Page 1 Document of The World Bank Report No: 48171-YE PROJECT APPRAISAL DOCUMENT ON A PROPOSED GRANT IN THE AMOUNT OF US$20.0 MILLION TO THE REPUBLIC OF YEMEN FOR THE EDUCATION FOR ALL – FAST TRACK INITIATIVE CATALYTIC FUND PHASE III GRANT September 18, 2009 Human Development Sector Middle East and North Africa Region Page 2 Vice President: Shamshad Akhtar Country Manager/Director: Emmanuel Mbi Sector Director Steen Lau Jorgensen Sector Manager: Mourad Ezzine Task Team Leader: Ayesha Yaqub Vawda Page 3 Page 4 CURRENCY EQUIVALENTS (Exchange Rate Effective July 21, 2009) Currency Unit = Yemeni Rial (YR) YR 1.0 = US$ .00498 YR = US$1.0 FISCAL YEAR: January 1 - December 31 ABBREVIATIONS AND ACRONYMS AES Annual Education Survey AFMIS Automated Financial Management Information System AWP Annual Work Plan BEEP Basic Education Expansion Project BEDP Basic Education Development Project NBEDS National Basic Education Development Strategy BoQ Bills of Quantity CAS Country Assistance Strategy CBY Central Bank of Yemen CFAA Country Financial Accountability Assessment CW Civil Works DA Designated Account DEO District Education Office DFID United Kingdom’s Department for International Development DPs Developmental Partners EA Environmental Assessment EFA Education For All EFA - FTI Education For All – Fast Track Initiative EIRR Economic Internal Rate of Return EMIS Education Management Information System EMP Environmental Management Plan FM Financial Management GDP Gross Domestic Product GEO Governorate Education Office GoY Government of Yemen GER Gross Enrollment Rate GNI Gross National Income GPI Gender Parity Index GTZ Germany’s Gesellschaft fur Technische Zusammenarbeit HBS Household Budget Survey IDA International Development Association KfW German Credit Institute for Reconstruction MDGs Millennium Development Goals MDTF Multi-Donor Trust Fund MoCSI Ministry of Civil Service and Insurance MoE Ministry of Education MoF Ministry of Finance MoPIC Ministry of Planning and International Cooperation MoU Memorandum of Understanding MTEF Medium Term Expenditure Framework MTRF Medium Term Results Framework NER Net Enrollment Rate NGSES National General Secondary Education Strategy NPV Net Present Value ODA Overseas Development Assistance PAD Project Appraisal Document PAU Project Administration Unit PDO Project Development Objective Page 5 PD Partnership Declaration P FS Project's Financial Statements PMU Project Management Unit PRSP Poverty Reduction Strategy Paper PWP Public Works Project ROSC Reports on the Observance of Standards and Codes RNE Royal Netherlands Embassy SEDGAP Secondary Education Development and Girls Access Project TIMSS Trends in International Mathematics and Science Study UNICEF United Nation Children’s Fund USAID United States Agency for International Development Page 6 YEMEN, REPUBLIC OF Education for All Fast-Track Initiative Catalytic Fund Phase III CONTENTS Page I. STRATEGIC CONTEXT AND RATIONALE.............................................................................11 A. C OUNTRY AND SECTOR ISSUES .......................................................................................................11 B. R ATIONALE FOR B ANK INVOLVEMENT ..........................................................................................12 C. H IGHER LEVEL OBJECTIVES TO WHICH THE PROJECT CONTRIBUTES ..............................................13 II. PROJECT DESCRIPTION.............................................................................................................13 A. F INANCING INSTRUMENT ................................................................................................................13 B. D EVELOPMENT OBJECTIVE AND KEY INDICATORS .........................................................................13 C. P ROJECT COMPONENTS ...................................................................................................................14 D. J USTIFICATION OF PROJECT DESIGN ...............................................................................................15 III. IMPLEMENTATION..................................................................................................................16 A. P ARTNERSHIP ARRANGEMENTS ......................................................................................................16 B. I NSTITUTIONAL AND IMPLEMENTATION ARRANGEMENTS .............................................................16 C. M ONITORING AND EVALUATION OF OUTCOMES / RESULTS .............................................................18 D. S USTAINABILITY .............................................................................................................................18 E. C RITICAL R ISKS ..............................................................................................................................18 F. E FFECTIVENESS CONDITIONS AND OTHER SPECIFIC UNDERTAKINGS .............................................20 IV. APPRAISAL SUMMARY...........................................................................................................20 A. E CONOMIC AND FINANCIAL ANALYSES ..........................................................................................20 B. T ECHNICAL .....................................................................................................................................21 C. F IDUCIARY ......................................................................................................................................22 D. S OCIAL ............................................................................................................................................23 E. E NVIRONMENT ...............................................................................................................................24 F. S AFEGUARD POLICIES .....................................................................................................................25 G. P OLICY E XCEPTIONS AND R EADINESS ...........................................................................................25 ANNEX 1: COUNTRY, SECTOR AND PROJECT BACKGROUND...............................................27 ANNEX 2: MAJOR RELATED PROJECTS FINANCED BY THE BANK AND/OR OTHER AGENCIES................................................................................................................................................32 ANNEX 3: RESULTS FRAMEWORK AND MONITORING ............................................................35 ANNEX 4: DETAILED PROJECT DESCRIPTION............................................................................39 ANNEX 5: PROJECT COST...................................................................................................................43 ANNEX 6: IMPLEMENTATION ARRANGEMENTS........................................................................44 ANNEX 7: FINANCIAL MANAGEMENT AND DISBURSEMENT ARRANGEMENTS..............48 ANNEX 8: PROCUREMENT ARRANGEMENTS ..............................................................................59 ANNEX 9: ECONOMIC AND FINANCIAL ANALYSIS....................................................................66 ANNEX 10: SAFEGUARD POLICY ISSUES.......................................................................................71 ANNEX 11: PROJECT PREPARATION AND SUPERVISION.........................................................75 ANNEX 12: SECTOR POLICY LETTER.............................................................................................76 Page 7 ANNEX 13: DOCUMENTS IN THE PROJECT FILE.........................................................................79 ANNEX 14: STATEMENT OF LOANS AND CREDITS.....................................................................80 ANNEX 15: COUNTRY AT A GLANCE...............................................................................................82 ANNEX 16: MAPS....................................................................................................................................84 Page 8 REPUBLIC OF YEMEN EDUCATION FOR ALL – CATALYTIC FUND PHASE III GRANT PROJECT APPRAISAL DOCUMENT Middle East and North Africa Region (MNSHD) Date: September 18, 2009 Team Leader: Ayesha Vawda Country Director: Emmanuel Mbi Sector Director: Steen Lau Jorgensen Sectors: Basic Education (100 %) Themes: Education for All (P); Access; Equity Gender (S) Project ID: P114253 Environmental screening category: B Lending Instrument: Grant Project Financing Data [ ] Loan [ ] Credit [ X ] Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (US$m): 20.00 Proposed terms: Multi-Donor Grant (The Netherlands, Belgium, Canada, Italy, Norway, Russia, Sweden, the United Kingdom, Spain, the European Commission and Ireland). Financing Plan (US$m) Source Local Foreign Total BORROWER/RECIPIENT Education For All Fast Track Initiative Catalytic Fund 20.00 20.00 Total: 20.00 20.00 Recipient of TF Funds: Republic of Yemen Responsible Agency: Ministry of Education *Recipient contribution will be in the form of in-kind contributions of school furniture Estimated disbursements (Bank FY/US$m) FY 2010 2011 2012 Annual 14.1 4.8 1.1 Cumulative 14.1 18.9 20.0 TF Approval/IBTF Clearance Date: July 28, 2004 TF Activation Date: February 6, 2006 Project implementation period EFA-FTI Grant Phase III: 2.5 years from October 1, 2009 to March 31, 2012 (Completion Date) Expected effectiveness date: October 1, 2009 Expected Grant closing date: September 30, 2012 Page 9 Does the project depart from the CAS in content or other significant respects? Ref. PAD A.3 [ ]Yes [X] No Does the project require any exceptions from Bank policies? Ref. PAD D.7 Have these been approved by Bank management? Is approval for any policy exception sought from the Board? [ ]Yes [X] No [ ]Yes [ ] No [ ]Yes [X] No Does the project include any critical risks rated “substantial” or “high”? Ref. PAD C.5 [X]Yes [ ] No Does the project meet the Regional criteria for readiness for implementation? Ref. PAD D.7 [X]Yes [ ] No Project development objective Ref. PAD B.2, Technical Annex 1 The Project Development Objective is to increase access of children, especially girls, to primary education in 7 underserved governorates. Project description Ref. PAD B.3, Technical Annex 1 . The project has three components: Component 1: Increasing access to primary education in targeted districts of project governorates. Construction of new primary classrooms and rehabilitation of existing classrooms and school infrastructure in the targeted districts in the Project Area to provide for about 17,430 primary school student places through the carrying out of works and the provision of consultants’ services. Component 2: Improving enrolment and retention of primary school students in project governorates. Support to improve the enrollment and retention of primary school students through: (1) the provision of training and contractual fees to about 500 female teachers to teach in remote schools; (2) capacity building through the support of inspection field visits; and (3) the provision of about 900,000 school materials kits to grade 1-6 primary students in the Project Area, and Component 3: Supporting Grant implementation, administration and monitoring. (1) Capacity building of about one hundred (100) employees from forty (40) district education offices for using computer equipment through the provision of goods and training. (2) Support to the existing Project administration unit (“PAU”) within the Recipient’s Ministry of Education (“MOE”) and the existing Project management unit of the Third Public Works Project (Credit No. 3859) within the Recipient’s Ministry of Planning and International Cooperation (“PMU”) for the effective fiduciary management, reporting and monitoring of the Project activities through the provision of consultants’ services. (3) Support to MOE for the preparation and identification of school sites by school mapping and validation of such sites. (4) Preparation of a study to assess the impact of all three phases of the catalytic fund grants particularly phase III thereof through the provision of consultants’ services. Which safeguard policies are triggered, if any? Ref. PAD D.6, Technical Annex 7 Environment: OP 4. 101 and OP 4.12. An Environmental Management Plan (EMP) and Resettlement Policy Framework (RPF) have been prepared. The EMP was disclosed in June 2009 and the RPF was disclosed in August 2009 . Significant, non-standard conditions, if any , for: Ref. PAD C.6 Grant effectiveness: None Board presentation: None Covenants applicable to project implementation: (a) By October 10, 2009, signature of MoU between the Project Implementation Unit (PIU) of the PWP of the Ministry of Planning and International Cooperation (MoPIC) and the PAU clarifying Page 10 the rules of engagement for implementing civil works, and (b) By December 31, 2009, MOE shall enter into contractual arrangements satisfactory to the World Bank with the Recipient’s Ministry of Civil Service and Insurance and the Ministry of Finance to employ the certified Contractual Teachers upon the completion of their contractual term, training and certification under the Project. Page 11 11 I. STRATEGIC CONTEXT AND RATIONALE A. Country and sector issues 2. Socio economic background. With a GNI per capita of about US$ 870 (2007), Yemen is the poorest country in the Middle East region. Living conditions for most of the 22 million Yemenis remain difficult with over 40 percent of the Yemenis living in poverty (vs. a 2015 target of 19 percent), especially in rural areas where some 73% of the population resides. Yemen ranks 153 out of 177 countries on the 2007 Human Development Index. 3. Although significant progress has been made over the last few years, Yemen is unlikely to reach most Millennium Development Goals (MDGs) by 2015, and the situation is particularly dire for women. Life expectancy has improved from 42 years in 1970 to 62 in 2005, and a significant, though still insufficient, increase has been achieved in basic education enrollment (from 3 million in 1996 to 4.3 million in 2007). Yet, much remains to be done, especially in the areas of infant and child mortality (82 and 113 per 1000 live births respectively); maternal mortality (365 per 100,000 live births); malnutrition (46 percent of 5-year old are underweight); and access to, retention in and quality of education. The diverse geography and high population growth rate pose daunting challenges for service delivery. Almost half of the population is less than 15 years, about 20% under five and the fertility rate remains among the highest in the world, at 6.2 births per woman. 4. Education sector background. Introduced in 1994, the structure of Yemen’s unified education system comprises 9 years of compulsory basic education, followed by 3 years of general secondary, both managed by the Ministry of Education (MoE). The private sector is small, accounting for only about 2% of basic and secondary and 15% of university enrollments (2004/05). Public schooling is subsidized at all levels. 5. Although enrollments in basic education have expanded tremendously, a large group of children remain out of school, either due to non-enrollment or early dropout particularly in the more rural and “difficult-to-reach” Governorates. The number of students in basic education has grown from 250,000 in 1970 to more than 4.3 million today, and most of this expansion has occurred during the last decade. However, the Gross Enrollment Rate (GER) for basic education in 2007-2008 is low at approximately 74%, with a large gap between boys (83%) and girls (64%) enrolment. 6. Despite a problem of data inconsistency (details in Annex 3), recent trends points to a growing concern of slower enrollment growth. Retention also remains a problem. The Grade 6 Completion Rate (equivalent to the Primary Completion Rate -- PCR) was 49% for girls, 70% for boys and 60% for both in 2006-2007. If the trend of the past 3 years continues, achievement of the EFA goal is at risk. According to the Household Budget Survey (HBS), there were 1.8 million out-of-school children aged 6 -14 years in 2005 and over half are concentrated in 7 of the 22 governorates where lack of available schools is the main supply-side obstacle and lack of female teachers the main demand-side obstacle for girls. 7. Credible Plan and recent policy reforms . Education has been one of the top priorities in the government strategies. In the Poverty Reduction Strategy Paper (PRSP) developed in 2000 and the ongoing Third Five-Year Plan (2006-2010), education development remains a main strategic objective of the government. In 2002, the Government of Yemen developed the National Basic Education Development Strategy (NBEDS) focusing on: (i) improvement of the quality of education; (ii) improvement of the management of the sector and the orientation towards decentralization; (iii) Page 12 12 priority to basic education; and (iv) emphasis on the education of girls, which in turn will raise the overall enrollment rate (a summary of the strategy is available in project files). Much progress has been made to strengthen the policy environment since the articulation of the NBEDS. Key achievements include the development of a Medium Term Results Framework (MTRF) in 2006 and a Medium Term Expenditure Framework (MTEF) in 2007, participation in the Trends in International Mathematics and Science Study (TIMSS) in 2007, the use of a school mapping database and technical criteria as a basis for school establishment and personnel deployment decisions to reduce inefficiencies since 2003, competition in school construction which has resulted in reducing unit cost to a third since 2002, linking of the teacher-posts to the school rather than to the individual to enable sustainable provision of teachers, particularly females in rural areas in 2007, understanding the phenomenon of teacher absenteeism and tackling it since early 2006 and the abolition of school fees for girls in grades 1-6 and boys in grades 1-3 starting in September 2007. Nevertheless, the demand for schooling at the primary and secondary levels continues to be high, and the GoY’s EFA-FTI strategy is focused on the majority of the 1.8 million out-of-school children in the rural and poorest governorates. 8. Financing Gap . Education expenditures continue to be prioritized in the national budget, ranging over the last decade from 14% to 21%. However, while the MTEF developed by the Ministry of Education (MoE) requires US$720 million annually to achieve the NBEDS targets, approximately US$600 million is available for the basic education sector from the GoY. With the signing of the Partnership Declaration (PD) of January 2004, the Government of Yemen’s (GoY’s) strong ownership created effective harmonization and alignment with the Development Partners (DPs). The DPs support the GoY program with about US$50 million annually (mostly through smaller projects and a pre-SWAp jointly financed by IDA, the Netherlands, DFID and KfW). Despite these efforts, there remains a financing gap of about US$70 million per year. The Project Grant (US$20 million over 3 years) contributes to bridging the gap for basic education. 9. Given the significant needs of the sector and a large financing gap despite local and external financing having prioritized education, Yemen prepared a proposal for Catalytic Fund financing in 2002 (full proposal in project files and summary and presented in the sector policy letter, Annex 12.). This proposal was endorsed and Yemen was selected as part of the first group of ten countries to be endorsed for Catalytic Fund (CF) financing. In order to provide predictable financing, 3 grants of US$10 million each were endorsed. Having successfully implemented the first two grants (grant impact studies available in project files) and given the largely unmet financing gap, the third grant amount was doubled at the 2007 EFA FTI CF meetings in Cairo. This project document is for this third phase grant of US$20 million. B. Rationale for Bank involvement 10. As noted earlier, the challenge to achieve EFA is large and the internal financing (despite education sector receiving one of the largest proportions of public expenditures) and external financing (Yemen is reported as one of the lowest Overseas Development Assistance (ODA) /capita recipient countries) are quite limited to help meet that challenge. Therefore, Yemen faces a significant gap in resources to achieve EFA. Implementation and absorptive capacity in Yemen remain weak which further constrains increased financing for EFA to the country, particularly under the existing project modalities. Nevertheless, Yemen was successful in fully utilizing the first two CF grants, which were at the time considered to be difficult to absorb in a short time frame. Because Yemen has already worked effectively with the FTI/CF, and because the FTI/CF provides predictable financing for achieving EFA, Yemen is particularly well suited to employ the FTI resources. Page 13 13 11. IDA has historically supported the GoY in the articulation of a common framework through the development of a sector strategy, followed by an investment based on the strategy. This has also helped pave the way for other DPs in the country to adopt a common strategic approach. This approach was used for the proposed Project Grant application in 2002, which was based on a strategic analysis of the sector needs and financing gap that Yemen faces in reaching universal primary completion by 2015 (attached in project files). The proposed Project continues the tradition of IDA’s long term strategic support to Yemen’s education sector and is focused on increasing primary school access for out-of-school children in seven of the poorest and most remote Governorates. It will also help Yemen to achieve the second MDG. 12. The Bank was nominated to be the supervising entity for the first two EFA FTI grants on behalf of the DPs and this has worked quite effectively. The Phase III Grant will continue this arrangement. 13. IDA also brings to this project its international and country-specific experience, in particular, with respect to demand-driven interventions like the conditional cash transfer schemes, as an incentive to encourage enrollment of girls and the deployment of more qualified female teachers. IDA has signed the Donor PD which ensures a common strategic approach to education sector financing and support in Yemen. C. Higher level objectives to which the project contributes 14. This Project is consistent with IDA’s last 1 and most recently approved Country Assistance Strategy (CAS). 2 The existing CAS supports investments aimed at reducing poverty through social and economic development. The overall objective of the Bank Group’s program proposed in the CAS for FY10-13 is to facilitate Yemen’s further progress towards the MDGs and helping foster human and social development is the third strategic objective. The Project funding fits in the GoY’s third five-year Socio-Economic Development Plan for Poverty Reduction (2006-2010) and the corresponding Public Investment Program (2007-2010) which prioritizes the achievement of the MDGs. The GoY’s Children and Youth strategy also provides an entry point into working cross- sectorally to achieve the MDGs. II. PROJECT DESCRIPTION A. Financing instrument 15. The funding instrument is a specific sector investment Grant for an estimated amount of US$20.0 million. B. Development objective and key indicators 16. Approved by the Cabinet of Ministers in 2003, the National Basic Education Development Strategy (NBEDS) aims to increase enrollments in basic education, particularly for girls and in rural areas, to reach 95 percent of 6 to 14 year olds by 2015. As mentioned earlier in the PAD, based on the principles of the NBEDS, and in recognition of the financing gap to achieve universal primary completion by 2015, the GoY prepared a “credible” plan in 2002 to achieve Education for All (EFA) by 2015. This plan was approved, and Yemen was selected to be among the first group of ten countries to receive financing from the EFA Fast Track Initiative (FTI) Catalytic Fund. Due to 1 The CAS (report 36014-YEM) is dated May 17, 2006. 2 The most recent CAS covers the period FY10 –FY13. Page 14 14 absorptive capacity constraints and limited financing available in the Catalytic Fund, the three FTI CF grants awarded to Yemen since 2003 (totaling $40 million, including the project) only cover a small proportion of the annual financing gap of $70 million. 