Document of The World Bank FOR OFFICIAL USE ONLY C4Z % 1 7 qY- 70V Report No. P-5336-TO MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 7.0 MILLION TO THE REPUBLIC OF TOGO FOR A TECHNICAL EDUCATION AND VOCATIONAL TRAINING PROJECT JULY 23, 1990 This documeat has a restricted dsributon and may be used by redpients only In the perfomnce of their offkial dudes. Its contents may not odrwise be dbibsed without Word Bank autrizatioL CURRENCY EQUVALENTS Currency Unit - CFA Franc (CFAP) US$ 1 - CYAF 285 (July 1990) CFAF 1 Million - US$ 3,184.71 SDR 1 US$ 1.2987 MEASURES I m - 1.09 yd. 1 m2 - 10.76 sq. ft. 1 km2 - 0.38 sq. mi. ABBREVIATIONS AND ACRONYMS DAC = Directorate of Administrative Affairs DAFPP = Directorate of Apprenticeship and Vocational Training DERP = Directorate of Studies, Research and Strategic Studies DET - Directorate of Technical Education FED = European Development Fund NTF - National Training Fund GTZ - German Technical Cooperation METFP = Ministry of Technical Education and Vocational Training VET - Technical Education and Vocational Training FISCAL YEAR SCHOOL YEAR January 1 - December 31 September - August FOR OFFICI USE ONLY REPUBLIC OF TOGO TECHNICAL EDUCATION AND VOCATIONAL TRAINING PROJECT CREDIT AND PROJECT SUMM4RY Borrowers Government of the Republic of Togo BeneficiarZ: Ministry of Technical Education and Vocational Training (METFP) IDA Credit Amounts SDR 7.0 million (US$9.2 million equivalent) Termss Standard with 40 years maturity Onlendint Terms: Not applicable Financins Plan: Locl Foroign Toal (US- M1lII11on) IDA 2.40 .67 9.16 EC 0.86 2.8S 3.n Govnent 2.9U 0.00 2.87 Toal 6.21 9.52 15.73 Estimated Disbursements from IDA credit: - ~~- Ca lender Year (USS ml lI one) 1990 1991 192 9 1994 199s 1996 1997 Annual: 7i 70 1 . Ti T -F 1.0 XU T Cwmlative: 0.J 1.1 2.0 3.2 6.6 6.1 9.1 9.2 Economic Rate of Return: Not applicable Staff Appraisal Report: 8655-TO Map: IBRD 22419 This document has a resticted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. 1 MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE REPUBLIC OF TOGO FOR A TECHNICAL EDUCATION AND VOCATIONAL TRAINING PROJECT 1. I submit for your approval the following memorandum and recommendation on a proposed development credit to the Republic of Togo for SDR 7.0 million (US$ 9.2 million equivalent). The proposed credit would be on standard IDA terms with forty years maturity and would help finance a technical education and vocational training project. The project would be cofinanced by a grant from the European Development Fund (FED) for USS 3.7 million equivalent and by a Government contribution of US$2.9 million equivalent. 2. Country Sector Background: With the creation of the Ministry of Technical Education and Professional Training (METFP) in 1984, the Government started to focus attention on the need to reform technical education and vocational training (VET). However, because the vocational training tax was not used for training but fed Treasury's general resources, and because METFP's structure was incomplete, little progress has taken place in reshaping the system. VET continues to be regarded as a second choice for those who cannot continue directly within general education. Yet, although VET will continue to be rather limited in size (due in part to the small modern sector of the economy which absorbs only 4? of school leavers), its importance for long-term growth and development will increase. In particular, it is crucial in addressing the employment needs of a private sector being enhanced by the adjustment process. 3. The key sectoral issues are: (i) the 'social' orientation of VET which has aimed at fulfilling the aspirations of students for further studies rather than enhancing employability; (ii) METFP's management and planning weakness and the lack of linkages to employers and the private sector; (iii) outdated qualifications of VET staff, inherited for the most part from general education and thus unrelated to current labor market conditions; and (iv) inadequate and unstable sector financing which has declined over the last six years. 