Document o f The World Bank

FOR OFFICIAL USE ONLY

Report No: 25520-LSO

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT

IN THE AMOUNT OF SDR 15.3 MILLION

(US$2 1 .O MILLION EQUIVALENT)

TO THE

KINGDOM OF LESOTHO

FOR THE

SECOND EDUCATION SECTOR DEVELOPMENT PROJECT (PHASE 11)

IN SUPPORT OF THE SECOND PHASE OF THE EDUCATION SECTOR PROGRAM

M A Y 20,2003

Human Development 1 Country Department 1 Africa Region

This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not be otherwise disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective May 8,2003)

Currency Unit = Lesotho Maloti M 1.00 = US$0.138

US$1 = M 7.23

ART COSC CSR CWIQ DTEP DRT DTT ECCD ECOL EFU EMIS FPE G O L ICT JC L C E NFE MOET MTEF NCDC NER N M D S NTT NUL PCSU PER PCR PRSP PTR ssu TTI TVET

FISCAL YEAR April 1 -- March 31

ABBREVIATIONS AND ACRONYMS

Area Resource Teacher Cambridge Overseas School Certificate Country Status Report Core Welfare Indicator Questionnaire Distance Teacher Education Program District Resource Teacher District Teacher Trainer Early Childhood Care and Development Examination Council o f Lesotho Education Facilities Unit Education Management Information System Free Primary Education Government o f Lesotho Information, Communication and Technology Junior Certificate Lesotho College o f Education Non-formal Education Ministry o f Education and Training Medium Term Expenditure Framework National Curriculum Development Center N e t Enrollment Ratio National Manpower Development Secretariat National Teacher Trainer National University o f Lesotho Project Coordination and Support Unit Public Expenditure Review Pupil Classroom Ratio Poverty Reduction Strategy Paper Pupil Teacher Ratio School Supply Unit Thaba-Tseka Technical Institute Technical and Vocational Education Training

Vice President: Callisto Madavo Country ManageriDirector: Fayez Omar

Sector ManageriDirector: Dzingai Mutumbuka Task Team LeaderiTask Manager: Xiaoyan Liang

FOR OFFICIAL USE ONLY

LESOTHO SECOND EDUCATION SECTOR DEVELOPMENT PROJECT (PHASE 11)

CONTENTS

A. Program Purpose and Project Development Objective

1. Program purpose and program phasing 2. Project development objective 3. K e y performance indicators

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 2. M a i n sector issues and Government strategy 3. Sector issues to be addressed by the project and strategic choices 4. Program description and performance triggers for subsequent loans

C. Program and Project Description Summary

1. Project components 2. K e y pol icy and institutional reforms supported by the project 3. Benefits and target population 4. Institutional and implementation arrangements

D. Project Rationale

1. Project alternatives considered and reasons for rejection 2. Major related projects financed by the Bank and/or other development agencies 3. Lessons learned and reflected in the project design 4. Indications o f borrower commitment and ownership 5. Value added o f Bank support in this project

E. Summary Project Analysis

1. Economic 2. Financial 3. Technical 4. Institutional 5, Environmental 6. Social 7. Safeguard Policies

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6 6

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23 24 26 27 28

28 30 31 34 36 37 38

This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not be otherwise disclosed without World Bank authorization.

F. Sustainability and Risks

1. Sustainability 2. Critical r isks 3. Possible controversial aspects

G. Main Credit Conditions

1. Effectiveness Condition 2. Other

H. Readiness for Implementation

I. Compliance with Bank Policies

Annexes

Annex 1 : Project Design Summary Annex 2: Detailed Project Description Annex 3: Estimated Project Costs Annex 4: Economic and Financial Analysis Annex 5: Financial Summary Annex 6: (A) Procurement Arrangements

(B) Financial Management and Disbursement Arrangements Annex 7: Project Processing Schedule Annex 8: Documents in the Project File Annex 9: Statement o f Loans and Credits Annex 10: Country at a Glance Annex 1 1 : Fulfillment o f Triggers for Moving from Phase I to Phase I1 Annex 12: Performance Indicators and Technical Notes Annex 13: Letter o f Sector Policy

38 39 39

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42 52 66 68 75 76 82 88 89 90 92 94 98

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MAP( S) IBRD No. 29948

LESOTHO Second Education Sector Development Project (Phase 11)

Project Appraisal Document Africa Regional Office

AFTH 1

Date: May 20, 2003 Sector ManagedDirector: Dzingai B. Mutumbuka Country ManagedDirector: Fayez S. Omar Project ID: PO81269 Lending Instrument: Adaptable Program Loan (APL)

Team Leader: Xiaoyan Liang Sector(s): Primary education (65%), Secondary education (25%), Vocational training (5%), Tertiary education (3%), Pre-primary education (2%) Theme(s): ducati ion for all (PI, Education for the knowledge economy (S)

APL 1 Credit

-

Commitment Closing - US$ m % US$ m US$ m Date Date 21.00 78.7 5.70 26.70 0913011999 1213 112003 Kingdom o f Lesotho

APL 2

APL 3 Credit

Credit

21.00 77.2 6.20 27.20 0913012003 1213 112007 Kingdom o f Lesotho

25.00 75.8 8.00 33.00 0913012007 1213112011 Kingdom o f Lesotho

Total I 67.00 I

EDUCATION AND TRAINING (MOET)

Project implementation period: 913012003 - 1213 1/2007 Expected effectiveness date: 09!3012003 Expected closing date: 12!3 112007

I ’ C l A ’ i ” 0 i r m *(nU./” 2m

19.90 I 86.90 I

A. Program Purpose and Project Development Objective 1. Program purpose and program phasing:

Lesotho i s a mountainous country surrounded by South Africa with a population o f about 2 mi l l ion and a 1999 GNP per capita o f US$550. The country i s resource scarce for international trade purposes. However, Lesotho’s water and (the sk i l l s o f its) people have some prospects o f becoming relatively abundant and could be used for development purposes. For instance, through the Highland Water Project, Lesotho recently started harnessing i t s water resources for export to South Africa. Also, traditionally more than 20% o f GNP has come from remittances by Basothos residing and working in South Africa and other countries. Recognizing this, the Government o f Lesotho (GOL) has manifested i t s commitment to education through (a) devoting a relatively high share o f government budget to education, (b) embracing the Education for All and Millenium Development Goals, and (c) identifying education as one o f the key strategies for alleviating poverty in i t s interim Poverty Reduction Strategy Paper, and (d) adopting a Free Primary Education (FPE) policy in 1999.

Program Phases Phase I

(September 1999 to December 2003)

Phase I1 (tentative)

Phase 111 (tentative)

The 12-year Education Sector Development Program (ESDP) I1 designed in 1999. The ESDP I1 was designed in 1999 (prior to FPE) as a 12-year Adaptable Program Loan (APL) to support the education sector. The goal o f the 12-year program i s to assist the GOL in achieving i t s goal o f producing more and better educated Basothos and enabling them to participate in local and regional labor markets. The 1999 ESDP I1 Project Appraisal Document (PAD) for Phase I stated that the program purpose was to produce “more Basotho better educated, and actively employed both regionally and locally and participating in community leadership roles”.

Investment Areas

Revitalizing TVET program

Deepening institutional reforms

Developing policy options/capacity building in ECCD; strengthening ECCD linkages to primary education At the primary & secondary school level, increasing accesdequity, developing policy optionshmproving quality o f education Developing policy options and building capacity in TVET Developing policy options and building capacity in NFE Implementing and strengthening institutional reforms Undertaking a public expenditure review (PER), making budget allocations based on MTEF Implementing a comprehensive program o f ECCD with clearly defined roles for GOL and other providers Continuing support to primary and secondary education

Strengthening the delivery o f NFE

Strengthening the delivery o f ECCD to reach 50% of 3-5 year olds Continuing support to primary level to achieve universal primary education and to secondary education tc achieve 40% net enrollment Building upon Phase I and Phase I1 investments in TVET and NFE Completion o f institutional reforms targeted by program

The ESDP I1 i s to be implemented in three phases: Phase I (1999-2002), Phase I1 (2003-2006), and Phase I11 (2007-201 1). As indicated in the ESDP I1 Phase I PAD, Phase I will mostly support primary and secondary education and to underpin investments later on will also support extensive analysis and capacity building in the areas o f ECCD, TVET and NFE. Similarly, analytical work completed in Phase I1 wil l underpin investment decisions for Phase 111. outlines the major investment areas for each o f the Phases as conceived in 1999:

The table below

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I t was understood that the design o f the 2nd and 3rd phases was tentative and may be changed to take into account the important developments in education and the achievements and lessons learned from the 1 st phase implementation.

Important developments in education since 1999: Free Primary Education, Medium Term Expenditure Framework, and Education Sector Strategic Plan. Three important developments in education characterize the sector since 1999 which have had a bearing on the design and implementation o f Phase 11. First, in 1999, the GOL introduced a Free Primary Education Policy. The pol icy was to be implemented in a phased fashion so that fees were abolished for one standard every year starting from 2000. In addition to abolishing fees, the policy also includes provision o f a teaching and learning materials package, school feeding, and maintenance. Immediately after the policy, primary enrollment increased from 365,000 to 41 1,000 in 2000, a 12% increase. M u c h o f the enrollment increase was in Standard 1. The primary enrollment kept increasing in 2001 and 2002, though the rate o f increase was much slower compared to 2000. By 2002, total primary enrollment reached over 418,000.

Second, as an explicit strategy for improving the equity and efficiency o f sector budget allocation, ESDP I1 built in i t s design the development o f a Medium Term Expenditure Framework for Education (MTEF). Tremendous progress has been achieved in uti l izing MTEF for purposes o f budget preparation. Major achievements were (i) the review o f the budget and financial management system -- a new system o f classification o f expenditure which has been prepared by the Ministry o f Education and Training (MOET) and concurred to by the Ministry o f Finance; (ii) reviewed and obtained ceilings for programs and sub-programs which fit within the overall ministry budget ceilings; (iii) achieved adequate allocative weights to suit strategic priority areas; (iv) developed budgets for recurrent (personal emoluments and other costs) and capital; (v) drafted a supplementary note explaining the basis for determining the various ceilings and concept o f a three year indicative budget cycle. I t i s expected that the MOET will continue to use MTEF to align sector budgets with priorities.

Thirdly in 200 1, the MOET started the process o f developing an Education Sector Strategic Plan, with financial support f rom DffD. The draft as it stands has provided some basic input to the development o f the MTEF and the log-frame workshop in preparation o f the proposed ESDP I1 Phase 11. The Ministry and the development partners are, however, o f the view that the Plan needs further work to strengthen i ts status as the education sector strategy o f the country. In addition to editing, the document would benefit from fine tuning in areas such as: priority setting, costing estimation, and development o f projections.

Achievements and lessons learned during the ESDP I1 Phase I. The ESDP I1 Phase I (Education Sector Development Project I1 Credit 3 192) has an IDA allocation o f US$21 mill ion. The closing date o f Phase I was extended for an additional year up to December 3 1, 2003. I t s development objectives were to assist the Government o f Lesotho in i t s effort to increase the access, equity, and improve the quality o f primary and secondary education. Further, it supported the Government in the development o f a pol icy and institutional framework for early childhood education, technical and vocational education, and non-formal education.

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Specifically, ESDP I1 Phase I has supported the fol lowing major activities:

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Capacity building in ECCD and establishment o f home-based ECCD care in 4 p i lo t districts Development o f a Medium Term Expenditure Framework for education Training o f existing Secondary School Boards, Primary Advisory Committees, and Primary Management Committees Construction o f 4 13 primary classrooms including 63 in remote and “inac~essible’~ areas Construction o f School-Supply Unit Warehouse and refurbishment o f Lesotho Teacher College student hostels Launching o f Primary Distance Teacher Education Program and enrolling a total o f 750 teachers in years 2002 and 2003 Provision o f primary core textbooks needed to cover the additional enrollment due to FPE and for replenishment o f the existing stock Launching o f a scholarship program and awarding 15,000 scholarships orphans and other disadvantaged children in 200 1 and 2002 Support for an education EMIS program which utilizes ED*Assist and producing annual educations statistics in a consistent fashion Policy work and capacity building for technical and vocational education Policy work and capacity building in non-formal education and piloting o f Learner Post literacy program in 2 districts Ministry-wide capacity building

However, ESDP I1 Phase I has experienced persistent diff iculty in implementing the TVET and NFE components. Delays, omissions, and in the majority o f cases, slow progress appear to have characterized particularly the TVET system. Reasons include (a) a lack o f capacity in the Ministry in TVET; (b) the introduction o f FPE and focus on primary and secondary education diverted the Ministry’s attention from TVET; and (c) the complexity o f TVET reform. As a result, none o f the TVET and NFE triggers will be fulfilled by the end o f Phase I (see Annex 11 on trigger fulfil lment).

The Proposed ESDP I1 Phase 11: The design o f the ESDP I1 Phase I1 i s guided by the above three factors: (a) the ESDP I1 framework agreed in 1999; (b) recent developments in education; and (c) lessons learned from implementing Phase I. This proposed Project (with a proposed IDA allocation o f US$2 1 mil l ion) will support mainly the continuation o f activities o f Phase I during the period o f September 2003 to December 2007, including support for primary and secondary education, early childhood care and development, continued pol icy work and capacity building in technical and vocational, higher and non-formal education, and MOE institutional strengthening.

2. Project development objective: (see Annex 1)

The Development Objective o f the proposed Phase I1 i s to further improve the access, equity, and quality o f primary and secondary education, promote l ifelong learning through building capacity in early childhood, technical and vocational, higher and non-formal education, and strengthening the institutional capacity o f the Ministry o f Education and Training.

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3. Key performance indicators: (see Annex 1)

Two sets o f performance indicators wil l be used: indicators for measuring the achievement o f the Development Objectives (DO, outcome, or impact indicators) and key implementation progress indicators (IP or output indicators).

2

DO/Impact Indicators. DO indicators recognize the fact that ESDP I1 does not act alone in the support for the education sector. Other development partners such as GOL, AfDB and Ireland Aid wil l also contribute to the achievement o f these indicators. Further, the design o f the DO indicators i s influenced by the Education for All and Mi l len ium Development Goals o f universal primary education (completion). Annex 12 l i s t s the DO/Impact Indicators for the entire ESDP I1 and provides technical notes.

65% Share of total education recurrent budget increased (including NMDS) devoted to primary and secondary education increased

ECCD coverage increased 31 % 40%

58%

Outcomellmpact Indicators I I

5

2002 2007 target (Baseline 1 data) 1 J::tB":, 1

Lower Secondary education coverage Form A-C (gross enrollment) increased

Performance (overall mean) of national achievement test at primary education level in Math and Languages improved:

43% 50%

- Standard 3 Mathematics overall mean score improved

- Standard 3 English Comprehension overall mean score improved

I 3 IPrimary completion rate increased I 77% I 83% I

44% 50%

31% 36%

E e n z i m e n t ratio increased

- Standard 3 Sesotho Comprehension overall mean score improved

- Standard 6 Mathematics overall mean score improved

- Standard 6 English Comprehension overall mean score improved

I 85% I 90% I

71% 75%

49% 55%

45% 50% ~ - Standard 6 Sesotho Comprehension overall mean score improved An adequate legal and regulatory framework conducive to a demand-driven TVET system in olace

58% 65%

I I I

I L I I

IP/Output Indicators:

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252 primary classrooms with facilities, furniture, and equipment are built, 70 o f which wi l l be in remote areas 3 government secondary schools with related facilities, furniture, and equipment built in three districts 15,000 bursaries awarded to orphans and other disadvantaged children in primary and secondary schools annually Primary book:student ratio maintained at 5: 1 and school-based secondary textbook revolving fund established. Distance Teacher Education Program produces at least 250 graduates annually f rom 2005 onwards

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7500 primary and 1000 secondary teachers o f Math, English, and Science provided with refresher course bi-annually Primary and secondary school inspectors (65) and advisors (92) trained annually 400 primary principals/deputies, 100 primary management committees, 125 secondary headddeputies, and 30 secondary boards trained annually ECCD home-based centers established in al l districts (at least 2 bases per district) Revised TVET A c t submitted to Parliament TVET financial management and performance monitoring system developed Development and introduction o f TVET financing strategy TTI Hostel constructed Development o f higher education monitoring indicators and the establishment o f a higher education incentive fund which will be tied to the achievement o f indicators MTEF implemented annually and education PER updated by 2004 Education Planning Unit strengthened in policy development, planning, monitoring and evaluation MOET HIV/AIDS pol icy in place

B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: 1775 1-LSO

The objective o f the Bank's most recent CAS for Lesotho i s to support the GOL's strategy o f poverty reduction and i t s efforts to sustain macroeconomic performance. As stated in the CAS, "the Bank will support the GOL effort o f poverty reduction through investing in human resource development: strengthen education and on-the-job/vocational training to deal with Lesotho's severe capacity constraints and to make the work force more adaptable to labor-market changes in and outside the country."

Date of latest CAS discussion: June 4, 1998

For Lesotho to be competitive and export skilled labor within the region, as wel l as meet local labor market needs, i t must carefully develop and implement policies and plans in education and training. The proposed project will contribute to the goal o f human resource development by strategically expanding the ECCD coverage via a home-based care approach, increasing access and equity and enhancing efficiency and quality in primary and secondary education, building capacity in TVET and higher education so that they are more demand-driven and are better able to deliver relevant education and training, and strengthening the institutional capacity o f the Minstry o f Education.