17. The Project Development Objective is to increase access of children, especially girls, to primary education in 7 underserved governorates out of 21 governorates. The targeted governorates are Al-Hodeidah, Hajjah, Dhamar, Al-Baida, Ryma, Al-Mahweet, and Al-Daleh. These governorates were selected because they show the lowest education participation rates in the country, have a relatively lower proportion of girls attending primary schools, and contain a significant proportion of the out-of-school children in Yemen. Moreover, there are limited, if any, interventions by other externally-funded projects in these governorates. These governorates include 4 of the earlier FTI-CF Grant I and II financed governorates. The Phase III project implementation duration will be two and a half years. The project will support some interventions (e.g., provision of contract female teachers) that would help improve retention in the primary education cycle, particularly for girls. However, the impact of these interventions cannot be measured within the life of the project. Therefore, the project indicators will focus on access enhancement objectives. The Phase III project will be implemented within the context of the on-going multi-donor financed Basic Education Development Project (BEDP) and Secondary Education Development and Girls Access Project (SEDGAP), which will all contribute to improving the provision of better quality education in the rural Governorates. The Project indicators will be reported by governorate: 1. Number of boys enrolled in G1-6 in 7 intervention governorates will increase by 50,000 compared to the baseline of 616,874 2. Number of girls enrolled in G1-6 in 7 intervention governorates will increase by 69,000 compared to the baseline of 437,450 18. The baseline data for these indicators have been taken from the latest Annual Education Survey from 2007-08. The GoY emphasized that the indicators for Project need to be realistic and measurable in the context of the volume of funding and time frame of implementation. The implementation period of 2.5 years is proposed to allow enough time for completion and measurement of the preliminary outcomes of the project. One of the principal lessons learned from the Phase I and II Grants is that it is difficult to measure a significant impact on enrolment and /or quality in such a limited time (i.e., 12-18 months) particularly when a significant proportion of the grant is financing construction activities. Phase III is focusing on construction in order to help bridge a part of the primary access gap in remote areas. In the context of the limited scope of the Phase III Grant (compared to the GoY’s overall basic education sector support), the Phase III Grant results will have to be measured using output/results indicators that are limited in scope and focused on the intervention Governorates. For the reasons mentioned above, while the Indicative Framework will be monitored by the MoE at the national level, it will not be reported as an outcome of this project. C. Project components 19. The Grant for the Project has been designed in consultation with the Development Partner representatives in Yemen. The project will have three components as follows: 20. Component 1 (US$11.20 million): Increasing access to primary education in targeted districts of project governorates . About 17,430 new and improved student places (mainly for girls) will be created in the selected 7 governorates, 11,700 additional spaces through about 390 new classrooms and 5,730 improved additional student places will be provided through rehabilitation of Page 15 15 about 191 classrooms. The component will finance building of new primary classrooms and rehabilitation of existing classrooms and school infrastructure (civil works). 21. Component 2 (US$6.60 million): Improving enrolment and retention of primary school students in project governorates. About 500 female teachers will be trained and contracted to teach in remote schools, capacity building through the support of inspection field visits will be undertaken and about 900,000 school materials kits will be procured and distributed to grade 1-6 primary students in the selected 7 governorates. 22. Component 3 (US$1.25 million): Supporting Grant implementation, administration and monitoring. Capacity building for improved data collection and reporting of about one hundred (100) employees from forty (40) district education offices will be undertaken for using computer equipment through the provision of goods and training. Support will be provided to the existing PAU, which managed the earlier EFA FTI CF grants and is also managing the BEDP and the SEDGAP) and the existing Project management unit of the Third Public Works Project (Credit No. 3859) within the Ministry of Planning and International Cooperation for the effective fiduciary management, reporting and monitoring of the Project activities. Support will also be provided to the MOE for the preparation and identification of school sites by school mapping and the validation of such sites. Also, one study will be conducted to assess the impact of all the three phases of CF grants particularly phase III including environmental mitigation measures. D. Justification of project design 23. The design and preparation of the Project benefitted from the lessons learned from implementation of the Basic Education Expansion Project (BEEP), the BEDP and EFA-FTI Grant Phases I and II, and the preparation process of the SEDGAP. The project was prepared in collaboration with the DPs, in order to support the NBEDS. Key lessons incorporated in Grant design include: a. Ensure harmonized dialogue and monitoring of project outcomes by bringing together the education DPs and building on the BEDP. Key DPs are supporting the project and implementation arrangements. b. Focus limited and clearly designed interventions in areas targeted on the basis of needs. The successful implementation of the EFA-FTI Grant Phases I and II Catalytic Fund was built on the experiences of implementing the IDA-financed BEEP. Considering the weak implementation, fiduciary and monitoring and evaluation capacity of the Government, the BEEP had a simple and targeted design. It focused on the most under-served districts among four target governorates. It contributed to increasing the enrollment, especially among girls, and surpassed achievement on all DO indicators. Similarly, the EFA-FTI-CF Phases I and II focused on under-served districts in four Governorates (Hodaida, Hajja, Dhamar and Al Baidah). These were selected on the basis of educational and socio-economic indicators. The GoY successfully implemented the two EFA CF Phases within the twelve to eighteen month implementation periods. c. Emphasize implementation readiness during the preparation phase to avoid unnecessary delays. Prior to appraisal, the MoE (with the PWP and PAU) has: (i) undertake the initial steps for baseline inventories for civil works in the 7 targeted Governorates, and (ii) drafted the two Memoranda of Understanding for :(a) the implementation of project activities by the PWP and (b) reaching a multi-Ministry agreement on training, certification and recruitment of about 500 female teachers in the 7 Governorates. d. Use, to the extent possible, existing implementation arrangements. Lessons learned from EFA- FTI Grant Phase I and II and the BEEP show that the MoE can mobilize existing local Page 16 16 management structures in the Governorates to ensure timely implementation. This will minimize the implementation costs for the GoY. e. Adopt simple and measurable outcome and output indicators. Phases I and II suffered from the lack of an adequate monitoring mechanism and the complexity of the monitoring framework. Yemen is still at an early stage of the development of a monitoring and evaluation system and its data collection tools (having done the first ever school survey in 1998). Due to the fact that the MoE used three different methods of annual data collection during the past 3 years, data consistency was lost for these three years, and the data collected are not credible. The absence of credible population data also confuses the picture where enrollment rates (as opposed to actual enrollment) were used for the outcome indicators under Phases I and II. To mitigate these potential issues for the Phase III Grant, it is suggested to measure increased percentage of “actual” enrollment growth and include a few output-level indicators for the outcome level. The government continues to monitor the EFA-FTI Indicative Framework which measures national level indicators. However, this framework will not be adopted as an official PDO for the Phase III Grant. III. IMPLEMENTATION A. Partnership arrangements 24. Donor harmonization. The DPs active in the education sector in Yemen have signed a Partnership Declaration (PD) (in project files) aiming at greater harmonization and alignment of sector support on the basis of NBEDS. 3 Since the approval of the CF Grants in 2002, four Joint Annual Reviews have been conducted annually since 2005 to review progress made in the sector. While IDA is nominated to lead the appraisal and supervision of the EFA-FTI Phase III Grant, the Yemen Education DPs have been actively involved in supporting the MoE’s preparation of the Grant and will participate in the supervision work. B. Institutional and implementation arrangements 25. The Grant Phase III project will operate under the overall guidance and oversight of the MoE. The MoE will be responsible for implementing the project through its offices in the center, governorate and district. The PAU of the MoE will be delegated responsibility for the fiduciary management of the project (excluding civil works) and the Project Management Unit (PMU) of the Public Works Project (PWP) of the Ministry of Planning and International Cooperation (MoPIC) will implement the civil works under the project. 26. The Phase I and II Grant and BEEP implementation arrangements have worked effectively to date and will therefore continue to be used with one exception (i.e., for civil works). The Government of Yemen decided in December 2007 that all civil works for externally financed operations will be implemented by the PMU of the PWP. Therefore, civil works under the Phase III Grant will be implemented through the PWP. The PWP is an implementing agency under the MoPIC and has 3 Twelve Development Partners (DPs), including the Governments of Yemen (represented by MoE), Germany, Kingdom of the Netherlands, United Kingdom, France, the Social Fund for Development, the Public Works Project, UNICEF, IDA, World Food Programme, and the International Labour Organization (ILO) signed the PD in 2004. In 2007, all of these partners (excluding France and the ILO), signed the update to this Declaration and the United States Agency for International Development (USAID) joined as an additional partner. The current lead-DP is USAID. Page 17 17 extensive experience in implementing externally-financed projects (including World Bank financed projects since 1996) in Yemen (more details in Annexes). 27. Implementation and monitoring in each of the seven targeted Governorates will be carried out by Governorate Education Offices (GEOs) and District Education Offices (DEOs) where the project is active. GEOs and DEOs (with support from the PAU and PWP) will: (i) ensure that project implementation is carried out in the targeted governorates and districts; (ii) review and approve governorate-specific implementation plans; and (iii) monitor progress (through regular progress reports) in coordination with the PAU and PWP. 28. The PAU will provide guidance, support and capacity building where required to the MoE Directorates, and project related staff in the governorates and its districts. The PAU will be responsible for: (i) communicating with IDA and DPs on all implementation matters; (ii) implementation and monitoring of outcome and output indicators; (iii) supporting the 7 targeted Governorates to develop and carry out their implementation plans; (iv) preparing and submitting bi- annual progress reports to the MoE and IDA, including the baseline and values of specific implementation indicators by component and activity; (v) ensuring compliance with the signed MoUs; (v) resolving implementation issues; and (vii) facilitating implementation through Financial Management (FM), procurement of goods and services and Technical Assistance (TA) in accordance with IDA regulations and procedures. The current staffing of the PAU has been strengthened through the addition of a Basic Education coordinator (who will supervise both the BEDP and the FTI CF Grant III), a Monitoring and Evaluation Officer, and an assistant (updated PAU organigram is presented in Annex 6). The Basic Education Coordinator at the PAU will report to the PAU Director and through him to the MoE. The PAU will share with IDA and other DPs the implementation progress reports it receives from the 7 targeted Governorates (GEOs and DEOs) and the PWP. 29. The PMU of the PWP will be responsible for implementation of Component 1 in close coordination with the PAU and the MoE. The PWP will submit its implementation and monitoring reports to the PAU as agreed under the MoU between the parties. This arrangement is currently being implemented in the SEDGAP project, which is also being administered by the PAU. A MoU spelling out the rules of engagement and responsibilities of the three parties, i.e., the MoE, PAU and PWP for Grant III implementation has been drafted and is satisfactory to IDA. The MoU is expected to be signed and submitted to IDA by October 10, 2009. 30. The female teacher contracting scheme is new to the FTI financing, but is already under implementation in the BEDP, which is also being administered by the PAU. The operations manual for the female teacher scheme that is being used successfully under the BEDP and will be used under the FTI Phase III Grant (see project files). Because the timing of the EFA FTI Phase III Grant is less than that required for certification training that is being followed under the BEDP, (i.e., one month pre-contract training followed by 9 months of training offered in modules for 3 months each time over 3 years), a special schedule has been prepared to ensure that the female teachers who are contracted under the project will receive the complete training that will enable certification and recruitment in the civil service. An MoU detailing the roles and responsibilities of the MoE in training and certifying the teachers, the MoCSI in recruiting the teachers into the civil service and the MoF in providing financing for the recruitment of these teachers has been drafted and is to be signed by December 31, 2009 between the 3 ministries. While this MoU is also the same as the one employed in the BEDP, it will contain, additionally, an annex detailing the schedule of training to enable certification. Page 18 18 C. Monitoring and evaluation of outcomes/results 31. The Technical Office of the MoE will continue to monitor the FTI Indicative Framework as part of MoE Monitoring Plan. Data on indicators will be reported by the PAU and collected through MoE administrative data and governorate and district level data as reported by implementation teams, particularly for the output indicators. 32. Lessons from the Phase I and II Grants indicate that improvements in the quality of learning and teaching as well as growth in enrollment rates are difficult to measure over the limited implementation period of the CF grants. 33. Because it is very likely that Yemen will still need substantial support to reach EFA, the Credible Plan and financing gap will need to be updated. Also, it will be critical to assess the impact of the Phase III Grant as has been done for the Phase I and II Grants (grant Implementation Completion Memoranda and Detailed Assessment reports are available in project files and have been instrumental in designing this phase). These two studies will be undertaken during the last six months of the grant implementation period. D. Sustainability 34. Project preparation was done by the MoE and the PAU, using their extensive experience in the Phase I and II Grants and other externally financed projects, including BEEP, BEDP, and SEDGAP. The MoE is fully committed to the Project goals and is working closely with the seven governorates, their districts and at the school level, as was the case in the implementation of the earlier grants. The foundational works for school site selection have, also like for the other projects mentioned above, started with engineering surveys including the communities in which schools are to be built. 35. The Project will not have any substantial recurrent cost implications on the MoE budget as the Grant is financing already costed activities in the MoE’s MTEF. After the closing of the Project Grant, approximately US$760,000 will be required annually for maintenance of schools, furniture and equipments, and to continue financing female teachers, which is equivalent to 0.1% of the government’s lower-basic education expenditure. However, it is worth noting that the success of the project will likely increase the number of students and hence require a greater number of teachers and classrooms in the long run. E. Critical Risks 36. The overall risk for this project has been assessed as Moderate. Critical risks and mitigation measures include: Risk Risk Mitigation Measures Risk Rating with Mitigation A lack of effective monitoring and evaluation mechanisms is a risk for not understanding the full impact of the Grant. The MoE has started developing Education Management Information System (EMIS); MoE introduced a consultancy to strengthen education data collection, reporting and verification, and annual data quality control surveys; An independent assessment study is also planned for Moderate Page 19 19 FTI-CF Phase III to determine its impact. Local interference in project implementation Pre-identification of intervention sites followed by beneficiary surveys to confirm site selection and consultation with GEO and DEO staff prior to effectiveness. Resettlement Policy Framework (RPF) has been prepared and cleared by IDA Moderate Insufficient technical and institutional sustainability PAU will provide support for capacity building at the level of the targeted Governorates and their districts. Moderate Implementation arrangements not clearly understood by GEOs, DEOs and project schools responsible for implementing certain project activities Project will have additional support from the ongoing BEDP and SEDGAP for training in procurement, financial management and monitoring of project- related tasks; MoE and PAU staff are already working with targeted GEOs and their DEOs; Development of an MoU between the PWP and the MoE detailing roles and responsibilities throughout the process of construction; Strengthened monitoring of progress by country-office based task team. Moderate Sites are not selected according to the MoE criteria and insufficient compliance with sanitary standards and criteria Criteria have already been tested and successfully applied in BEEP, BEDP, and FTI Phases I and II with completion of school mapping; Communities will be involved in site selection and will be familiarized with the process before implementation; Project reports to detail compliance with EMP and RPF Impact study of project to detail compliance with EMP and RPF Moderate Delay in implementation due to difficult physical and geographic conditions in the 7 targeted Governorates PAU and GEOs working closely with the communities and schools; Site selection for school construction has been initiated by the PAU. Regular monitoring reports to be submitted by the PWP to the MoE and IDA. Moderate During the past few years, there has been a significant increase in the cost of construction due to inflation of cement, fuel, and other materials. There is a risk of not achieving the target number of classroom to be constructed due to cost escalation. A study on civil works cost has been conducted by KfW to understand the factors causing the high inflation of construction costs. PAU has experience with operating during periods of high inflation and has improved planning for the uncertainty associated with civil works. Substantial Failure to hire an adequate number of female teachers and deploy them to schools that are in need will This activity is already financed by the BEDP, and the MoE has some experience in this. As it has been done for BEDP, the MoE will sign a MoU with the Ministries Moderate Page 20 20 negatively affect the retention of students. of Finance and Civil Service and Insurance in order to assure that the contracted and trained female teachers will be recruited as civil servants af ter the Grant’s closure. Financial management: Insufficient financial management capacity in the PAU. This is especially risky since the PAU staff will be responsible for managing several projects (BEDP, SEDGAP and the FTI III). The capacity constraint will have an impact on the quality of accounting recording and reporting and on planning Insufficient financial management capacity is also a concern for Public Works PMU which is proposed to be the implementing agency for the majority of the funds. Public Works PMU is already responsible for managing several projects (e.g. PWP III, HRSP civil works component, SEDGAP civil works component). The capacity constraint will have an impact on the quality of accounting recording and reporting and on planning. PAU staff have experience in financial management of IDA-financed projects and have proven their ability to manage more than one project concurrently. Additionally, the PAU has strengthened its capacity by hiring additional accountants to the team and has assigned tasks to each staff to organize and coordinate the work properly. The new staff will need to be training on World Bank guidelines as well as using of the project’s accounting system. Moderate Procurement: Despite a significant improvement during the past year, the procurement capacity of the PAU and PWP still requires an improvement in the quality and timeliness of procurement. At the country-level, a new national procurement system has been established with a national procurement law. An international Procurement Advisor has been brought to the PAU to provide hands-on training to PAU and PWP staff. Moderate F. Effectiveness conditions and other specific undertakings 37. There will be no conditions of effectiveness. 38. Covenants will include: (a) By October 10, 2009, signature of MoU between the Project Implementation Unit (PIU) of the PWP of the Ministry of Planning and International Cooperation (MoPIC) and the PAU clarifying the rules of engagement for implementing civil works, and (b) By December 31, 2009, MOE shall enter into contractual arrangements satisfactory to the World Bank with the Recipient’s Ministry of Civil Service and Insurance and the Ministry of Finance to employ the certified Contractual Teachers upon the completion of their contractual term, training and certification under the Project IV. APPRAISAL SUMMARY A. Economic and financial analyses Page 21 21 39. The benefits of the project are projected to far exceed the costs, with an Economic Internal Rate of Return (EIRR) of 15.8%, indicating economic viability of this project. The intervention will result in an increase in the number of Grade 6 completers in intervention governorates by (i) increasing number of student places through classroom construction, and (ii) improved retention rates through provision of female teachers. These two outcomes of the intervention will add 836,000 more graduates during 20 years after the project intervention compared to the case without the FTI intervention. This additional number of Grade 6 completers will increase the economic productivity by USD 80 million at present value over 20 years from project effectiveness. 40. Although it is not likely, three cases where the NPV will fall to zero are simulated, which includes situations where: (i) the Student Teacher Ratio (STR) for Grades 1-6 in the FTI governorates improves from 23.3 to only 23.4 instead of 25.2 in the base scenario; (ii) the wage difference between Grade 6 completers and illiterate people is less than YR4,400 per month, and (iii) the annual improvement in the retention rate is only 0.24 percentage points as opposed to 0.50 percentage points. While the second case is out of the control of the MoE, the first and third scenarios can be avoided. Improving these parameters more than the base scenario will likely result in higher economic benefits than those estimated, provided all the other assumptions are the same. 41. The updated FTI simulation model identifies a total resource gap of US$265 million between 2009 and the first half of 2011 in order to achieve the MDG target by 2015. Over the 30 months EFA-FTI Grant Phase III implementation period, the external resources (US$20 million) will account for 1.3 percent of the projected lower basic (primary) education resources (i.e. US$1,488 million). The contribution of the project will therefore finance 10% of the resource gap during the same period (i.e., US$20 million of resource gap of US$204 million). This implies that the resource gap to achieve the MDGs will remain large despite the project and that government commitment to implement its strategy from its own resources as well as through seeking additional external financing is still necessary. B. Technical 42. The 7 target Governorates for intervention represent low performing Governorates where the need for intervention to achieve the basic EFA goal is the greatest. As presented in Table 1 below, in comparison to the non-project governorates and to the national average, these governorates register, for both male and female students, where relevant: (i) lower access rate to school, (ii) lower completion rates of Grade 6, and (iii) lower Gross Enrollment Rates. In addition, 47% of the out-of- school children are found in the 7 targeted governorates. Table 1: Key Indicators for Project and Non-Project Governorates, 2006 Indicators for 2006 7 targeted governorates 14 Non- targeted Governorates National G1 Access Rate (male) 120% 129% 126% G1 Access Rate (female) 99% 121% 113% G1 Access Rate (total) 110% 125% 119% G6 Completion Rate (male) 64% 79% 74% G6 Completion Rate (female) 38% 58% 51% G6 Completion Rate (total) 52% 69% 63% GER Grade 1-6 (male) 87% 99% 95% GER Grade 1-6 (female) 65% 85% 78% GER Grade 1-6 (total) 76% 93% 87% Out-of-School Children Age 6-11 (male)* 263,969 295,105 559,073 Page 22 22 Out-of-School Children Age 6-11 (female)* 354,129 409,239 763,368 Out-of-School Children Age 6-11 (total)* 618,098 704,344 1,322,442 Source: World Bank staff calculations based on MoE's Annual Educational Survey for school year 2006/07 and WB estimate on population projection; *Data from Household Budget Survey 2005 43. An analysis from the Household Budget Survey in 2005 indicated that supply-side factors are still important reasons for non-enrollment, particularly in the governorates targeted by this project (see Table 2 below). Among the age 6-11 out-of-school children, while 7% of boys and 12% girls reported lack of school as the main reason for non-enrollment in non-project targeted Governorates, 15% of boys and 19% of girls reported so in the targeted governorates. In the targeted governorates, a lack of teachers (particularly female teachers) is also a main obstacle for enrollment. 