4. Government's revised VET policy is designed to address the above issues. It consists of a shift from a socially oriented supply-driven VET system to an employment oriented demand-driven system. It requires greater involvement of the business and industrial community, and will necessitate streamlining and completing the METFP's organizational structure. New content and instructional methods will be based upon two ideast 'professionalization' of content and the use of "dual" training methods. "Professionalization' will increase both the practical content of technical education and the theoretical content of apprenticeship training. 'Dual' training will combine theory courses in 2 training establishments with part-time practical instruction and work experience in business and industry. On the financial side, in 1989 the vocational training tax was formally allocated to training and will thus increase resources for VET. Revisions, based on a competitive national training fund, in the method of allocating resources for training will lead to more efficient and effective resource use. 5. Rationale for IDA involvement: The thrust of IDA's country strategy is to provide consistent and coherent support for the Government's efforts to eliminate obstacles to long term growth and development. Education and training issues, especially as they relate to labor market needs, have not been explicitly addressed in past structural adjustment programs, and previous human resources projects have been limited to general education with no specific concern for training for employment in the private sect'r. Through its involvement, IDA will help integrate these issues into the development process, and assist in improving Government expenditure patterns in the sector, while increasing the overall productivity of the work-force through a better match between supply of and demand for skilled manpower. It will also help coordinate other aid efforts, primarily through improvements in sector analysis, planning, budgeting, and management, and the promotion of new approaches to training. 6. Proiect Obiectives: The first objective of the project is to make the technical education and vocational training system demand driven, employment oriented and responsive to the needs of the productive sectors. The main strategy to address this objective is to create: (1) a capacity to monitor the state of the labor market and the performance of training institutions, and provide feedback to guide the funding of training; and (2) a flexible funding mechanism to allocate finance to specific training programs based on identified labor market needs. The second objective is to strengthen the structure and activities of METFP, the key arm of the Government for implementing VET policies. This will be achieved by strengthening the institutional capacity of the METFP, and supporting the development of a regional VET network. 7. ProJect Description: The project has three components: (i) strengthening the administrative capacity of all METFP directorates, and specifically creating a 'Training and Employment Observatory, which will monitor the labor market and the employability of VET trainees and provide feedback to guide the funding of training; (ii) training and upgrading VET staff to improve manager- ial and administrative staff's familiarity with dual training methods, and to improve instructional staff's skill specializations; (iii) creating a "National Training Fund' which will allocate finance to specific training sub- projects such as the reform of existing training institutions and work experience internships, based on labor market needs. The total project cost is estimated at US$15.7 million equivalent, with a foreign exchange component of US$9.5 million (60Z). A breakdown of costs and the financing plan are shown in Schedule A. Amounts and methods of procurement and of disbursements, and the disbursement profile are shown in Schedule B. A timetable of key project 3 processing events and the status of Bank Group operations in the Republic of Togo are given in Schedules C and D, respectively. A map is attached. The Staff Appraisal Report, No. 8655-TO, dated July 23, 1990, is also attached. 