2. M a i n sector issues and Government strategy:

2.1 Main Sector Issues. Despite these positive developments as described above, many challenges remain. Primary education enrollment seems to have stagnated after the init ial jump in 2000 after FPE, primary completion rate i s low, and wastage remains high. Secondary coverage i s low. Regional and gender disparity in access to secondary i s high. Access to and quality o f ECCD services vary greatly across the country; The pol icy directions remain to be developed and capacity i s weak for TVET, higher education, and non-formal education. Further, Lesotho has one o f the highest HIV/AIDS prevalence rates. The attrition o f MOET officials,

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staff, and teachers and the situation o f orphans and other disadvantaged children pose particularly serious challenges to the education sector. As for education financing, though education enjoys a relatively high share o f total Government budget, within education the share allocated to primary and secondary education i s s t i l l l ow compared to other countries. And the relative high share o f the education budget devoted to higher education remains a concern. In short, Lesotho s t i l l has a long way to go to achieving the Millennium Development Goals o f universal primary education by 20 15 and eliminating gender disparity by 2005.

Primary and Secondary Education

Coverage and Equity. In the mid- 1990s, Lesotho's primary participation rate started to decrease significantly. Primary enrollment dropped from 378,000 in 1995 to only 365,000 in 1999. The major reason seemed to be that households could not afford the high fees charged in primary schools. Anecdotal evidence further suggested that the declining employment opportunities for Basotho men in the South African mines and the elimination o f school fees in South Afr ica in 1994 could have contributed to the primary enrollment decline.

Since more than 90% o f the Basotho primary schools are owned by churches, the Government had no control on primary fees charged to parents even though it was paying for teacher salaries. As part o f the commitment to EFA, the Government introduced in 1999 Free Primary Education (FPE) pol icy which effectively reversed the declining trend o f primary enrollment. Primary enrollment increased by 12% in the first year o f FPE and reached more than 41 1,000. ESDP I1 Phase 1 (1 999-2003) provided timely support in constructing more classrooms, training teachers and strengthening school level management, provided primary core textbooks, science kits, and other teaching learning materials, and strengthening the MOE institutional capacity at the central level. The ESDP I1 support had helped maintain the enrollment gain from FPE by ensuring basic physical facil i ty and minimum primary education quality. Primary enrollment continued to increase in 200 1 and 2002, though at a much slower rate. In 2002, primary enrollment reached 418,668, resulting in primary NER o f 85% according to both the 2001 Lesotho Demographic Survey and the 2002 Core Welfare Indicator Questionnaire. New population estimates also confirmed that Lesotho has achieved a primary NER o f 85%.

The primary NER o f 85% i s high compared to the rest o f SSA countries. However, growth in enrollment after 2000 i s much slower than expected, indicating that i t i s much more diff icult for the education system to reach the remaining 15% o f the school-age population. Primary participation in rural areas consistently lags behind that o f urban areas. The recently completed CWIQ Survey found that net primary enrollment rate in rural areas was 6 percentage points lower than that o f the urban areas in 2002. There are also fewer boys than girls enrolled in primary school though the gender balance has improved consistently during the last decade. In addition to the l o w quality o f education, the lack o f adequate physical facilities continues to constrain the growth in primary enrollment, especially in remote districts and the overcrowded Maseru district. The EMIS data o f 2000 show a national average Pupil Teacher Ratio (PTR) o f 47.9, with a variation between the districts o f 45.1 to 55.7. The Pupil Classroom Ratio (PCR) comes to 65.1 with a district variation between 57.5 to 97.7. In total there are 8,957 classes in 6,3 12 classrooms, which indicates that over 2,600 classes are hnct ion ing either in double shif ts and/or without classrooms. The data also reveal that only 4,230 classrooms are o f a permanent nature.

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Secondary enrollment, on the other hand, has been steadily but slowly growing since early 1990s. Secondary enrollment increased from 5 1,895 in 1992 to 77,9 19 in 2001. However, the growth i s s t i l l not fast enough to overcome the population growth and consequently the gross secondary enrollment rate was only 29% in 200 1. Great disparity exists in secondary coverage: more than 40% o f the urban secondary age group are enrolled in secondary schools, compared to only 20% for the rural area, and only 7% for the rural poor (CWIQ 2002). Gender disparity i s much more severe than that o f primary education. Female secondary enrollment rate i s almost twice as high as that o f males.

Secondary coverage i s constrained by factors including the high level o f fees students have to pay for tuition, books and others and l imited physical facilities, in addition to quality and efficiency factors. A recent Wor ld Bank study o n "Growth and Employment Options Study for Lesotho" found that secondary education contributes significantly to wage earnings. Constraints on secondary participation wil l have to be addressed before such benefits can materialize for Lesotho.

Internal Efficiency and Quality. Wastage i s s t i l l high in primary education. In 2002, though primary gross intake rate was more than 180% (number o f new entrants regardless o f age over the population o f 6 year olds), the primary completion rate (number o f graduates regardless o f age over the population o f 12 year olds) was only 77%. Though they are not the same cohort, the trend s t i l l indicates a high proportion o f primary students drop out before completing the cycle. In particular, many pupils drop out after Standard 3 (Free Primary Education currently only covers up to Standard 3). Further, the primary net intake (number o f new entrants who are 6 year olds over the population o f a l l 6 year olds) in 2002 was only 63%, indicating that 37% o f Basotho 6 year olds wil l enroll at a later age, if at all.

The Ministry o f Education and Training administers annually through the Examination Council of Lesotho (ECOL) a Primary School Leaving Exam. The pass rate o f students who sat for the exam was 87.5%, representing a 3 percentage points increase over 2001. ECOL has recently administered the f i rs t national assessment o f student achievement in Math, English, and Sesotho for Standard 3 and Standard 6. Preliminary results show that while Standard 3 and 6 students seem to do rather well in Sesotho, they have l o w achievement in both English (pass rates were 3 1% for Standard 3 and 45% for Standard 6) and Mathematics (pass rates were 44% for Standard 3 and 49% for Standard 6). The national assessment will be continued to provide information on the trend o f student achievement. The results from the first assessment in 2003 wil l be used as baseline data.

Multiple factors contribute to the l o w quality and l o w efficiency at the primary level, including a shortage o f qualified teachers and overcrowded classrooms (described above). In 2002,25 percent o f the teaching force didn't have a diploma or above degrees and were therefore considered underqualified or unqualified. Quality also suffers because o f the lack o f capacity in management at the school level; many school heads and committees (Advisory and Management Committees for primary schools and School Boards for secondary schools) wi l l require further training. Inspectors and advisors generally lack training. School inspection has also been

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jeopardized by a lack o f operational funds and an over-centralized staffing structure. As a result, most inspectors spend the majority o f working hours in central offices filling out bureaucratic forms, rather than visiting the schools. The school advisory services were affected by similar issues and consequently primary and secondary advisors have not been able to provide timely pedagogical guidance to teachers.

The secondary education system also faces even more serious problems o f wastage and low quality. In 2002, the transition rate from primary Standard 7 to the f i rst year o f secondary (Form A) was high (70 percent). But for every 100 children who entered Form A, only 10 students graduated from Form E. Some 33 percent o f students dropped out between Forms A and C; another 24 percent dropped out between Forms D and E; and the transition rate was 64 percent from Form C to Form D. As for performance, 71 percent o f the pupils who sat for the Junior Certificate (JC) exam passed, but only 34 percent o f those who sat for the Cambridge Overseas School Certificate (COSC) passed. Pass rates were especially l ow in key subjects such as mathematics. Trends in secondary student achievement in recent years are not clear because there are no standardized attainment tests administered yet at the secondary level.

Orphans and Other Disadvantaged Children. Lesotho has several types o f “disadvantaged children”. The f i rs t type are orphans including HIV/AIDS orphans. Lesotho has a relatively high HIV/AIDS prevalence rate, about 30% according to a recent UN study. Though the exact number o f orphans i s not known, the C W I Q 2002 survey found that 6.3% o f al l Basotho households are caring for orphans under the age o f 15. Assuming that each such household takes care o f 2 orphans and there are more than 430,000 households, the number o f orphans will be more than 52,000. In fact, the Government estimates that the number o f orphans i s around 70,000! The second type are herd boys. The employment o f herd boys, an inherited and enduring tradition, i s widespread in Lesotho. Spending weeks at a time alone with their herds, the boys travel long distances away from their villages for the animals to graze. This time away from home results in missed opportunity for education, socialization and adequate nutrition. This i s also why boys’ enrollment in primary and secondary education lags behind that o f girls. Finally, there are other poor non-orphan non-herd-boy children f rom remote mountain and other poverty-stricken areas.

The FPE i s to be introduced in a phased fashion so that fees are removed one standard per year starting from 2000. Therefore by 2002, students in Standard 4, 5,6, and 7 continue to pay fees. The orphans and other disadvantaged children identified in the above paragraph are least l ikely to be able to pay for such fees and as a result, they tend to drop out or not enroll at all. Further, fees at secondary schools tend to be more inhibitive. On average, secondary schools including government schools charge 900 Malo t i (US$ 100) per year just for tuition. In addition, parents have to buy books and uniforms and pay for examinations, food, and transportation. Book fees for a secondary student can be as high as US$lOO per year.

Uneven ECCD Coverage and Quality. As in many African countries, the pressures o f modern l i f e in Lesotho are eroding the traditional system o f chi ld care. Migration and wage employment have weakened the extended family, previously the main provider o f chi ld care. As a result, the prevalence o f private-run day care centers and pre-schools has grown quickly, particularly in

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urban and peri-urban areas. By 2002, there were about 1,700 ECCD centers serving approximately 40,000 children o f 3 to 5 years old, reaching a gross enrollment rate o f 3 1 %. In Lesotho, Government does not provide for ECCD so the existing centers are funded by communities or private individuals. The quality o f these services varies greatly. Further, since fees are charged in the private centers, ECCD coverage remains particularly l ow for children from poor households.

In 1985, the MOET began to play an important role in planning, regulating and monitoring al l ECCD centers. The MOET established an ECCD Unit to improve the effectiveness and uti l ization o f community-run and private ECCD centers. The MOET started piloting a home-based care approach in 1999 with financial support from ESDP 11. During the Phase I o f ESDP 11, home-based ECCD care were established on a p i lo t basis in 4 districts (2 bases per district) as a low-cost alternative to center care focusing particularly on poor children whose family could not afford center-based care. The home-based care heavily rely on volunteer caretakers and parents in the community. The ECCD unit in the Ministry provided training o f the caretakers and parents, very minimum play equipment and other teaching leaming materials. Total enrollment in the 8 bases reached about 400. Though formal evaluation i s s t i l l to be conducted (results expected by June 2003), ini t ial visits to those bases had found positive impact on community, parents, and children.

Technical and Vocational Education. Given Lesotho's unique geographic situation and l imited employment opportunities, the GOL recognizes the importance o f adapting i t s training policies to produce workers with marketable sk i l l s that will make them competitive in both the local and regional markets. The TVET system can play a crucial role in the economic and social development o f Lesotho. A recent Wor ld Bank study found that technical training has a significant impact on wages. Expansion o f this sub-sector and improvement o f i t s quality are thus priorities o f GOL. However, there are several problems with the current system which must f i rst be addressed, including (a) a supply-driven approach, which i s due to i t s weak linkage to the labor market and (b) i t s need for sustainable financing.

Weak Labor Market Links. The existing, supply-driven system i s not in a position to respond to national or regional labor market needs. TVET institutions have weak l i n k s with industry and offer l imited courses o f l o w quality. Employers generally report dissatisfaction with the graduates. Foreign investors, especially in the fast-growing textile and leather industries, resort to using expatriate technicians rather than hiring Basotho. Therefore, j ob creation does not always benefit the local population. Although the demand for semi-skilled and skilled labor i s growing, many TVET graduates encounter difficulties finding employment. This situation signifies the importance o f strengthening l i nks between the training programs and the needs o f the private sector. I t further calls for the development o f entrepreneurial ski l ls.

Uncertain Sustainability. On the other hand, costs have increased substantially, thus raising questions about sustainability. The current system, although small, i s underutilized and enrollment has stagnated over the past decade. Although a l l TVET institutions charge fees, the existing system relies primari ly on financing from the GOL. No govemment today can afford to finance a l l the ski l ls needed in a modem market economy and diversifying financing for this

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sub-sector i s essential to promote sustainable sk i l l s development. Further diversification o f the financing for ski l ls development will be needed, including the role to be played by employers. The GOL should assess i t s capacity to provide sustainable funding for the subsector and to reconsider the role o f user charges. The Government should also consider fostering a private sector training market because it seems impossible to contemplate that a GOL-fhnded training sector would grow fast enough to accomodate the skill needs o f the economy.

During the ESDP I1 Phase I, support was given to developing the policies and institutional framework needed to create a revitalized and demand-driven TVET system. Efforts had been made to establish (a) a tripartite management structure made up o f representatives o f employers, employees, and the GOL; (b) a qualifications framework and an enhanced accreditation system; and (c) a financial management and performance monitoring system. The reforms in these three areas were to be encapsulated in a revised TVET Act. Phase I also supported a sk i l l s needs assessment for the national economy and for three selected industries. Unfortunately, much o f the Phase I effort failed and key TVET performance indicators have not been met. To date, the MOE has yet to incorporate the new TVET policy document into the law and submit the revised TVET Act to the Parliament. Without the Act, the new TVET Board with tripartite representation can not be legitimized and a new financing strategy can not be introduced. At the same time, the consultancy for Skills Needs Assessment study (for 3 p i lo t industries and for al l sectors) was severely delayed and the draft report i s s t i l l being reviewed. The Ski l ls Needs Assessment was expected to trigger the TVET movement toward a more demand-driven program. The knowledge o f ski l ls demanded by important economic sectors wi l l enable the process o f TVET curriculum review through the six Industrial Advisory Committees which were established during the ESDP I1 Phase I. Litt le progress has been made in the development o f a qualifications framework and accreditation system.

Several factors contributed to the unsatisfactory performance o f the TVET sector, including the lack o f a TVET reform champion in the country, the lack of long-term technical assistance, and the focus o f MOET’s attention on primary and secondary especially since FPE. Further, the design o f the TVET component in Phase I may have been too ambitious. I t i s now widely-recognized that reforms in TVET are much more complex and can take as long as 10 to 15 years. This i s further compounded by the fact that the Basothos have deep-rooted bel ief in centralized systems. Finally, IDA’S dialogue with the Ministry on TVET has also been compromised because o f a lack o f technical expertise and financial resources f rom IDA in supervision.

Recent evidence from the Bank’s “Growth and Employment Options Study for Lesotho” found positive returns to ski l ls development. At the same time, the Government has identified s k i l l s development as an important strategy for building the national economy. Therefore, it i s necessary to continue laying the foundation for TVET reform during Phase I1 by focusing on the passage o f the TVET Act and the establishment o f a new financing mechanism for the TVET system in Lesotho. Priority i s being given to getting the policies right for a market-led system o f ski l ls development. Support for TVET has to be coupled with long-term technical assistance to the Ministry. Management and financing o f the TVET system will need to encourage increased accountability for performance and link provision to market demand.

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Higher Education, Lesotho's higher education system can be described as (a) small as there were only about 9000 students enrolled in major national tertiary institutions in 2002; (b) very costly to the Government which traditionally devotes one third o f i t s total education recurrent budget to higher education; and (c) training largely for South Afr ica and the regional labor market, rather than the local one. The ESDP I1 Phase I did not invest directly in the higher education subsector. However the ESDP I1 Phase I requires that the Government increases the share o f budget devoted to primary and secondary education, implying that the tertiary share needed to be reduced. This approach has proven to be inadequate in helping the higher education subsector achieve i t s goals o f efficiency, quality, and equity. The education sector in Lesotho consists o f MOET plus bursaries through the National Manpower Development Secretariat (NMDS). Including the NMDS, the share o f higher education in the budget remained at around 30% o f the education recurrent budget in 2002. Though an argument could be made that small states such as Lesotho may need a higher share o f tertiary budget, the share o f 30% i s s t i l l very high.

Recently, the higher education sector in Lesotho, particularly the National University o f Lesotho, has actively engaged in a reform process. As higher education seeks to transform itself, a variety o f issues will need to be addressed, including (a) further reducing the tertiary level budget share; (b) addressing the data needs for system management; (c) defining a pol icy framework for higher education and creating an effective Council for Higher Education; (d) exploring new sources o f revenue; (e) finding the right mix in distance education; (0 upgrading ICT; and (g) staff training for transformation. To the extent that further research might be usefu l i t would lay the basis for conclusions specifying what needs to be transformed and why, what benchmarks wil l permit assessment o f progress and what cost calculations wil l permit measurement o f resources "saved". Tracer studies o f where the graduates o f higher education go and what they do are lacking and would also be useful.

Non-formal Education. Prior to the introduction o f Free Primary Education, non-formal education was identified as a priority for the Ministry to achieve i ts Education for All goals. The potential beneficiaries o f the non-formal education are numerous, including herd boys not able to attend formal school system; youth who previously dropped out o f the formal school system and are looking for a second chance; miners who have returned from South Africa; and other illiterate adults. The introduction o f FPE has successfully brought into the formal school system many o f those children who could not afford schooling before. There i s now a need to re-orient non-formal education fi-om a predominantly literacy program for children who could not afford formal schooling to a ski l ls development program for adults who are beyond the age o f formal schooling. At the same time, the Ministry o f Education and Training, with support from ESDP I1 Phase I, was pi lot ing the Learner Post program in two districts. The survey o f the learners enrolled in the pilots confirmed that the adult learners would l ike to have more ski l ls development modules. The Ministry intends to continue the pi lot but now with an emphasis beyond basic literacy and numeracy.

