposal. 34. Since the SDF i s a new activity the internal control procedures are being developed andwill have approved by IDA prior to disbursement and implementation. 8 35. Currently the FM performance has been rated marginally satisfactory based on RAPMAN-PRIMAdatabase. 9 Annex 1:RevisedResultsFramework Project Development Improve equitable access to and completion of basic education indepri Objective quality of teaching and learning, management efficiency and relevanc of post-basic education PDO Outcomes Outcome Indicators Use of Information 1.Improve equitable 1.1 Primary Gross Enrolment Rate indeprived districts increases Establish contribution o f access to, and 1.2 Gender Parity Index at Primary Level in deprived districts improves. project to higher level completion of basic 1.3 Primary Completion Rate indeprived districts increases objectives set inthe education in deprived Education Strategic Plan districts. and inthe National EducationReform 2. Improve quality of 2.1. Supported Programs under TALIF show improvements inteaching, Program. teaching and management efficiency or learning outcomes. learning, 2.2. 75% o fnewpolytechnic and post graduate programs assessedas management satisfactory. efficiency and 2.3. Skills Development Fund(SDF) mechanism is functional. relevance of post- basic education.' Sector Capacity Strengthen accountability Building o f educationmanagement 1.Inbasic education, 1.1 Implementannualprograms o f work (APW) indeprived districts to at central and local levels. capacities o f DE0 improve access and gender parity. offices inthe 53 1.2 Targeted deprived districts have improved resource management deprived districts capacities. increased. 1.3 % o f targeted districts for which the EducationManagement Information System is usedto generate annual reports. Provide information for 2. Inpost-basic 2. Technical training institutes supported by SDF achieve 80% o f the systemic scale up and education, capacities targets o ftheir institutionaldevelopment plans. basis for engagement o f o f selected Technical other development Training Institutes partners. increased. Pilot Programmatic 1.1 Gross Admission Rate to Primary Iindeprived districts improves Provide GoG with lessons Scheme 1.2 Gross Enrollment Rate at JHS Iindeprived districts increases on how inthe context o f 1.3 Gender parity index at JHS level indeprived districts improves. decentralization, service 1.4 67 schools inthe NorthernRegion re-constructed. deliverycanbe improved. 1.5 Capitation grant piloted indeprived Districts and adopted for national scale up. Teaching and 1.1 TALIF financing and project assessment mechanisms are functional Provide GoG with Learning Innovation 1.2 % o f HIV/AIDS specific measures assessedsatisfactory appropriate accountability Fund(TALIF) 1.3 Higher educationpolicy i s aligned to principles o f equity, efficiency, measures for assessing for relevance, quality and accountability. higher education performance. 6 'Unlessindicated otherwise, targets inthe table are set as o f the Closing o fthe Project. Especially inTVET and at tertiary level. 10 1I d m n Y El .I c, 0 daiea d a a $ W u a e .I c, v2 a u 0 m 1 c, 3; a .. c'1 2 3El * I L .. rn I I /I m d c 8 ?g ? n u + E " L m ? G c 2 E& %a %a E E Li 5 I) 3 3 a3 23 a Annex 5: Skills Development Fund Skills Development Fund 1. The establishment o f a Skills Development Fund (SDF) is the Government's request to set up a demand-driven funding mechanism as a sustainable source o f financing technical and vocational education and training (TVET). Such a mechanism i s strongly owned by the Government as it appeared first in the 2002 Education Reform Report: and later inthe 2004 TVET policy framework document," The intention with the SDF is to unify and supplement public financing for TVET as well as make it easier for funds to be allocated in line with both general national socio-economic priorities but also sector priorities. A SDF mechanism would draw on a variety o f income sources, including training levies, government budgetary allocation, development partner funding and income generated by the fund itself. It i s expected that the Government would provide funding from 2010 and there i s also interest by other donors, including DANIDA. 2. The EdSeP sub-component will focus on establishing a solid fund mechanism with transparent processes. I t will involve various government agencies, training providers and employers in the process. The intended beneficiaries o f the SDF also include TVET providers, trainees and employers. The objectives o f the SDF include the improvement o f productivity andthe increased employment o f skilled labor inselected sectors. 3. The Council for Technical Vocational Education and Training (COTVET) (which includes key GoG and non-governmental stakeholders, including industry) will have a keyrole indefining(and redefining) priority areas for the SDF. The COTVET will set up a SDF Secretariat which will administer the SDF as part o f the Sector Capacity Building Component. Thus, the MoE and the Financial Procurement and Management Unit will exercise fiduciary oversight for the SDF. 4. The pilot would run for approximately 12 months, after which it is expected that COTVET would scale up and manage the Fund, possibly with WB as well as DANIDA short-term support. Duringthe period up to December 2009 it i s envisaged that the GoG (and COTVET) would play a key role in getting an industry training levy established which would provide sustainable financing to the SDF. Eventually, the SDF would become akey funding instrumentto sustainably support skills development inGhana. 