8. Agreed Actionst Agreement has been reached with the Government on project objectives and design. Specific agreements cover: (1) the streamlining and realignment of responsibilities between the METFP's Directorates; (2) the effective allocation of the vocational training tax to the National Training Fund (NT?) for the funding of training activities; (3) the legal texts governing the administrative procedures and management of the NTF; (4) the pipeline of training projects for the first eighteen months of the NTF's operations; and (5) the criteria governing selection of training sub-projects eligible for financing by the NTF. These criteria cover the economic, instructional, and financial characteristics of sub-projects and include cost- sharing between Government and the private sector. Other agreements reached during negotiations include: (i) the overall size of the formal training system and its share in the education sector's budget; (ii) the technical education and vocational training investment program for the next three years and its investment budget for 1991; and (iii) the appointment of personnel to three key posts (Project Coordinator, Director of the METFP's Directorate of Studies, Research and Strategic Studies, and the Executive Secretary of the NTF). 9. Environmental Aspects: As part of the instructional courses, the environmental awareness of trainees will be raised. The project activities themselves will have no adverse environmental effects. 10. Proiect Benefits: The first benefit of the project is institutional. The project will strengthen the key strategic functions of the METFP, and put in place improved procedures for the allocation and use of public funds. Thus, Government will be better able to administer the VET system. Direct association of the private sector in the content and operation of the training activities will establish automatic regulation of the system, thereby improving its responsiveness to the needs of the economy. The second benefit is economic. It will come in the form of an annual output of between 500 and 1000 highly skilled and productive workers ready for immediate employment in pre-identified posts. This will reduce the level of graduate unemployment and raise the productivity of the workforce, thereby contributing to private enterprise competitiveness and economic growth. The third benefit is also economic; the project will produce a number of efficiency gains. Changes in testing and examinations, together with the adoption of dual training methods should contribute to 4ecrease student repetitions. Dual training, besides providing practical work experience, will also free-up training places allowing more efficient use of existing training facilities and an increase in the number of in-service trainees. Finally, the use of competitive funds will promote both quality control of training and cost efficiency improvements. Efficient resource allocation with better management will reinforce, at the sector level, the Government's structural adjustment program. 4 11. Riskss There are three main risks. First, Government's commitment to allocate funds for VET through a competitive national training fund (NTF) rather than through annual budgetary allocations might wane. This was addressed during project preparation with the finalization of all necessary legal documents needed to allocate the proceeds of the vocational training tax to the training fund. To ensure implementation, a specific condition has been attached to this credit. Resource allocation will also be addressed through the regular annual reviews of public expenditures and public investments which are