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Education Sector Financing. Compared to other countries, GOL’s commitment to education i s very high. More than a quarter (28%) o f a l l GOL recurrent expenditures now go to education and training, including the 4% o f Government budget which i s allocated for bursaries, but administered by the National Manpower Development Secretariat (NMDS) attached to the Ministry o f Finance and Development Planning. However, sub-sectoral allocation remains a concern. At the time o f ESDP I1 Phase I appraisal in 1999, the recurrent education budget allocated to primary and secondary subsectors combined was only 58% and about 30% o f the budget was devoted to tertiary education. During the Phase I implementation, it was agreed that by the end o f Phase I total education recurrent budget allocated to primary and secondary should increase by at least 2 percentage points. M u c h effort was also put in developing an education sector Medium Term Expenditure Framework. With assistance from a consulting firm, the Ministry o f Education reclassified the coding o f the education budget so that overall budget transparency i s improved and also successfully submitted the f i rst MTEF in December 2002. The figures f rom the MTEF (2003-2005) indicate that primary and secondary share o f the recurrent budget will reach 63% o f the total education recurrent budget, a 5 percentage point increase, assuming that the N M D S budget would not increase substantially.

The annual budget for the fiscal year beginning April 2003 became available only during the appraisal mission. The Ministry o f Finance has largely adhered to the priorities set out in the MTEF as far as the Ministry o f Education i s concerned. However, the budget for the N M D S was not part o f the MTEF submission from the Ministry o f Education and Training. The N M D S budget for the fiscal year beginning in 2003 almost doubled as compared to the previous year to Malot i 198 mil l ion. When the N M D S budget i s included as total education sector budget, the share o f recurrent budget devoted to primary and secondary education dropped to 57.7%, back to the level o f 1999.

The subsectoral allocation, therefore, i s s t i l l skewed in favor o f tertiary education. The share o f the higher education budget remains at about 30% in 2003. Unit cost expense o f educating one NUL student i s equivalent to educating 1 16 primary pupils or 34 secondary students, a ratio that i s high compared to neighboring countries. Though there may be a case made for Lesotho to devote a relatively higher share o f the education budget to higher education due to i t s small size and the diff iculty in achieving economies-of-scale, the share o f 30% i s s t i l l high compared to that o f about 20% in neighboring countries. Continued effort needs to be devoted to increasing the efficiency and effectiveness o f the higher education sector, thus reducing the share to the tertiary subsector. With introduction o f the MTEF, monitoring o f recurrent expenditure will become easier.

MOET Institutional Capacity. The public sector capacity in Lesotho i s generally weak. The Wor ld Bank had prepared and appraised a Public Sector Reform and Improvement Project. However, this project has not materialized due to repeated deferral o f negotiations by the Government o f Lesotho. Therefore, capacity building efforts in the education sector (such as decentralization and MTEF) are moving ahead in the absence o f a Government-wide plan for public sector capacity improvement.

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Challenges of Decentralization and School Governance. The Ministry began implementing i t s decentralization plan by building District Resource Centers and legalizing School Advisory and Management Committees. However, the roles and responsibilities o f central officers versus district and other officers are s t i l l not clearly delineated. As a result, most decisions continue to be taken centrally at headquarters. For the system to function efficiently, i t will be necessary to spell out the roles and responsibilities o f the lower tiers o f the management structure.

More than 90 percent o f primary and 80 percent o f secondary schools are legally owned by churches. In the past, church secretaries were responsible for hiring, firing, deploying and disciplining teachers. However, when church resources for financing recurrent and capital costs dried up, the GOL became more involved and began providing grants for teachers' salaries, instructional materials and infrastructure. By the 1990s, the Government o f Lesotho was paying for a l l teacher salaries. The GOL clearly demonstrated i t s commitment to improving school governance by passing the Education Ac t in 1995. This Act legally underpinned the agreement between the MOET and the churches to collaborate in the delivery o f education. It also provided for increased participation by parents and called for a l l primary and secondary schools to establish School Advisory and Management Committees. These comprise representatives from the MOET, churches and parents. The Education Ac t has facilitated more parental involvement and has also facilitated commendable progress in resolving the churchhtate conflict over the management o f schools. However, much work needs to be done to enforce the Ac t and to continue training school committees in their new roles. Additional efforts are required to further define the appropriate roles for the churches and the state in the provision o f education.

Policy Development, Planning, Monitoring and Evaluation. At the central level, the Education Planning Unit (EPU) within MOET i s in charge o f planning, monitoring and evaluation. The EPU i s headed by a Director o f Planning who answers to both the Principal Secretary o f Planning and the Principal Secretary o f Education. The EPU i s staffed mainly with planners who are "cadres" posted to MOET from Central Planning. The MOET has l i t t le control over their appointments. The current EPU has very weak capacity. Several planners in the EPU left after having benefited from the long-term training supported by ESDP I1 and the positions have not been filled. Most importantly, traditionally the Education Planning Unit has only concemed i t s e l f with project implementation, and had not done any sectoral planning or pol icy development. Therefore, the EPU i s not organized and the staff i s not trained properly for real planning. Planning and pol icy development i s usually done by the Principal Secretary, Deputy Principal Secretary, and ad hoc committees, or sometimes even technical assistance.

In 2000, due to the above-mentioned weak capacity in the EPU, implementation o f ESDP II Phase I greatly suffered and the project was under "unsatisfactory" status for more than a year. In an effort to improve the implementation o f ESDP 11, the MOET established a Project Coordination and Support Unit and thus separated the EPU from project implementation temporarily. Currently, the EPU i s struggling to re-orient i tself . Support from ESDP I1 Phase I1 i s critical for the Ministry to continue the process o f developing Education Sector Strategic Plan and implementing the Medium Term Expenditure Framework, thus promoting long-term sustainability o f the reforms introduced. The support wil l be focused mainly on strengthening the EPU's capacity in policy development, planning, and monitoring and evaluation. Further, the

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rest o f the MOE senior management and the district education officers will also need to be continuously trained in order to improve overall management efficiency.

Education Management Information System (EMIS). MOET has a long tradition o f collecting school statistics annually. With support f rom ESDP I1 Phase I, MOET revised the annual EMIS forms, adopted the Ed*Assist software for EMIS, and trained relevant officials in the use o f Ed*Assist. However, several challenges remain. First, challenges remain as to how to capacitate the districts so that elements o f the EMIS data collection can be delegated to the districts and feedback can be provided to schools in a more timely fashion. Second, due to a lack o f capacity to analyze the data, the information i s not used for pol icy making and planning. For example, the recurrent budget was not aligned with sector priorities and performance prior to the introduction o f MTEF in 2003. Third, the existing EMIS i s also isolated f rom other information databases such as those holding examinations and personnel records. Also ECCD data are not captured. Finally, the EMIS does not sufficiently capture information o n disadvantaged groups and whether o r not bursaries are provided for such children.

HIWAIDS Policy for Education. The impact o f the high HIV/AIDS prevalence rate (30%) i s increasingly fe l t in education. Attending finerals o f family and friends has become almost a weekly event for the Ministry officials. Frequently the MOET i s visited by relatives to try to get a bursary for HIV/AIDS orphans. The Ministry i s now more open to discuss HIV/AIDS related issues and i s trying to devise strategies to mitigate i t s negative impacts. So far the MOE had incorporated elements o f HIV/AIDS education into i t s primary, secondary, and teacher education curriculum. It also provides bursaries for HIV/AIDS orphans. However, a comprehensive policy towards HIV/AIDS will s t i l l be needed to coordinate a l l H IV/AIDS related activities o f the Ministry. Such a pol icy wil l have to be grounded by a good understanding o f the full impact o f H IV/AIDS in the education sector.

2.2 GOL Strategies

The Government i s well aware o f the important role o f education in poverty reduction. I t s strategy for education development seems to be two-pronged. While clearly identifying primary and secondary education as i t s priority, the Government i s also emphasizing the sectoral approach to education development and the call for capacity building and strategic investment in early childhood, technical and vocational, higher education, and non-formal education.

The most important Government strategy to improve access to primary education i s the Free Primary Education introduced in 1999. Through FPE, the Ministry o f Education i s providing a package o f teaching and learning materials, core textbooks, school feeding, and school maintenance (so far MOET has not been able to pay 5 Malot i per student for school maintenance). The FPE wil l continue to be implemented and by 2006 a l l primary standards should be covered. Beyond, the MOET i s contemplating inclusion o f lower secondary (Form A, Form B, and Form C) so that i t will also be provided free to the students. However, this i s not expected to happen very soon due to tight fiscal conditions o f the country. In the interim, the MOET will institute a secondary school fee pol icy so that fees charged by a l l secondary schools wil l be subject to MOET regulations.

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The MOET developed a 10-year Education Sector Development Strategy. As mentioned earlier, additional work especially in prioritization and costing wil l be needed to bring the draft to a final stage, after which the MOET will develop annual operational plans l inked with the Medium Term Expenditure Framework to guide the Ministry’s day-to-day work. Despite i t s weaknesses, the draft Education Sector Strategy identifies the fol lowing major strategies for improving access, equity, and quality o f the primary and secondary education sector and capacity building in other sectors:

e Increase Access, Equity, and Quality o f Primary and Secondary Education (a) Classroom Construction: Continue the construction to reach PCR o f 40: 1 in primary and

30: 1 in secondary. Priorities will be given to inaccessible remote areas. The Ministry also altered the standard design o f primary classrooms to allow smaller schools in those areas.

(b) Bursaries. The Ministry will continue supporting the implementation o f bursaries for orphans and other disadvantaged children in upper primary standards which do not yet benefit f rom FPE and in al l secondary grades.

(c) Provision of essential teaching and learning materials. The Ministry will continue i t s effort in replenishing primary core textbooks and procuring additional textbooks required to cater for new primary enrollment so as to maintain the book to pupil ratio o f 5 : 1. Further, the Ministry wi l l launch a school-based secondary core textbook revolving fund so that cost to students on books will be substantially reduced.

(d) Distance Teacher Education Program. Continue upgrading teacher’s qualifications to at least the diploma level and to reach primary PTR 40: 1 and secondary PTR 30: 1.

(e) School support through decentralized inspection and advisory services. Based on a consultancy financed by IDA’S ESDP I1 Phase I, the MOET i s in the process o f reforming the organization and functions o f primary and secondary inspection and advisory services so that schools wil l be regularly inspected and implementation o f inspection results wi l l be monitored more closely. Further primary and secondary schools will be supported by a renewed advisory services which will be closely linked to the inspection.

($I Improved curriculum and assessment framework. The MOET will continue to develop an Integrated Curriculum and Assessment Framework for primary and secondary education. Further, MOET intends to localize the Cambridge Overseas School Certificate to reduce the cost and to continue the implementation o f a National Assessment.

(sl, School management. School-level management including principals/deputies, Primary Advisory and Management Committees, and Secondary School Boards will continue to be strengthened, as part o f the Ministry’s effort to implement the 1995 Education Ac t and Local Government Ac t and bring more voices into the management o f schools, thereby providing a means o f collaboration between the state and the churches in the delivery o f education and enhancing community ownership in the provision o f education.

0 Promote Lifelong Learning through Building Capacity in ECCD, TVET, Higher Education, and Non-formal Education (a) In ECCD, the Ministry will continue expanding ECCD coverage through promoting

community-based programs while strengthening MOET’s role in planning, regulation and monitoring o f a l l ECCD providers especially in enforcing standards o f health and safety.

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(b) In Technical and Vocational Education, the Government will continue policy development and capacity building and introduce market-driven training.

(c) In Higher Education, the Government will continue policy development and capacity building to lay the foundations for further expansion and improvement for the subsector.

(d) In Non-formal Education, the Ministry would l ike to continue the support for Learner Post pilots while broadening the focus of the pilots to include more sk i l l s training modules.

a MOET Institutional Strengthening (a) District Education Management. The MOET emphasizes training o f the district

education officers in decentralized district-based education management and equipping the District Resource Centers to enable more functions to be carried out at the district level.

(6) Ministry of Education Policy Development, Planning, Monitoring and Evaluation. At the central level, the MOET will emphasize overall capacity building in policy development, planning, monitoring and evaluation and using MTEF to align Sector Financing with priorities. The Government has committed itself to ensuring that 65% o f the education sector budget (including the NMDS) i s devoted to primary and secondary education by 2007. The Ministry will also develop a comprehensive HIV/AIDS policy for education.

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

The proposed Phase I1 Project therefore wil l help address the above-identified issues. In particular, it wil l adopt the strategies o f the Government and continue to support primary and secondary education, pol icy work and capacity building in ECCD, technical and vocational education, higher and non-formal education, and strengthening the MOET institutional capacity at both the district and central levels.

In shaping the proposed Phase I1 Project, the GOL/IDA has made the following strategic choices:

I t recognizes that a targeted approach i s more likely to address the specific needs o f the poorest groups in isolated, impoverished regions, thus addressing the problem o f equity o f access to and quality of education services. The targeted approach will be used in the identification o f new sites for primary schools, expansion o f secondary schools, for the identification o f scholarship beneficiaries, and selection o f ECCD home-based care sites.

I t also recognizes that in order to sustain enrollment gains and to prevent deterioration in quality in primary education, the Ministry will need to sustain support for the provision o f qualified teachers, the provision o f educational materials for primary and secondary schools, strengthening o f school-level management, strengthening school inspection and school support, and improvement o f curriculum and assessment.

I t i s important to be engaged in policy development, capacity building, and pi lot ing in subsectors other than primary and secondary. This i s true not only f rom perspective o f a sector-wide approach and systemic reform in education to promote a culture o f l i felong

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learning, but also from the the fact that increased spending in primary and secondary will have to come at the expense o f the other subsectors. Such a shift in public expenditure i s not possible without improving the efficiency o f these sectors and diversification o f their financing.

3. MTEF implemented consistently, and at least 65% education sector recurrent budget (including the bursaries administered by NMDS) allocated to primary and secondary 4. Primary book:pupil ratio maintained at 5: 1 and school-based secondary core textbook revolving fund established 5. Distance Teacher Education Program produces at least 250 graduates annually from 2005 onwards 6. Adequate legal and regulatory framework conducive to a demand-driven TVET system in place

I t recognizes the importance o f building capacity in policy development, planning, monitoring and evaluation in order to ensure long-term sustainability o f the program.

I t recognizes the need to align allocations o f public expenditure with GOL priorities for the sector through the tool o f the Medium Term Expenditure Framework.

4. Program description and performance triggers for subsequent loans:

The 12-year ESDP I1 Program i s described in Section A. 1 o f this PAD. The following triggers are proposed for ESDP I1 to move from Phase I1 to Phase 111.

Proposed Triggers for Moving from ESDP I1 Phase I1 to Phase I11

1. 75% o f IDA funds for Phase I1 committed 2. Primarv comuletion rate increased to 83%

C. Program and Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown):

The proposed ESDP I1 Phase I1 will be implemented during the 4-year period o f 2003 to 2007 and will have the fol lowing four main components:

I. Primary Education 2. Secondary Education 3. 4. Strengthening MOET Institutional Capacity

Lifelong learning in ECCD, TVET, Higher and Non-Formal Education

The detailed pol icy and investment elements o f the proposed Phase I1 Project for the period September 2003 to December 2007 are:

0 252 primary classrooms with related facilities, hmiture, and equipment are built, 70 o f which will be located in remote areas

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0

0

0

0

0

0

0

0

0

0

0 0

0 0

0

0

0

0

3 secondary schools with related facilities, furniture, and equipment built in three districts 15,000 bursaries awarded to orphans and other disadvantaged children in primary and secondary schools annually Additional core primary textbooks provided to cater for the new enrollment and the replenishment and school-based secondary textbook revolving fimd established Distance Teacher Education Program continues to be supported so that i t produces at least 250 graduates annually from 2005 onwards Develop an Integrated Curriculum and Examination Framework, localize the Cambridge Overseas School Certificate Exam and continue to implement National Standardized Tests in basic literacy and numeracy 7500 primary teachers and 1000 secondary teachers o f Math, English, Science, and Sesotho provided with refresher course bi-annually Primary inspectors (45), primary advisors (85), secondary inspectors (20) and secondary advisors (1 7) trained annually School management (400 primary principals and deputies, 100 primary management committees, 125 secondary principals and deputies, and 30 Secondary Boards) trained in finance and management ECCD home-based centers established in al l districts (at least 2 bases per district) Revised TVET Ac t submitted to Parliament TVET financial management and monitoring system developed TVET innovation fund established Thaba-Tseka Technical Institute student hostel constructed Higher education monitoring indicators developed Establishment o f higher education incentive fund which will be tied to the achievement o f indicators Two Non-formal Education Learner Post pilots continue to be supported District management strengthened and 10 District Resource Centers provided with equipment and library materials MOET capacity strengthened in policy development, planning, monitoring and evaluation and in using MTEF to align sector financing with priorities. Further, HIV/AIDS policy development will be supported.

Proposed ESDP I1 Phase I1 Costs (including contingencies) by Component and Sub-component (a 5th component i s added for project implementation).