5. The membership to the Board o fthe SDFwould be broadbased to avoid conflict o f interest and there would be very strong employer involvement in managing the fund; COTVET would have a key role to play on the SDF Board. The pilot SDF would be sector neutral: public and private sector TVET institutions would be eligible, as would micro, small, medium and large enterprises. GoG (2002) Meeting the Challenges of Education in the Twenty First Century. Report of the President's committee onthe Reviewo f EducationReforms inGhana (October, 2002): Accra. 10GoG (2004) Draft TVETPolicyFrameworkfor Ghana (August2004), MoEYS:Accra. 22 6. The operation o f the SDF would be clearly defined and agreement would be reached at the highest level (e.g., COTVET Board, Ministers and Chief Directors o f MoE, MoESW, MoTI, MoF, GEA, AGI etc). The specific activities for which financial allocations could be made would be clearly defined (e.g. financing the needs o f TVET institutions for equipment, raw materials, teaching materials and wages o f trainers; developing training and retraining programs for public and private companies; scholarships based on the financial needs o f eligible students; vocational awareness campaigns in the media; and training needs surveys). Furthermore the SDF would be specific about who could benefit from the fund. The DANIDA consultants proposed that the SDF should consist o ftwo funding windows: Support to training providers (government and non-government institutions) for the development o f new (short) courses including support for upgrading and training o f teaching staff at the training institutions. Training incentives to enterprises (in the medium and small scale sector) including tailor-made training with focus on product development, productivity, maintenance, and quality assurance on the basis o f an overall business devehpment plan (for enterprises or sector organizations). Support can include identification o f training needs on the basis o f HRD plans and training needs assessments at enterprise or sector level. 7. During the pilot of the SDF, according to the request by the Government, WE3 support would be focused on support to government training providers under MoE (as the EdSEP - which i s being restructured to accommodate a SDF pilot - i s currently under MoE). The Fund would initially support a small number o f training providers who will develop proposals for developing linkages with industries, expand admissions and graduations, improve skill levels o f graduates. The objective o f the pilot i s to assess the effectiveness o f this type o f funding as opposed to traditional input-drivenpublic support to TVET providers and to refine the SDF mechanism according to the lessons learned duringthe pilot phase. 8. The allocation mechanism o f the SDF would help develop a demand-driven approach and not perpetuate a supply-drivenone. The decision o f SDF allocations would focus on the planned results and outcomes that the applicants aim to achieve. The design o f the SDF should be such that it would boost not only supply o f skills training but also demand for it. It would be a dynamic hnding system in which the providers o f the endowment will be able to define and redefine priority areas. 9. Eligible beneficiaries would define their plans, submit proposals and independent expert committee would decide about the relevance, quality, and eligibility o f the applicants/applications. In the medium-long term, training institutions could have their financial allocations from the SDF linked to their performance (including the performance o f their graduates), for which benchmarks and indicators would have to be 23 developed and monitored. The pilot SDF would also help to develop various monitoring approaches and indicators. 10. Initially, the SDF would have an upper ceiling o f about US$150,000 per proposal. IDA would finance up to five proposals in the first year. In addition to IDA, it is envisioned that the Government would also use the SDF mechanism to extend the numberofpilots. 11. Procurement under this new component will be managed by the GESRPMU, the selected institutions and identified private sector institutions. Depending on agreed needs, it is expected that procurement packages under ICB and all consultancy service contracts will be managed centrally by the GES/FPMU. Other procurement will be processed by the TVET institutions. Under the provisions o f the PPA, these institutions have in place procurement units and Entity Tender Committees (ETC) and will be supported by the GESRPMU. 12. Regarding Financial Management, SDF funds are part o f the Sector Capacity Building Component. The details of the transfer i.e., lump sum, tranches etc will be addressed inthe approved SDF Operations Manual. The internal controls specifically for the use of the SDF to beneficiary agencies or training institutions is now being finalized inthe SDF Operations Manual and this is a condition for disbursement. Disbursements for SDF will be conditionedupon the Bank approval o fthe SDF Operations Manual. 13. As a next step, the SDF mechanisms as well as the monitoring and evaluation system need to be urgentlyset up with latest internationalbest practices. This mechanism would be definedina SDF manual, ina TORfor the implementingagency inthe setup o f a decision making committee (SDF Committee) and in the M&E manual. This documentation needs to be agreed upon in a workshop that would include key decision makers from the GoG andfrom the industries. 24