due to take place for this sector in the framework of the macroeconomic adjustment program. Second, there is a possibility of reluctance on the part of the private sector to play an active role in training of the workforce. The second risk has been addressed during project preparation. At that time, the private sector was fully consulted and played an active role in the preparation and design of the projects now in the pipeline awaiting NTF financing approval. In addition, METFP is preparing a guide for employers interested in using the NTF and will run a national publicity campaign. Finally, the METFP has limited capacity to manage the implementation of a project of this nature. This issue is addressed by phasing the implementation of the project to minimize the burden on the institutions involved in the VET system. The METFP will be reinforced with short-term consultant services in specialized training issues, and training programs will be run for the national team in charge of the project. 12. Recommendation: I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve the proposed credit. Barber B. Conable President Washington, D.C. July 23, 1990 5 Schedule A REPUBLIC OF TOGO TECHNICAL EDUCATION AND VOCATIONAL TRAINING PROJECT ESTIMATED COSTS AND FINANCING PLAN Project Cost Summr, ----- - (US$ mllon) ----- I. xnstltAlonv 1Ov lop t Local Foreign Totel 1. Str ngth ning ItiTFPP Dir ectrates DERP 0.6. 0.3 0.98 OET 0.21 0.0? 0.87 DAFPP 0.06 0.15 0.21 DAC 0.09 0.89 0.48 2. Labor Market Informalon System OEF 0.10 0.21 0.87 8. Monitoring the VET Reform Program Monitoring the Reform 0.15 0.08 0.18 Coordinating the project/PPF 0.00 0.51 0.51 Sub-Total I I 2 9) ) II. Traininj of sector personnel In $dual' VET 1. Management and Administrativ- Staff 0.00 0.41 0.41 2. Instructional Staff 0.00 0.45 0.46 Sub-Totsl II T ..07) T M7) III. National Trainins Fund 3. Cr Ting the "nagerial structures Management Committee 0.02 0.00 0.02 Executive Secretariat 0.28 0.18 0.41 2. Funding Training Activities VET reform sub projects 1.56 2.84 8.09 SAVP 0.24 0.00 0.024 Other non specified sub projects 1.52 2.86 8.68 Sub-TotalIII 7 6S) '(8) (T.4T) Total Base Cost 4.8B 8.04 12.90 Physical Contingencles 0.87 0.68 1.06 Price Contingencies 0.0# 0.61 1.78 Total Project Costs 8.21 90.2 15.78 Financing Plan IDA 2.48 6.67 9.15 EC 0.68 2.86 8.71 Covrnment 2.87 0.00 2.67 Total 6.21 9.52 15.78 6 RE PULIC OF TOGO Schedule B TECHNICAL EDUCATION AND VOCATIONAL TRAINING PROJECT PROCUREOMET METHOD AND DISBURSEMENTS Procurement metho - ------- (US U illion.)--- -_ Proomeselemof t Ica LC Othr N/A Total Civil Works 0.6 1.6 - - 2.4 (0.() (1.0) -- --- 0) Furniture 0.1 0.2 -- - 0.8 (0.1) (0.1) ____-@2) Equ1p_wt 1.8 1.1 0.0 - 2.4 (1.8) (0-0) (0.0) _ (2.2) of whRub vebicles 0.8 0.0 - -- 0.8 (0.8) (0.0) __ _ (0.8) Teahing Vatwrilsi 0.1 0.1 0.0 - 0.6 (0.1) (0.1) (0.0) __ (0.2) Consultant Services - - 2.8 -- 2.8 _ t.(1.9) - (1-9) Training Cost - - 2.6 - 2.5 -- - (0.8) - (0.8) Fl lohlps - --15 1.5 - - - (1.5) (1.5) Opereting cot - - -- 2.4 2.4 _ - (0.7) (0-7) PPF Refinancing - -0. 0.6 -- ~- - (.-6 (0.0) TOTAL 2.8 8.0 5.9 4.5 15.7 TOTAL FDWCD BY IDA 2.1 2.1 2.2 2.8 _9.2 Not.: Figures In pereothose show therespectiv amount financsd by the IDA Credit. Allocation and Disbursement of IDA Credit (in USN *lllions) Cateaorv Amounts PC9b fooniuo 1. Cvi I Work 0.1 2. Furniture 0.1 90 S. Equipment 0.4 100 4. Coesultant Servlce 1.8 100 S. fe lowships 1.8 100 6. Operating Costs/Personnel 0.6 80X In 1990 and 1991; SON In 1992; 4OX In 1998; and 20X in 1994. 7. Goods, Sorvices & Works financed under Grents 8.7 80 8. PPF Refinancing 0.0 100 9. Una Iocated 1.1 TOTAL -: Estimated Olebursments frem IDA credit: _ _ _ Calendar Year- (ml lIions US$) 1990 1991 1992 1998 1994 1996 1996 1997 Annual: 51 - 0 9: - 2. 