1. Primary Education 1.1 Classroomifumiture/equipment (US$9.95m) 1.2 Targetted equity-based program (US$0.52m) 1.3 TeachingAeaming materials (US$0.2 lm) 1.4 Primary inspectiodadvisory (US$0.98) 1.5 Primary school management (US$0.40m) 1.6 Distance Teacher Education Project (US$1.45m) 1.7 Curriculum and assessment (US$0.66m)

14.18 52.1 1 1.47 54.6

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2. Secondary Education 2.1 Classroom/furniture/equipment (US$ 1.78m) 2.2 Targetted equity-based program (USS2.57m) 2.3 TeachingAearning materials (US$ lm) 2.4 Secondary inspectiodadvisory (US$0.35m) 2.5 Secondary school management (US$O.25m)

3.1 ECCD (US$O.35m) 3.2 TVET (US$l.O9m) 3.3 Higher Education (US$0.40m) 3.4 NFE (US$O.33m)

4.1 District Management (US$l.O3m) 4.2 MOET policy/planning/M&E (US$1.82m) 4.3 Staff development and training (US$OSm) 4.4 HIV/AIDS in education (US$0.25m)

3 .Lifelong learning in ECCD/TVET/Higher/NFE

4. MOET Institutional Strengthening

5. Project implementation Total Project Costs

Total Financing Required Jote: Costs in this table include contingencies.

5.95

2.16

3.60

1.31 27.20 27.20

21.9

7.9

13.2

4.8 100.0 100.0

4.18

1.83

2.46

1.06 21.00 21.00

19.9

8.7

11.7

5.0

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

ESDP I1 Phase I1 continues to support the following key policy and institutional reforms started in Phase I:

0

e

0

0

e

0

Regularly align budgetary allocations with sectoral priorities v ia the MTEF and PER MOET will explicitly target resources on the orphans and other disadvantaged children in poor and most isolated communities Establish a curriculum and examination framework and implement national assessment MOET will continue to push the decentralization agenda through strengthening school-level management and district education offices MOET will continue to encourage community participation in the expansion o f ECCD services through home-based care approach. Re-vitalize TVET so that i t i s a demand-driven rather than supply-driven system

In addition, the project wil l support the fol lowing key pol icy and institutional reforms adopted by the Government since 1999:

Free Primary Education Bursaries for orphans and other disadvantaged children Distance Teacher Education Program Decentralization o f school inspection and advisory services Maintaining the primary textbook: pupil ratio at 5: 1 and establishing school-based textbook revolving fund for secondary schools Establishment o f secondary core textbook revolving fund In-service training o f primary and secondary teachers o f Mathematics, Science, and English

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0

0

a

Institutionalize national assessment for primary and secondary education Improving the efficiency o f the higher education subsector Establishing a comprehensive HIV/AIDS policy for education

3. Benefits and target population:

Target Population

The primary beneficiaries o f the project wil l include: a l l primary and some secondary school age children; children between the ages o f 3 and 5 who will benefit f rom increased ECCD coverage; TVET and tertiary students who will benefit from potentially more relevant and higher quality sk i l l s training and education; the reduced public cost o f TVET and higher education will further enable more students to be enrolled at a l l levels o f education; and the participants in the two NFE pilots such as illiterate adults, returning miners and others seeking additional ski l ls and training. The secondary beneficiaries include parents and communities because (a) their burden o f educating and caring for their children i s now being shared by the Ministry o f Education and Training with support f rom the project; (b) villagers living near areas o f school construction sites wil l benefit f rom the increased employment opportunities due to the construction; and (c) communities will continue to exercise their voices through the functioning o f newly established primary school committees and secondary school boards. Finally, MOET officials and teachers will also benefit from the project because o f increased opportunities for training and exposure to the best practices in education reforms and increased job effectiveness and satisfaction.

Further, the proposed project will target orphans and other disadvantaged children. Three components o f the project target these children. First, selection o f sites for construction o f primary and secondary classrooms wil l be based on the needs defined by the school age population, poverty, pupil to classroom ratio and the school mapping exercise. Second, the scholarships wil l only be awarded to orphans and other vulnerable children. The scholarship program i s expected to benefit about 15,000 such children annually which covers 5% o f a l l primary and secondary students and about 40% o f the total orphan population. A p i lo t will also be established to bring orphans and other disadvantaged children who are currently out o f school into the school system. determined by poverty and chi ld population criteria.

Finally, the selection o f ECCD home-based care sites wil l also be

Benefits

The short-term benefits o f the proposed Phase I1 will be drawn primarily from direct investments in the primary and secondary education subsectors. These investments wil l result in increased enrollment o f school-aged children in primary and secondary school . Once they enroll, these children will benefit f rom quality improvements such as lower pupil-teacher ratios, lower pupil-classroom ratios, more affordable and better quality textbooks, more and better trained teachers, and a more effective and efficient education management. Although rates o f retum to education in Lesotho have not been calculated, economic returns to primary and secondary education for the sub-region are high: The average “social” rate o f retum for l ow and middle-income sub-Saharan African countries i s 24% for investment in primary education and 18% for investment in secondary education according to a 1995 World Bank study, “Priorities

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and Strategies in Education. Recent analysis for the Lesotho labor force survey indicates that education attainment i s positively and significantly associated with employment and higher wages.

Indirect, medium-term benefits will accrue f rom improved efficiency and equity in the management and delivery o f educational services, both centrally and at the district and school levels. Regularly updating the PERs and subsequent annual budget allocations based on the MTEF will al low the MOET to monitor the expenditures o n basic education as compared to expenditures o n higher education and align allocations with sectoral priorities. Recruitment and training o f personnel in key units in the MOET will enhance i t s capacity to implement the project and manage long-term reforms. The establishment and training o f school committees wil l enhance collaboration among GOL, churches, schools and communities in delivering education services and managing schools.

The nation and i t s people will derive long-term benefits f rom expanded access to quality education and training. With more Basothos better educated, a higher proportion o f the population wil l participate in the labor market and be gainfully employed locally, regionally, or internationally. This will help reduce the number o f people living in absolute poverty. Society as a whole will benefit from resulting higher literacy rates, increased social cohesion, lower crime rates, improvements in chi ld health and nutritional status, improvements in health outcomes for adults, higher educational attainment for future generations, lower fertility rates and intensified economic growth, and reduction o f skill bottlenecks and expansion o f employment.

4. Institutional and implementation arrangements:

Under the overall leadership o f the Principal Secretary for Education and Training (PS, MOET), the project wil l be implemented by the various Programs including theECCD unit, primary and secondary inspectorates, National Curriculum Development Center, Examination Council o f Lesotho, School Supply Unit, Lesotho College o f Education, Education Planning Unit, Education Facil ity Unit, Technical and Vocational Department, the Higher Education Council, and the Non-formal Education Unit within the Ministry. I t will be coordinated by the Director o f Planning.

The MOET Senior Management Committee, chaired by the PS, MOET will have responsibility for project implementation and wil l ensure full integration o f the implementation process into the regular operations o f the MOET. Task Forces may be established from time to time to provide technical guidance to specific issues during implementation.

Under the ongoing project, the MOET has built good capacity for c iv i l works within the Education Facilities Unit (EFU), and this unit will be maintained. The MOET will hire additional EFU staff to ensure adequate attention to the needs o f classroom construction in the inaccessible areas, which i s expected to take longer than construction in the accessible areas. Relevant staff may be recruited for the implementation o f primary school construction using community approach in at least two p i lo t sites, which wil l rely heavily on local labor as means o f greater ownership, possible lower cost and poverty alleviation.

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Adequate capacity for procurement o f goods now also exists in EFU, though coordination o f all procurement activities including c iv i l works, goods, and consultancies wil l need to be strengthened. EFU will appoint a Procurement Coordinator from i t s existing staff to ensure better coordination o f al l procurement activities including those financed by other donors. Further, in case the need for additional procurement capacity should arise, the project wil l allocate funds for short-term procurement technical assistance.

4.1 Monitoring and evaluation arrangements

The central project monitoring tools are as follows:

Quarterly Financial Monitoring Report which will include a financial report, a physical progress report, and a procurement plan.

Twice-a-year supervision, a mid-term review, and end-of-project completion reports will provide monitoring information at regular intervals.

Program evaluation and research studies will provide a second source o f monitoring information. These wil l assess the impact o f the scholarship program, teacher training and training o f school-management, inspectors and advisors, continuous evaluation o f the home-based ECCD care, the uti l ization o f physical facilities and teaching and learning materials by 2006, one year before the closing o f Phase 11.

National assessment o f student learning achievement.

The MTEF will serve as a tool for monitoring the budgetary process and sub-sectoral budget allocation.

EMIS will provide annual reports o n key performance indicators such as school enrollment, achievement, repetition and drop-out rates.

Special studies wil l also focus on emerging social issues and improve the collection o f information on disadvantaged groups.

Annual audits

D. Project Rationale 1. Project alternatives considered and reasons for rejection:

a) A P L vs. traditional investment loan. As agreed in 1999, the ESDP I1 adopts the A P L as lending instrument, owing to the scale and evolutionary nature o f ESDP 11. The A P L will enable sustained, long-term Bank support in the education sector during the period o f 1999 to 20 1 I. Flexibility in design will facilitate the targeting o f future investments to new sector priorities.

b) proposal was made by the Ministry to expand the overcrowding secondary schools as a measure

Building new government secondary schools vs. expanding existing ones. An original

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for increasing access to secondary education. However, the Ministry finally decided to construct new basic government secondary schools in districts where currently there are no government schools for equity reasons.

Sector Issue

c) support for higher education. However, there was an implici t understanding that the tertiary share o f the education recurrent budget was to be reduced and the education recurrent budget devoted to primary and secondary education was to be increased. However, the recent completion o f the Ministry’s Strategic Plan for the whole sector points to the importance o f understanding the place o f higher education in the Plan, including the long term enrollment implications o f the recent introduction o f free primary education. Therefore, at the beginning o f Phase I1 preparation, the Bank Higher Education Specialist visited Lesotho and considered the possibility o f supporting higher education during Phase 11. I t was agreed that a small sum would be set aside for a planning workshop early in Phase 11, collection o f baseline data, and the establishment o f an incentive hnd for priority equipment and training needs that would reinforce the transformation process already started at the tertiary level. These would be made available on the basis o f the measured achievement over a three-year period o f cost saving targets established at the planning workshop.

Support for higher education. The ESDP I1 framework as agreed in 1999 did not include

Project

d) Support for HIV/AIDS. The HIV/AIDS prevalence rate in Lesotho was about 30% according to a recent UN study. In the past, every program within education was doing a l i t t le bit o f HIV/AIDS, without overall coordination. The M O E T has recently established an HIV/AIDS coordination office and also has committed up to 2% o f i t s budget over the next three years to HIV/AIDS prevention and education. The MOET i s currently planning to do a study on the impact o f HIV/AIDS on education, followed by developing an HIV/AIDS pol icy for education. The ESDP I1 Phase I1 wi l l set a small amount to assist the Ministry in this effort.

Ban k-financed Expandedlupgraded vocational, technical, and commercial education; provided education to out-of-school youth and adults

Constructed curriculum development center and secondary schools, provided equipmentlvehicles, technical assistance, and fellowships

Improved quality and efficiency in primary and vocational education

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

Education Project (Cr. 4970), US$4 million, closed March 3 1, 1979

Second Education Project (Cr. 7480), US$7.5 million, closed December 31, 1982

Third Education Project (Cr. 11480), US$10 million, closed September 30, 1987

Latest Supervision (PSR) Ratings

(Bank-finance Implementation

Progress (IP)

S

S

S

projects only) Development

Objective (DO)

S

S

S

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Reduced overcrowding; increased the wailability o f instructional materials, md upgraded unqualified teachers

demand-driven approach to supporting Zommunity development through a phased implementation o f multi- sectoral special fund; and (b) to strengthen Lesotho's capacity to monitor scope and trends o f poverty in the country.

Increase the access, equity, and improve the quality o f primary and secondary education. Supports Govt in development o f policy and institutional framework for early childhood education, technical and vocational education, and non-formal education. 3ther development agencies

[a) increase quality, efficiency and relevance o f educational programs at s l l levels o f education system, with a special focus on primary education; and (b) build institutional capacity to improve overall sectoral performance

Support Project (LIL), US$4.7 million, closing September 30, 2003

Education Sector Development Project I1 (Phase I) , US$21, closing December 3 1,2003

Fourth Education Project (Cr. 15 120), US$lO million, closed September 30, 1991

Education Sector Development Project (Cr. 2287), US$25.2 million, closed June 30, 1999

(a) demonstrate the effectiveness o f a ICommunity Development

AfDB

Ireland Aid Lesotho

Primary classroom constructioi in 3 districts; provision o f furniturelleaming materials to primary schools; construction o f secondary scienceltechnical laboratories; in-service trainine o f primarylsecondary school teachers; capacity building for MOE. US$12.8 million. Project period: 1999-2002 primary classroom construction, furniturelequip. training o f paraprofessional teachers, mgmt training, institutional strengthening.

PlDO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), H Highly Unsatisf

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3. Lessons learned and reflected in the project design:

The P A D o f ESDP I1 Phase I detailed the lessons learned from past education projects which have been incorporated into the design o f ESDP 11. These lessons include the importance o f MOET participation and ownership, partnership with other development partners, balancing the investment in improving educational quality versus increasing school spaces through construction, aligning the budge allocation with priority areas through the MTEF tool, and targeting o f orphans and other disadvantaged children.

During the implementation o f ESDP I1 Phase I, the fol lowing additional lessons were learned and are reflected in the design o f the proposed Phase 11.

Identification o f sites for school construction. Phase I was to expand primary coverage through building additional classrooms in the existing schools. When the Government introduced FPE in 1999, i t also stated that the Government would now only build and expand government schools only. This shift delayed the implementation o f Phase I since new sites had to be found for construction. An ad hoc Task Force was established and a set o f criteria was developed for identification o f primary school construction sites. Though this procedure has worked relatively wel l during Phase I, a more scientific approach for site selection i s needed to target the most disadvantaged areas and avoid over-building in certain areas. A primary and secondary school mapping exercise i s being conducted to guide the selection o f sites during Phase T I .

Annual budget for scholarship component. The ESDP I1 Phase I design init ial ly did not identify scholarships as a strategy toward achieving equity in education. Phase I allocated a budget for “targeted equity based program’’ but detailed activities for the component were not defined. Towards the middle o f ESDP I1 implementation, the MOET and the Bank finally agreed to use scholarships as an explicit strategy. The scholarship program was formally launched by the Minister in 200 1. During the f i rst two years o f implementation in 200 1 and 2002, i t became so popular, yet politicized, that the MOET felt pressure to process more and more applications without consideration for annual planning and budgeting. Subsequently, Phase I ended up not being able to pay some o f the scholarships awarded because o f the shortage o f funds. It was agreed that during Phase 11, annual planning and budgeting will be used as a tool and quotas will be distributed to the districts based on an agreed formula.

Outsourcing o f training. ESDP I1 Phase I had built in a large number o f training activities including the training o f a l l Primary Advisory and Management Committees and Secondary School Boards. The burden o f training fe l l mostly on the inspectors who themselves were already over committed to other responsibilities. This was the most important reason why some o f the training was delayed. In Phase 11, outsoucing o f similar training activities to universities and other training institutions will be explicit ly encouraged. An important side benefit o f the outsourcing was to give incentive to public and private tertiary institutions. In the context o f higher education reform, access to ESDP I1 training funds wil l be very important to the survival o f these institutions.

Technical and Vocational Education. The unsatisfactory implementation o f the TVET component during Phase I has shown that the reforms in TVET are very complex and the MOET

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will need not only a champion in the country but also long-term technical assistance in order to implement the reform agenda built in the project. We also learned that there i s a deep-rooted belief in centralized systems and movement toward a flexible, demand-driven system will be long and difficult. Further, IDA'S dialogue with the Ministry on TVET had also been compromised because o f lack o f technical expertise and financial resources during supervision. The design o f the TVET component in the proposed Phase I1 will reflect these lessons by (a) allowing more time in Phase I1 to continue laying the foundation for reform; (b) providing long term technical assistance; and (c) separately, IDA will intensify our own dialogue with the MOET on the TVET sector.

Project Implementation. In the past, including the first two years o f ESDP I1 Phase I, all MOET projects were coordinated by the Education Planning Unit under the Director o f Planning. The EPU was a synonym for "project implementation". However, EPU had l i t t le understanding o f planning and pol icy development. Starting from 2000, project implementation also started to suffer due to loss o f staff in EPU. There was a disbursement lag o f almost 20 months. In 2001, as a temporary measure, the then PS Education requested Bank support to recruit a Project Coordinator who would help the PS and Director o f Planning focus on the coordination o f project activities. The strategy has proved successful as implementation quickly improved and disbursement lag was reduced to only 7 months within a year. The ESDP I1 Phase I1 will init ially continue with this temporary arrangement, while at the same time emphasize strengthening the Planning Unit in policy development, planning, monitoring and evaluation. As soon as the capacity o f the Planning Unit i s sufficiently improved (by independent consultant assessment), the Ministry o f Education and Training will contemplate the incorporation o f the project coordination back into the Planning Unit. An integrated approach to project implementation wil l contribute to long-term sustainability.

4. Indications o f borrower commitment and ownership:

The GOL has demonstrated a strong commitment to improving education and recognizes that education and training are powerful tools in the fight against poverty. The share o f Government expenditures devoted to education has been around 28% (including the 4% allocated to National Manpower Planning Secretariat for bursaries) in recent years, high compared to other countries in the region.

At the policy level, the Government i s committed to producing a Poverty Reduction Strategy Paper (PRSP) where education will feature prominently. A full PRSP should be produced by December 2003. Lesotho also embraced Education for All and the Mi l lennium Development Goals for education. The introduction o f Free Primary Education was the f i rst step towards achieving these goals. The Government i s also committed to further increasing the share o f education budget allocated to primary and secondary education from 57.7% in the 2003 budget to 65% (including the budget that goes to the National Manpower Development Secretariat) by the conclusion o f Phase 11.