19% of girls are not attending schools in the targeted governorates because of the absence of female teachers. From this analysis, it is expected that the impact of interventions will be maximized by providing schools and teachers in the targeted governorates. Table 2: Reasons for non-enrollment for age 6-11 children by gender and governorates Non-project Governorates Project Governorates Male Female Male Female Lack of schools 7% 12% 15% 19% Lack of teachers 2% 17% 6% 21% of which female teachers: 0% 17% 1% 19% Source: WB staff calculation using HBS 2005 C. Fiduciary 44. Financial Management. The Project will be implemented by two separate entities: (1) MoE will implement Components 2 and 3 of the project with the fiduciary responsibility entrusted to the PAU, and (2) PMU of the PWP of the MoPIC will implement Component 1 covering Civil Works. Both implementing entities have significant experience in implementing IDA-financed projects as currently they are the implementing the ongoing projects, (BEDP, SEDGAP and PWP III), and have completed implementation of several projects (BEEP, FTI I & II, PWP I & II). Also, both entities have been assessed recently as they are the implementers of SEDGAP which was declared effective by IDA in January 2009. 45. The FM assessment performed during the appraisal of SEDGAP has been updated to take into consideration the EFA-FTI FM risk and how to manage such risk. Based on this update, the FM risk associated with the financing of the Project is related to additional resources needed to manage the project and the flow of information and communication between the two implementing entities. To mitigate these risks, the following measures have been agreed upon and documented in a memorandum of understanding (MOU) between the PAU of MoE, and the PMU of the PWP of the MoPIC which has been reviewed and cleared by IDA. This MoU describes: (a) the responsibility of implementation of project activities by the PWP including the auditing arrangements; (b) the PWP's arrangements to facilitate the flow of funds and disbursement arrangements under the project; (c) the controls that PWP needs to introduce to enable it to account for the funds received on a periodic basis; and (d) PWP's reporting requirements and the flow of information between the two entities. Additionally, two months after effectiveness, the PAU will: (i) appoint a qualified internal auditor to assist the current senior internal auditor with project transactions, and (ii) recruit an independent Page 23 23 external auditor acceptable to IDA, to audit on an annual basis the Project Financial Statements (PFS), and to review the quarterly Interim Financial Reports (IFRs). 46. Flow of Funds and Disbursement Arrangements. Grant funds will be deposited in two advances into a US Dollar Designated Account (DA) to be opened by the PAU at the Central Bank of Yemen (CBY). The Grant financing to PWP will be channeled through the PAU of the MoE. The PWP will open a USD Sub-account at CBY. Details of flow of funds to PWP have been specified in the MOU between the PAU and the PWP described in the FM Annex of this PAD. 47. Reporting Requirements. The PAU will be responsible for obtaining PWP's Interim Financial Reports (IFRs) and Project Financial Statements (PFS) and submitting compiled reports to IDA. The PAU will also be responsible for appointing the Project's external auditor for both entities. The PAU and the PWP will each issue quarterly IFRs reflecting the activities they are implementing, due to IDA not later than 45 days after the end of each quarter, and annually audited PFS, due to IDA not later than six months after the end of the project fiscal year. 48. Auditing Requirements. The IFRs will be reviewed and the PFS will be audited by an independent external auditor, acceptable to IDA and based on Terms of Reference (TOR) cleared by IDA. The FM arrangements under this Project are further detailed in Annex 7 of this PAD. 49. Procurement : The procurement capacity of the PAU and the PWP was assessed at the time of the appraisal of SEDGAP and the MTR mission for the BEDP. The two project management units were considered capable of handling required procurements for the different education sector projects they were managing at the time, which also included the now closed FTI II for the PAU. However, with respect to ensuring that the appropriate level of procurement capacity is in place for the incremental effort required by the significantly enhanced Project implementation (factor of 2X), inter alia IDA has made the following recommendations: (a) hiring of additional Procurement staff in the PAU; and (b) giving serious consideration to extending the contract of the internationally recruited Procurement Advisor in the PAU for another year. In this connection, it is worth noting that the PAU has already hired the recommended procurement staff (5 staff). In addition, in view of incremental demands on the PAU as a result of the EFA-FTI Phase III implementation start-up in FY10, the Procurement Advisor’s contract has also been extended for another year starting from September 2008 to continue providing essential support to the PAU, as well as to train the newly hired staff. Similarly, as part of the scaling-up of the procurement function staffing to handle procurement under the SEDGAP, the PWP has recently hired an additional Procurement Specialist, which would ensure that the PWP has the procurement capacity to handle the civil works procurement demands generated from implementing the Project. D. Social 50. The project context is highly favorable as it is being designed within the context of Yemen’s EFA strategy and in partnership with the DPs. The Grant Phase III highlights the importance of reducing gender disparities in access to basic education and contributing to the expansion of access in remote and rural Governorates. Project preparation was participatory and was based on feedback and cooperation from the targeted communities and districts in the 7 Governorates. 51. The project addresses both the supply and demand side factors affecting girls’ basic education in Yemen. A combination of cultural, economic, social, and infrastructure factors come together in the Page 24 24 decision of families to pull out, or for girls, to drop out of the education system. These include early marriage, poverty and the lack of girl-friendly facilities, transportation to schools and female teachers. The project will contribute to addressing these constraints through: (i) financing expansion of access (schools rehabilitation and new classrooms); (ii) training, certification and recruitment of additional female basic education teachers; and (iii) providing capacity building support in the targeted governorate and district offices. Site selection and improving the school environment will be supported through a community participatory approach. 52. Community participation is one of the keys to th e project’s success. Taking into account that community participation remains a relatively new concept in the country and that many mothers in particular are illiterate, the project will ensure that community participation is a priority during implementation. Additional support from the BEDP and SEDGAP will also contribute to these goals and enhance accountability toward the communities and schools. 53. Land Acquisition/Resettlement. Land for new construction is community owned and will be voluntarily donated by the beneficiary communities as part of their contribution. However in any specific problem cases relating to land acquisition, it could be that the World Bank’s operational policy on involuntary resettlement OP 4.12 would come into effect and the Resettlement Policy Framework (RPF) that has been prepared, will be applied. Procedure of land donation will be properly documented, signed by relevant individuals from the community and stamped by legitimate authority. This documentation will be filed with the PAU and PWP. The land acquisition process will be completed and documented before the start of any construction. E. Environment 54. Project Environmental Classification : The project is classified as Category B, according to the World Bank’s Operation Policy on environmental assessment (OP 4.01). The project includes new construction as well as extension and rehabilitation of existing schools. Activities are expected to be associated with only minor adverse environmental impacts. Potential negative environmental impacts are expected to be site-specific and temporary in nature and would be mitigated through the implementation of an EMP. 55. Public Consultation : Site selection for new school construction as well as school designs have been developed by MoE in consultation with community representatives, and have taken various environmental and social criteria into consideration. Site identification is conducted by a school mapping committee consisting of the following individuals: community participation officer, engineer, district education officer and school mapping specialist. Specific site characteristics such as geographic and topographic features, vulnerability to natural hazards such as earthquakes and floods, historical areas, and flood or on rain water channel (wadi) areas, mountainous or flat areas, noise, and other environmental issues would be identified in the school-mapping database. 56. Environmental Management Plan (EMP) : The EMP that was prepared by MoE and satisfactorily implemented during FTI Phases I & II has been updated and improved. It has also taken into consideration the EMP that was prepared for the PWP. This EMP will be implemented during the Grant Phase III to ensure effective incorporation of environmental management measures for component 1 on civil works. All potential environmental issues will be considered during planning, implementation and monitoring stages. Furthermore, in addition to the generic EMP, site-specific environmental measures will be included in the standard bidding documents and bills of quantities for contractors. Standard school design prototypes that have been used for other recent projects will be enhanced and used for new school construction. The school design prototypes will include measures Page 25 25 for ensuring availability of water supply for students, and school hygiene at all times. Such measures could include selection of site to the extent possible near water sources, and addition of rooftop rainwater harvesting measures. Similarly, adequate sanitation systems will be included in the design including upgrading of existing systems for schools that are to be rehabilitated. 57. Monitoring and Reporting : PWP staff and supervision engineers have already received capacity building (training) for EMP monitoring & follow-up through the PWP. For FTI III, contractors engaged by PWP will also be trained accordingly. The PAU will conduct regular site visits as part of its monitoring responsibilities. In terms of reporting, PAU, in its bi-annual progress report will include issues related to EMP implementation (including issues related to adequate water and sanitation facilities) with details on environmental issues encountered if any, and mitigation measures applied. The impact studies planned under component 3 will also include an assessment of the EMP implementation for phase III. 58. Disclosure of Safeguards Reports : The safeguard policies on Environmental Assessment (OP 4.01) and Involuntary Resettlement (OP 4.12) are triggered and accordingly, an Environmental Management Plan (EMP) and Resettlement Policy Framework (RPF) have been prepared by the MoE. Both documents have been translated into Arabic. Both English and Arabic versions have been disclosed on specific government websites and other relevant places in-country, including MoE offices in the seven project governorates. The EMP was disclosed in June 2009 and the RPF was disclosed in August 2009 at the World Bank Infoshop. F. Safeguard policies Safeguard Policies Triggered by the Project Yes No Environmental Assessment ( OP / BP 4.01) [X] [ ] Natural Habitats ( OP / BP 4.04) [ ] [X] Pest Management ( OP 4.09 ) [ ] [X] Physical Cultural Resources ( OP/BP 4.11 ) [ ] [X] Involuntary Resettlement ( OP / BP 4.12) [X] [ ] Indigenous Peoples ( OP / BP 4.10) [ ] [X] Forests ( OP / BP 4.36) [ ] [X] Safety of Dams ( OP / BP 4.37) [ ] [X] Projects in Disputed Areas ( OP / BP 7.60) * [ ] [X] Projects on International Waterways ( OP / BP 7.50) [ ] [X] G. Policy Exceptions and Readiness 59. No policy exceptions are sought. 60. The MoE and PAU are presently undertaking a set of activities for launching implementation of Component 1, including beneficiary surveys and analysis of the information to select the final sites for intervention. 61. The 2 MoUs are drafted and satisfactory to IDA. * By supporting the proposed program, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas. Page 26 26 Page 27 27 Annex 1: Country, Sector and Project Background 1. Socio economic background. Since unification in 1990, the Republic of Yemen has made significant development progress. During the period 1975-2004: 4 (i) life expectancy increased from about 40 to 63 years; (ii) adult literacy jumped from 10 to 49%; (iii) female illiteracy dropped from 95 to 69%; (iv) primary school enrolment rates increased from 57 to 91%; and (v) fertility rates declined from 7.9 to 6.3 births per woman. Nevertheless, the country ranked 153 out of 177 countries in the 2007 Human Development Index and 121 out of 140 countries in the Gender Development Index (2006). The pace of improvements has slowed down recently and Yemen is unlikely to meet the MDGs. 2. Poverty reduction remains a challenge for Yemen with 35% of the population of 19.2 million (2004) living in poverty, with a higher concentration in rural areas where 73% of Yemenis live. Ten percent of the population lives on less than US$1 a day; 46% of children under the age of five are under weight; under-five child mortality stands at a very high rate of 94 per 1,000 live births; maternal mortality rates stand at 351 per 100,000 live births and 64% of the population does not have sustainable access to safe drinking water. 5 3. GNI per capita is about US$870 (2007), one-fourth of the average of US$2,794 for the Middle East and North African Region. Real (GDP) growth (4.4% in 2008) has been lower than expected, with declining oil production 6 being offset by favorable developments in world oil prices. Owing in part to a relatively high rate of population growth of about 3.0% annually (2004), there has been only marginal improvement in per capita income. It is likely that the future decline in oil production will in turn negatively affect non-oil GDP growth and therefore adversely affect poverty reduction and employment targets. 4. Education system . Introduced in 1994, the structure of Yemen’s unified education system comprises: 9 years of compulsory basic education (Grades 1-9, approximate age group 6-14 years); followed by 3 years of general secondary (Grades 10-12, approximate age group 15-17 years), with enrollment diversified into the science and literary tracks in Grades 11 and 12. Access to general secondary school is open to all pupils who pass the Grade 9 examination. Basic and secondary education are under the mandate of the MoE. Basic school completers may also join 2- or 3-year programs in vocational schools operating under the authority of the MoTEVT. 7 Access to university education, under the authority of the MoHESR, depends on performance in the national secondary examination. 5. Public schooling is subsidized at all levels with no tuition fees for basic or secondary education. 8 The private sector is small, accounting for an estimated 2% of students in basic and secondary education and 15% in universities in 2004/05. 4 1975 data obtained from Republic of Yemen Country Social Analysis. World Bank: Water, Environment, Social and Rural Development Department, Middle East and North African Region, Report No. 34008-YE. April 15, 2007. 2004 data obtained from the Annual Educational Survey 2004 conducted by the MoE and the 2004 Census conducted by the Central Statistical Organization, GoY. 5 Republic of Yemen Country Social Analysis. World Bank: Water, Environment, Social and Rural Development Department, Middle East and North African Region, Report No. 34008-YE. April 15, 2007. 6 A sharp loss exceeding 8% was reported in oil production between 2005 and 2006. 7 In 2003/04, 1.6% of secondary education enrollments were reported in TEVT institutions. 8 Although locally levied participation fees, uniform costs and indirect costs of school attendance can be prohibitive for poor families. Page 28 28 6. Public expenditures continue to prioritize education, ranging over the last decade from 5.2 to 6.8% of GDP and from 14 to 21% of total public expenditures. However, sub-sectoral allocations are increasingly being made in favor of post-secondary education, a trend that is inconsistent with the priority accorded to basic education in the PRSP. Between 1997 and 2005, expenditures on higher education and TEVT rose from 10 to 15% and from 1.2 to 1.7%, respectively, and declined on general education (basic and secondary combined) from 85 to 81%. 9 7. As a result of the significant and consistent investments in education in Yemen, the education system has expanded tremendously and GERs for basic, secondary and tertiary education, survival rates of the school-age cohort and the share of girls in total enrollments at all levels have improved despite the greater than 3% population growth rate. From 250,000 students in 1970, the basic education system now comprises 4.3 million students. Between 1996 and 2004, secondary enrollment increased from 324,000 to 595,000 and university enrollment increased from 104,000 to 201,000. 8. Education Policies and Strategies. In 2002, the Government of Yemen developed the NBEDS focusing on: (i) improvement of the quality of education; (ii) improvement of the management of the sector and the orientation towards decentralization; (iii) priority to basic education; and (iv) emphasizing the education of girls, which in turn will raise the overall enrollment rate (a summary of the strategy is available in project files). Over the last six years, the country has endorsed at least five strategies that aim to address educational development challenges, including the NBEDS (2002), the NGSES (2007), the Technical Education and Vocational Training Strategy (2004), the Higher Education Development Strategy (2006), and the Children and Youth Strategy (2007). In recognition of the absence of a national vision that looks at education and training in an integrated manner, and the existence of disconnects between the strategies and investments of the various sub-sectors, the GoY has launched an exercise to steer dialogue between the three education ministries in Yemen (MoE, MoTEVT and MoHESR) and to support the development of an integrated education vision for Yemen spanning all education sectors. 9. The MoE introduced a number of policy changes in 2006 to manage a results based approach. This included the following: a) One sector budget ceiling: the MoE has adopted the MoF budget ceiling as the basis for achievement of sector results over the medium term. b) A results-based budgeting and planning system: All funding in the budget ceiling is allocated to sector outcomes in the Basic Education Development Strategy (2003 to 2015) and medium NBEDS plan, the Medium Term Results Framework (2006 to 2010). c) The MoE Annual Work Plan (AWP): The AWP provides the annual implementation plan and budget based on the MoF budget ceiling. It provides one consistent foundation for implementation of all the outcomes defined for access, quality and institutional capacity. The AWP coordinates all implementation to achieve outcomes and the basis for alignment all stakeholders to sector results and outcomes (only one official implementation plan). 10. In 2007 the MTEF was introduced to facilitate more strategic management of the resources available for education over the medium term. This included a number of steps proposed by MoE in 2007: 9 Approximately 59% of the total education budget is allocated to basic education and 22% to secondary. This estimation assumes differential teacher costs at the secondary level. In reality, it is difficult to separate expenditures between basic and secondary education because: (i) the MoE budget is provided for general education and not segregated for the two levels, and (ii) many schools offer basic and secondary grades together, using the same premises and in many case, the same teachers. Page 29 29 a) Institutionalizing the results based budgeting and planning process introduced by MoE in 2006 that supported the line item budget negotiated with MoF for 2007 and that are presented in the 2007 MoE AWP. b) Proposal to introduce a results based financial and expenditure management systems between MoF and MoE to enable MoF to effectively manage the budget ceiling in line with sector results. c) Introducing medium term expenditure planning using MoF projected resources and MoE strategies through the Medium Term Expenditure Framework document. d) Systems for sector accountability to MoF, Parliament and citizens on achievement of results. 11. Additional areas of policy development and education reform include: participation in TIMSS in 2007, the use of a school mapping database and technical criteria as a basis for school establishment and personnel deployment decisions to reduce inefficiencies since 2003, competition in school construction which has resulted in reducing unit cost to a third since 2002, linking of the teacher-posts to the school rather than to the individual to enable sustainable provision of teachers, particularly females in rural areas in 2007, understanding the phenomenon of teacher absenteeism and tackling it since early 2006 and the abolition of school fees for girls in grades 1-6 and boys in grades 1-3 starting in September 2007. Nevertheless, the demand for schooling at the primary and secondary levels continues to be high, and the GoY’s EFA-FTI strategy is focused on the majority of the 1.8 million out-of-school children in the rural and poorest governorates. 12. In an effort to translate the policy reforms into reality in the context of the availability of external resources (particularly through SEDGAP 10 ) the MoE has entered into agreements with each of the Governorates and Districts that would be targeted through the project through a protocol of participation. This protocol aims at the signatories (MoE, MoPIC, MoF, MoCSI and the Governorates) to declare their commitment to comply with the policies in the target districts: a) At least 15 percent of all new teaching posts (basic and secondary level) created and approved in each fiscal year in Project Districts will have been filled by female teachers; b) The Heads of the Education offices (or their representatives) of the targeted Governorates and Districts will be part of the selection process for all new (basic and secondary level) teacher recruitments; c) The targeted Governorates will initiate the process of planning teachers redeployment within the Governorate, and update the plan on an annual basis for MoE approval; d) The targeted project Districts will apply and continue to apply Cabinet Decree no. 167 for the Year 2006 allocating new teaching posts to the schools and not to the individual teachers. As such, all transfers requested by the targeted Districts will require the prior approval of the General Department of Human Resources of the targeted Governorates; e) Teacher absenteeism will be verified by the Districts’ supervisors as part of their regular visits by verifying teachers’ attendance sheets. The said supervisors will inform the Project Districts of teacher absenteeism (in writing) in order to enact the transfer of the teacher’s salary equivalent to the number of unjustified missing days to the Local Councils. 13. Poverty and education levels 11 . Over the last years the incidence of poverty among the illiterate has declined marginally to 44 percent. According to the 1998 HBS, the poverty rate for households headed by an illiterate person was 47.3 percent nationally - 48.8 percent in rural areas and 39.9 percent in urban areas. In the estimation of the 2005 HBS, these rates declined to 44 percent nationally - 47 percent in rural areas and 34 percent in urban areas, respectively. 