6 T n i:c T T Cumulattve: 0.8 1.1 2.0 8.2 6.6 8.1 9.1 9.2 Schedule C REPUBLIC OF TOGO TECHNICAL EDUCATION AND VOCATIONAL TRAINING PROJECT Timetable of ReZ Project Processing Events: (a) Time taken to prepares 20 months (b) Prepared bys Government and consultants financed by a PPP (c) First IDA missions February, 1988 (d) Appraisal mission departure: October, 1989 (e) Negotiations: July, 1990 (f) Planned date of effectiveness: October, 1990 (g) List of relevant PCRs & PPARss PCR Credit 1018-TOt- EFC139 October 11, 1988 8 Schedule D THE STATUS OF BAK GROUP OPERATIONS IN TOGO A. STATET_ OF PNK LOANS AND IDA CREDITS (As of April 30, 1990) Almost is LO millius Loan or Fiscal Undis- Closing Credit No. Year Borowr Purpose ank IDA burid Date Credits 21 Cridits(s) closed 240.97 C13020-TD6 1983 1060 RURAL DEVT. II 23.50 03/31/91(RI C13540-TOG 1983 T090 #ATER SUPPLY 12.00 5.48 12/31190 C15680-TOG 1985 T060 EDUCATION DEV. II 1 .40 4.63 06130/91 C16000-TUG 1985 TOG0 T.A. III 6.20 2.31 06130191(RI C13021-TO0 1986 TO6Q RURUAL OEVT. It 6.90 8.34 03/31191(R) C17450TOG 1987 1060 COCOAI/CFFEE III 17.90 8.38 12/31/92 C16080-TO6 1987 T060 AGRICULTURAL EITENSI 9.70 8.25 0630193 C18430-TOG 1988 T080 IOF 11.50 10.72 06/30/97 C19610-TOS 1988 1O60 TRAIISP REIHAB 40.00 33.62 06/30194 C19290-TU0 1988 T08 COTTON III 15.10 13.96 06/30/93 C19930-TO 19B9 tO60 BRAS5OOTS DBEV.INITI 500 4.33 12/31/94 C20180-TOC 1969 1 TM6 PRE-INVEST PROJECT 5.00 5.16 12131/92 C20560-T06 1989 T090 TELECOM 16.00 16.42 12/31194 C18922-TOG(S) 1990 tO60 SAL III .20 .26 1030190 TOTAL nuber Credits x 14 181.40 121.92 Loans 4 Loans(s) closed 60.00 All closed for TOS0 TOTAL number Loans 0 TOTAL4a* 60.00 422.37 of which repaid 51.39 2.82 TOTAL held by Bank & IDA 9.61 419.56 Aount sold of ohich repaid TOTAL undisbursed 122.03 Notes: * Not yet effective If Not yet siqned n Total Aproved, Repayments, and Outstanding balance represent both active and inactive Loans and Credits. (Rl indicates formally revised Closing Date. (SI indicates SAL/SECAL Loans and Credits. The Net Approved and Bank Repayments are historical value, all others are market value. The Signing, Effective, and Closing dates are based upon the Loan Departeent offical data and are not taken from the Task Budget file. 9 Schedule D THE STATUS OF UANK GROUP OPERATIONS IN TOGO A. STATHE3NT OF BANK LOANS AND IDA, CREDITS continued List of Closed SALs and SECALs (As of June 30, 1990) Amount in USS illion (less Cancllations) Loan or Fiscal Undis- ClUosing Credit No. Yee Dorromer Purpose link IDA bursed Date- C136S0-TO6 1983 TMDD SBC 20.00 .00 12/31195 C15fl90-T06 1995 TOSD STSUC.mDJ. 11 27.90 .00 12/31/87 CA0020-T06 1986 T06 STRWC.ADJ. II 10.00 .00 12/31/87 C18920-TO0 1999 T0DD SAL III 45.00 .11 05/31190 C18921-T06 1989 TUB SAL III .10 .00 05131190 Total TO6 122.90 .11 10 Schedule D B. STATEMET OF IPC DMNESTMENTS (As of May 24, 1990) Fiscal Type of Year Obliger Business Loan Uguity Total ---------US$ mln------ 1987 PAC-TOGO Textiles & Fibers 7.09 1.00 8.09 1987 Ducros-TOGO Food & Food Processing 1.40 - 1.40 1988 STS Iron & Steel 0.85 - 0.85 9.34 1.00 10.34 Less Cancellations, Payments and exchange adjustments 7.07 1.00 8.07 Total Coditments held by IPC 2.27 - 2.27 9 Schedule D TEE STATUS OF BANK GROUP OPERATIONS IN TOGO A. STATEMENT OF BANK LOANS AND IDA CREDITS continued List of Closed SALs and SECALs (As of June 30, 1990) Asount in U0$ siXlion Il.ss cancellations) Loan or Fiscal Undis- Closing Credit No. Year Burrwer Purpose Bank IDA bursed Date C00030-T06 1993 T0OG SAC 20.00 .00 12131195 C13U0-T06 1993 TOWO SAC 20.00 .00 12/31/15 C15990-T0S 1995 TMO6 STRUC.ADJ. 11 27.90 .00 12/31/0t CA0020-T0S 190A TMO STRIC.AOJ. II 10.00 .00 12/31/07 C10920-TOS 1989 TOfU SAL III 45.00 .11 05/31/90 C18921-TUS 1989 TMO SAL III .10 .00 05131190 Total TDO 122.90 .11 10 Schedule D B. STATEMENT OF IPC INVESTMENTS (As of May 24, 1990) Fiscal Type of Year Obliger Business Loan-- lUitS Total 1987 PAC-TOGO Textiles & Fibers 7.09 1.00 8.09 1987 Ducros-TOGO Food & Pood Processing 1.40 - 1.40 1988 STS Iron & Steel 0.8S - 0.85 9.34 1.00 10.34 Less Cancellations, Payments and exchange adjustments 7.07 1.00 8.07 Total Coumitments held by IPC 2.27 - 2.27 - 4