The GOL also has full ownership o f the ESDP I1 program. In November 1997, the GOL held a Round Table Conference o n "Poverty Reduction Within the Context o f Good Governance." At this meeting, the GOL outlined a costed poverty alleviation program centered o n five priori ty

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areas, including "improving social services to the poor." This priority area focuses heavily on improving the quality o f education and extending access to education. Following the presentation o f i t s specific education priorities, the GOL asked the Bank to finance a new project, ESDP 11, to support i t s education sector program. In September 2002, fol lowing the successful implementation o f ESDP I1 Phase I, the GOL sent a formal request to the Bank to proceed to ESDP I1 Phase 11.

5. Value added of Bank support in this project:

The Wor ld Bank has consistently supported the GOL in i t s education efforts since the early 1980s. It i s now the major external financier o f education in Lesotho. The proposed project incorporates many lessons learned from the experience over the years including that from the implementation o f ESDP I1 Phase I, as outlined above. The value added o f Wor ld Bank support i s in assisting the GOL to clarify i t s ideas and focus on priority areas, and in providing global comparisons and experiences in other countries.

In particular, as a result o f GOL and Wor ld Bank discussions, the project wil l now focus on several areas previously not dealt with sufficiently: (a) priorit izing primary classroom construction in inaccessible areas; (b) developing a new distance education program for teacher training, drawing o n lessons learned from the Wor ld Bank Afr ica Region study: Enhancing Learning Opportunities in Africa: Distance Education and Information and Communications; (c) emphasizing decentralization o f school management by establishing and training school committees; (d) institutionalizing a bursary scheme for orphans and other disadvantaged children; (e) investigating means o f increasing cost-efficiency at NUL; and (f, regularly undertaking a PER in education and subsequently making budget allocations based on annual MTEF.

E. Summary Project Analysis (Detai led assessments are in the pro ject f i le, see Annex 8)

1. Economic (see Annex 4): 0 Cost benef i t 3 Cost effectiveness

Other (specify)

NPV=US$ million; ERR = % (see A n n e x 4)

Economic Benefits. The most recent year for which a Labor Force Survey i s available i s 1999. The Survey i s limited to the territory o f Lesotho, but households are asked to identify household members who are citizens o f Lesotho but who are working in the Republic o f South Africa. On that basis, Lesotho's labor force was estimated to have been about 849,000 in 1999. The distribution o f these 849,000 persons was roughly as follows: employed within Lesotho, 5 14,000; employed in RSA, 103,000; unemployed (within Lesotho), 232,000. The unemployment rate i s either 3 1%, if the measure i s l imited to the territory o f Lesotho, or 27%, if Lesotho citizens working in R S A are included within the measure o f the labor force. The high level o f unemployment i s obviously a major economic and social problem for the country.

Only 23% o f employed persons were wage and salary employees, while 69% were employed in subsistence farming, and 8% were self-employed (in occupations other than subsistence farming).

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Poverty analysis suggests that households with individuals in paid (wage and salary) employment have the greatest chance o f escaping poverty. Education has a powerful effect on an individual’s l ikelihood o f obtaining paid employment. Only 40% o f those without any education or with Standards 1-7 education are in paid employment. 50% o f those with Forms 1-7 education are in paid employment, while more than 80% o f those with A level o r higher are in paid employment.

Median income by education

0 2 4 6 8 10 12 14 16 18

No of years of education

Among paid employees, education i s an important factor in determining eamings. As shown in the chart above, eamings increase marginally with schooling until about 11 years, after which they rise steeply, and then level o f f again.

Social benejits. In addition to enabling people to earn larger incomes, education enables people to understand health issues better, and therefore to lead healthier lifestyles. The education o f females benefits not only themselves, but also their children. From the Population Census o f 1996, it i s known that adult females in Lesotho with more education tend to have fewer children. The Core Welfare Indicators Questionnaire (CWIQ) survey o f 2002 found a strong correlation between education and awareness o f how HIV/AIDS i s transmitted. Surveys in other southern Afr ican countries have found positive relationships between mothers’ education and children’s nutritional status, and negative relationships between mothers’ education and infant mortality, and it would be helpful for C W I Q to be analyzed further to explore those relationships in Lesotho.

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

Fiscal Implications o f Expanding Enrollment and Improving Quality

Government expenditure in the macroeconomic context. Due to the high ratio o f international trade to Lesotho’s GDP (a “small country” effect), and the income from the Lesotho Highlands Water Project, the Government receives revenue equivalent to 37% o f GDP - a much higher ratio than i s typical for countries at Lesotho’s l ow income level. This has enabled a high level o f Government expenditure, at 48% o f GDP in 2002/03. Despite the favorable revenue situation, and some external grant aid, expenditure i s so elevated that Lesotho i s incurring budget deficits amounting to 5% o f GDP. Over the medium term, it will be important for levels o f expenditure and deficit financing to be curtailed, to enable a larger share o f national income to be devoted to private sector investment and growth.

The education sector in Lesotho, consisting o f the Ministry o f Education and Training plus bursaries administered through the National Manpower Development Secretariat, absorbs 32% o f Government recurrent expenditure, excluding interest payments, and 28% o f total Government expenditure. Government expenditure on education amounts to 12% o f GDP, substantially greater than in most African countries.

Issues in the composition of Government expenditure on education, andfiscal planning for the sector. The distribution o f education sector recurrent expenditure i s as follows: basic education, 40%; secondary education, 17%; TVET, 6%; higher education, 29%; teacher training, 3%; administration and supporting services, 5%. In relation to other Afr ican countries (and despite the FPE pol icy which has shifted some costs formerly borne by parents, onto the Government budget), Lesotho s t i l l spends a relatively small share on basic education, and an unusually high share o n tertiary education. The diff iculty o f achieving “economies o f scale” at the National University o f a country with a small population helps explain the latter observation.

Under Phase I, the Ministry o f Education and Training prepared the first-ever sectoral Medium Term Expenditure Framework, covering 2003/04 through 2005/06, with the assistance o f a consulting firm. MTEF will become a routine activity o f the Ministry. Thus, the next MTEF will be for 2004/05 through 2006/07. I t will simulate the fiscal impact o f enrollment expansion and quality improvement, including the investments to be made under Phase 11, and reflecting the revised demographic projections. In that context, the fol lowing factual and pol icy issues are relevant:

0 It would be desirable to simulate the evolution o f primary enrollments necessary to

The Ministry intends to reduce class size at the primary level, and to increase the

achieve the Mi l len ium Development Goal o f universal primary completion, no later than by 2015.

proportion o f trained teachers at the primary level. These factors wil l increase the cost to the Government o f primary education.

0

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a The share o f the budget going to the non-instructional purpose o f feeding i s substantial,

One l ikely consequence o f primary enrollment expansion i s increased enrollment at the and deserves scrutiny.

secondary level. On the other hand, secondary education displays inefficiency - teachers teach too few class periods, and pupil/teacher ratios are low.

have been cut, without any other reforms, i s that the institutions slide into illiquidity, and quality suffers. There i s a need for strategic planning (including financial planning) at NUL that i s consistent with the Government’s intentions concerning long-term support for higher education. Bursaries are means-tested for secondary students, but not for tertiary students. This seems inconsistent. One way to free up a greater share o f the budget for primary and secondary education would be to introduce means-testing for tertiary student bursaries.

a

a The experience o f other countries where Government budget allocations to universities

a

These issues wil l be the subject o f dialogue between the Ministry and the Bank supervision team during the supervision stage o f Phase 11. Despite the fact that NMDS i s under a different Ministry, it will be important for NMDS to be brought into the MTEF process for the education sector.

Fiscal Impact:

Please see above.

3. Technical: Curriculum and assessment. A number o f ongoing changes-such as revisions to the primary level curriculum, transfer o f the Primary School Leaving Examinations to the Examination Council o f Lesotho (ECOL), the move toward localizing end-of-secondary examinations, and the development o f a National Assessment system-have placed the National Curriculum Development Center NCDC) and ECOL under great pressure. The establishment o f a national curriculum and assessment pol icy framework would help to guide the future work o f the institutions and also help to prevent tensions in the system. However, the development o f such framework turns out to be more complex than originally envisaged. The ESDP I1 Phase I has experienced delay. Continued technical and financial support i s critical to ensure the successful implementation o f this important quality aspect o f the ESDP 11.

Textbooks. Using i ts own resources, the GOL has developed one o f the most viable primary textbook provision schemes in Africa. The GOL established a primary textbook revolving fund by providing seed money for the purchase o f a start-up set o f textbooks; parents then paid an annual user fee, which provided the income to purchase replacement copies as and when required. This system has been very successful. However, with the introduction o f Free Primary Education in 1999, parental book user fees have been effectively abolished for Standards 1-3 and will be abolished for a l l Standards by 2006. GOL has agreed to finance the additional textbooks required to cater for new enrolment and for the continuous replenishment o f a l l core primary textbooks as required. While in the long te rm the GOL will make adequate allocation o f i t s education recurrent budget for textbook provision, i t i s important that ESDP I1 supports the financing o f the additional copies required for increased enrollment and the annual replenishment

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o f existing textbook stock so that the primary book to pupil ratios will be maintained at least at 5 : l .

However, the changes from a parent funded textbook provision scheme to a free textbook scheme requires that the current management structure and systems o f the School Supplies Unit (SSU) should be reviewed and streamlined in order to achieve important cost reductions in procurement and improved efficiencies in operation. Thus, at the primary level ESDP I1 wil l work with the SSU and NCDC to develop and introduce a competitive evaluation, approval and procurement system in which price wil l be a significant factor in evaluation. ESDP I1 will also support a move toward the approval o f more than one competing textbook for each standard and subject in order to remove the current monopolistic system. In financing and distribution there should also be a move towards a demand-oriented system through the introduction o f notional per capita textbook budgets for every school so that schools can decide for themselves what their ordering priorities should be from the MOET l i s t o f approved textbooks and teachers' guides.

Further, the high cost o f secondary education has been repeatedly identified as the most important reason why many children do not enroll in secondary schools. The high cost o f secondary textbooks i s a major cause o f the high cost o f secondary education to parents and i s a major inhibiting factor for the majority o f Basotho households: annual book provision costs can be as high as Maloti1,OOO (US$125) for a secondary student. Based on the successful experience with the primary textbook revolving fund, the Ministry o f Education intends to launch a core textbook rental scheme, init ially for junior secondary education. At the request o f the Ministry o f Education, IDA will finance the purchase o f the init ial stock o f core secondary textbooks after MOETLDA approves a revised l i s t o f suitable core textbooks. This wil l also require work with NCDC to design and introduce a new textbook evaluation and approval system for junior secondary, which will establish price as a significant factor in evaluation and result in base line competitive prices with an agreed formula for annual inflationary price increases and standardized discounts for quantity orders. This wil l create downward pressure on the textbook prices charged to the school system

Teacher development and support. ESDP I1 Phase I1 will continue to support efforts to increase LCE's capacity to produce Primary Diploma teachers through the Distance Teacher Education Project which was launched in January 2002. The Ministry i s faced with the challenge o f upgrading qualifications for those who are either unqualified or underqualifed. About 25% o f the serving primary teachers (more than 2000) do not yet have a Diploma and are therefore considered either unqualified or underqualified. The recently launched Distance Teacher Education project was designed to expedite this process. It i s expected that the f i rs t 500 Diploma teachers will graduate in 2005 f rom the DTEP and thereafter at least 250 annually. In the past, very litt le has been done to refresh teachers' knowledge and ski l ls due to the lack o f resources and the MOE giving priority to upgrading teachers' qualifications. The ESDP I1 Phase I1 will support the in-service o f Math, Science and English teachers in al l primary and secondary schools.

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School-level management. ESDP I1 will continue to support the Ministry’s decentralization process by strengthening school-level management. By decree o f the 1995 Education Act, a l l primary schools are to establish Primary Advisory Committees and a cluster o f church primary schools will establish a Primary Management Committee, and secondary schools are to establish Secondary School Boards. An important objective o f this pol icy i s to increase parental participation in the management o f schools. The ESDP I1 Phase I had finished training al l the committees and boards. Evaluation o f the impact o f training i s currently underway and new priorities in capacity building will be identified and supported by the ESDP I1 Phase 11. Further, since the membership o f these committees expire in 3 years, there i s a need to continuously train the renewed committees.

The project also aims to involve parents in the process o f classroom construction as a way to build ownership. A community approach will be piloted for primary school construction.

FulfUment of Phase I triggers for moving into Phase II. At the time o f designing Phase I, it was agreed that six trigger indicators would have to be achieved before GOL can qualify for Phase I1 support. Despite the achievement noted above, we presently expect that only three o f the six triggers qualifying the GOL for a second IDA credit wil l be fulf i l led by the end o f ESDP I1 Phase I. Therefore, Board approval for Phase I1 will be necessary. The fulf i l lment o f triggers i s brief ly summarized below. Details o f trigger fulfillment are contained in Annex 1 1 o f the PAD.

Trigger 1: Primary Net Enrollment Ratio (increase the NER from 68% in 1999 to 73% by the end of the project). The Bank team reported satisfactory progress o n this trigger. Based on the 2001 Lesotho Demographic Survey and 2002 Core Welfare Questionnaire Indicator Survey, the primary net enrollment ratio in Lesotho has reached 85%.

Trigger 2: MTEF “used” and Percentages of Expenditure (increase the expenditures of primary and secondary subsectors combined from 68% in 1999 to 70%). The Ministry o f Education and Training has definitely met the “process” trigger o f implementing the MTEF. The question i s whether they met the “outcome” trigger relating to budget allocation and expenditures for primary and secondary education. During the period o f 1999 to 2002, there was progress in increasing the share o f education recurrent budget devoted to primary and secondary education f rom 57% to about 61%. However, the unexpected doubling o f N M D S budget in 2003 has again reduced the share o f primary and secondary education to 57.7%, back to the level o f 1999. As indicated in Annex 4, despite the fact that NMDS i s under a different Ministry, i t will be important for NMDS to be brought into the MTEF process for the education sector in the future. This important issue wil l be the subject o f dialogue between the Ministry and the Bank supervision team during the supervision stage.

Trigger 3: “At least 75% of School Advisory and Management Committees for primary and secondary schools functioning satisfactorily by December 2001 (assessed independently) ”. Impact assessment i s being conducted.

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Triggers 4 and 5: “Technical and Vocational Education Act in place by December 2000” and “A financial management andperformance monitoring system for TVET in place by June 2002”. These two triggers will not be fulf i l led by December 2003. Factors contributing to the unsatisfactory performance o f the TVET sub-sector, as stated in Section B 2.1 o f this PAD, include the lack o f a TVET reform champion, the lack o f sustained technical assistance, and the fact that reforms in TVET are complex and can take as long as 10 to 15 years. It i s necessary to continue laying the foundation for TVET reform during Phase 11. Support for TVET in Phase I1 wil l be coupled with long-term technical assistance to the Ministry.

Trigger 6: “NFE Act approved; operational guidelines issued and options defined by December 2001 ”. This trigger i s unlikely to be fulfilled. Prior to the introduction o f Free Primary Education, non-formal education was identified as a priority for the Ministry o f Education to achieve i t s EFA goals. The introduction o f FPE has successfully brought into the formal school system many o f the children who could not afford schooling before. There i s now a need to re-orient non-formal education f rom a predominantly literacy program for children who could not afford formal schooling to a ski l ls development program for adults who are beyond the age o f formal schooling. ESDP I1 Phase I1 will continue to support the Learning Post p i lo t in two districts, but now with an emphasis beyond basic literacy and numeracy .

4. Institutional: The MOET has a relatively good record o f project implementation. However, the MOET faces persistent problems o f weak capacity. This i s partially due to an inabil ity to retain highly skilled professionals because they often leave to take advantage o f better paying j ob opportunities in the private sector or South Africa. To offset capacity weaknesses, TA engaged for previous projects will be maintained as necessary under the proposed project. The TA referred to here means professionals, both Basotho and others, who work outside o f the public service. For example, as noted earlier, the position o f Project Coordinator wil l be temporarily maintained so that the Project Coordinator wil l assist the PS and Director o f Planning in the overall coordination o f project activities. Further, MOET’s capacity for procurement o f c iv i l works and services has been strengthened substantially during previous projects, the existing TA for c iv i l works will also be maintained. Furthermore, covenants require the government to maintain staffing levels o f key implementing units, for example, the Planning Unit, Accounts Section. The project anticipates providing management and other technical training for serving officers in key units to improve their efficiency. 4.1 Executing agencies:

The Project wil l be executed by the relevant programs o f the Ministry o f Education and Training, under the overall leadership o f the Principal Secretary. 4.2 Project management:

The Project will be coordinated by the Director o f Planning. The MOET Senior Management Committee, chaired by the PS, wil l have the responsibility for project management and wil l ensure full integration o f the implementation process into the regular operations o f the MOET. Task Force may be established from time to time to provide technical guidance to specific issues.

- 34 -

4.3 Procurement issues:

Support from the IDA-financed Education Sector Development Project (ESDP) I and the first phase o f ESDP I1 has greatly strengthened the procurement capacity o f the Ministry o f Education and Training. The Education Facil ity Unit i s in charge o f procurement o f c iv i l works as wel l as goods. There i s currently a contract manager and a procurement manager. Coordination o f the procurement o f goods and c iv i l works i s being provided by a technical advisor. The Project Coordinator in charge o f procuring consultants, training, workshops, and study tours. Improved coordination may be necessary among various procurement activities. This may be achieved by appointing an overall procurement coordinator f rom the existing EFU staff. Based on the excellent performance in procurement exhibited by EFU, the Procurement Specialist has approved raising o f thresholds for ICB for c iv i l works to US$750,000. Details o f the procurement arrangement can be found in the procurement Annex 6(A).