10 The SEDGAP started implementation in early 2009. 11 Yemen Poverty Assessment, by the Government of Yemen and Development Partners; June 2007. Page 30 30 14. Location affects the poverty rate especially at higher levels of education. There is a large difference between the urban and rural poverty level for the same educational attainment of the household heads. The largest urban-rural difference in the poverty rates is observed among the university graduates, where rural poverty rate is 6 times higher than that of urban (5 percent vs. 29 percent). On the other hand, the gap among the illiterates is the smallest and is only 1.4 times. 15. The difference in poverty between households with educated household heads and non-educated household heads remains large. The poverty rate among households with households who have university and above education is only 13 percent as opposed to 44 percent among those households headed by illiterate people. Those who have no formal education consist of 68 percent of the poor in Yemen. 16. Despite the overall increase in the educational level of Yemeni children over the last decade, regional and gender gaps in enrolment rates still largely persist. Throughout the system, the enrolment rates of girls are lower than those of boys and enrolments in rural areas are lower than those in urban areas. Although most equitable, the basic education enrolment rate for urban non-poor boys (98.4%) is more than twice that for rural poor girls (47.9%). These gaps persist and become more intense at higher levels of education. The secondary education GER for urban non-poor boys is six times that of rural poor girls; the tertiary education GER is 41 times that of rural poor girls. 17. The gap in enrollment rates between the poorest and the richest deciles has grown between 1998 and 2005. The enrollment rate decreased for the poorest deciles and increased for the richest deciles. In 2005, among the children aged 6-14 in the poorest deciles, 64 percent of boys and 37 percent of girls are enrolled, which is 6 percentage and 4 percentage points respectively lower than HBS 1998. On the other hand, 86 percent of boys and 78 percent of girls in the richest income deciles are enrolled, 3 percentage points and 26 percentage points respectively higher than HBS 1998. 18. The supply-side issues are still major reasons for non-attendance in rural areas. Irrespective of poor or non-poor, the share of supply-side reasons (no schools, teachers, female teachers, or sanitary facilities) in rural areas is very large for both boys and girls. More than 35 percent of boys and about 50 percent of girls in rural areas do not attend school for supply-side reasons, while in urban areas, non-enrolment is due mainly to attitudinal factors (no interest in schooling by children or family) and other family-specific reasons. 19. On the other hand, the reasons for dropout are mainly demand-side , which can be classified into economic (working for family or outside) or attitudinal reasons (e.g. fami ly has no interest in child’s study; children having no interest, achieving sufficient level). Except for rural girls, whose obstacle for enrollment is still 30 percent supply-side, demand-side issues take up 75 to 90 percent of the reasons for dropping out. Economic reasons for dropping out are observed more among boys, but not necessarily among the poor. In comparison with the GER trend, public awareness rising will be the most effective approach to reach the remaining 10% of urban non-enrollees, and 30 to 50% of non- enrollees in rural areas. It should be noted that encouragement of timely enrollment at age 6 is also inevitable as many age 6 to 7 children remain non-enrolled because they are considered too young. 20. Basic education indicators and monitoring. The BEDP and FTI indicators have been updated in 2008. Values for indicators (except for the share of girls in enrollment) declined since last year, probably due to more realistic data coming from the Comprehensive Education Survey conducted in the 2005/06 school year. Between the school years 2004/05 and 2005/06, the GER for basic education declined from 77.7% to 73.5% and the PCR declined from 61% to 58% for all children (from 73% to 69% for boys and from 47% to 46% for girls.) The share of girls’ enrollment increased Page 31 31 from 40% to 41% nationally. The PCR for boys has been declining consistently over the last three years, which is a cause for concern. 21. Trend analysis of education indicator issues. There are currently two issues that emerge in trend analysis of education indicators. First, the 2005/06 Comprehensive School Survey (CSS), done every five years, used a method of data collection that is different from that used for the Annual Education Survey (AES). The CSS is considered to be a more accurate measure of performance than the AES because it relies on actual visits to all schools by trained surveyors. Second, for the 2006/07 school year, the MoE changed the methodology of annual data collection to a web-based system. This new system enables faster data compilation at a lower cost, but is not fully consistent with the AES in two ways: (i) less information is covered; and (ii) data accuracy due to uncertain capacity of the data entry personnel (school headmasters). As a result, it is likely that the results of 2006/07 cannot be compared with the results of 2005/06 or even earlier years. To ensure that the BEDP and the FTI results monitoring framework will properly track sector and project performance progress, the MoE: (i) has reviewed methodologies (AES questionnaires and school surveys) to ensure that all required indicators are covered; (ii) is conducting a small-sample survey of about 500 basic education schools for quality control of a new web-based monitoring instrument; and (iii) is assessing the reasons for the increasing dropouts among boys. Page 32 32 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies Latest Supervision (ISR) Ratings (Bank-financed Projects only) Sector Issue Project Impleme ntation Progress (IP) Develop ment Objectiv e (DO) ICR Outcome Rating (if (OED Rating) Bank-financed education projects: 1. Improve student learning outcomes, with special emphasis on science and mathematics education, by improving teacher training, increasing girls’ access to basic education with increased community participation; establishing labor market-oriented, two-year, secondary education programs covering business, commerce and industry. 2. Increase access to education services in rural areas and strengthening of capacities at the sub-national level. 3. Increase quality of higher education output and rationalize spending on higher education · Yemen – Secondary Teacher Training Project (P005832) (US$19.4m – 1991-98) · Yemen: Education Sector Investment Project (P005911) (SDR23.9m – 1994-04) · Yemen: Basic Education Expansion Project (P043255) (SDR 42.4m (IDA) – 2000- 07) · Yemen: Basic Education Development Project (P076185) (SDR 44.3m (IDA), 47.0m (The Netherlands, DfID-UK) 2004-10) · Yemen: Second Vocational Training Project (P086308)(SD NA MS MS MS MU MU S S NA MS S MS MU MU S S S MS NA NA NA U NA NA Page 33 33 4. Expansion and improvement of school buildings and facilities for basic education R 15m – 2007- 12) · Yemen: Child Development Project (P050483) (SDR 21.2m. 2000-05) · Yemen: Higher Education Project (P076183) (US$5m – 2002-08) · Yemen: Social Fund for Development III (P082498) (SDR41.7 m (IDA); US$300 million? (Foreign multilateral institutions) 2004 -08 Page 34 34 Other major development agencies 1. UNICEF 2. Germany: GTZ 3. USA 4. Social Fund for Development Area-based programs: Community school projects · Basic Education Improvement Project; · Literacy · Expand basic education and decentralized management · Raising the Secondary School enrollment of 15-17- year- olds; narrowing the gap of enrolled boys and girls in Secondary and Basic Education, and creation of model schools N/A N/A N/A N/A N/A N/A N/A N/A Page 35 35 Annex 3: Results Framework and Monitoring Results Framework PDO Project Outcome Indicators Use of Project Outcome Information The Project Development Objective is to increase access of children, especially girls, to primary education in 7 underserved governorates. I ndicators will be measured by MoE and PAU in the context of the NBEDS: a) Number of boys enrolled in G1-6 in 7 intervention governorates will increase by 50,000 compared to the baseline of 616,874 b) Number of girls enrolled in G1-6 in 7 intervention governorates will increase by 69,000 compared to the baseline of 437,450 T hese indicators will be used to monitor the overall progress towards project goals in equity, efficiency, and quality. Bi-annual progress reports with data by Governorate will be submitted by the PAU and the MoE. Due to a governorate-wide intervention of some of the FTI activities, and difficulty of obtaining data at the school level the outcome indicators are monitored at the governorate level. Because there is still Insifficuent capacity at the district and school level, especially in the remote and rural areas, for measuring performance indicators consistently, the collection and analysis of data will require significant technical assistance from the PAU and the MoE. Intermediate Outcome by Component Outcome indicators Use of Intermediate Outcome Monitoring Component 1: Increasing access to primary education in targeted districts of project governorates. a) About 17,430 new and improved student places (mainly for girls) will be created in the selected 7 governorates 12 ) b) Construction of about 240 new classrooms in 30 targeted districts in 7 governorates c) Extending about 44 basic schools with a total of about 150 classrooms d) Rehabilitation of about 191 classrooms in 50 basic schools in the 7 targeted governorates. Classroom numbers are approximate and subject to revision on the basis of market prices at the time of advertising by the PWP. Civil works outcomes will be linked to improved retention and access, particularly for girls’. Component 2: Improving enrolment and retention of a) Provision of 900,000 school kits for students in grades 1 - 6 to Inspection field visit reports will be prepared by the Governorates’ 12 (11,700 additional spaces through about 390 new classrooms and 5,730 improved additional student places will be provided through rehabilitation of about 191 classrooms¹). Page 36 36 primary school students in project governorates encourage increased enrolment in all districts in 7 target governorates. b) 2,000 schools in 7 project g overnorates receive at least 3 inspection visits per year ² c) Training and contracting 500 female teachers in the 7 targeted governorates to support girls' enrolment and retention in 7 governorates education departments in cooperation with the PAU. Results (outcomes and impact) will be reported in the PAU’s bi-annual progress reports, which will be submitted to the MoE and IDA. Component 3: Supporting Grant implementation, administration and monitoring. a) Provision of office equipments and training of 100 employees from 40 districts for using PC equipments b) Producing an in-depth impact study for FTI CF Grants, particularly Phase III. The PAU will provide monitoring and evaluation reports (progress reports) with detailed performance indicators and analysis on a bi-annual basis (including the integration of PWP implementation supervision into its bi- annual progress reports). The PAU will be responsible for EFA- FTI Grant Phase III project coordination with the MoE and PWP. ¹About 17,430 student places is calculated as (240 CL (new) + 150 CL (ext) +(191CL (reh) )* 30 students per CL=17,430 ² The project duration is 2.5 years, so in the last year, only 2 visits will be financed. See Table 4 of Annex 9 for the assumptions used to calculate these impacts. Arrangements for results monitoring 1. The Technical Office of the MoE will continue to monitor the FTI Indicative Framework as part of the MoE Monitoring Plan at the national level. The PDO indicators are monitored through government official data and intermediate outcome indicators are measured through the PAU. 2. The PAU will share all related implementation progress reports that it receives from the 7 targeted Governorates and its GEOs and DEOs. Relevant staff in the GEOs and DEOs will monitor progress at the Governorate level and submit progress reports to the PAU. The PAU will submit the GEO progress reports to IDA when requested and will ensure that a technical summary of these reports will be included in its bi-annual implementation progress reports to the MoE and IDA. 3. The MoE is aware that the collection, recording, management and use of data is a crucial input for EFA-FTI strategic development, priority setting, resource allocation and annual planning at the central, governorate, district, and school levels. The EFA-FTI Grant Phase III will contribute to further building capacity in the seven targeted governorates and their school districts to improve data collection and analysis, and subsequent improvement in the expansion of access and the school environment (notably to encourage gir ls’ enrolment). 4. The baseline data for project indicators is taken from the latest Annual Education Survey from 2007-08. The GoY emphasized that the indicators for the EFA-FTI Phase III project need to be realistic and measurable in the context of the volume of funding. The implementation period of 3 Page 37 37 years is proposed to allow enough time for completion and measurement of the preliminary outcomes of the project. One of the principal lessons learnt from the Phase I and II Grants is that it is difficult to measure a significant impact on enrolment and / or quality in such a limited time- span, particularly when a significant proportion of the grant is financing construction activities. Phase III is focusing on construction in order to help bridging the primary access gap in remote areas. In the context of the limited scope and implementation duration of the Phase III Grant (compared to the GoY’s overall basic education sector support) the Phase III Grant results will have to be measured using output / results indicator. Arrangements for Results Monitoring Target Values Data Collection and Reporting Project Outcome Indicators Baseline (2007/08) YR1 (2009/10) (12 months) YR2 (2010/11) (12 months) YR3 (2011/12) (6 months) Frequency Data Collection Instruments Responsibility for Data Collection 1 Number of boys enrolled in G1-6 in 7 intervention governorates increased by 50,000 compared to the baseline of 616,874. 616,874 635,000 646,000 667,000 Annual PAU Progress Report PAU 2 Number of girls enrolled in G1-6 in 7 intervention governorates increased by 69,000 compared to the baseline of 437,450 437,450 470,000 484,000 507,000 Annual PAU Progress Report PAU Page 38 38 ¹ In the third implementation year only 2 visits per School will be implemented (because the implementation period is only 6 month in that year.) Intermediate Output Indicators YR1 (2009/10) (12 month) YR2 (2010/11) (12 months) YR3 (2011/12) (6 months) Frequency Data Collection (i) Instruments (ii) Responsibility for D ata Collection Component 1 1.1 About 17,430 new and improved student places (mainly for girls) will be created in the selected 7 governorates (11,700 additional spaces through about 390 new classrooms and 5,730 improved additional student places through rehabilitation of about 191 classrooms). 1,500 10,800 5,130 Annual (i) PAU Progress Report (ii) PWP 1.2. Construction of about 240 new classrooms in 30 targeted districts in 7 governorates 0 160 80 2 times a year (i) PAU Report (ii) PWP 1.3. Extending about 44 basic schools with a total of about 150 classrooms 0 100 50 2 times a year (i) PAU Progress Report (ii) PWP 1.4. Rehabilitation of about 191classrooms in 50 basic schools in the 7 targeted governorates. 50 100 41 2 times a year (i) PAU Progress Report (ii) PWP Component 2 2.1 Provision of 1,000,000 school kits / packages for students in grades 1-6 to encourage increased enrolment in all districts in 7 target governorates. 400,000 500,000 0 2 times a year (i) PAU Progress Report (ii) MoE / Governorates collect and PAU report 2.2 2,000 schools in 7 project governorates receive at least 3 inspection visits per year ¹ 2,000 2,000 2,000 2 times (i) Progress Report (ii) MoE / Governorates and PAU & PAU 2.3 Training and contracting 500 female teachers in the 7 targeted governorates to support girls' enrolment and retention in 7 governorates Teachers identified and receive first year training 500 500 2 times (i) PAU Progress Report (ii) MoE / Governorates collect and PAU report & Component 3 3.1 Provision of office equipments and training of 100 employees from 40 districts for using PC equipments 0 Provision of equipments 2 times a year (i) PAU Progress Report (ii) MoE / Governorates collects and PAU report & 3.2 Producing EFA-FTI study to assess the impact of all the three phases of CF grants particularly phase III including environmental mitigation measures. TORs approved by MoE and IDA Consultant hired and starts study Final study reports approved by MoE and submitted to IDA and DPs Study result should be available by end of the project (i) PAU Progress Report (ii) PAU Page 39 39 Annex 4: Detailed Project Description 1. The PDO of the Project is to support the Government of Yemen achieve its Basic Education Development Strategy target of 95% enrollment in Grades 1-9 by 2015 by increasing access to and retention in education, especially for girls, in 7 underserved governorates. These governorates are: Al-Hodeidah, Hajjah, Dhamar, Al-Baida, Ryma, Al-Mahweet, and Al- Daleh. Implementation duration of the Project implementation project will be 2.5 years. This would include 2 years of implementation and an additional 6 months for the assessment study. 2. The scope of this project reflects the commitments made by the DPs and the GoY to intensify the effort to achieve the MDG of primary Education For All (EFA) by 2015. The GoY will contribute to the project though its PAU and the GEOs in the 7 targeted Governorates. This funding is Phase III of Yemen’s EFA-FTI Grant allocation and supplements ongoing education sector improvement activities under the BEDP and SEDGAP. The project will notably target improvement in the poorest rural and “difficult-to-reach Governorates.” 3. Component 1: Increasing access to primary education in targeted districts of project governorates (US$11.20 million, excluding contingencies). The objective of component 1 is to provide about 17,430 new and improved student places (mainly for girls) in the selected 7 governorates (11,700 additional spaces through about 390 new classrooms and 5,730 improved additional student places will be provided through rehabilitation of about 250 classrooms). Component 1 will provide construction of about 240 primary classrooms in 30 districts and rehabilitation of about 191 classrooms in 50 primary schools. In addition, about 44 primary schools will be extended with a total of about 150 classrooms 13 . This component will be implemented by the project management unit of the Third Public Works Project (Credit No. 3859) within the Ministry of Planning and International Cooperation (“PWP”), in close collaboration with the PAU according to existing and approved social and environmental guidelines. The PWP and PAU will coordinate planning, supervision and monitoring activities and a MoU will be signed by October 10, 2009 to articulate these engagements. 4. Unit costs for civil works in Yemen (construction costs per classroom) are high compared to international standards. Boundary walls, adequate water supply and sanitation, administration rooms are included in the unit cost calculations. The targeted governorates and districts are in remote areas, and often difficult to reach. PWP works with local subcontractors who bid competitively for contracts. To support monitoring of the unit costs, the PAU (with inputs from the PWP) will provide an annual progress report to IDA and the PAU during implementation and include detailed unit cost reviews. Furniture in all classrooms will be provided by the MoE as an in-kind contribution to the project. 5. Component 2: Improving enrolment and retention of primary school students in project governorates (US$6.60 million, excluding contingencies). The objective of component 2 is to contribute to enrolment and retention of primary students (especially girls) in the selected 7 Governorates. Component 2 will procure and distribute about 900,000 school kits to grade 1- 6 primary students in the selected 7 governorates. The school kits aim to attract children to 13 The numbers of classrooms are approximate and subject to revision on the basis of the market prices at the time of advertising. Page 40 40 enroll and also defer some of the direct costs to enrollment for parents. Districts (111 districts are targeted) and primary schools will be visited 3 times each year to provide support and capacity building. The objective of these visits is to enhance teaching and learning in the classrooms. These expenditures would ideally be recurrent government expenditures and are deemed essential to maintain and enhance the quality of teaching and learning. Due to resource limitations, these are being financed through the Grant and are not an exception to OP 6.0. About 500 female teachers will be contracted in rural districts / areas (based on operations manual already developed under the BEDP and available in project files) to support girls’ enrolment and retention. The female contract-teachers will receive annual training in order to be qualified at the end of the Phase III implementation period. An agreement between the MoE and the Civil Service and Finance Ministries will be signed by October 10, 2009 that would ensure recruitment of these contract-teachers into the civil service after completion of Phase III implementation. Retention rate to Grade 6 is 37% in schools with no female teachers and 70% in mixed schools where 50% of teachers are female. The objective therefore, of the female contract-teachers scheme is to increase enrollment and retention of girls. 6. Component 3: Supporting Grant implementation, administration and monitoring (US$1.25 million, excluding contingencies). The objective of component 3 is to provide support to the existing PAU (which is managing the BEDP and other projects) and the PWP and to provide effective monitoring and evaluation for Phase III implementation (at central level and in the targeted governorate and districts where phase 3 is being implemented). About 40 rural districts in the 7 target governorates will be provided with administrative equipment and staff training (implemented by MoE and PAU and linked to wider framework of ongoing BEDP activities). The PAU will be responsible for Phase III implementation (including responsibility to coordinate with and PWP) and provide effective monitoring and evaluation (through submitting implementation progress reports with detailed performance indicators and analysis on a bi-annual basis). The PAU will be responsible for cooperation with the PWP and integrate PWP implementation supervision into its bi-annual progress reports. Support will also be provided to the MOE for the preparation and identification of school sites by school mapping and the validation of such sites. Component 3 will also finance a study to assess the impact of the all three phases of CF grants particularly phase III including environmental mitigation measures. 7. A detailed plan of activities to be funded by the grant has been prepared by the MoE. The DPs reviewed and cleared this plan (see Table 4.1) Page 41 4 1 T a b l e 4 . 1 : Y e m e n : E d u c a t i o n F o r A l l - F a s t T r a c k I n i t i a t i v e P h a s e I I I D e t a i l e d A c t i v i t y P l a n P r o g r a m s P l a n n e d A c t i v i t i e s E s t i m a t e d c o s t ( U S $ ) R e s p o n s i b i l i t y f o r I m p l e m e n t a t i o n J u s t i f i c a t i o n a n d N o t e s C o m p o n e n t 1 : I n c r e a s i n g a c c e s s t o p r i m a r y e d u c a t i o n i n t a r g e t e d d i s t r i c t s o f p r o j e c t g o v e r n o r a t e s ( U S $ 1 1 . 2 0 m i l l i o n , e x c l u d i n g c o n t i n g e n c i e s ) . 1 . 1 C o n s t r u c t i o n o f n e w s c h o o l s B u i l d i n g a p p r o x i m a t e l y 2 4 0 n e w c l a s s r o o m s w i t h b o u n d a r y w a l l s , t o i l e t s , a d m i n i s t r a t i o n r o o m s , a n d s t a i r s c a s e t h a t l e a d t o t h e s e c o n d f l o o r , i n a b o u t 3 0 d i s t r i c t s o f l - H o d e i d a h , H a j j a h , D h a m a r , A l - B a i d a , a n d R y m a . 6 , 0 0 0 , 0 0 0 P W P U n i t c o s t o f $ 2 5 0 0 0 p e r c l a s s r o o m . T a r g e t 7 g o v e r n o r a t e s w h e r e m a j o r i t y o f o u t - o f - s c h o o l c h i l d r e n a r e ; B o u n d a r y w a l l s , a d e q u a t e w a t e r s u p p l y a n d s a n i t a t i o n , a d m i n i s t r a t i o n r o o m s a n d o u t f i t t i n g t h e c l a s s r o o m s w i t h f u r n i t u r e a r e i n c l u d e d i n t h e u n i t c o s t c a l c u l a t i o n s . T h e t a r g e t e d g o v e r n o r a t e s a n d d i s t r i c t s a r e i n r e m o t e a r e a s , a n d o f t e n d i f f i c u l t t o r e a c h . P W P w o r k s w i t h l o c a l s u b c o n t r a c t o r s w h o b i d c o m p e t i t i v e l y f o r c o n t r a c t s . 1 . 2 E x t e n s i o n o f e x i s t i n g s c h o o l s E x t e n s i o n o f 4 4 s c h o o l s w i t h t o t a l o f a b o u t 1 5 0 c l a s s r o o m s i n 7 t a r g e t g o v e r n o r a t e s 3 , 2 4 0 , 0 0 0 P W P U n i t c o s t o f $ 2 1 , 6 0 0 p e r c l a s s r o o m 1 . 3 R e h a b i l i t a t i o n o f e x i s t i n g s c h o o l s R e h a b i l i t a t i o n o f 1 9 1 c l a s s r o o m s i n 5 0 s c h o o l s i n 7 t a r g e t g o v e r n o r a t e s 1 , 3 7 5 , 2 0 0 P W P U n i t c o s t o f $ 7 , 2 0 0 p e r c l a s s r o o m 1 . 4 C o n s u l t a n c y C i v i l w o r k s s u p e r v i s i o n 5 8 3 , 0 0 0 P W P F i r m s a n d i n d i v i d u a l c o n s u l t a n c i e s f o r r e h a b i l i t a t i o n , e x t e n s i o n a n d c o n s t r u c t i o n o f c l a s s r o o m s C o m p o n e n t 2 : I m p r o v i n g e n r o l m e n t a n d r e t e n t i o n o f p r i m a r y s c h o o l s t u d e n t s i n p r o j e c t g o v e r n o r a t e s ( U S $ 6 . 6 0 m i l l i o n , e x c l u d i n g c o n t i n g e n c i e s ) . 2 . 1 P r o v i d i n g s c h o o l k i t s / p a c k a g e s t o S t u d e n t s P r o v i d i n g 9 0 0 , 0 0 0 s t u d e n t s i n G r a d e s 1 - 6 w i t h s c h o o l k i t s / p a c k a g e s t o e n c o u r a g e e n r o l l m e n t i n a l l d i s t r i c t s i n 7 t a r g e t g o v e r n o r a t e s . 2 , 7 0 0 , 0 0 0 M o E , P r o j e c t S e c t o r E s t i m a t e d a t U S $ 3 p e r s t u d e n t k i t / p a c k a g e 2 . 2 S u p p o r t i n g i n s p e c t i o n f i e l d v i s i t s 2 , 0 0 0 s c h o o l s i n 7 p r o j e c t g o v e r n o r a t e s r e c e i v e a t l e a s t 3 i n s p e c t i o n v i s i t s p e r y e a r 2 / 1 , 2 0 0 , 0 0 0 M o E , C u r r i c u l u m a n d I n s p e c t i o n S e c t o r G o v e r n o r a t e s E d u c a t i o n D e p a r t m e n t s w i l l p a r t i c i p a t e i n t h e i n s p e c t i o n f i e l d v i s i t s b y t h e M o E a n d P A U 2 . 3 F e m a l e T e a c h e r C o n t r a c t i n g C o n t r a c t i n g 5 0 0 f e m a l e t e a c h e r s i n t h e 7 t a r g e t e d g o v e r n o r a t e s t o s u p p o r t g i r l s ' e n r o l m e n t a n d r e t e n t i o n i n 7 g o v e r n o r a t e s 2 , 0 7 0 , 0 0 0 M o E , G e n e r a l E d u c a t i o n S e c t o r T h e c o n t r a c t i n g o f 5 0 0 f e m a l e t e a c h e r s w i l l c o n t r i b u t e t o f i l l t h e g a p f o r f e m a l e t e a c h e r s i n r u r a l a r e a s Page 42 4 2 T a b l e 4 . 1 : Y e m e n : E d u c a t i o n F o r A l l - F a s t T r a c k I n i t i a t i v e P h a s e I I I D e t a i l e d A c t i v i t y P l a n P r o g r a m s P l a n n e d A c t i v i t i e s E s t i m a t e d c o s t ( U S $ ) R e s p o n s i b i l i t y f o r I m p l e m e n t a t i o n J u s t i f i c a t i o n a n d N o t e s 2 . 4 F e m a l e T e a c h e r T r a i n i n g T r a i n i n g o f 5 0 0 f e m a l e t e a c h e r s f o r c e r t i f i c a t i o n 6 3 0 , 0 0 0 T r a i n i n g / G e n e r a l E d u c a t i o n S e c t o r s T h e M o U b e t w e e n t h e r e l e v a n t M i n i s t r i e s a n d t h e M o E w i l l g u a r a n t e e t r a i n i n g c e r t i f i c a t i o n a n d r e c r u i t m e n t o f t h e 5 0 0 f e m a l e t e a c h e r s C o m p o n e n t 3 : S u p p o r t i n g G r a n t i m p l e m e n t a t i o n , a d m i n i s t r a t i o n a n d m o n i t o r i n g ( U S $ 1 . 2 5 m i l l i o n , e x c l u d i n g c o n t i n g e n c i e s ) . 3 . 1 C a p a c i t y B u i l d i n g a t D i s t r i c t E d u c a t i o n O f f i c e s P r o v i s i o n o f o f f i c e e q u i p m e n t s a n d t r a i n i n g o f 1 0 0 e m p l o y e e s f r o m 4 0 d i s t r i c t s f o r u s i n g P C e q u i p m e n t s 3 3 0 , 0 0 0 M o E , T e c h n i c a l O f f i c e T h e P A U a n d M o E w i l l w o r k w i t h t h e G o v e r n o r a t e s ’ a n d D i s t r i c t E d u c a t i o n O f f i c e s t o c o l l e c t d a t a , i m p l e m e n t t h e s u r v e y s ( o n q u a l i t y a n d p a r t i c i p a t i o n o f g i r l s i n s c h o o l i n g ) . 3 . 2 S u p p o r t i n g P r o j e c t M a n a g e m e n t O p e r a t i o n c o s t , c o n s u l t a n c y s e r v i c e s a n d p r o v i s i o n o f t r a n s p o r t a t i o n f o r m o n i t o r i n g a n d s u p e r v i s i o n o f p r o j e c t a c t i v i t i e s ( P A U a n d P W P ) . 8 4 6 , 0 0 0 P A U T h e P A U w i l l s u b m i t b i - a n n u a l i m p l e m e n t a t i o n p r o g r e s s r e p o r t s o f t h e E F A - F T I G r a n t P h a s e I I I p r o j e c t t o I D A a n d t h e o t h e r D P s ( t h o s e a c t i v e i n t h e e d u c a t i o n s e c t o r ) . 3 . 3 P r e p a r a t i o n f o r C i v i l W o r k s I d e n t i f i c a t i o n o f s c h o o l s i t e s b y s c h o o l m a p p i n g a n d v a l i d a t i o n o f t h e s i t e s b y f i e l d v i s i t s 2 0 , 0 0 0 M o E , P r o j e c t S e c t o r S c h o o l s i t e s h a v e a l r e a d y b e e n i d e n t i f i e d a n d m o s t o f t h e w o r k i s u n d e r w a y . 3 . 4 . E F A - F T I G r a n t P h a s e I I I A s s e s s m e n t S t u d y A s s e s s m e n t o f t h e i m p a c t o f t h e a l l t h r e e p h a s e s o f C F g r a n t s p a r t i c u l a r l y P h a s e I I I i n c l u d i n g e n v i r o n m e n t a l m i t i g a t i o n m e a s u r e s . 5 0 , 0 0 0 P A U T h e P A U w i l l c o n t r a c t i n d e p e n d e n t c o n s u l t a n t b u r e a u s t o i m p l e m e n t t h e s t u d i e s . T h e T O R s w i l l b e d r a w n u p b y t h e P A U a n d M o E a n d a p p r o v e d b y I D A . 3 . 5 . E x t e r n a l a u d i t o r f o r t h e p r o j e c t 8 , 1 0 0 P A U T h e P A U w i l l c o n t r a c t e x t e r n a l a u d i t o r t o a u d i t t h e p r o j e c t C o n t i n g e n c y 9 4 5 , 9 0 0 P r o j e c t T o t a l c o s t 2 0 , 0 0 0 , 0 0 0 N O T E S : 1 / M o U b e t w e e n M o E a n d M o C S , M o F w i l l b e s i g n e d t o e n s u r e r e c r u i t m e n t o f c o n t r a c t e d f e m a l e t e a c h e r s i n t o c i v i l s e r v i c e u p o n p r o j e c t c o m p l e t i o n 2 / O t h e r d i s t r i c t s i n t h e t a r g e t g o v e r n o r a t e s h a v e b e e n a l r e a d y s u p p o r t e d b y F T I P h a s e s I a n d I I a n d B a s i c E d u c a t i o n D e v e l o p m e n t P r o j e c t . Page 43 43 Annex 5: Project Cost Project Cost By Component and/or Activity Local Foreign Total US$ million US$ million US$ million A. Component 1: Increasing access to primary education in targeted districts of project governorates 11.20 0 11.20 B. Component 2: Improving enrolment and retention of primary school students in project governorates 6.60 0 6.60 C. Component 3: Supporting Grant implementation, administration and monitoring. 1.25 0 1.25 Total Cost (excluding contingencies) 19.05 0 19.05 Contingencies 6% 0.95 0 0.95 Total Project Costs 20.00 0 20.00 Page 44 44 Annex 6: Implementation Arrangements 1. The MoE is the GoY agency responsible for implementing the Grant Phase III project. The MoE will be responsible for implementing the project through its offices in the center, governorate and district. The PAU of the MoE will be delegated responsibility for the fiduciary management of the project (excluding civil works) and the PMU of the PWP of the MoPIC will implement the civil works under the project. 2. The Phase I and II Grant and BEEP implementation arrangements have worked effectively to date and will therefore continue to be employed with one exception (i.e., for civil works). The Government of Yemen decided on December 13, 2007 that all civil works for externally- financed operations will be implemented by the PMU of the PWP. Therefore, civil works under the Phase III Grant will be implemented through the PWP. 3. Implementation and monitoring in each of the seven targeted Governorates will be carried out by Governorate Education Offices (GEOs) and District Education Offices (DEOs) where the project is active. GEOs and DEOs (with support from the PAU and PWP) will ensure: (i) project implementation in the targeted governorates and districts; (ii) review and approve governorate-specific implementation plans; and (iii) monitor progress (through regular progress reports) in coordination with the PAU and the PWP. In addition, PAU will conduct regular visits to ensure activities are implemented according to the plan. 4. The PAU will provide guidance, support and capacity building where required to the MoE’s Directorates, and project related staff in the governorates and its districts. The PAU will be responsible for: (i) communicating with IDA and DPs on all implementation matters; (ii) implementation and monitoring of outcome and output indicators; (iii) supporting the 7 targeted Governorates to develop and implement their implementation plans; (iv) preparing and submitting bi-annual progress reports to the MoE and IDA, including values of specific implementation indicators by component and activity; (v) ensuring compliance with the signed MoUs; (v) resolving implementation issues; and (vi) facilitating implementation through Financial Management (FM), procurement of goods and services and Technical Assistance (TA) in accordance with IDA regulations and procedures. 5. The PAU will be responsible for the procurement of goods and services required for the implementation of eligible Project activities following IDA procedures and for monitoring the timely delivery of such goods and services. The PAU will be responsible for obtaining IDA’s no objection for the acquisition of such goods and services and for the documentation of all Grant Phase III-related procurement, disbursement and financial management activities. The PAU will also be responsible for submission of regular bi-annual progress reports and the required audit reports (including PWP’s part) to IDA and the DPs in a timely manner. The PAU will fully participate in joint supervision missions. 6. The current staffing of the PAU has been strengthened through one Basic Education Coordinator (who will supervise both the BEDP and the FTI CF Grant III) and an assistant in the monitoring and evaluation unit (see Figure 1 for an updated PAU organigram). The Basic Education Coordinator at the PAU will report to the PAU Director and through him to the MoE. He will be responsible for ensuring that fiduciary requirements set by the IDA Financial and Grant Agreements are fully complied with. This Coordinator will coordinate the work of the PAU’s staff in charge of procurement and financial management for the Grant Phase III implementation. The PAU will share with IDA and other DPs the implementation progress reports it receives from the 7 targeted Governorates (GEOs and DEOs) and the PWP. Page 45 45 7. The PAU will make regular site visits to ensure that MoE has furniture and equipment, textbooks, teachers and student registration arrangements in place and that all schools/classrooms built are operational. 8. The M&E officer at GEO (MoE staff) paid by the PAU will be responsible for coordinating data collection on a semi-annual basis and presenting it so as to enable PAU to develop its Progress Report. 9. The GoY is expected to allocate 1 percent of the amount of the Grant to oversee supervision of FTI activities. Page 46 46 Figure 1: New Staffing Structure for the PAU PAU Director Secondary Ed. coordinator (Day to day co- or / technical review) Financial Management Unit -Sr. Fin Specialist - 2 Fin specialists (assistants for Sr. Fin specialist for Basic & Secondary) - 8 Accountants - 5 Accountant clerks - Secretary Procurement Unit - International Advisor (Temporary) -Sr. Proc. Specialist. - Civil work Specialists. (2) - Goods Specialists. (2). -TA proc. Specialists (2) - Proc. assistants (3). -Secretary Monitoring and Evaluation Unit -Sr. Specialists. - 3 Specialists. - 2 Secretaries (one specifically for FTI) Admin Assistant Admin Assistant Basic Ed coordinator for the BEDP and the EFA FTI Phase III Grant (Day to day co- ordination / technical review) - Sr. Internal Auditor - Internal Auditor Page 47 47 10. Given the recent GoY policy decision, the implementation of Component 1 will be entrusted to: a) the PMU of the PWP of the MoPIC for classroom construction, rehabilitation, and up grading of schools, including the selection of private consulting firms to undertake the detailed survey and inventory of project sites, the civil works procurement, the civil works implementation and the site supervision, as well as preparation of tender documents for the acquisition of school furniture and general equipment in accordance with IDA procedures. Accordingly, the PWP will be responsible for monitoring and undertaking quality control of the full procurement process up to awarding of contracts and later for the clearance of payments to contractors. The PWP will submit its implementation and monitoring reports to the PAU as agreed under the MoU between the parties. This arrangement is currently being implemented in the SEDGAP project, which is also being administered by the PAU. The MoU spelling out the rules of engagement and responsibilities of the three parties, i.e., the MoE, PAU and PWP for Grant III implementation has been drafted and reviewed. The MoU is expected to be signed and submitted to IDA by October 10, 2009. The PWP will be subject to the same auditing arrangements as the PAU and the PAU auditor will issue one consolidated report for both entities. PWP will fully participate in the joint supervision missions, and b) The MoE, through the PAU, for the preparation of school standard designs, the setting of the standard lists, drawings and technical specifications, and the monitoring of all activities implemented by the PWP. 11. The female teacher contracting scheme is new to the FTI financing, but is already under successful implementation in the BEDP, which is also being administered by the PAU. The operations manual for the female teacher scheme that is being used successfully under the BEDP will be employed under the Phase III Grant (see project files for the operations manual). Because the timing of the Phase III Grant is less than that required for certification training that is being followed under the BEDP (i.e., one month pre-contract training followed by 9 months of training offered in modules for 3 months each time over 3 years), a special schedule has been prepared to ensure that the female teachers who are contracted under the project will receive the complete training that will enable certification and recruitment in the civil service. A MoU detailing the roles and responsibilities of the MoE in training and certifying the teachers, the MoCSI in recruiting the teachers into the civil service and the MoF in providing financing for the recruitment of these teachers has been drafted and is to be signed by December 31, 2009 between the 3 ministries. While this MoU is also the same as the one employed in the BEDP, it will contain, additionally, an annex detailing the schedule of training to enable certification. Page 48 48 Annex 7: Financial Management and Disbursement Arrangements A. General 1. The Project will be implemented by two separate entities: (i) MoE will implement Components 2 and 3 of the project with the fiduciary responsibility entrusted to the PAU as the unit following on these aspects under the ongoing IDA projects; and (ii) the PWP PMU of MoPIC will implement Component 1 covering Civil Works. Both implementing entities have significant experience in implementing IDA-financed projects as currently they are implement the ongoing projects, (BEDP and PWP III), and have completed implementation of several projects (BEEP, FTI I & II, PWP I & II). Also, both entities’ financial management systems have recently been satisfactorily assessed as they are the implementers of SEDGAP recently declared effective by IDA. B. Risk Assessment Country Risks 2. The Country Financial Accountability Assessment (CFAA) report (2003) indicated that there had been some progress in the fiscal area, particularly in terms of budget expenditure classification and consolidation of investment. However, a lack of progress was observed on achieving budget comprehensiveness and implementing a broader fiscal framework based on multi-year expenditures framework. Efforts to move forward in reforming budget implementation, cash management, accounting and reporting have been pinned on the design and implementation of the IDA-supported Automated Financial Management Information System (AFMIS), which is experiencing significant delays. Also, draft Reports on the Observance of Standards and Codes (ROSC) of (2003) stated that, at present, the accounting and auditing practices in Yemen suffer from institutional insufficiencies in regulation, compliance, and enforcement of standards and rules. These factors, as well as the poor quality of education and training in accounting, have contributed to the generally observed insufficiencies of the financial reporting and auditing system in the country. Such country risks result in having higher potential exposure to corruption. These risks are mitigated through the project's design which follows the ring-fencing approach based on PMU structure. An independent external auditor acceptable to IDA will perform quarterly reviews on the Project's IFRs and annual audits of the Project's Financial Statements. Inherent Risks Issue / Risk Risk Before MM Mitigating Measures (MM) Risk After MM Based on the findings of the various Country assessments conducted recently, serious weaknesses were identified in the accounting and auditing professions in Yemen. High Use of Country system is not ready, thus, the project design follows the ring fencing method based on PMU structure. Also, an independent qualified private audit firm will perform quarterly reviews on the project Interim Financial Reports (IFRs) and annual audits of the Project Financial Statements (PFS). Substantial Page 49 49 Project Financial Management Risks Issue / Risk Risk Before MM Comments/ Mitigating Measures (MM) Risk After MM Implementing Entity The implementing entities are currently responsible and have managed in the past several projects. This has provided the units with knowledge about IDA guidelines and procedures. Substantial The PAU and PWP have proved their ability to successfully manage IDA- financed projects and have strengthened their staff capacity to manage more than one project. Civil Works (CW) will be implemented by PWP which has a successful track record in such implementation under current and prior IDA projects. Flow of funds has been simplified to have two advances disbursed to the PAU's DA. The PAU and PMU will utilize their accounting system which is able to record and report funds by source & use of funds as well as by category and activity. Project receipts and disbursements will be reviewed on quarterly basis through the quarterly IFRs. Continuous support through the World Bank field office will be provided. Moderate Staffing Staff capacity to manage several projects concurrently. Substantial The project implementation is ring fenced. The current FM staffing is deemed adequate to manage the ongoing projects as well as the FTI III. Assigned FM staff within the PAU and PMU have TORs which were cleared by IDA, and have previous experience in IDA projects. The PAU has a qualified and experienced FM supported by 2 chief accountants and 6 other accountants, in addition to one senior internal auditor who will be supported by an internal auditor staff (currently vacant position). This position will be filled within two months of project effectiveness. Moreover, PWP has a qualified and experienced FM supported by 1 chief accountant and 5 other accountants, in addition to an internal audit manager and an internal audit staff. Moderate Information System Having an accounting system ready for the FTI III. Substantial PAU and PWP have existing accounting systems capable of facilitating the accounting and reporting for EFA-FTI III and allows the generation on timely basis of the project financial reports. Moderate Internal Controls & Accounting Policies and Procedures Page 50 50 Issue / Risk Risk Before MM Comments/ Mitigating Measures (MM) Risk After MM Lack of appropriate and comprehensive accounting policies and procedures and increased risk of internal controls as a result of the added project. Moderate The PAU and PWP have established internal controls which are properly documented in their Financial Manual. The PAU and PWP will continue to apply internal controls (e.g. segregation of duties, internal auditor, ex-ante reviews, controls over fixed assets) to ensure proper use of funds and proper maintenance of original supporting documents. They will maintain separate fixed assets register for assets financed by the new project and separate monthly bank reconciliations. Low Flow of Funds The Project funds will be made available through IDA to the PAU. The PAU will transfer allocated funds to PWP. Substantial All payments will be centralized in the PAU and PWP. Grant funds will be deposited in two advances into a DA to be opened by the PAU at the CBY, subsequently; the PAU will transfer to PWP, funds allocated as per the Grant Agreement and MoU. Disbursement arrangements between the PAU and PWP will be established in a MoU to establish the procedures to transfer funds from the PAU's DA to the PWP’s USD sub-account which will be opened too at CBY. The PWP will provide periodically reports on the cash status. A draft of the MoU has been reviewed by IDA and the final signed MoU, satisfactory to IDA will be submitted to IDA before project effectiveness. Moderate Internal Audit Limited capacity of the internal audit department in the PAU. Substantial The PAU has a senior internal auditor who is responsible for the Projects managed by the PAU reporting to the Head of the PAU. The PAU will strengthen the internal audit department capacity by filling the current vacant and previously agreed position for a qualified internal auditor staff who will report to the senior internal auditor Moderate Activity based risks 1. Management of Civil Works under Component 1. 2. Under Component 2, (a) Inventory management of Goods comprised of school kits to be delivered to students, (b) Managing Female Teacher Contracting and (c) Managing operation cost for Substantial 1. CW accounts for a large percentage of the Grant (approx. 58%), a low risk activity to be implemented by PWP. 2 (a) School kits will be distributed to the students in the selected districts directly from the supplier and the kits will be easily identified as they will marked with a unique name referencing the Project under MoE. The delivery of such school kits wil l Moderate Page 51 51 Issue / Risk Risk Before MM Comments/ Mitigating Measures (MM) Risk After MM inspection field visits. 3. Management of activities for capacity building and PAU operation cost and impact studies, under Component 3. be subject to the PAU's internal controls over goods as documented in their Financial Manual. Such controls ensure proper receipt of goods by the school as evidenced by signed receipt documents confirming the quantity of kits received by each school authorized official. Any discrepancies between quantity received and invoiced will be resolved with the supplier accordingly. Also, the PAU and the World Bank will visit schools to ensure proper controls and receipts. The external auditor TORs will be extended to include the validation of the distribution system. (b) Funds will be disbursed for female teacher contracting in accordance with the Project's Manual and based on approved list of teachers and regular supervision by the MoE and the World Bank to ensure controls over teachers' attendance and related salaries are properly conducted. (c) Four visits a year will take place to the selected districts and cost to operate such visits will be financed based on approved budget and proper supporting documents in accordance with the project's manual. 3. Training and necessary administrative equipment will be financed under this activity. This will be based on approved budget and proper supporting documents in accordance with the project's manual. In accordance with the Project's approved budget and manual, eligible operation cost will be financed under this activity and an independent consultant will be contracted to perform the impact study. External Audit Inadequate audit profession in Yemen. High An independent qualified private auditor acceptable to IDA will be hired to audit PAU and PWP accounts according to TOR cleared by IDA. The TOR will include special verification on the goods distributed, salaries paid and assets purchased. Also the Bank is working with the audit profession in Yemen to enhance the capacity through various actions Moderate Page 52 52 Issue / Risk Risk Before MM Comments/ Mitigating Measures (MM) Risk After MM including training workshops and audit toolkits for Bank-financed projects. Overall Inherent Risk Before MM Substantial Overall Inherent Risk after MM Moderate Overall FM Risk Assessment 3. As detailed above, the inherent risk in the Country is High and the project financial management risk assessment is Substantial . The successful implementation of the mitigation measures, which have been agreed upon with the Government, will eventually reduce the project financial management risk to Moderate. C. Financial Management Arrangements 4. The Project will finance interventions in the 7 targeted Governorates (IDA estimated equivalent of US$20 million) as follows: (a) school rehabilitation and new construction (through competitive local contracts), (b) teacher training and the provision of improved learning materials, and (c) at least 500 additional female teacher posts (on a contract basis). The Project will be implemented within the context of the BEDP and the SEDGAP, which will all contribute to improving the provision of better quality basic education in the rural governorates. 