Procurement o f textbooks for primary and secondary education could be complex. I C B wil l be used for textbooks which can be procured f rom the international market. Since the number o f publishers represented in Lesotho i s small and there may be l itt le interest among other f i r m s to compete for relatively small contracts, L imi ted International Bidding (LIB) may be used. Individual contracts will be usually below the threshold o f US$200,000 equivalent. 4.4 Financial management issues:

Responsibility for the financial management o f the project l ies with the MOET, through i t s Project Coordination and Support Unit (PCSU), as was the case with the previous phase.

Accounting systems and the related pillars o f internal control are already h l l y established. Competent staff with the experience o f running the previous Bank supported phase i s being retained, as are the proven fund f low mechanisms used in that phase.

N e w computer software i s being introduced to enhance both control and the accuracy o f record keeping. Prior to this, record keeping was largely manual, with only certain reports being generated in Excel. All staff wil l therefore require training in the use o f the new software, as we l l as general training on accounting in a computerized environment.

In addition, the project will be required to produce Financial Monitoring Reports (FMRs). While the new software wil l go some way towards facilitating this, the present accounting staff will require some training and mentoring in the design and production o f FMRs.

The existing external audit arrangements are adequate, with a statutory audit carried out annually by the country's Auditor General o n terms acceptable to the Bank. The annual audits wil l thus continue to be due at the end of September o f each year, which i s six months after the end o f the fiscal year.

Disbursement. The project i s expected to continue to operate three bank accounts as follows:

1. The Special Account (USD) held at the Lesotho Central Bank for transfers to the local

- 35 -

currency account and payments to foreign suppliers, 2. Local currency (maloti) account at the Lesotho Central Bank for receiving transfers from the

Special Account, and making maloti payments to local suppliers, 3. Local currency (maloti) account at the Lesotho Central Bank for housing counterpart hnds.

Disbursements from the loan will be made based on traditional disbursement methods (Le. from the Special Account with reimbursements made based on Statements o f Expenditures (SOEs), as we l l as direct payments f rom the Loan Account where appropriate). FMRs produced wi l l therefore essentially be a reporting tool until such time as the quality o f reporting i s deemed sufficiently high to support replenishment requests. The project however has to demonstrate the abil ity to produce FMRs before any disbursements from the credit can occur (see Annex 6 for the detailed financial management action plan).

5. Environmental: 5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis.

The Borrower has carried out an Environmental Analysis (EA) which addresses potential environmental and social impacts due to the construction o f classrooms and related facilities. The EA includes (i) an Environmental and Social Management Framework (ESMF) for classroom construction and hostels; (ii) an Environmental Mit igation Plan for the project; and (iv) a Resettlement Policy Framework. 5.2 What are the main features o f the EMP and are they adequate?

The ESMF identified and assessed to the extent possible, potential environmental and social imacts and appropriate mitigation measures and presented this in the form o f a generic checklist developed. I t also developed an environmental and social screening form that would assist in determining potential adverse environmental and social impacts during project implementation pertaining to project activities. The ESMF presents definitive, conclusive and clear procedures consistent with the Laws o f Lesotho and the Wor ld Bank Safeguard Policies. 5.3 For Category A and B projects, timeline and status o f EA:

Final report o f ESMF was received o n April 10,2003. 5.4 How have stakeholders been consulted at the stage o f (a) environmental screening and (b) draft EA report on the environmental impacts and proposed environment management plan? Describe mechanisms o f consultation that were used and which groups were consulted?

Relevant Ministries, MOET officials, Education Facilities Unit, communities, and other stakeholders have been consulted in the development o f the ESMF. Mechanisms o f consultation include workshops, briefings, and informal consultations. 5.5 What mechanisms have been established to monitor and evaluate the impact o f the project on the environment? Do the indicators reflect the objectives and results o f the EMP?

For the construction o f schools and hostels, the ESMF establishes the screening process mechanism to enable the local community and the Education Facilities Unit (EFU) to simultaneously identify adverse potential environmental and social impacts o f their activities and to address them by incorporating the relevant mitigation measures into the designs before they submit them for review and subsequent approval. The main features o f this mechanism requires

Environmental Category: B (Partial Assessment)

Date o f receipt o f final draft:

- 36 -

project implementers to screen their projects at the preparation stage using the screening forms developed and the environmental and social checklists developed to identify potential adverse effectshmpacts. The ESMF including the Resettlement Policy Framework has been approved by the relevant department in the Wor ld Bank.

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

The key social issue relevant to the project objectives i s the schooling outcome o f the disadvantaged groups in Lesotho. The achievement o f the project development objectives will be measured by the improvement in primary completion rate, primary net intake rate, and ECCD coverage rate. This means that the project social development outcome will be positive since any improvement in these rates wi l l mean that those who were not able to enroll and complete primary schools are now able to do so. Further, in the design o f three important components, the project targetted assistance to those who are most in need. These include the selection o f sites for school construction, the award o f bursary, and expansion o f ECCD home-based care. The targeting o f assistance will help achieve the social development outcome further. 6.2 Participatory Approach: How are key stakeholders participating in the project?

The ESDP I1 i s designed by the Ministry o f Education and Training with financial and technical support from the Wor ld Bank. During the preparation, the Ministry consulted widely with a range o f education stakeholders, including MOET officials at the district and central level, teachers, students, and parents. During the implementation o f Phase I, the MOET has maintained such consultation and communication with the stakeholders. Further, various components o f the ESDP I1 such as training, ECCD home-based care, the DTEP have built-in evaluation and stakeholders are able to voice their views through the evaluation. Finally, stakeholders are able to provide constant feedback to the project through the semi-annual Bank supervision missions which normally plan on meeting with key stakeholders. 6.3 H o w does the project involve consultations or collaboration wi th NGOs or other c iv i l society organizations?

The ESDP I1 does not have a systematic method o f consulting and collaborating with the NGOs or other c iv i l society organizations. The NGOs and other organiations are considered one o f the stakeholders. However, the MOET has consulted extensively with Save the Children since i t has experience in administering a bursary scheme for secondary school children. The M O E T also consulted many NGOs which provide non-formal education. 6.4 What institutional arrangements have been provided to ensure the project achieves i t s social development outcomes?

For the overall project, the MOET EMIS will provide ongoing information on how the disadvantaged groups are affected by the intervention. The primary and secondary school mapping excercise wil l provide up-to-date information on where new schools are most needed, The scholarship component wil l be managed by a scholarship committee at the central level and scholarship officers at the district level. The nominations wil l come from communities and verified by schools.

- 37 -

6.5 How wi l l the project monitor performance in terms o f social development outcomes?

The Monitoring and Evaluation subcomponent o f the project and the MOET's ongoing Education Management Information System (EMIS) will provide annual data to monitor the schooling outcomes o f the disadvantaged groups.

Safety of Dams (OP 4.37, BP 4.37) Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)*

7. Safeguard Policies:

C; Yes NO

\-' Yes NO

Yes NO / - \

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

Environmental Assessment and Resettlement Policy Framework have been developed for the project. See Section E.5. The other safeguard policies are not triggered.

F. Sustainability and Risks 1. Sustainability:

In order to achieve i ts development impact, a project should be implemented in an environment that i s politically, socially and economically conducive. Beyond this, strong human and institutional capacity need to be in place. As in almost every country, polit ical instability could present a major external risk to the project. However, following the c iv i l unrest in September 1998, the security situation in Lesotho has stabilized and the different political parties seem to be working together for the good o f the nation. A peaceful election was held in M a y 2002.

The lack o f financial sustainability represents a potential risk. The GOL recurrent budget allocated to education has been around 28%, high compared to other countries. A further increase o f education's share seems unlikely. Equitable allocation within the education sector i s critical to ensure adequate funding for priority areas. In particular, the expenditures o n basic education need to be protected and hrther increased relative to the tertiary sector. The MOET will use MTEF as a tool to monitor the intrasectoral allocation and ensure adequate funding for primary and secondary education.

The MOET may lack sufficient capacity to implement the program. In part due to the loss o f people who go to South Africa for better paying jobs, there i s a high turnover rate in the GOL bureaucracy. This results in vacancies in key units which often take a long time to fill. In order to

- 38 -

fill crucial gaps in capacity, the MOET often resorts to employing technical assistance (TA). Sustaining bureaucratic efficiency on the basis o f TA poses a moral hazard and contributes to the lack o f staffing continuity in the MOET. Institutional capacity i s especially problematic in the Planning Unit. The proposed project will be very selective in the use o f TA and emphasize strengthening local capacity.

The high level o f HIV/AIDS prevalence rate posts another significant risk to the education sector. The epidemic will result in the loss o f a significant number o f teachers, inspectors, advisors, and other MOET officials. It wil l also affect the population o f school-age children. Further, i t also means that a healthy Basotho wil l have to support more sick people and orphans. The implication for education i s thus huge. The project wil l support a study o f the impact o f H IV/AIDS on education which wil l be used to develop a comprehensive HIV/AIDS policy in education.

2. Crit ical Risks (reflecting the failure o f critical assumptions found in the fourth column o f Annex 1):

Risk From Outputs to Objective Education stakeholders may not cooperate Secular decline in economic growth could reduce GOL investments in the education sector GOL may not allocate adequate funds to priority subsectors High HIV/AIDS prevalence may mean heavy loss o f capacity within MOE

Weak institutional capacity may inhibit project implementation

Lack o f experience in implmenting innovation funds in TVET and higher education may weaken the implementation o f the component Overall Risk Rating

Risk Rating - H (High Risk), S (Substantial Ris

Risk Rating

M

M

N

S

M

S

M M (Modest Risk), N

Risk Mitigation Measure

information dissemination; regular consultation Jetween MOET and stakeholders Sustained dialogue with private sector to diversify financing; dialogue with GOL to Ensure investment-friendly legislation Regularly conduct PER and allocate resources according to annual MTEF Strengthen HIViAIDS activities coordination; regular consultation with stakeholders; and develop comprehensive HIV/AIDS policy in education

Conduct needs assessment and complete recruitment; sustain staffing levels in key units; implement training program for key personnel; engage T A as needed Information dissemination; consultation with stakeholders; coordinating with other development partners who have experience in Lesotho and regionally; engage TA as needed

Jegligible or Low Risk)

3. Possible Controversial Aspects:

None.

- 39 -

G. Main Creditconditions 1. Effectiveness Condition

None.

Conditions for Negotiations 0

0

0

0

Agreement on the format and content o f Financial Monitoring Reports (fulf i l led during the appraisal by April 22,2003) Procurement Plan for the 1 st year o f project implementation (fulfilled during the appraisal mission by April 22, 2003) Project Implementation Manual developed and agreed with IDA (fulf i l led during the appraisal mission by April 22,2003) MOET Staff training plan developed and agreed with IDA (fulf i l led during the appraisal mission by April 22,2003)

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

Covenants :

0

0

0

0

0

0

0

0

The Government shall implement the Project in accordance with the procedures, guidelines, timetables and criteria set forth in the PIM, except as IDA shall otherwise agree. The Government shall maintain policies and procedures adequate to enable it to monitor and evaluate on an ongoing basis, in accordance with the performance indicators agreed. The Government and IDA shall carry out an annual review o f the Project every year commencing October 3 1,2004. The Government and IDA shall carry out a mid-term review o f the Project no later than September 30,2005. The Government wil l cause PSCU to have i t s records, accounts and financial statements audited each year, commencing with the accounts for the year ending March 2004. The PSCU will submit quarterly FMRs, starting with the f i rst quarter after effectiveness. MTEF implemented annually, PER updated regularly, and the share o f education budget for primary and secondary education will reach 65% by 2007. Policy documents for ECCD, TVET, Higher Education, and HIV/AIDS formulated by June 30,2005

H. Readiness for Implementation 1. a) The engineering design documents for the f i rs t year's activities are complete and ready for the

start o f project implementation. c 1. b) No t applicable.

3

7

2. The procurement documents for the f i rs t year's activities are complete and ready for the start o f

3. The Project Implementation Plan has been appraised and found to be realistic and o f satisfactory

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

project implementation.

quality.

- 4 0 -

I. Compliance with Bank Policies k 1. This project complies with all applicable Bank policies. a 2. The following exceptions to Bank policies are recommended for approval. The project complies

with al l other applicable Bank policies.

w q e/-- Xiaoyan &ang c Dzingai B. Mutumbuka Fayez S. Omar - Team Leader Sector ManagerlDirector Country ManagerlDirector

-41 -

Annex 1: Project Design Summary LESOTHO: Second Education Sector Development Project (Phase II)

Poverty reduction through investing in human resources development

The education system will produce more and better educated and functionally literate Basotho

Student enrollment and performance data

project evaluation for each

include MOET annual school statistics from EMIS, national

Statistics, and other studies which will be carried out

reach 90%

ratio increased to 93%

60%

5. Performance in national achievement tests improved on average by 20%

(See detailed l i s t o f indicators and technical notes in Annex 12.)

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I v e l o p m e n t Objective: T o further improve the access, equity, and quality o f primary and secondary education, promote lifelong leaming by capacity building in ECCD, TVET, higher and nonformal education, and strengthening the institutional capacity o f the Ministry o f Education

Key Performance Indicators

Outcome I Impact Indicators: 1. ECCD coverage increased from 3 1 % in 2002 to 40% in 2007

2. Primary completion rate increased from 77% in 2001 to 83% in 2007;

3. Primary net enrollment ratio increased from 85% in 2001 to 90% in 2007

4. Lower secondary coverage increased from 43% to 50% in 2007

5. Average scores o f national achievement tests in primary (3&6) Math, English, and Sesotho improved by at least 15%

6. Share o f total education recurrent budget (including NMPS) devoted to primary and secondary education increased from 57% to 65% in 2007

7. Adequate legal and regulatory framework conducive to establishing a demand-driven TVET system in place.

(See Annex 12 for detailed l i s t o f indicators and technical notes)

Data Collection Strategy

'roject reports:

{MIS, Census

!MIS

!MIS

tesults from National jtandardized Tests

From Objective to Purpose)

upport for the ESDP I1 i s ustained through Phase 111; larents will enroll their hildren in ECCD, primary nd secondary education;

- 4 3 -

btput from each :omponent: , PR IMARY EDUCATION

. Construction and provision f classroom umitureiequipment

. Targetted Equity-based 'rogram

. Essential teaching/learning naterials provided for basic ,ducation

.. Primary School inspection

.nd advisory services

Output Indicators:

252 primary classrooms constructed, (2 schools using community approach)

10,000 bursaries to be paid for 2003

DTEP beneficiary database developed

10,000 bursaries provided for orphans and other needy upper primary students by 2005

Evaluation o f the bursary scheme

Needs assessment for inclusive education conducted by December 2003

Procure core textbooks to maintain primary pupi1:textbook ratio o f 1 :5 through yearly replenishment o f core textbooks

Inspection Manual used and reviewed every two years from 2004

3 day in-service training for 5 primary teachers per school (focusing on teachers teaching Mathematics, Science, English, Sesotho, and Social Sciences) held bi-annually at local dissemination centers (there are a total o f 1400 primary schools in Lesotho)

One week In-service workshop held annually for 40 primary inspectors and 5 Special Education Inspectors and PIEP Coordinator

Data Collection Strategy

'roject reports:

3FU construction completion .eports and site visits

latabase

:eceipts

3udit reports

report

Delivery records and distribution records, EMIS

review and adoption o f review

training attendance records

training attendance records

'rom Outputs to Objective)

chools fully utilized once ley are built

iursaries are given to needy tudents only

3ooks are utilized b y students md teachers

reachers are able to apply the mowledge and ski l ls in the :lassroom

3ach primary schol inspected ince every 3 years

- 4 4 -

. School Management primary)

3ne week In-service workshops held annually for 85 primary advisors

. Distance Teacher ducation Project continually ipported

400 primary principals trained in school management every year from 2004 to 2007

. Basic education curriculum md examination improved

100 primary school Management Committees trained

[I. SECONDARY EDUCTION

DTEP materials review and development and production (Year 4)

1. Construction and provisior D f classroom furniture/equipment

Support to DTEP mplementation (8 in-house vorkshops per year)

I T E P administrative and inancial management trengthened

I T E P learner support mproved through #trengthening o f 10 DRTs (see Iutput 4)

ntegrated curriculum and issessment framework ipproved

Revise and implement C&A packages for ECCD, primary, secondary, and TVET and localize for senior secondary

Implement national assessme) for primary and secondary

3 government secondary schools constructed, one for each o f the following three districts: Mokhotlong, Thaba-Tseka, and Berea

aining attendance records

aining records, E M I S

,aining records, E M I S

iraduates records

{orkshop reports

tudent management system in llace and operational

ipproved framework

packages developed

workshop reports

EFU construction completion reports and site visits

ich primary school assisted 4 nes a year

,incipals can apply new iowledge and skills in hools

11 DTEP tutors deployed to e districts

Zacilites fully utilized once hey are built

- 4 5 -

. Targetted Equity-based rogram

. Essential teachinglearning naterials provided for econdary education

.. Secondary school nspection and advisory ervices

i. School management secondary)

500 bursaries to be paid for 1003

ITEP beneficiary database leveloped

.t least 2500 bursaries wovided for orphans and other ieedy secondary school tudents by 2007

?valuation o f the bursary icheme

qeeds assessment for inclusive :ducation conducted by Iecember 2003

inother pilot established to nclude more out-of-school :hildren

Support to establish ;chool-based secondary .evolving fund for core extbooks

5 day in-service training for 4 Secondary teachers per school :focusing on teachers teaching Mathematics, Science, Englisb md Management) held 3i-annually at local ilissemination centers (a total 3 f 250 secondary schools)

3ne week in-service workshol held annually for 20 secondar] inspectors

One week in-service workshops held annually for 17 secondary advisors

500 secondary school principals and deputies trainec in school management by 2007

30 Secondary School Boards trained

ierification excercise and iudit reports

latabase

iudit reports

'eport

ieport

Pilot established

SSU and school records

Training attendance records and training evaluation

training attendance records and training evaluation

training attendance records and training evaluation

training records and training evaluation

training records and training evaluation

iursaries are given to needy tudents only

Books are utilized by students and teachers

Teachers are able to apply the knowledge and skil ls in the classroom

Each secondary school inspected once every 3 years

Each secondary school assisted 4 times a year

- 4 6 -

:I. L IFELONG LEARNING

. Expansion o f ECD Strategy eveloped and implemented

:. Capacity building for xhnica l and vocational ducation

1. Capacity buildng for higher :ducation

Home-based centers establised n 6 remaining districts (2 3ases per district) through :ommunity mobilization

Home-based manuals & other 3asic materials procured and iistributed

[n-service workshop held innually for 185 NTT and DTT and ART at 80 iissemination centers

rraining o f home-based :aretakers and parents for eacE home-based care in the premise

Development o f ECCD teacher in-service diploma program in collaboration with LCE and DTEP

Completion o f TVET policy and legislation

Completion o f the financing strategy and financial management system

Capacity building for T V E T Board

Capacity building for TVD

Construction o f TTI hostel

Establishment o f a T V E T innovations fund

Dissemination o f Higher Educaiton Act and strengthening National Council for Higher Education

Development o f higher education policy framework

)ases established

nanuals

workshop reports

training records

Program developed

Policy document and Act

financing mechanism developed

Training records and reports

training records and reports

EFU records and site visits

Establishment o f the fund

workshop records, equipment delivery records, training attendance

Policy document

TTs agree to participate in me-based care

- 4 7 -

. Non-formal education

V. M O E INSTITUTIONAL 'TRENGTHENING

. District Management

!. Planning, Monitoring, and {valuation strengthened

5 . Staff Development and rraining

t . HIV iA IDS

levelopment o f monitoring ndicators and Collection o f laseline data including :ommissioning o f studies

.ncentive fund for tertiary nstitutions which w i l l be tied o achievement o f agreed ndicators established

Von-formal education learner 3ost pi lot continued

District education management strengthened

Resource needs assessment o f DRTs

District Resource Centers each provided with one vehicle, twc computers and printers, one photocopying equipment, 200 reference books (based on resource needs assessment)

Evaluate impact o f improved DRCs on education delivery

Strategic plan reviewed and revised and annual operational plans in use from December 31.2003

MTEF implemented annually, and PER updated

Donor coordination strengthened

E P U capacity for monitoring & evaluation, research and policy development strengthened (including EMIS

Targeted staff training in strategic areas implemented annually based on agreed training plan

Recruitment o f HIViAIDS

idicators developed and onsultant reports

stablishment o f incentive md

valuation reports

olicy guidelines

eport

quipment delivery records

:valuation report

mgoing revised Strategic Plar

4nnual MTEF report

loint reviews held

3MIS system operational and ntegrated with GIS

rraining records

HIV/AIDS intervention

here is proper maintenance a le DRTs

- 4 8 -

r . PROJECT MPLEMENTATION

reports coordinator for education

Study o f impact o f HIVIAIDS in education

Development o f HIV/AIDS policy for education

Support for PSCU continued

Financial and procurement management system

PSCU records

systems in place and in use

- 49 -

'roject Components I Sub-components: . PRIMARY EDUCATION

L . Construction and provision i f classroom krnitureiequipment

Z. Targetted Equity-based Program

3. Essential teachingileaming naterials provided for basic :ducation

$. Primary School inspection md advisory services

5 . School Management :primary)

5. Distance Teacher Education Project continually supported

7. Basic education curriculum md examination improved

[I. SECONDARY EDUCATION

1. Construction and provision o f classroom hmiture/equipment

2. Targetted Equity-based Program

3. Essential teachingilearning materials provided for secondary education

4. Secondary school inspection and advisory services

5. School management (secondary)

iputs: (budget for each omponent) including contingencies)

JS$ 9.95 mil l ion

JS$ 523,000

JS$ 210,000

JS$984,000

JSS 395,000

JSS 1.45 mil l ion

JS$663,000

JS$ 1.78 mil l ion

JS$ 2.57 mil l ion

JS$ 1 mil l ion

JS$353,000

JS$246,000

D

'roject reports: rom Components to utputs)

- 50 -

111. LIFELONG LEARNING

1. Expansion of ECCD Strategy developed and implemented

2. Capacity building for technical and vocational education

3. Capacity buildng for higher education

4. Non-formal education

IV. MOET INSTITUTIONAL STRENGTHENING.

1. District Management

2. Planning, Monitoring, and Evaluation strengthened

3, Staff Development and Training

4. HIV/AIDS

V. PROJECT SUPPORT & COORDINATION

1. Project Implementation

2. Financial and Procurement Management System

US$346,000

US$ 1.09million

US$400,000

US$330,000

US$ 1.03 million

US$ 1.82million

US$500,000

USS248,OOO

US$ 1.02 million

US$292,000

- 51 -

Annex 2: Detailed Project Description LESOTHO: Second Education Sector Development Project (Phase II)

The development objective o f the proposed ESDP I1 Phase T I i s to further improve the access, equity, and quality o f primary and secondary education, promote l ifelong learning through capacity building in ECCD, TVET, higher and non-formal education, and continue to strengthen the MOET institutional capacity.

By Component:

Project Component 1 - US$14.18 million Primary Education

Subcomponent 1 : Primarv classroom construction. This subcomponent will finance 252 primary classrooms with related facilities including administrative block, kitchen, latrines, and standard classroom furniture. At least 70 classrooms wil l be located in remote "inaccessible" areas with flexible design to accomodate a smaller population catchment. Two schools will be built using a community-based construction approach. Further, an additional 100 science kits will be procured for schools that were constructed during the ESDP I1 Phase I and schools to be constructed during this phase.

Current information from MOET EMIS shows that the Thaba-Tseka and Maseru Districts seem to have the highest average pupil to classroom ratios. JICA, AdB, and Ireland Aid have chosen to target these districts in the primary school construction program. Therefore, IDA'S primary construction will target Berea, Leribe, and Botha Bothe, where the average school-age population to classroom ratio i s s t i l l more than 60. The same procedures as in Phase I will be used to select sites for Lo t 1. Subsequent selection o f sites will be guided by the GIS system to be developed within the first year o f project effectiveness.

Further, community participation in the construction o f primary schools will be piloted in at least two sites. The MOET has been slow in introducing community participation in i t s primary school construction due to confusion over whether direct contracting o f works to local communities or skilled workers i s allowed. The approach has already been used in Zambia, Malawi, and Tanzania, where the community i s expected to contribute 1520% o f project costs in donated materials and labor, an elected Project Committee i s responsible for getting the project done including hiring necessary skilled workers, and a grant i s made to the Project Committee. Community participation has the potential o f sustainability, l o w cost, and participation. This approach wil l be piloted with financial support from ESDP I1 Phase 11. An expert with experience using this approach (a Basotho or someone f rom the region) may be recruited to assist in the setting up and testing o f community approaches. The consultant will be attached to the EFU Special Service Section. Factors such as motivation, capacity and willingness o f district education officers towards the community approach wil l be included in the selection o f sites.

Implementing Unit: Education Planning Unit, Education Facil ity Unit

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Subcomponent 2 : Targetted Eauity Based Program . This component will annually finance up to 15,000 bursaries to orphans and other disadvantaged children in upper primary and lower secondary grades. The program wil l benefit approximately 5% o f students enrolled in upper primary and secondary grades and about 40% o f the existing orphans based on a recent Core Welfare Indicator Questionnaire Survey. The number o f bursaries to be awarded to primary schools will be about 10,000 annually to cover orphans enrolled in the upper primary grades who do not benefit f rom the FPE. With support from the A P L Phase I, the MOET had established a relatively well-functionning institutional arrangement for the implementation o f the bursary scheme. The National Manpower Development Secretariat (NMDS) under the Ministry o f Finance and Planning used to administer a small number o f secondary bursaries. In the interest o f rationalizing bursary programs, it was agreed that the MOET will be the implementing agency for al l primary and secondary bursaries, whereas the N M D S will focus exclusively on tertiary bursaries.

The MOET, in consultation with stakeholders will develop an annual budget and quota o f scholarships for each district. Based on the selection criteria specified in the application form, recommendations for awards wil l be made by schools, verified by the communities, and processed by the district-based bursary committee. The Scholarship Officer in the Central Office will consolidate the awards, liase with the Project Coordinator on budgeting and disbursement, and monitor and evaluate the impact o f the scheme, and propose to the Senior Management necessary revisions to the selection criteria and procedures. Payments are not made to individual children but to schools. Schools receiving scholarships are required to open a Bank account.

Further, the project wi l l finance the procurement o f a beneficiary database to improve the efficiency o f the bursary administration. Auditing and evaluation o f the scheme wil l also be supported.

The bursary scheme mainly targeted at children who are already enrolled in schools but have diff iculty in paying the school and other fees. During Phase 11, a scheme wil l be piloted to attract orphans and other disadvantaged children who are currently out o f the school system.

Implementing Unit: Bursary Officer in consultation with MOET Bursary Committee

Subcomponent 3 : Primary teaching and leamina materials. This component will support the additional core primary textbooks needed to cater for new primary enrolment and the annual stock replenishments needed to maintain the primary book to pupil ratio at least at 5: I

Lesotho currently has a relatively successful primary textbook rental scheme supported by a sustainable textbook revolving fund, which has operated since the mid 1980s. The rental fees collected from parents are held in the revolving fund managed by the School Supplies Unit o f the MOET and are used to purchase the additional copies required for increased primary enrolments and the normal annual replenishment to replace copies that are no longer usable. Since the introduction o f Free Primary Education in 1999 book rental fees are being progressively phased out. As a result, the income to the revolving fund declines every year and the revolving fund, and thus the textbook rental scheme are no longer financially sustainable without direct GOL/donor

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financial support. However, the fiscal situation o f the GOL has not allowed the required compensation to be paid to the SSU for the loss o f i t s rental income. At the request o f the MOET the ESDP I1 Phase I purchased additional copies o f core textbooks. The proposed ESDP I1 Phase I1 will continue to do so. However, it i s agreed that only 5 core textbooks for each Standard wil l be financed by ESDP I1 Phase 11. In addition, existing textbook evaluation, approval and procurement procedures wil l be reviewed and reformed to provide the MOE with much greater control over input prices. The current monopoly system o f textbook supply will be replaced with the introduction o f competing, altemative textbooks for each subject in each standard. These reforms should provide the basis for greater control o f input costs while maintaining an emphasis on content and presentational quality. At school level decentralised textbook selection will be required as essential support for the introduction o f competing altemative textbooks. This in tum will require the introduction o f notional per capita textbook purchasing power for each school and the development o f school ordering within their allocated budgets plus centralised order consolidation and procurement by the SSU. These structural changes wil l reduce unit textbook costs, maintain o r improve content quality and will provide significant efficiency and operational improvements. The provision o f school based purchasing power and the development o f decentralised school ordering will probably require the development o f a national primary textbook fund or budget line, into which funds from donors and the MOE can be pooled to meet annual textbook financing requirements

Implementing Unit: School Supply Unit in close liaison with the Primary Inspectorate and NCDC

Sub-component 4: Primary school support through decentralized inspection and advisory services. This component wil l finance (a) a refresher course for primary teachers in core subjects once every two years and (b) annual training o f primary inspectors and advisors.

Under ESDP I1 Phase I, emphasis o f teacher education has been primarily on pre-service and in-service o f under-qualified and unqualified teachers through the Distance Teacher Education Program. Lit t le has been done to provide on-going pedagogical support for practising teachers. During this phase, the ESDP I1 will support a refresher course for a l l primary teachers o f Math, English, and Sciences. Private and public tertiary institutions will be invited to develop various modules and train the teachers so that the burden o f training does not fal l entirely on the inspectors.

There are a total o f about 1400 primary schools in Lesotho and almost 7500 teachers teaching core subjects including Math, English, Science, Sesotho and l i fe ski l ls. The refresher courses will be non-residential and wil l be conducted in the 80 dissemination centers existing throughout the country.

Also under Phase I, a review o f primary inspection and advisory services was undertaken by the consulting firm Multi-serve. Useful recommendations were made to the Ministry and the Ministry i s ready to take up some o f the recommendations including (a) the adoption o f new inspection manuals, (b) decentralizing the primary inspectors to the districts, and (c) revise the primary advisory services. The ESDP I1 Phase I1 wil l support the implementation o f these

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recommendations, including the training o f 45 primary inspectors and 85 primary advisors in the use o f new inspection manuals and other monitoring tools. The training will be designed based on findings and recommendations from the Multi-serve review.

The training in this component will require sophisticated coordination in content and sequencing and to make sure that a l l activities lead to improvement in classroom teaching and learning. A Task Force comprising o f primary inspectors, district education officers, primary advisors, and teachers wil l be established. The Task Force will be provided with technical assistance if needed and will prepare a detailed implementation plan for a l l the training activities concerning primary teachers, inspectors, and advisors during the 4-year period.

Implementing Unit: Field Inspectorate

Subcomponent 5 : Primary school management. This component wil l finance the continuous training o f school management (principals and their deputies, and primary management committees).

Since the 1995 Education Law, primary school governance in Lesotho i s comprised o f a School Advisory Committee and School Management Committee for church schools. Government schools, on the other hand, are governed by only one management committee per school. Both committees have representation by school principals, proprietors, teachers, and parents. Every school i s to have a School Advisory Committee. The School Management Committee ususally governs more than one school. Under the ESDP I1 Phase I, all existing primary advisory and management committees were trained in general and financial management. However, the membership o f the committee expires every 3 years so there i s a continuous need to train the newly elected committees. Since it i s expected that many committee members will be re-elected, the magnitude o f training wil l be much smaller. Fol lowing a needs assessment, the project wil l finance the training of 100 primary management committees annually in general and financial management o f schools.

Increased emphasis on the school-level management also place much more responsibility on primary principals and their deputies, who are now also expected to assist in the implementation o f the bursary scheme, Free Primary Education, school-based distance teacher education program,HIV/AIDS counseling, beyond their normal workload. Unfortunately most o f the principals and deputies are not well trained for their jobs. Fol lowing a needs assessment, Phase I1 o f the ESDP I1 will finance the design and training o f 400 school principals and their deputies. The focus of the training for the principles wil l be coordinated with the inspector and teacher training in the last subcomponent and will be oriented toward providing pedagogical support to teaching and learning. The primary inspectorate wil l finalize the training priorities in consultation with the MOET Senior Management and IDA. Training may be outsourced.

Implementing Unit: Field Inspectorate

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Subcomponent 6: Distance Teacher Education Program. As o f 2001, about 25% o f Lesotho's 8225 primary teachers are s t i l l not qualified, meaning they have a below diploma level education. This component will continue to support the Distance Teacher Education Program (DTEP) which has been supported by the ESDP I1 Phase I and launched in January 2002. I t i s expected that the f i rs t cohort o f 500 teachers will graduate with diploma degrees in December 2005 and subsequently a minimum o f 250 teachers will graduate annually.

The ESDP I1 Phase I1 will continue to support the following areas a) curriculum and materials development and review, (b) training o f tutors; (c) learner support (through the equipping o f District Resource Centers); and (d) strengthening o f DTEP administrative and financial management.

The DTEP i s currently designed as a 4-year program. I t s curriculum i s largely based on the full-time pre-service program but i t s mode o f delivery can be described as largely v ia distance education with "sandwich" residential courses in between. The objective o f the program i s to upgrade qualifications through a distance learning mode to both underqualified and unqualified teachers. At the init ial stage o f program development, technical assistance was provided to the Lesotho College o f Education, including (a) training o f college tutors in DTEP module writing,(b) the development o f the DTEP 1 st year modules, (c) implementation o f the 1 s t year DTEP, d) training o f DTEP administrators, and (e) a study on the physical infrastructure needs for the DTEP. In addition, Phase I procured office equipment for the DTEP and reference materials for the tutors and student teachers.

With assistance from the ESDP I1 Phase 11, these activities will be repeated. In addition, Phase I1 wil l support the continuous review o f the curriculum and modules with a view toward further increasing the efficiency and effectiveness o f the program.

Implementing Unit: Lesotho College o f Education

Subcomponent 7 : Basic Education Curriculum and Examination. This component wil l finance the continued development o f an Integrated Curriculum and Examination Framework, localization o f the Cambridge Overseas School Certificate Exam and implementation o f the National Standardized Tests in basic literacy and numeracy.

The National Curriculum Development Center (NCDC) i s responsible for setting the curriclum for primary and secondary education. The Examination Council o f Lesotho (ECOL) i s responsible for examinations. In the past, there has been very litt le correspondence between the two agencies and consequently the emphasis and directions o f curriculum sometimes do not agree with the examinations. The ESDP I1 Phase I had attempted to support the development o f an Integrated Curriculum and Assessment Framework for primary and secondary education. Such a framework will prescribe the compulsory subjects for each phase o f education and assign them an appropriate "weight" in the curriculum. It will also indicate any supplementary subjects needed and provide recommendations for the overall structure and balance o f the curriculum. Further, the Framework will prescribe the purpose and timing o f formal national assessments and

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examinations. Subsequently, N C D C and ECOL will be responsible for the detailed development o f the proposed curricula and schemes o f external assessment, respectively. Regional HIVIAIDS education materials will be adapted and integrated into the curriculum.