5. Relation between the two implementing entities: The MoE and PWP will sign the protocols (MoUs) subject to IDA clearance. The MoUs will describe: (a) the responsibility of implementation of project activities by the PWP including the auditing arrangements; (b) the PWP's arrangements to facilitate the flow of funds under the project, (c) the controls that PWP will need to introduce allowing it to account for the funds received on periodic basis; and (d) PWP's reporting requirements and the flow of information between the two entities. The protocols will include, but will not be limited to, the following: 1. The PAU shall transfer the total project funds allocated to PWP in two secondary advances, based on PWP's cash forecast for year 1 of project implementation (secondary advance # 1) and PWP's progress report and existing commitments reaching at least 50% of PWP's total allocation of funds (secondary advance # 2). The PAU shall transfer the two secondary advances to PWP's sub Designated Account to be opened at CBY, in the name of PWP for the construction of schools for FTI III. 2. The PWP will implement the project in accordance with the Grant Agreement, the signed MoU with the MoE and the PWP's Operations Manual. 3. The PWP will facilitate the work of the project's external auditor to conduct the quarterly reviews and annual audits and ensure timely submission of such reports to the PAU, including a management report on variance analysis between plan and actual expenditures. The reports should be submitted to the PAU before the due date to allow for the PAU to compile the reports with the MoE's reports and submit the compiled reports to IDA. 4. The PWP shall undertake all necessary measures to ensure quality and timely completion of construction of schools. Such measures will include but not be restricted to: assigning consultants to supervise the schools sites; carrying out the procurement of contracts for civil works and consultants according to World Bank guidelines and the manual of procedure of the PWP; Page 53 53 conducting the civil works and supervision of physical implementation; coordinating with the PAU the process of completion and hand-over of schools to the MoE; submitting quarterly progress reports to the PAU on physical and financial status of this project; and maintaining the originals of all project documents. 5. The PWP shall submit monthly commitment tracking sheets for signed contracts to the PAU within seven days after the end of each month. 6. PWP will open a Sub-Designated Account in US Dollars in the CBY to be used for deposit and disbursement of the funds for this project, and will submit to the PAU the authorized persons’ signatures. 7. The PWP shall ensure timely disbursement to cover the project's eligible expenditures through the closing date of the project, as stated in the project's legal agreement. The PWP will have a three month grace period to finalize payments for work completed prior to the closing date. Any remaining balance in the PWP's project account shall be refunded to the PAU's DA not later than four months after the closing date. 6. Organization & Staffing. FM activities under the Project will be carried out by the PAU and the PWP of the PMU of the MoPIC based in Sana'a. Both the PAU and the PWP are staffed with existing staff including their respective Directors and Financial Managers, who will extend their oversight role to the Project. The PAU Director and Financial Manager will be supported by two chief accountants, six other accountants, one senior internal auditor and one internal auditor staff (currently vacant position). In PWP, the Project Director and Financial Manager will be supported by one chief accountant, five other accountants, an internal audit manager and internal auditor staff. These are deemed adequate for the FM Department of the Project, noting that the PAU will fill the position of the internal auditor staff within two months after project effectiveness. 7. Accounting System. The project will follow cash basis accounting and will generate a separate commitment tracking sheet that will reflect the financial status of all signed contracts under the project. The current accounting system will be modified to facilitate the project's accounting and report generation. 8. Reporting Requirements. In line with IDA guidelines, the following reports will be required. 1. Quarterly : Interim unaudited Financial Reports (IFRs). IFRs for both units will be reviewed by an independent external auditor under clear TOR. The PAU will be responsible for compiling the project IFRs and remitting them to the IDA not later than 45 days after the end of each quarter. The format of the IFRs will be agreed upon during negotiation and disclosed in the project Disbursement Letter. The IFRs will include the following: a. Statement of source and uses of funds and uses of funds by project component, activities and expenditure categories, quarterly cash forecast, an expenditure report comparing actual and planned expenditures by category, and PAU's DA's and PWP's sub-DA's reconciliation statement. b. Contracts listing: to include a listing of all contracts showing amounts committed and disbursed as of the report date. 2. Annually : The yearly Project Financial Statements (PFS) will be audited by an independent external auditor acceptable to IDA. The audited PFS will be remitted to IDA within six months after the end of the project fiscal year. The PFS will follow the cash basis of accounting. The PFS will include: Page 54 54 a. Statement of sources & uses of funds; b. Schedules classifying Project expenditures by component and by category, showing yearly and cumulative balances; c. DA's reconciliation statement reconciling opening and year-end balances; and d. Statement of Project commitments, i.e., the unpaid balance s under the Project’s signed contracts. 9. PWP and PAU will generate two separate quarterly IFRs and two separate annual financial statements during the project life. The PAU is responsible for contracting with an external independent auditor to be assigned under clear TOR which includes in scope the activities implemented by PWP. The PAU will be responsible for obtaining PWP's reviewed IFRs and audited annual financial statements and submitting compiled reports to IDA. The relation between the auditor and the PWP will be defined in the protocol/MoU. 10. External Audit. The Project’s financial statements will be audited by a private independent external auditor acceptable to IDA and with TOR to be prepared and submitted by the PAU for IDA’s no objection. The TOR will include special verification on the goods distributed, salaries paid and assets purchased. The external auditor report (in English) shall encompass all Project’s components and activities and shall be in accordance with internationally accepted auditing standards e.g., International Standards on Auditing (ISA). The audit report and opinion will cover the Project’s financial statements, reconciliation and use of the DA and the advances made to the PWP. In addition, the auditor is required to prepare a “Management Letter” identifying any observations, comments and deficiencies in the system and controls that the auditor considers pertinent, and shall provide recommendations for their improvement. 11. Flow of Funds and Disbursement Arrangements (Figure 2). Grant funds will be disbursed by IDA in two advances and deposited into a US Dollar DA at CBY to be opened and maintained by the PAU. The Grant financing to PWP will be channeled through the PAU of the MoE. The PWP will open a USD sub-account at CBY.. Advance based disbursement will be used under this Project. Two requests for payments from the Grant will be initiated by the PAU through the use of Withdrawal Applications (WAs) with IFRs. The first advance will be disbursed upon submission of the first WA after effectiveness of the Project. The second advance will be disbursed upon submission of an acceptable progress report to IDA including both PAU and PWP activities. Additionally, the PAU will open and manage a sub-account at CBY, funded from and under the PAU’s DA. The PWP will also open and manage a USD second sub-account at CBY, funded from and under the PWP’s USD sub-account. For the PAU, the sub-account will be in YR and will be used to disburse for eligible expenditures related to training, support to inspection and supervision, consultancy services for contractual teacher(s) under Part B.1 of the project, and incremental operating cost. The PWP’s sub-account will be in USD and will be used to disburse for eligible expenditures related to consultants’ services and incremental operating cost. The rationale for such sub-accounts is to allow for a faster and timelier disbursement of large number of small payments. 12. Designated Account. The PAU will be responsible for maintaining and operating DA in US Dollars at CBY under conditions acceptable to IDA. Also, the PWP will be responsible for maintaining and operating its sub-account in USD at CBY. The name and corresponding specimen signature of each of the authorized signatories will be submitted to IDA after Project effectiveness. Page 55 55 13. Sub-Accounts . The PAU and PWP, separately, will open a sub- account under the PAU’s DA, and PWP’s USD sub-account, respectively. The following procedures apply to these two sub- accounts. The following procedures apply to sub-accounts of both the PAU and PWP. Sub-account controls procedures: 1- The entity will create a separate cost center in its chart of account for the sub-account. 2- The sub-account advance threshold will be based on estimated cash flow for 90 days. 3- For each advance request to the sub-account, the entity will prepare a disbursement plan detailed by category and activity, illustrating how the funds will be used. 4- The disbursement plan must be reviewed by the Financial Manager and approved by the Project Director and submitted to the Ministry of Finance (MOF) for approval. 5- Advances to the sub-account must be settled within a maximum period of 90 days and original supporting documents of disbursements from the sub-account must be maintained at the Project. 6- No new advances to the sub-account are to be made unless the outstanding advance balance is settled. However, the project can partially settle its advance to the sub-account and request replenishment from the DA equivalent to the settled amount. 7- The Financial Manager will be responsible for ensuring that advances to the sub-account are timely settled and original supporting documentations are maintained. 8- The Financial Manager is responsible for ensuring that with each withdrawal application submitted to IDA, the Designated Account and the sub-account balances and relevant reconciliations are provided. 9- The Project is not entitled to claim the advances made from the DA to the sub-account in its WAs to IDA until settlements are made and original supporting documents are provided. 10- The sub-account will be part of the external auditor’s scope of work when performing the quarterly reviews and annual audits on the Project accounts. 14. The chart below summarizes the project’s flow of funds, noting the following definitions: · PAU’s Eligible Expenditures (a): Goods and Consultants’ services other than contractual teacher(s) under Part B.1 of the project will be paid from the PAU’s USD DA. · PAU’s Eligible Expenditures (b): Training, support to inspection and supervision, consultancy services for contractual teacher(s) under Part B.1 of the project, and incremental operating cost will be paid from the PAU’s YR Sub-Account. · PWP’s Eligible Expenditures (a): Works will be paid from the PWP’s USD Sub-DA. · PWP’s Eligible Expenditures (b): Consultant’s services and incremental operating cost will be paid from the PWP’s USD Sub-Account. Page 56 56 Note: The chart below applies to eligible payments from the Project’s US$ DA for all eligible expenditures, except for PAU/PMU salaries and wages as they require an additional approval from MoPIC before MoF. Payment requests Grant Funds PAU’s USD DA PAU’s YR Sub- Account PAU’s Eligible Expenditures (b) PAU’s Eligible Expenditures (a) PWP’s USD Sub- Account PWP’s Eligible Expenditures (a) PWP’s Eligible Expenditures (b) PWP’s second USD Sub- Account Page 57 57 will be reviewed by the Project's internal auditor prior to disbursement (ex ante), as well as subsequent to d isbursement (ex post) on a risk-based sample to be documented in the internal auditor's work program. 15. Allocation of Grant proceeds. The allocation of the Grant proceeds by disbursement category and percentage of eligible expenditures to be financed is expected to be as in the table shown below: Category Amount of the Grant Allocated (expressed in USD) Percentage of Expenditures to be Financed (inclusive of Taxes) (1) Goods 3,285,100 100% (2) Works 10,615,200 100% (3) Consultants’ services for: (a) Contractual Teacher(s) under Part B.1 of the Project (b) the other parts of the Project 2,070,000 737,900 100% (4) Training 680,000 100% (5) Travel Costs for Inspection Field Visits 940,000 100% (6) Travel Costs for Identification of Schools 20,000 100% (7) Incremental Operating Costs for: (a) the PAU (b) the PMU 265,900 440,000 100% (8) Unallocated 945,900 TOTAL AMOUNT 20,000,000 Pmt req. FM & Director MoF approval CBY Pmt Page 58 58 Financial Management (FM) Action Plan 16. The following FM action plan has been developed and agreed upon with the Recipient: No. Action Due date Responsibility 1 Sign the protocols (Memorandums of Understanding – MoU) which will describe the (a) responsibility of implementation of project activities by the PWP, (b) PWP's Project allocated amount by expenditure category and eligible %, (c) PWP's need to open a separate DA in CBY, (d) PWP's procedures to receive the allocated funds, & (e) PWP's reporting requirements and other coordination procedures. Effectiveness PAU & PMU 2 PAU to fill the currently vacant position of a qualified internal auditor to assist and report to the current senior internal auditor. 2 months from effectiveness PAU 3 PAU to appoint a qualified independent external auditor acceptable to IDA, to perform quarterly reviews on the Project's IFRs and annual audits on the Project's Financial Statements. 2 months from effectiveness PAU IDA Supervision 17 . Financial management of the Project will be supervised by IDA in conjunction with its overall supervision of the Project. Supervision will be performed on a semi-annual basis and will review the adequacy of Project financial management arrangements as well as the IFRs and review of audit reports. The first supervision after Project effectiveness will determine the need for performing a third supervision during the first year of the Project to make sure that all systems are operating effectively. Page 59 59 Annex 8: Procurement Arrangements A. Background 1. The 2000 Yemen Country Procurement Assessment Report (CPAR) showed that the procurement legislation, Law No. 3 of 1997 and corresponding Executive Regulations introduced by Decree No. 234 of 1997, although an improvement over previous laws, was not up to acceptable international standards. As a transition strategy, the CPAR recommended the development of a set of comprehensive National Procurement Manuals (NPM) to support capacity building of the GoY’s procurement at all levels with national Standard Bid Documents (SBDs) for goods, works and services. 2. The completed country procurement “tool kits” were endorsed by the Cabinet in April 2006 and capacity building efforts using these tool kits have been underway, led by the Technical Committee of the High Tender Board for broad dissemination in seven pilot ministries and agencies including the MoE. In addition, as a core policy objective of the National Reform Agenda adopted by the GoY in early 2006, a new reform-oriented good practice public procurement law has been prepared with DP support (IDA, USAID and the Dutch), and ratified by Parliament as Law No. 23 on July 24th, 2007. Drafting of the Executive Regulations or By-laws has been underway for some time led by an Inter Ministerial Committee assisted by consultants financed by USAID, culminating in a Cabinet Decree establishing the Executive Regulations on January 27, 2009 as mandatory Bylaws applicable to all procuring entities in the GoY. Enforcement of the regulations would be the responsibility of the restructured institutions handling government contracts at national and local levels in accordance with Law No. 23. 3. In mid-2007, Yemen agreed to participate in the 21 country pilot in the OECD-DAC baseline assessment “of the performance, transparency, and accountability of its country systems” with a view to enhancing use of mutually agreed frameworks for harmonization and alignment on use of common procurement procedures by donors and Governments. The draft self assessment by Yemen led by the Higher Tender Board (HTB) of a representative sample of line Ministries to help identify gaps and the requisite capacity building needs using the OECD/DAC methodology will now be discussed and validated at a OECD/DAC workshop planned for early 2009. 4. Procurement under the project will be carried out in accordance with the “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants” known as the “2006 Anti-Corruption Guidelines”, and the “Guidelines: Procurement under IBRD Loans and IDA Credits” published by the Bank in May 2004 and revised in October 2006 and the “Guidelines: Selection and Employment of Consultants by World Bank Borrowers”, dated May 2004 and revised October 2006, and the accompanying standard bidding documents for any new procurement. 5. Advertisement. A General Procurement Notice (GPN) for procurement under EFA-FTI Phase III will be issued in the UNDB and dg-Market for major consulting assignments, and for any International Competitive Bidding (ICB) for goods and works. The GPN will be issued not less than eight weeks prior to the publication of the first Specific Procurement Notice (SPN), and be updated annually for all outstanding ICB for goods and all large consulting contracts. It would also be published in the national press or official gazette for purposes of informing potential bidders for contracts under National Competitive Bidding (NCB) and to obtain expressions of interest from national consultants. 6. Procurement Arrangements for the Project implementation. The procurement capacity of the PAU and the PWP was assessed at the time of the appraisal of SEDGAP and the Mid-Term Review mission and the 2009 supervision mission of the ongoing BEDP. The two PMUs were considered capable of handling required procurements for the different education sector projects they were managing at the Page 60 60 time, which also included the now closed FTI II for the PAU. In addition, in view of incremental demands on the PAU as a result of the Project’s implementation start-up in 2009, the international procurement advisor’s contract has also been extend for another year starting from September 2008 to be able to continue providing essential support to the PAU, as well as training the newly hired staff. Similarly, as part of the scaling-up of the procurement function staffing to handle procurement under the SEDGAP, the PWP has recently hired an additional Procurement Specialist to ensure that the PWP has the procurement capacity to handle the civil works procurement demands generated from implementing the Phase III grant. A detailed procurement plan for the Project has been reviewed, is satisfactory to IDA and has been attached to this annex. B. Procurement Capacity and Implementation Arrangements 7. The assessment of procurement capacity reviewed organizational aspects of handling procurement at the PAU as well as at the PWP levels, procurement staff skills, quality and adequacy of supporting and control systems. In addition, the procurement cycle handling capabilities of the PAU and the PWP including past experience in bid preparation, evaluation of bids, contract award, and contract management were reviewed. The PAU was restructured in late 2006 and a Procurement Unit led by a manager responsible for Planning and Procurement with three procurement officers and a Procurement Assistant to administer procurement activities for education projects (the BEEP ongoing at the time, BEDP and the FTI) was established. However, by mid-2007 serious staffing issues with respect to the procurement function arose at the PAU as a result of the sudden departure of three of the core procurement function staff, for more competitive salary offers from elsewhere in the market. 8. The assessment of procurement capacity to be able to mitigate potential increased risk to proper handling of procurement at the PAU with the anticipated addition of the Project to its fiduciary portfolio has confirmed that both the PAU and PWP are sufficiently staffed in terms of the requirements on the designated procurement staff to carry out the compliance burden of the EFA-FTI grant. Moreover, the contract for the internationally recruited Procurement Advisor for the PAU under GTZ financing has been extended for another year thus contributing to the satisfactory management of procurement implementation requirements arising from the grant operation. C. Procurement Implementation Risks 9. The corrective measures to mitigate the procurement risks identified in the capacity assessment are specified in the Action Plan below. Although the procurement risks are primarily capacity shortfalls in the pre-effectiveness phase, and mitigation measures if implemented as could potentially reduce the risk profile by post-effectiveness in late-2009, the overall project risk for procurement at appraisal is still considered Substantial. 10. The capacity assessment for the Phase III Grant has been more of an update of the recent SEDGAP assessment, and thus the resulting Procurement Action Plan is an endorsement of the work in progress in line with the SEDGAP action plan provided below: Page 61 61 Procurement Action Plan Issue/Problem Remedial Action Responsibility Enhancement of the PAU’s Procurement Unit Implementation Capacity Insufficient incentives and reduction in procurement capacity. Phased recruitment of required core procurement staff prior to EFA-FTI Grant Phase III Effectiveness. MoE/MoPIC: Activity Completed with PAU procurement staff already recruited and responding well to on-the-job mentoring from the Procurement advisor Limited in-country market for staff with experience in procurement. Quality control and capacity building of newly hired PAU staff. PAU/Procurement Adviser: Ongoing Weak contract management and M&E capacity at GEO levels Implement long agreed GEO incentives for project management and supervision and scale-up on-the-job training delivery. MoE/PAU: Ongoing with IDA missions bringing MoE’s attention to ensure candor in reporting contractor performance Records on claims and disputes Improve files for all procurement processes, particularly on complaints from contractors. PAU: Ongoing EFA-FTI Grant Phase III implementation readiness of the PWP The PWP procurement function is currently comprised of an experienced Procurement Manager and a Procurement Assistant. The risk to PWP’s capacity in being able to manage the additional workload under SEDGAP and this grant is high. Appoint on a competitive basis, a dedicated Procurement & Contract Management Officer reporting to the Procurement Manager MoPIC/ PWP: The PWP has recently hired a Procurement Specialist to focus on both the SEDGAP and the FTI Phase III grant D. Procurement Plan 11. The PAU, in collaboration with the PWP, has developed a detailed procurement plan covering the 2.5 years of implementation of the Grant. The Procurement Plan was reviewed and cleared by IDA and is attached in this annex. It will also be available in the project files and publicly disclosed in IDA’s external website. If needed, the Plan will be updated in agreement with the IDA Task Team as required to reflect the actual project implementation needs and improvements in institutional capacity. E. Frequency of Procurement Supervision 12. In addition to the prior review supervision to be carried out from the Bank offices, the capacity assessment of the PAU and PWP has recommended two annual supervision missions to visit the field to carry out post review of procurement actions. Page 62 62 F. Post Review 13. Monitoring and evaluation of the PAU’s procurement performance under the Project would be carried out under the prior review thresholds indicated in the Procurement Plan during joint DP supervision missions and through ex-post procurement reviews as deemed necessary during the project implementation. In view of the procurement function capacity shortfalls at the PAU notwithstanding efforts to address this issue in the shortest possible period, 2 out of 10 contracts under the EFA-FTI Phase III managed jointly by the PAU and the PWP will be subject to post review. Importantly, during implementation, post reviews of in country training would also be conducted from time to time to review the selection of institutions, course contents, nominated trainees and justifications thereof, and costs incurred. Page 63 63 Procurement Plan I. General 1. P roject Information Project Name: EDUCATION FOR ALL - C ATALYTIC FUND PHASE III GRANT PROJECT Country: P roject ID: Bank's approval date of Procurement Plan O riginal: July 8, 2009 2. Revision 1: I I. Goods, Work and Non-Consulting Services Thresholds 1. Procurement Category Prior Review Threshold (USD) Comments 1a. Goods ( =>)350,000 First 2 Contracts + all ICB Works ( =>)1,500,000 First 2 Contracts + all ICB Non-Consultant Services NA Procurement Method Procurement Method Comments 1b. ICB and LIB (Goods) ( =>)350,000 NCB (Goods) < 350,000 Shopping (Goods) < 50,000 ICB (Works) ( =>)1,500,000 NCB (Works) < 1,500,000 Shopping (Works) < 50,000 2. 3. 4. 5. 6. III. Selection of Consultants Procurement Category Prior Review Threshold (USD) Comments 1a. Consulting Firms (Competitive) ( =>)100,000 First 3 Contracts + All QCBS Consulting Firms (Sole Source) All Contracts Individual Consultants (Competitive) ( =>)50,000 First 3 Contracts Individual Consultants (Sole Source) All Contracts Procurement Method Procurement Method Threshold (USD) Comments 1b. QCBS ( =>) 100,000 QCB < 100,000 FCS < 100,000 LCS < 100,000 CQS < 100,000 Consulting Firms (Competitive) ( =>) 100,000 Consulting Firms (Sole Source) ( =>) 50,000 Individual Consultants (Competitive) < 50,000 Individual Consultants (Sole Source) < 50,000 2. Note: OPCPR list of ceilings can be found here: http://go.worldbank.org/MKXO98RY40 P 114253 Procurement Packages with Methods and Time Schedule: See Procurement plan for goods/works and non-consulting services Any Other Special Procurement Arrangements: NA Prequalification. Bidders for N/A shall be prequlified in accordance with the provisions of paragraphs 2.9 and 2.10 of the Guidelines. Proposed Procedures for CDD Components (as per paragraph 3.17 of the Guidelines): Refer to the relevant CDD project implementation document approved by the Bank NA Prior Review Threshold. Procurement Decisions subject to Prior Review by the Bank as stated in Appendix 1 to the Guidelines for Procurement: [Thresholds for applicable procurement methods (not limited to the list below) will be determined by the Procurement Reference to (if any) Project Operational/Procurement Manual:NA Prior Review Threshold: Selection decisions subject to Prior Review by Bank as stated in Appendix 1 to the Guidelines Selection and Employment of Consultants: Short list comprising entirely of national consultants: Short list of consultants for services, estimated to cost less than Yemen Page 64 6 4 P r o c u r e m e n t p l a n f o r g o o d s / w o r k s a n d n o n - c o n s u l t i n g s e r v i c e s * * A p p l i c a b l e i n c a s e o f B a n k ' s p r i o r r e v i e w P r e q u a l i f i c a t i o n S L N o . P a c k a g e / R e f e r e n c e N o . D e s c r i p t i o n o f G o o d s / W o r k s G o o d s / W o r k s / N C S E s t i m a t e d C o s t a n d D a t e o f E s t i m a t e C u r r e n c y o f E s t i m a t e d C o s t R e v i e w b y B a n k ( P r i o r / P o s t ) M e t h o d o f S e l e c t i o n D o m e s t i c P r e f e r e n c e ( y e s / n o ) P r e q u a l i f i c a t i o n ( y e s / n o ) P r e p a r a t i o n o f B i d D o c u m e n t ( D a t e ) B a n k ’ s N o O b j e c t i o n t o B i d d i n g D o c u m e n t ( D a t e ) * * B i d I n v i t a t i o n ( D a t e ) B i d C l o s i n g ( D a t e ) B i d O p e n i n g ( D a t e ) C o n t r a c t A w a r d D e c i s i o n ( D a t e ) B a n k ’ s N o O b j e c t i o n t o B i d E v a u l a t i o n R e p o r t a n d C o n t r a c t A w a r d ( D a t e ) * * C o n t r a c t S i g n e d ( D a t e ) C o m p l e t i o n o f C o n t r a c t ( D a t e ) P l a n n e d 2 , 4 0 0 , 0 0 0 . 0 0 U S $ P o s t N C B N o N o 5 - M a y - 0 9 N A 1 8 - J u l - 0 9 2 2 - A u g - 0 9 2 2 - A u g - 0 9 3 - O c t - 0 9 N A 1 0 - O c t - 0 9 1 5 - J u l - 1 0 R e v i s e d A c t u a l P l a n n e d 3 , 0 0 0 , 0 0 0 . 0 0 U S $ P o s t N C B N o N o 1 2 - J u n - 0 9 N A 1 9 - A u g - 0 9 2 0 - S e p - 0 9 2 0 - S e p - 0 9 3 - N o v - 0 9 N A 1 0 - N o v - 0 9 1 5 - A u g - 1 0 R e v i s e d A c t u a l P l a n n e d 1 , 4 4 0 , 0 0 0 . 0 0 U S $ P o s t N C B N o N o 5 - M a y - 0 9 N A 1 8 - J u l - 0 9 2 2 - A u g - 0 9 2 2 - A u g - 0 9 3 - O c t - 0 9 N A 1 0 - O c t - 0 9 1 5 - J u l - 1 0 R e v i s e d A c t u a l P l a n n e d 1 , 8 0 0 , 0 0 0 . 0 0 U S $ P r i o r N C B N o N o 1 2 - J u n - 0 9 0 9 - - 3 0 1 9 - A u g - 0 9 2 0 - S e p - 0 9 2 0 - S e p - 0 9 3 - N o v - 0 9 1 5 - N o v - 0 9 2 0 - N o v - 0 9 2 5 - A u g - 1 0 R e v i s e d A c t u a l P l a n n e d 1 , 3 7 5 , 0 0 0 . 0 0 U S $ P o s t N C B N o N o 1 3 - A p r - 0 9 N A 4 - O c t - 0 9 6 - N o v - 0 9 6 - N o v - 0 9 2 0 - D e c - 0 9 N A 2 8 - D e c - 0 9 1 8 - J u l - 1 0 R e v i s e d A c t u a l P l a n n e d 1 , 2 0 0 , 0 0 0 . 0 0 U S $ P r i o r I C B N o N o 7 - D e c - 0 9 2 6 - D e c - 0 9 2 9 - D e c - 0 9 1 3 - F e b - 1 0 1 3 - F e b - 1 0 1 5 - M a r - 1 0 2 9 - M a r - 1 0 1 6 - A p r - 1 0 1 5 - J u l - 1 0 R e v i s e d A c t u a l P l a n n e d 4 0 , 0 0 0 . 0 0 U S $ P o s t N S N o N o 4 - D e c - 0 9 N A 2 8 - D e c - 0 9 2 8 - J a n - 1 0 2 8 - J a n - 1 0 1 5 - F e b - 1 0 1 - M a r - 1 0 1 7 - M a r - 1 0 1 5 - J u n - 1 0 R e v i s e d A c t u a l P l a n n e d 2 6 0 , 0 0 0 . 0 0 U S $ P o s t N C B N o N o 1 2 - D e c - 0 9 3 0 - D e c - 0 9 4 - J a n - 1 0 8 - J a n - 1 0 1 2 - J a n - 1 0 1 - F e b - 1 0 1 6 - F e b - 1 0 6 - M a r - 1 0 4 - J u l - 1 0 R e v i s e d A c t u a l P l a n n e d 1 , 5 0 0 , 0 0 0 . 0 0 U S $ P r i o r I C B N o N o 1 8 - D e c - 1 0 9 - J a n - 1 1 1 8 - J a n - 1 1 2 4 - J a n - 1 1 3 0 - J a n - 1 1 1 - M a r - 1 1 1 5 - M a r - 1 1 5 - A p r - 1 1 1 4 - J u l - 1 1 R e v i s e d A c t u a l W o r k s W o r k s W o r k s W o r k s F T I - 5 / 3 R e h a b i l i t a t i o n i o n o f S c h o o l s ( 1 9 1 C R ) i n s o m e D i s t r i c t s i n 5 G o v s . ( M u l t i c o n t r a c t s ) 6 4 l o t s P r o v i d i n g o f b a g s f o r 4 0 0 0 0 0 s t u d e n t i n F T I 4 G o v s , e a c h G o v . i s o n e l o t . * G o o d s W o r k s C o n s t r u c t i o n o f N e w S c h o o l s ( 1 1 0 C R s ) w i t h f a c i l i t i e s s u c h a s T o i l e t s , A d m . R o o m s … e t c . ( M u l t i c o n t r a c t s ) F T I - 3 / 3 C o n s t r u c t i o n o f N e w S c h o o l s ( 1 3 0 C R s ) w i t h f a c i l i t i e s s u c h a s T o i l e t s , A d m . R o o m s … e t c . ( M u l t i c o n t r a c t s ) F T I - 4 / 3 E x t e n s i o n o f S c h o o l s ( 8 0 C R ) w i t h n e e d e d f a c i l i t i e s i n s o m e D i s t r i c t s i n 5 G o v s . ( M u l t i c o n t r a c t s ) F T I - 2 / 3 E x t e n s i o n o f S c h o o l s ( 7 0 C R ) w i t h n e e d e d f a c i l i t i e s i n s o m e D i s t r i c t s i n 5 G o v s . ( M u l t i c o n t r a c t s ) C i v i l W o r k s 4 5 F T I - 1 / 3 1 2 3 7 P r o v i s i o n o f ( O f f i c e ) e q u i p m e n t t o D E O s a s i d e n t i f i e d b y C u r r i c u l u m G o o d s 8 2 l o t s P r o v i s i o n o f V e h i c l e s f o r s u p e r v i s i o n G o o d s 9 4 l o t s P r o v i d i n g o f b a g s f o r 5 0 0 0 0 0 s t u d e n t i n F T I 4 G o v s , e a c h G o v . i s o n e l o t . * G o o d s Page 65 6 5 P r o c u r e m e n t f o r c o n s u l t i n g s e r v i c e s * * A p p l i c a b l e i n c a s e o f B a n k ' s p r i o r r e v i e w S L N o . P a c k a g e / R e f e r e n c e N o . D e s c r i p t i o n o f S e r v i c e s E s t i m a t e d C o s t C u r r e n c y o f E s t i m a t e d C o s t R e v i e w b y B a n k ( P r i o r / P o s t ) T y p e o f C o n s u l t a n t ( F i r m / I n d i v i d u a l ) M e t h o d o f S e l e c t i o n T O R / S h o r t l i s t t o b e F i n a l i s e d ( D a t e ) R F P F i n a l D r a f t t o b e f o r w a r d e d t o t h e B a n k ( D a t e ) N o O b j e c t i o n f r o m B a n k f o r T O R ( D a t e ) * * N o O b j e c t i o n f r o m B a n k f o r S h o r t l i s t ( D a t e ) * * N o O b j e c t i o n f r o m B a n k f o r F i n a l R F P ( D a t e ) * * R F P I s s u e d ( D a t e ) P r o p o s a l S u b m i s s i o n D e a d l i n e ( D a t e ) N o O b j e c t i o n b y t h e B a n k t o t h e T e c h n i c a l E v a l u a t i o n R e p o r t ( D a t e ) * * N o O b j e c t i o n b y t h e B a n k ( T e c h n i c a l / # C o m b i n e d / D r a f t C o n t r a c t / F i n a l C o n t r a c t ) ( D a t e ) * * C o n t r a c t S i g n e d ( D a t e ) S e r v i c e s C o m p l e t i o n ( D a t e ) P l a n n e d 1 3 7 , 5 0 0 . 0 0 U S $ P o s t I n d i v i d u a l I C 2 8 - J u l - 0 9 N A 5 - A u g - 0 9 N A N A N A 2 5 - A u g - 0 9 N A N A 3 - O c t - 0 9 1 5 - J u l - 1 0 R e v i s e d A c t u a l P l a n n e d 1 6 2 , 5 0 0 . 0 0 U S $ P o s t I n d i v i d u a l I C 3 1 - A u g - 0 9 N A 6 - S e p - 0 9 N A N A N A 2 6 - S e p - 0 9 N A N A 3 - N o v - 0 9 1 5 - A u g - 1 0 R e v i s e d A c t u a l P l a n n e d 9 2 , 5 0 0 . 0 0 U S $ P o s t I n d i v i d u a l I C 2 8 - J u l - 0 9 N A 5 - A u g - 0 9 N A N A N A 2 5 - A u g - 0 9 N A N A 3 - O c t - 0 9 1 5 - J u l - 1 0 R e v i s e d A c t u a l P l a n n e d 9 2 , 5 0 0 . 0 0 U S $ P o s t I n d i v i d u a l I C 3 1 - A u g - 0 9 N A 6 - S e p - 0 9 N A N A N A 2 6 - S e p - 0 9 N A N A 3 - N o v - 0 9 1 5 - A u g - 1 0 R e v i s e d A c t u a l P l a n n e d 5 2 , 0 0 0 . 0 0 U S $ P o s t I n d i v i d u a l I C 1 7 - O c t - 0 9 N A 2 4 - O c t - 0 9 N A N A N A 1 1 - N o v - 0 9 N A N A 2 0 - D e c - 0 9 1 8 - J u l - 1 0 R e v i s e d A c t u a l P l a n n e d 4 7 , 3 0 0 . 0 0 U S $ P o s t I n d i v i d u a l I C 5 - M a y - 0 9 N A 1 5 - M a y - 0 9 N A N A N A 8 - J u n - 0 9 N A N A 3 0 - J u l - 0 9 8 - O c t - 0 9 R e v i s e d A c t u a l P l a n n e d 4 9 , 8 0 0 . 0 0 U S $ P r i o r I n d i v i d u a l I C 1 0 - A u g - 0 9 2 0 - A u g - 1 1 3 - S e p - 1 1 2 7 - S e p - 1 1 3 0 - S e p - 1 1 N A 3 0 - O c t - 1 1 3 - D e c - 1 1 N A 8 - J a n - 1 2 7 - A p r - 1 2 R e v i s e d A c t u a l I n s o m e c o n t r a c t s , o n e o r m o r e o f t h e s e a p p r o v a l s m a y b e c o n t a i n e d i n o n e B a n k c o m m u n i c a t i o n . 5 F T I - 5 / 3 I n d i v i d u a l C o n s u l t a n t s f o r S u p e r v i s i n g R e h a b i l i t a t i o n o f 2 0 S c h o o l s . . ( 1 - 2 s c h o o l s f o r e a c h c o n t r a c t ) ( M u l t i c o n t r a c t s ) 4 F T I - 4 / 3 I n d i v i d u a l C o n s u l t a n t s f o r S u p e r v i s i n g i m p l e m e n t a t i o n o f E x t e n s i o n w o r k s f o r 2 5 S c h o o l s . . ( 1 - 2 s c h o o l s f o r e a c h c o n t r a c t ) ( M u l t i c o n t r a c t s ) 3 F T I - 2 / 3 I n d i v i d u a l C o n s u l t a n t s f o r S u p e r v i s i n g i m p l e m e n t a t i o n o f E x t e n s i o n w o r k s f o r 2 5 S c h o o l s . . ( 1 - 2 s c h o o l s f o r e a c h c o n t r a c t ) ( M u l t i c o n t r a c t s ) 2 F T I - 3 / 3 I n d i v i d u a l C o n s u l t a n t s f o r S u p e r v i s i n g i m p l e m e n t a t i o n o f 4 4 N e w S c h o o l s . . ( 1 - 2 s c h o o l s f o r e a c h c o n t r a c t ) ( M u l t i c o n t r a c t s ) 1 F T I - 1 / 3 I n d i v i d u a l C o n s u l t a n t s f o r S u p e r v i s i n g i m p l e m e n t a t i o n o f 3 6 N e w S c h o o l s . ( 1 - 2 s c h o o l s f o r e a c h c o n t r a c t ) ( M u l t i c o n t r a c t s ) 6 F T I - 6 / 3 I n d i v i d u a l C o n s u l t a n t s f o r S u p e r v i s i n g R e h a b i l i t a t i o n o f 1 8 S c h o o l s . . ( 1 - 2 s c h o o l s f o r e a c h c o n t r a c t ) ( M u l t i c o n t r a c t s ) 7 F T I - C S - 1 T e c h n i c a l a s s i s t a n c e f o r I m p a c t S t u d y f o r F T I P h a s e I - I I I Page 66 66 Annex 9: Economic and Financial Analysis I. Fiscal Analysis of the FTI Grant Phase III 1. The development of education sector in Yemen has been one of the country’s highest priorities. The share of education expenditure remains relatively high at 14 to 20 percent of total governmental expenditure during the past decade, one of the largest shares among all public sectors. Since 2002, there is a slight declining trend in the share of education expenditure against total public expenditure, but the government spent 5.7% of GDP on education sector and 14.3% of total public expenditure in 2007, which is relatively high compared to other counties (e.g., 4.5% of GDP spent in Sub-Saharan Africa). 2. In 2002, the GoY prepared the country’s education sector development plan, called the Credible Plan (in project files). In the Plan the GoY presented three financial scenarios for achieving the EFA targets by 2015, including Status Quo, Reform, and Cautionary Scenarios. The focus of the analysis was on the government’s financial envelope and requirements between 2001 and 2015, linked with the macroeconomic framework as well as estimates of external financing. The analysis warned that Yemen would face a significant financing gap unless efficiency of resource use is improved through a systemic reform. 3. The simulation model analysis has been updated in 2008 (Figure 3) to locate how far Yemen has moved towards its EFA target by 2015 and what the remaining financial implication is. The analysis discovered that there have not been significant financing gap until 2006 due mainly to two reasons. The first reason is that the MoE has been committed to reforms as presented in the Reform scenario, and various efficiency parameters have improved, including pupil-teacher ratios and use of double-shifting. Also the financing gap is not as large as anticipated because the enrollment expansion has not been as fast as expected in the original simulation. Relatively slow increase of enrollment has resulted in moderate pressure on the financial envelope so far. Given this, it appears that Yemen will be required to speed up the enrollment expansion during the next 6 years in order to achieve the EFA targets, and this need will result in a significant financial pressure to the country. Page 67 67 Figure 3: Scenarios for financing gaps for Grades 1-6 of basic education in Yemen (700) (600) (500) (400) ( 300) ( 200) ( 100) 0 2 , 0 0 1 2 , 0 0 2 2 , 0 0 3 2 , 0 0 4 2 , 0 0 5 2 , 0 0 6 2 , 0 0 7 2 , 0 0 8 2 , 0 0 9 2 , 0 1 0 2 , 0 1 1 2 , 0 1 2 2 , 0 1 3 2 , 0 1 4 2 , 0 1 5 F i n a n c i n g G a p ( U S D m i l l i o n ) Updated Scenario 2008 Status Quo Scenario, 2002 R eform Scenario, 2002 Cautionary Scenario, 2002 Source: WB staff calculation 4. Contribution of the FTI Phase III Grant: The GoY’s MTEF envisages financial resources of US$ 717 million for basic education between 2007 and 2010, of which US$ 595 million will be allocated for Grades 1-6 (lower basic). 1 4 According to the updated FTI simulation (as of 2008), which estimates the required resource envelope to achieve 100% Grade 6 completion rate in 2015, the required resources from 2009 to 2011 15 are respectively US$ 647 million, 678 million and US$ 734 million (358.5 million for 6 months). Based on these resource availability and requirements, the financing gap for 30 months is US$204 million. The FTI Phase III Grant will account for 10% of this financing gap over the 2.5 year project period. Currently, DP are financing approximately US$ 40 million annually to basic education, so this Grant will increase the external financing approximately by 20% during the next two and a half years. Table 3: Primary Education Budget Forecast and Project Cost, 2009-11 (million US$) 2009 2010 6 months of 2011 30 months from 2009 MoE Budget 874 874 437 2185 Secondary 157 157 78.5 393 Basic 717 717 358.5 1793 Of which Primary 595 595 298 1488 Project Cost 7 7 6 20 % in primary budget 1.2% 1.2% 2.0% 1.3% Primary Education Resource Requirement 1 / 647 678 367 1692 Resource gap in the Envelope 52 83 69 204 % in primary resource gap 14% 8% 9% 10% Source: 2007-2010 budgets are from MTEF document presented during Joint Annual Review (May 2007) Primary education budget is assumed at 83% of basic education budget. Assumption is derived from share of sections. 1/ Calculated by FTI Financial Simulation Model: Status Quo Scenario update in 2008 2011 budget estimate covers only 6 months II. Economic Analysis 1. Cost Benefit Analysis 14 Estimated by WB staff using the share of G1-6 classes in the basic education system. 15 This assumes the MOE budget in 2011 in real term remains the same as 2010. Page 68 68 5. The benefits of the project are projected to far exceed the costs, with an EIRR of 15.8%, indicating economic viability of this project. 6. Benefits. The benefits of the project come from more children completing Grade 6 of basic education. Empirical evidence from many countries shows that more education is positively correlated with earnings and is associated with higher expected life-time income. The case in Yemen is not an exception. In FTI governorates, Grade 6 graduates earn about YR 5,700 (US$28.50) more than those with no education per month according to the HBS 2005. 7. The intervention will result in an increase in the number of Grade 6 completers in intervention governorates by: (i) increasing number of student places through classroom construction 16 and (ii) improved retention rates through provision of female teachers. 1 7 These two outcomes of the intervention will add 836,000 more graduates during 20 years after the project intervention compared to the case without the FTI intervention. This additional number of Grade 6 completers will increase the economic productivity by US$287 million 18 over 20 years from the project commencement as indicated in Table 4. 8. Costs . The cost will include project intervention costs, the cost of furniture that the GoY finances, and the additional recurrent cost after project close, which include increased teacher cost due to female teacher contracting scheme and increased teachers due to a larger number of students, and maintenance cost for civil works and furniture. The total cost over 20 years from the project commencement is US$150 million. 9. EIRR simulation results. Table 4 shows the summary of both cost and benefit streams. The EIRR of the project will be 15.8%, and the Net Present Value will be US$16.8 million using a discount rate of 10%. Table 4: Summary of Cost and Benefit Streams and EIRR Years since project started (real US$ '000) Year 1 Year 2 Year 3 Year 4 Year 5 Year 19 Year 20 Program 2009 Total 16 Annually additional 14,800 seats will be added to non-project scenario. 17 Transition rate to next grade is assumed to improve annually by 0.5%. 18 US$83 million at present value when discount rate is 10%. Page 69 69 Increased G6 Completers Increased number of G6 graduates - 610 1,792 3,902 6,550 96,367 104,913 835,922 BENEFIT STREAM Increased earnings of graduates - 209 615 1,339 2,248 33,073 36,006 286,888 Total Benefits - 209 615 1,339 2,248 33,073 36,006 286,888 COST STREAM Project Cost 7,000 7,000 6,000 - - - - 20,000 Increased teacher salary for contract teachers - - 300 600 600 600 600 10,500 Increased teacher salary due to increased students - - 202 1,040 1,947 11,584 12,683 120,858 Increased maintenance cost for civil works - - - 46 46 139 139 1,526 Cost of furniture - 1,480 - - - - - 1,480 Increased maintenance cost for furniture - - 74 74 74 74 74 1,332 Total Costs 7,000 8,480 6,576 1,760 2,667 12,397 13,496 155,696 Net Benefits (7,000) (8,271) (5,961) (421) (419) 20,677 22,510 131,192 IRR 15.8% NPV at discount rate of 10% 16,789 Assumptions: For benefit stream: Grade 1 enrollment increases at 1.4% natural population growth rate plus 11,700 additional seats per year (after 3 rd year) Transition rates to Grade 2-6 improve 0.5% every year from the baseline in 2007 Difference of wage between G6 completers and illiterate is YR5720 (USD 28.6) per month in FTI governorates (WB staff calculation using HBS2005) Benefit potentially generated from more number of basic, secondary, and university graduates due to more completers of G6 is not included. For cost stream: Annual maintenance cost is calculated as: (1) for civil works - 0.5% during first 10 years and 1.5% during next 10 years of total value of the building; (2) Furniture - 5% of installment cost. Salary includes that of for female teachers hired and additional teachers required due to increased students (assuming $1200 per year) The project will be for 30 months. So the assumption is the half of the required salary in year 3 will be financed by project. Student teacher ratio is assumed to improve by 0.1 every year. As a result, the STR for FTI governorates for primary level improves from 23.3 in 2006 (baseline) to 25.2 in 2028 (year 20) 2. Sensitivity Analysis 10. Sensitivity analysis was conducted by changing parameters from the already presented base scenario. By changing three main parameters, three low case scenarios where NPV is likely to fall to zero and one high scenario which brings higher EIRR are estimated. There is a high risk that the NPV will fall zero if (i) the Student Teacher Ratio (STR) for Grades 1-6 in the FTI governorates improves from 23.3 to only 23.4 instead of 25.2 as in the base scenario; (ii) the wage difference between Grade 6 completers and illiterate is less than YR4, 400 per month, and (iii) the annual improvement in the retention rate is only 0.24 percentage point as opposed to 0.50 percentage point. While the second parameter is beyond the control for the education system, the first and the third parameters are under control of the MoE. Because the national level STR for Grades 1-6 is 26.7 in 2006, the expectation to improve STR from 23.3 to 25.2 is not too ambitious. If the system manages to improve further to 27.1, the EIRR will reach 19.7%. The third parameter of improved retention rate is not too ambitious either. The average retention rate to next grade Page 70 70 is 84% for boys and 80% for girls. By using this 0.50% assumption, retention rates for boys and girls will be 94% and 90% after 20 years of project commencement. It is important to be reminded that this assumption is made only to calculate the economic benefit, but the GoY is committed to improve this to 100% by 2015 under the FTI Credible Plan, in which case the EIRR will be higher than the base scenario. Table 5: Summary of Different Scenarios under Different Assumptions Scenarios Low 1 Low 2 Low 3 Base High Results EIRR 10.1% 10.0% 10.1% 15.8% 20.4% Assumptions STR in 2028 23.4 - - 25.2 27.1 Wage difference between G6 completer and illiterate (YR) - 4400 - 5720 - Annual improvement in retention rate - - 0.24% 0.50% - 3. Sustainability 11. Analysis shows three types of costs will likely affect the fiscal sustainability of the interventions, following the completion of the FTI Phase III, including: a) Increased maintenance cost of civil works: The Project will construct additional 370 new classrooms through new school construction and extension, which will incur maintenance cost of US$ 85,000 annually for the next 20 years after completion of the Grant. 19 b) Cost of furniture and maintenance: As in the arrangement for civil works for Phases I and II of FTI Grants, furnishing the constructed and extended classrooms will be the responsibility of the government. While the cost is already assumed in the government’s MTEF, 14,800 student places created through FTI Phase III Grant will require approximately US$ 1.48 million for furnishing. This also results in maintenance cost of 5% annually for the next 20 years. Average annual maintenance cost will be US$ 74,000. c) Increased salary cost for female teachers: The MoE will sign a Memorandum of Understanding (MoU) with the MoF and MoCS for officially recruiting the certified female teachers after qualification training is completed. Adding 500 female teachers in the civil service payroll will require recurrent cost of US$ 600,000 annually. 12. Due to the above mentioned costs, annually US$ 742,000 will be added to the financial requirements as a result of investments made through this Grant, which is equivalent to 0.1% of the government’s lower-basic education (i.e., Grade 1-6) expenditure. In addition to the above-mentioned direct fiscal impact of the FTI Phase III Grant, the GoY should be aware that more teachers will be required as enrollment increases. The project aims to increase a number of student places and improve retention, which will result in more students in the system. With FTI intervention, 29,000 teachers will be required in 20 years of project commencement while in the status quo scenario, 18,000 more teachers will be required. Although the rapid increase in the enrollment is already assumed by the MTEF, additional 11,000 teachers need to be financed for the enrollment gains resulting from the FTI intervention. Because the FTI Phase III Grant is only to a finance part of the government’s MTEF, the cost implication is already assumed in the government strategy. 19 Assumption used to calculate this is annually 0.5% of total CW cost for the first 10 years and 1.5% from 11 th year. Page 71 71 Annex 10: Safeguard Policy Issues Environment 1. The Project is categorized as an environmental category B project, where the safeguard policy on Environmental Assessment (OP4.01) is triggered. An EMP was prepared by the MoE and satisfactorily implemented during FTI Phases I and II. This EMP has been updated and will be implemented during the project life to ensure effective incorporation of environmental management measures —specifically for Components 1.1 and 1.2 dealing with civil works. The EMP has been disclosed both in-country (in Arabic also) and at the World Bank Info Shop. Hardcopies of this EMP are available in the MoE, PAU and PWP/PMU. Both English and Arabic versions are disclosed on specific government websites and other relevant places in-country as of August 26, 2009, including MoE offices in the seven project governorates. The EMP was disclosed in June 2009 and the RPF was disclosed in August 2009 at the World Bank Infoshop. 2. MoE will create public awareness of the proposed schools in the districts by various means of communication and consultations, including announcements in local newspapers and other awareness mechanisms as appropriate. 3. The project is rated environment category B because activities are expected to be associated with minor, if any, adverse environmental impacts. Potential negative environmental impacts are expected to be site-specific and temporary in nature, and would be mitigated with the implementation of the EMP. Furthermore, mitigating measures for these impacts will be included in the standard bidding documents and Bills of Quantity (BoQ) for contractors. The implementing agency will ensure that any potential environmental issues are considered during planning, implementation and monitoring stages. 4. Standard school design prototypes that have been used for the BEDP-P076185 and FTI Phase I and II projects will be enhanced as appropriate, and used for new school construction under the Project. The design prototypes consist of rural 3-classroom and 6-classroom schools including classrooms, playground, boundary walls, toilets, administration rooms and staircase leading to second floor (for future expansion). The standard school design will also include pre-wiring for electricity (wires, switches, light fixtures, etc.) and roof-top rainwater harvesting structures and reservoirs for water supply. The site selection for new school construction as well as school designs have been developed in consultation with community representatives, and have taken various environmental and social criteria into consideration. Site identification is conducted by a school mapping committee consisting of the following individuals: community participation officer, engineer, district education officer and school mapping specialist. 5. Institutional and Implementation Arrangements for EMP. The Project will use the same implementation arrangements as FTI phases I and II projects, with the exception that civil works component will be implemented by PWP. PWP is currently implementing the PWP-III project (P108649) that includes construction/rehabilitation of schools as part of its civil works component. As far as the EMP is concerned, the environmental impacts and mitigation measures are mainly for the civil works component. An assessment of the PWP capacity for environmental management concluded that it has a well-established and staffed unit. It has well established Environmental Management (EM) procedures in place that are currently being adopted for all its school construction, which constitutes to more than 50% of its activities. Most mitigation measures are taken care of within the designs, while those for construction stages are included in the contracts of both the contractor & supervision engineer. The EMP for the Phase III Grant has been prepared by the PWP and included in project files. Monitoring of EMP implementation is through regular reporting system (on a monthly basis) in addition to regular site visits. Page 72 72 PWP staff and supervision engineers have received capacity building for EMP monitoring & follow-up. For the Project contractors engaged by PWP will also be trained accordingly. 6. Water and Sanitation: The standard school design prototypes for all FTI III schools will include measures for water supply and sanitation. PWP will be responsible for the inclusion of appropriate enhancements in the standard school design that will ensure provision of adequate water supply and sanitation. As per project objective, schools identified for rehabilitation and extension, as well as sites selected for construction of new schools are in rural areas of the 7 underserved governorates. a) To the extent possible, sites selected for construction of new schools will be chosen depending on availability of nearby water source. Additionally, standard designs will include measures for the capture and storage of rainwater from rooftops. PWP will ensure that water supply is available in schools when supply runs low or during dry season by having other mechanisms in place. For example, with initiative and participation from school administration and local communities, funds can be raised for water delivery by tankers when deemed necessary, as being practiced in many schools around the country. b) All schools will have toilets with overhead tanks and minimum water usage type flush designs. Design of septic tank will be included in standard school design and appropriate location for cesspit will be identified by strictly following established criteria. Adherence to compliance will be monitored by site supervisors. PWP will be responsible for ensuring that mechanisms are established within schools for functioning and maintenance of toilets. If in some instances dry latrines are found to be a better alternative based on environmental criteria for certain sites, then this could be an option for some rural schools. However, the option will be evaluated by PWP site engineers and contractors, and documented for each instance. Appropriate training will be delivered to relevant beneficiaries such as administrators and parent councils on the importance of raising funds for continual school maintenance, and to students on the importance of sanitation. 7. Reforestation Program: PWP will include a sapling (tree) planting program in civil works contracts for new school construction. At all sites designated for 3-classroom and 6-classroom schools, approximately 50-100 saplings will be planted by the contractor in the vicinity of the school. This activity will be added as an item in the BOQ for the contractor. Given the acute deforestation that the country is currently facing, this initiative will ensure that in every contract finalized, there is a provision to plant saplings/trees, both to replace those lost during construction (if any), and to increase the local green coverage. This activity also provides hands-on environmental awareness for the local communities. 8. Supervision, Monitoring and Reporting: PWP will contract consultants to undertake routine supervision of ongoing civil works (including construction of classrooms, associated structures for rainwater harvesting, and toilets), who will apply the contractors’ EMP checklist. They will complete a monthly progress report detailing implementation progress and environmental issues if any. Additionally, PWP governorate staff and sub-area managers will undertake site visits 1-2 times a month. In the quarterly progress report that PAU will submit to IDA, it will include a section on EMP implementation, giving comprehensive information on environmental issues encountered and mitigation measures applied. Information will be obtained as relevant, from various engineers, site supervisors, contractors, and GEO/DEO supervisors. 9. Impact Assessment Study: PAU will prepare an impact assessment study to highlight experience gained and lessons learned from the execution of FTI III, building on the lessons from Phases I and II (impact studies and completion reports of the Phase I and II grant are available in project files). The study will also elaborate on the status of implementation of FTI III in achieving its stated objectives. In addition, the study will include the effectiveness of implementation of environmental management measures, Page 73 73 particularly concerning the civil works component (construction, rehabilitation and renovation of schools). It will: (i) provide concrete good practice examples of water supply and sanitation systems, and give recommendations in areas where the system is not functioning; (ii) identify schools where the enrolment and retention of girls has increased due to existence of functioning toilets with built-in maintenance mechanisms by the school administration and community councils; (iii) assess contractor’s compliance with environmental management at construction sites (health and safety of workers, appropriate disposal of debris, oils/lubricants and paints, archaeological find, noise pollution, dust emission); and (iv) contractor’s compliance with agreed school standard design specifications. Social 10. Land for new construction is community owned and will be voluntarily donated by the beneficiary communities as part of their contribution. Site selection for new school construction as well as school designs have been developed in consultation with community representatives, and have taken various environmental and social criteria into consideration. Site identification is conducted by a school mapping committee consisting of the following individuals: community participation officer, engineer, district education officer and school mapping specialist. Procedure for donating land will be documented, signed by relevant individuals from the community and stamped and attested by the legitimate authority. It is critical important that the procedure for donating land is carefully documented and proper documentation will be filed with the PAU and PWP. The land acquisition process should be completed and documented before start of construction. Additionally, the school mapping exercise will confirm the absence of people living on the selected site. The voluntary donation of land by communities and their involvement in site identification was recognized as fundamental for the success of BEEP. 11. Project design builds on the successes and lessons learnt from FTI I and II grants and SEDGAP (P089761), and it will complement the ongoing BEDP while focusing on other governorates. Additionally, a full social assessment was undertaken for the preparation of SEDGAP during 2007, which was based on findings and recommendations from studies commissioned by GoY to prepare the program. As consistent with FTI I and II, FTI III project is well aligned to support GoY achieve its NBEDS target of 95% enrolment in grades 1-9 by 2015 by increasing access to and retention in quality education in selected remote rural areas of the country where the out of school population is mostly concentrated, as outlined in the HBS of 2005. The focus of Project is 7 governorates which contain 54% of out of school children in Yemen. Extensive consultations have been conducted with communities, parents (fathers and mothers councils), teachers and other donors (RNE, DFID, GTZ, KFW and UNICEF). 12. Project objectives and activities will lead to increased access to schools in remote areas of under- served governorates, and increased enrolment and retention of students, specifically for girls, in these schools—which are the primary social development objectives of the project. 13. Access to schools: According to the HBS of 2005, lack of or insufficient schools is the principal reason for non-enrolment and retention of girls in the targeted 7 governorates. Many isolated and poor communities have no school buildings; many existing buildings are in poor condition and therefore in dire need for rehabilitation; and many classrooms are frequently over-crowded and therefore schools are in need for extension. The school mapping exercise committee by following School Mapping Criteria and Ministerial Decree No. 88 will identify strategic locations for construction of new schools, which will provide students better access to schools. Adding more schools will give girls access and proximity to schools. 14. Retention of students (girls): Page 74 74 a) As recognized during FTI I and II, distribution of school kits (school bag with exercise book, pens, pencils, ruler, sharpener, etc.) has a positive effect on teachers and parents who initially felt undecided about sending their children to school due to financial commitments to fulfil school needs. Both parents and teachers felt the kits provided a good incentive for their children to learn 20 . This initiative will be continued with FTI III. b) Increasing the number of female teachers by contracting more in rural areas will support enrolment of children, especially girls. Component 2 of the project provides for contracting 500 female teachers in rural areas to support girls’ enrolment and retention in the 7 governorates. Contracted teachers will receive certification training. Additionally, a Memorandum of Understanding (MoU) between MoE, Ministry of Civil Service (MOCS) and Ministry of Finance (MoF) will be signed to ensure recruitment of contracted female teachers into civil service. It is expected that this activity of the Project will encourage girls to enrol, retain and complete education in rural areas. The ongoing adult literacy program for adults in BEDP will result in better support for the enrolment and retention of children, especially girls. c) The involvement of communities in site selection and land donation will create a sense of ownership among communities, and encourage parents to send their children (boys and girls) to school 2 1 . d) Provision of toilet facilities has been found to have a positive impact on retention of girls. It is also a relief for female teachers in rural areas. Well functioning toilets are also vital from the point of view of promotion of better hygiene practices among children. As part of lessons learnt in school design from FTI II, adequate measures will be applied to ensure water and sanitation services in toilets, the absence of which could be a big factor to deter girls’ retention in schools. 15. Students with physical disabilities: Strong social stigma makes families view children with disabilities as a burden and a source of shame. As they are often deprived of educational opportunities, FTI III standard school design has expanded opportunities for this group, as is also being implemented in BEDP. Community awareness activities will target this group, thereby encouraging them to join the mainstream education system. Besides, included in the standard school design are certain accommodations for handicapped students such as access ramps, hand rail in school and toilets. 16. Public Consultation. Although a full consultation process is not required for category B projects, small-scale consultation has been undertaken. The role of the community participation officer in the site selection committee is to ensure that site selection is carried out in a consultative and participatory manner. Additionally, as was evidenced during FTI I and II projects, awareness-raising campaigns are routinely conducted (using newspapers, radio, TV, brochures and other informal methods); fathers and mothers councils are established; and social workers organize training sessions at governorate and district levels and setup training of trainers. Extensive consultations are routinely conducted with other donors (RNE, DFID, GTZ, KFW and UNIC EF). 17. Documentation of voluntary land contribution by community: The FTI used PWP form for school selection. Among the forms is the list of people attending the consultation meeting, list of beneficiaries’ committee, and documentation for land donation. This form is attested by the MoE offices at the governorate level and the local authority. 20 Implementation completion memorandum (ICM) for FTI phases I and II projects 21 Ibid Page 75 75 Annex 11: Project Preparation and Supervision Planned Actual PCN review Dec 17, 2009 Dec 17, 2008 Initial PID to PIC Dec 17, 2009 May 05, 2009 Initial ISDS to PIC Dec 17, 2009 May 05, 2009 Appraisal July 13, 2009 July 13, 2009 Negotiations Grant Signing September 9, 2009 Planned date of effectiveness October 1, 2009 Planned closing date September 30,2012 Key institutions responsible for preparation of the project: Ministry of Education Bank staff and consultants who worked on the project included: Name Title Unit Ayesha Vawda Senior Education Specialist, Task Team Leader MNSHD Shinsaku Nomura Education Economist MNSHD Abdul Rehman Al Sharjabi Operations Officer MNSHD Christina W. Djemmal Operations Officer MNSHD Mikael Mengesha Senior Procurement Specialist MNAPR Himdat Bayusuf Education Economist MNSHD Jacob Bregman Principal Education Specialist Consultant David Freese Senior Finance Officer LOAFC Moad Alrubaidi Financial Management Specialist MNAFM Banumathi Setlur Environment and Social Development Specialist MNSSD Knut Opsal Senior Social Scientist MNSSD Colin S. Scott Lead Specialist MNSSD Asma Al-Hanshali Program Assistant MNCYE Brigitte Franklin Program Assistant MNSHD Bank funds expended to date on project preparation: 1. Bank resources: US$ 50,000 2. Trust funds: US$60,000 3. Total: US$ 110,000 Page 76 76 Annex 12: Sector Policy Letter Page 77 77 Page 78 78 Page 79 79 Annex 13: Documents in the Project File Al-Shami, Ahmed Mohammed. Final Report of the Diagnostic Study of the Current Situation of the Ministry of Education and its Branches. June 2007. Cameron, John S., Assessment of Institutional Capacity of Ministry of Education, Governorate and District Offices. March 19, 2004. Catalytic Fund Proposal, 2002, Ministry of Education, Government of Yemen Document 2002 Credible Plan, 2002 Ministry of Education, Government of Yemen Document 2002 Environment Management Plan developed by the Government of Yemen (April 2009). Implementation Completion Memorandum of the Education For All Fast Track Initiative Catalytic Fund Grant Phase I, January 2007 Implementation Completion Memorandum of the Education For All Fast Track Initiative Catalytic Fund Grant Phase II, June 2008 Impact Evaluation of the Education For All Fast Track Initiative Catalytic Fund Grant Phase I, Ministry of Education, Government of Yemen June 2006 Impact Evaluation of the Education For All Fast Track Initiative Catalytic Fund Grant Phase II. Ministry of Education, Government of Yemen, Nov 2007 Johns, Adele. Teacher Professionalism. September, 2007. National Basic Education Development Strategy Ministry of Education, Government of Yemen 2002 Operation Manual of the Female Teacher Recruitment Scheme financed through the BEDP. Project Appraisal Document: Basic Education Development Project, July 2004 Project Appraisal Document: Secondary Education Development and Girls Access Project. 2008 Smart, Andy. A Review of curriculum and textbook activities planned under World Bank-funded programs. June 2005. Smith, Ian. Study on the Capacity of the Ministry of Education to Support the Implementation of the Basic Education Development Strategy. Draft Report. Report for the Second Joint Annual Review, March 2006.\ Todd, Mark. Institutional and Capacity Building. Mission Report. February 14-27, 2004. Page 80 80 Annex 14: Statement of IDA Financing Original Amount in US$ Millions Difference between expected and actual disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev’d P092211 2009 RY-RURAL ENERGY ACCESS 0.00 25.00 0.00 0.00 0.00 25.61 0.00 0.00 P107037 2009 RY-WATER SECTOR SUPPORT 0.00 90.00 0.00 0.00 0.00 87.73 0.00 0.00 P101453 2008 RY-INSTITUTIONAL REFORM GRANT (DPL) 0.00 50.93 0.00 0.00 0.00 26.99 -26.99 0.00 P089761 2008 Sec. Educ. Dev. and Girls Access Project 0.00 20.00 0.00 0.00 0.00 19.05 1.17 0.02 P089259 2007 RY Rainfed Agriculture and Livestock 0.00 20.00 0.00 0.00 0.00 16.37 5.39 0.56 P086308 2007 RY-Second Vocational Training Project 0.00 15.00 0.00 0.00 0.00 15.97 2.73 0.00 P085231 2006 RY- SECOND RURAL ACCESS 0.00 40.00 0.00 0.00 0.00 19.45 4.73 0.00 P086865 2006 RY-POWER SECTOR 0.00 50.00 0.00 0.00 0.00 52.07 44.15 0.00 P086886 2006 RY-Fisheries Res. Mngmnt & Conservation 0.00 25.00 0.00 0.00 0.00 23.47 7.29 0.00 P076185 2005 RY-Basic Education Development Program 0.00 65.00 0.00 0.00 0.00 29.82 19.41 2.61 P082976 2004 RY-THIRD PUBLIC WORKS 0.00 74.84 0.00 0.00 0.00 26.19 -4.66 -2.51 P082498 2004 RY-SOCIAL FUND FOR DEVELOPMENT III 0.00 75.00 0.00 0.00 0.00 5.07 -11.99 -2.30 P074413 2004 RY-Groundwater & Soil Conserv Proj 0.00 70.00 0.00 0.00 0.00 37.05 8.17 -1.82 P065111 2003 RY-PORT CITIES DEVELOPMENT PROGRAM 0.00 23.40 0.00 0.00 0.00 6.57 3.20 -3.18 P064981 2003 RY-SANA'A BASIN WATER MGMNT 0.00 24.00 0.00 0.00 0.00 9.59 6.67 -0.18 P057602 2003 RY URBAN WTR SUPPLY & SANITATION APL 0.00 130.00 0.00 0.00 4.74 48.50 35.16 1.94 P043254 2002 RY-Health Reform Support Proj (HRSP) 0.00 27.53 0.00 0.00 0.00 2.82 -3.40 -6.11 P070092 2002 RY TAIZ MUNICIPAL DEV & FLOOD PROTEC 0.00 100.20 0.00 0.00 0.00 47.20 -12.95 0.18 P005906 2001 RY-RURAL WATER SUPPLY & SANITATION 0.00 40.00 0.00 0.00 0.00 11.82 -10.59 -4.80 P050706 2000 RY-CIVIL SERVICE MODERN 0.00 44.00 0.00 0.00 0.00 20.77 3.18 3.18 Total: 0.00 1,009.90 0.00 0.00 4.74 532.11 70.67 - 12.41 Statement of the IFC’s Held and Disbursed Portfolio (In Millions of US Dollars) Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 1999 ACSM 6.37 0.00 0.00 0.00 6.37 0.00 0.00 0.00 2002 Ahlia Water 1.36 0.00 0.00 0.00 1.36 0.00 0.00 0.00 2006 NCC Yemen 35.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total portfolio: 42.73 0.00 0.00 0.00 7.73 0.00 0.00 0.00 Page 81 81 Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic. 2006 HSA 0.00 0.00 0.00 0.00 2006 Ras Issa 0.05 0.00 0.00 0.17 Total pending commitment: 0.05 0.00 0.00 0.17 Page 82 82 Annex 15: Country at a Glance M. E as t P OVER T Y and SOCIAL & North Low- Yemen Africa income 2007 Population, mid-year (millions) 22.4 313 1,296 GNI per capita (Atlas method, US$) 870 2,794 578 GNI (Atlas method, US$ billions) 19.4 876 749 Average annual growth, 2001-07 Population (%) 3.0 1.8 2.2 Labor force (%) 4.2 3.6 2.7 M os t recent es timate (lates t year available, 2001-07) Poverty (% of population below national poverty line) .. .. .. Urban population (% of total population) 30 57 32 Life expectancy at birth (years) 62 70 57 Infant mortality (per 1,000 live births) 75 34 85 Child malnutrition (% of children under 5) 41 .. 29 Access to an improved water source (% of population) 66 89 68 Literacy (% of population age 15+) 54 73 61 Gross primary enrollment (% of school-age population) 87 105 94 Male 100 108 100 Female 74 103 89 KE Y E CONOM IC R AT IOS and L ONG-T E R M T R E NDS 1987 1997 2006 2007 GDP (US$ billions) .. 6.9 19.1 22.5 Gross capital formation/GDP .. 24.7 .. .. Exports of goods and services/GDP .. 35.8 .. .. Gross domestic savings/GDP .. 16.0 .. .. Gross national savings/GDP .. 25.0 .. .. Current account balance/GDP .. 0.3 .. .. Interest payments/GDP .. 0.4 0.3 .. T otal debt/GDP .. 55.8 29.2 .. T otal debt service/exports .. 2.6 .. .. Present value of debt/GDP .. .. 19.5 .. Present value of debt/exports .. .. .. .. 1987-97 1997-07 2006 2007 2007-11 (average annual growth) GDP 6.0 4.1 3.2 3.6 .. GDP per capita 1.5 1.0 0.1 0.6 .. Exports of goods and services 27.2 8.6 .. .. .. ST R UCT UR E of the ECONOM Y Yemen, Rep. Low-income group D evelopment diamond* Life expectancy Access to improved water source GNI per capita Gross primary enrollment Yemen, Rep. Low-income group E conomic ratios * Trade Indebtedness Domestic savings Capital formation 1987 1997 2006 2007 (% of GDP) Agriculture .. 16.3 .. .. Industry .. 43.2 .. .. Manufacturing .. 10.3 .. .. Services .. 40.5 .. .. Household final consumption expenditure .. 71.0 .. .. General gov’t final consumption expenditure .. 13.0 .. .. Imports of goods and services .. 44.5 .. .. 1987-97 1997-07 2006 2007 (average annual growth) Agriculture 4.7 3.3 .. .. Industry 8.4 4.5 .. .. Manufacturing 5.0 9.9 .. .. Services 5.4 4.3 .. .. Household final consumption expenditure 3.0 1.5 .. .. General gov’t final consumption expenditure -0.1 8.7 .. .. Gross capital formation 14.6 0.8 .. .. Imports of goods and services 15.9 3.0 .. .. Note: 2007 data are preliminary estimates. T his table was produced from the Development Economics LDB database. * T he diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. 0 5 10 15 2 0 02 03 04 05 06 07 GCF GDP Growth of capital and GDP (%) -20 -10 0 10 20 02 03 04 05 06 07 Exports Imports Growth of exports and imports (%) Page 83 83 Yemen, Rep. P R ICE S and GOVE R NM E NT F INANCE 1 987 1997 2006 2007 D omes tic prices ( % change) Consumer prices .. 2.2 .. .. I mplicit GDP deflator .. 11. 8 13.6 15.0 Government finance (% of GDP, includes current grants) Current revenue .. 32.0 .. .. C urrent budget balance .. 4.8 .. .. Overall surplus/deficit .. -1. 5 .. .. T RADE 1987 1997 2006 2007 (US$ millions) T otal exports (fob) .. 2,274 .. .. Crude oil (government share) .. 1, 012 .. .. Crude oil (company share) .. 933 .. .. Manufactures .. 26 .. .. T otal imports (cif) .. 2,407 .. .. Food .. 992 .. .. Fuel and energy .. 231 .. .. Capital goods .. 440 .. .. Export price index (2000=100) .. 71 .. .. Import price index (2000=100) .. 107 .. .. T erms of trade ( 2000=100) . . 67 .. .. 0 2,000 4,000 6,000 8,000 01 02 03 04 05 06 07 Exports Imports E xport and import levels (US $ mill.) -10 0 10 20 30 02 03 04 05 06 07 GDP deflator CPI I nflation (%) Page 84 84 Annex 16: Maps