During the first phase o f ESDP 11, ECOL and N C D C experienced tremendous diff iculty in the development o f the framework for various reasons including (a) lack o f consistent technical support; (b) lack o f a formal mechanism for N C D C to work effectively with ECOL, and (c) weak capacity in NCDC. As a result, the Framework i s s t i l l being developed. The Ministry has assured IDA that emphasis wil l be placed on strengthening the N C D C leadership and better communication between ECOL and NCDC. At the same time, the MOE requested IDA support in providing ECOL/NCDC staff with further exposure to other countries' experience in developing such a framework and in providing technical assistance when needed. The ESDP I1 Phase I1 will therefore support (a) study tours (b) technical assistance o n curriculum and assessment framework, and (c) regional and national consultation on the framework.

The delay in the development o f the framework has also affected the implementation o f the National Assessment in terms o f determining the grades, subjects, and frequency o f assessment. Notwithstanding this, the f i rs t National Assessment was administered in early 2003 to a select sample o f Standard 3 and 6 students in English, Math, and Sesotho. Results from the f i rst assessment had been analyzed and became one o f the critical baseline data for monitoring the impact o f ESDP I1 Phase 11, taking into account shortcomings in the design o f the f i rs t tests. The ESDP I1 Phase I1 wil l support the subsequent review and implementation o f National Assessment in core subjects for primary and lower secondary education.

Finally, it i s also expected that ECOL wil l take over the responsibility o f administering the Cambridge Overseas School Certificate tests which were traditionally managed by Oxford University. The transfer will require that ECOL develop the relevant capacity in test writing, test administration, marking,and data storage. The ESDP I1 Phase I1 wil l support these activities.

Implementing Units: NCDC and ECOL

Project Component 2 - US$5.95 million Secondary Education

Subcomponent 1 : Secondary school construction. This subcomponent will finance the construction o f at least 3 secondary schools with related facilities, furniture, and equipment. I t i s proposed that the 3 secondary schools will be built in Thaba-Tseka, Mokhotlong, and Berea, where currently there are no government secondary schools. If funds allow, a fourth secondary school may be built in Quthing district. The selection o f sites within these districts will be guided by the GIS once the GIS becomes available.

Implementing Unit: Secondary Inspectorate and Education Facil ity Unit

Subcomponent 2: Targetted Equity Based Program. This component will annually finance up to 15000 bursaries to orphans and other disadvantaged children in upper primary and secondary grades. The program wil l benefit approximately 5% o f students enrolled in upper primary and

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secondary grades and about 40% o f the existing orphans based o n a recent Core Welfare Indicator Questionnaire Survey. The number o f bursaries to be awarded to lower secondary students wil l include up to 5,000 annually.

The MOET, in consultation with stakeholders will develop an annual budget and quota for bursaries in each district. Based on the selection criteria1 specified in the application form, recommendations for awards will be made by schools, verified by the communities, and processed by the district-based bursary committee. The Bursary Officer in the Central Office wil l consolidate the awards, liase with the Project Coordinator o n budgeting and disbursement, and monitor and evaluate the impact o f the scheme, and propose to the Senior Management necessary revisions to the selection criteria and procedures. Schools receiving bursaries are required to open a Bank account.

As described in the Primary Education Component, activities including the procurement o f a beneficiary database to improve the efficiency o f the bursary administration and auditing and evaluation o f the scheme will be carried out jo in t ly with the primary bursary subcomponent.

Implementing Unit: Bursary Officer in consultation with MOET Bursary Committee and Secondary Inspectorate

Subcomponent 3 : Secondary teaching and learning materials. This component wil l finance the development o f a secondary core textbook rental scheme and revolving fund and the purchase o f the init ial start-up stock for the rental scheme.

Basotho secondary students continue to purchase their own textbooks; a complete set can cost as much as US$lOO. The high cost o f textbooks i s one o f the contributing factors to the high costs o f secondary education to parents, which in turn i s the major inhibiting factor for secondary enrolment growth (GER 29%). While there i s a discussion on the feasibility o f extending Free Primary Education to cover the first three years o f secondary education, i t i s unlikely that the current fiscal situation o f the G O L will allow this extension o f free education in the short term. The MOET has therefore requested IDA support to establish a core secondary textbook rental scheme and revolving fund based on the same principles as the successful primary textbook rental scheme and revolving fund. The proposed ESDP I1 Phase I1 will support the design o f an appropriate rental scheme and revolving fund and essential improvements in the internal management systems and accounting practices o f SSU to enable it to manage the new scheme successfully. For example, the retail book trade within Lesotho i s dependent upon sales to the secondary sector for i t s survival and the introduction o f procurement and supply via the SSU could cause serious damage to a long established and successful sector o f the economy. Thus, a secondary revolving fund wil l probably operate o n the basis o f decentralised school-based revolving funds, rather than v ia a single centralised revolving fund. The successful launch o f a secondary revolving fund will also require the design o f new systems o f textbook evaluation and approval in close collaboration with NCDC and a review o f current ordering, procurement and distribution practices to ensure that students receive the best quality textbooks and the best possible value for money. As soon as the new systems are in place and a new approved secondary textbook l i s t i s made available, the init ial textbook stock wil l be procured.

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Implementing Unit: School Supply Unit in close liaison with the Secondary Inspectorate and N C D C

Sub-component 4: Secondarv school support through decentralized inspection and advisory services. This component will finance (a) a refresher course for secondary teachers o f Math, English, Science, and Sesotho once every two years and (b) annual training o f secondary inspectors and advisors.

Under ESDP I1 Phase I, litt le has been done to provide on-going pedagogical support for secondary teachers. During this phase, the ESDP I1 wil l support a 5-day refresher course for a l l secondary teachers o f Math, English, Sciences, and Sesotho. Private and public tertiary institutions will be invited to develop various modules and train the teachers so that the burden o f training does not fal l entirely on the inspectors.

There are a total o f about 250 secondary schools in Lesotho and about 1000 teachers teaching Math, English, Sciences, and Sesotho in these secondary schools. The refresher courses wil l be non-residential and will be conducted in the 80 dissemination centers existing throughout the country.

Also under Phase I, a review o f secondary inspection and advisory services was undertaken by the consulting firm Multi-Serve. Useful recommendations were made to the Ministry and the Ministry i s ready to take up some o f the recommendations including (a) the adoption o f new inspection manuals, (b) decentralizing inspectors to the districts, and (c)revise the secondary advisory services. The ESDP I1 Phase I1 will support the implementation o f these recommendations, including the training o f 20 secondary inspectors and 17 secondary advisors in the use o f new inspection manuals and other monitoring tools. The training wil l be designed based o n findings and recommendations from the Multi-Serve review.

The training in this component wil l require sophisticated coordination in content and sequencing and to make sure that a l l activities lead to improvement in classroom teaching and learning. A Task Force comprised o f secondary inspectors, senior district education officers, secondary advisors, and teachers wil l be established. The Task Force wi l l be provided with technical assistance if needed and wil l prepare a detailed implementation plan for al l the activities concerning secondary teachers, inspectors, and advisors during the 4-year period.

Implementing Unit: Central Inspectorate

Subcomponent 5: Secondarv school management. This component will finance the continuous training o f secondary school management (principals and their deputies, and Secondary School Boards).

Secondary schools in Lesotho are governed by Secondary School Boards, comprised o f proprietors' representatives, parents' and community representatives, teachers' representatives, principals, and local chiefs. Under the ESDP I1 Phase I, all existing secondary boards were

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trained in general and financial management. However, the membership o f the boards expires every 3 years so there i s a continuous need to train the newly elected boards. Since it i s expected that many boards memebers will be re-elected, the magnitude o f training will be smaller. Fol lowing a needs assessment, the project will finance the training o f approximately 30 secondary boards annually in general and financial management o f schools.

Increased emphasis o n the school-level management also place much more responsibility on secondary principals and their deputies, who are now also expected to assist in the implementation o f the bursary scheme, secondary book revolving hnd, HIV/AIDS counseling, beyond their normal workload. Unfortunately most o f the principals and deputies are not well trained for their jobs. Following a needs assessment, Phase I1 o f the ESDP I1 will finance the design and training o f secondary school principals and their deputies. The focus o f the training for the principles will be coordinated with the secondary inspectorate and teacher training in the last subcomponent and will be oriented toward providing pedagogical support to teaching and learning in secondary classrooms. The secondary inspectorates wil l finalize the training priorities in consultation with the MOET Senior Management and IDA. Training wil l be outsourced.

Implementing Unit: Central Inspectorate

Project Component 3 - US$ 2.16 million Promoting Lifelong Learning through Capacity Building in ECCD, TVET, Higher and Non-formal Education

Subcomponent 1 : ECCD Expansion through Home-based Care Approach. This component will finance the establishment o f ECCD home-based centers in al l districts (at least 2 bases per district). Further, it wil l support the ECCD unit in i ts role as a pol icy maker and regulator for al l ECCD providers.

The ECCD Unit within the Ministry o f Education and Training i s formally charged with monitoring and regulating the exisiting centers throughout the country. However it i s not responsible for direct provision o f ECCD centers. ECCD centers are run by private f i r m s or individuals and their fees tend to be inhibitive for the poor households. In order to increase the ECCD coverage, with support from ESDP I1 Phase I, the ECCD unit started to p i lo t with a home-based care approach providing low-cost home-based care to about 400 children under the ages o f 6 in 8 villages located in 4 districts. Most o f the children enrolled in the home-based care tend to be from poor households in the village. The home-based approach mostly relies o n volunteer parents as actual teacherdcaregivers, though the MOET provides training and curriculum materials for those bases. Existing community infrasture such as church halls or others have been used as classrooms for the bases. Further, these bases have indeed become community centers where idle mothers congregate together with village chiefs to discuss childrearing and community development. Some bases have also developed income-generating activities such as making and selling dresses and other hand crafts. Very positive feedback was received on these bases during IDA'S supervision visits.

A formal evaluation o f the ECCD home-based scheme i s being conducted by the MOET. At the same time, the ESDP T I Phase I1 wil l finance at least 12 additional bases, 2 for each o f the

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remaining 6 districts. Further expansion will also be supported if the results from the evaluation i s positive. Upon approval o f site selection by the MOET Senior Management, the ECCD Unit will conduct pitsos (community meeting) to organize the selected villages and establish home care bases. Further, Phase 11 will continue to finance the development and procurement o f manuals and other basic materials to the bases. Annual training wil l be conducted for the existing 185 National Teacher Trainers, District Teacher Trainers, and Area Resource Teachers at the existing 80 dissemination centers. Further, training wil l be provided on site to the volunteer home-base caretakers and parents.

Finally, in collaboration with the Lesotho College o f Education, the ESDP I1 will support the development o f a ECCD diploma teacher in-service program as part o f Distance Teacher Education Program.

Implementing Unit: ECCD Unit o f MOET

Subcomponent 2: Technical and vocational education. This component will continue activities begun in Phase I for pol icy development and capacity building in TVET to reorient the sub-sector from a supply- to a demand-driven system, and begin implementation o f the TVET policy. In particular, the project wil l support (a) completion o f the TVET policy and legislation; (b) completion o f the financing strategy and financial management system; (c) capacity building for the TVET Board; (d) capacity building for Technical Vocational Education and Training Department staff; (e) construction o f a hostel for the Thaba Tseka Training Institute; and ( f ) establishment o f an Innovations Fund for competitively financing new ski l ls training l inked to market demand.

The project i s intended to help Government get the policy environment right to encourage development o f an efficient, responsive, market-led training system, and support sustainable financing o f the system. The policy for provision and financing o f TVET will be reflected in the preparation o f authorizing legislation. Capacity building for strengthening the TVET Board and Staff i s included. The project wil l respond to trainee demand in remote areas for expanded access to sk i l l s training by completing construction o f a 1 00-bed hostel for the Thaba Tseka Training Institute.

The project will support the shift from supply- to demand-driven financing o f TVET through the development and implementation o f an Innovation Fund for Skills Training. The Fund wil l seek and finance proposals on a competitive basis f rom government and non-government training institutions to deliver short-term, modular training programs directed to sk i l l s in high demand in local labor markets. The Fund will introduce accountability and incentives for linking supply with demand by holding providers accountable for employment outcomes o f past graduates in future competition for Fund financing. The project will develop the institutional platform for the Fund, which can be used to receive Government and other donor financing, and finance the init ial competitive procurement o f new sk i l l s training linked to market demand.

Implementing Unit: Technical and Vocational Education Department

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Subcomponent 3: Higher Education (HE). For the Government o f Lesotho (GOL) to achieve i t s stated objectives in primary and secondary education, it will be necessary to allocate time and funds to Higher Education as well. It i s therefore fitting that the Government and Higher Education Institutions are putting in place the legal and policy framework and plans for the tasks o f transformation. The leadership in these institutions will also benefit from change in management skills. I t thus appears necessary to expose upper echelons o f management to appropriately customized training programmes. At the institutional level these plans seek to expand enrollment, reduce unit costs, diversify revenue sources and maintain quality and relevance while streamlining and rationalizing course offerings in terms o f national comparative advantage and responsiveness to developmental goals.

In particular, the project wil l support the following areas:

(a) Dissemination o f the Higher Education Ac t and strengthening the National Council o f Higher Education secretariate;

(b) Development o f the Higher Education Policy within the legislative framework, undertake study tours to inform the pol icy formulation process and hold consultative forums, and production o f the policy document for dissemination to a l l stakeholders;

(c) An early indicator workshop to to take stock o f the data gathering process that i s in place and i s envisioned; identify urgent information needs for planning purposes; and to identify realistic targets that could be achieved over the coming four years. This would include enrollments for which there are already projections, targets relating to management and governance, and, most important, financial targets that will permit the university and other institutions to know whether the savings that are predicted are being achieved and the cost recovery measures are working as anticipated.

(d) Collection o f base l ine data agreed f rom the workshop, including the commissioning o f studies o f university financing and the costs and benefits associated with students who go to South Afr ica to study and graduates who go for work,

(e) A modest amount o f funding wil l be kept in reserve to permit the provision o f incentives for priority equipment and training needs that would reinforce the transformation process at the tertiary level. These would be made available on the basis o f the measured achievement o f cost saving targets established at the workshop.

Implementing Unit: Higher Education Council

Subcomponent 4: Non-formal Education. In the sub-sector o f Non-Formal-Education, Phase I1 will continue to support the two Learner Post pilots in two districts. In particular, the project will focus on development o f relevant modules in income generation based on needs assessment and pre-testing o f materials.

Implementing Unit: Non-formal Education Unit

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Project Component 4 - US$3.60 million MOET Institutional Strengthening

Subcomponent 1 : District Education Management Strengthened . Under the ESDP I financed also by IDA, 10 District Resource Centers were built with the objective o f facilitating the Ministry's decentralization agenda. All 10 DRCs have exactly the same design and are equipped with basic office equipment and furniture, However, implementation o f decentralization has not been smooth at all. Whi le there i s concensus that delivery o f education services can be enhanced when there i s staff in the districts, there i s no concensus o n how much authority can be delegated to the district staff. Further, the recruitment o f district staff i s complicated by the delay in public sector reform which resulted in unclear guidance on recruitment. T o date, the role o f district education management vis a vis the central office s t i l l needs to be clarified. Many vacancies in the district offices s t i l l need to be filled either by new recruitment o r by re-deploying the centrally based staff. At the same time, reforms introduced by ESDP I1 such as distance teacher education, school inspection and advisory services, scholarships, and EMIS call for staff to be located in the districts and the DRCs be uti l ized to improve service delivery. Further, the office equipment and furniture have fallen out o f use. Some o f the facilities in the DRCs such as computers have already become out o f date. Essential equipment such as library books and furnitures, vehicles were not provided for. T o make the DRCs functional, it i s necessary that ESDP I1 Phase I1 finances the procurement o f essential equipment and furniture. A needs assessment will be conducted to determine the exact needs.

Apart from lacking proper facilities, the district education staff wil l need further training. The project will finance district-based training o f the district education staff in education management based on MOET policy guidelines on decentralization. Further, the project wil l finance study tours for the district staff to learn about other district-based system.

An end-of-project evaluation will be conducted on the impact o f improved district education management and DRCs o n the delivery o f education services.

Implementing Unit: Education Planning Unit, Education Facil ity Unit

Subcomponent 2: Strengthening MOET capacity in policy development, planning, monitoring and evaluation. This component wil l finance activities related to (a) review o f Education Sector Strategic Plan and i t s annual operational plan l inked with the MTEF, (b) activities related to the implementation o f MTEF and updating o f PERs, (c) activities promoting donor coordination, and (d) strengthening the EPU's capacity in pol icy development, planning, and monitoring and evaluation through reorganizing EPU organizational structure, staff recruitment and development, and EMIS development.

The project wil l support the review of the Education Sector Strategic Plan and i t s annual operational plans. The MOET has developed a draft Education Sector Strategic Plan for the next 10 years. The draft as i t stands has provided some basic input to the development o f the f i rs t M O E T MTEF and the design o f the proposed project Phase 11. The Ministry is, however, o f the view that the Plan needs further work to strengthen i t s status as the education sector strategy o f

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the country. In addition to editing, the document would benefit from fine tuning in areas such as: priority setting, costing estimation, and development o f projections before i t can be shared with al l development partners and be used as a common framework for financing.

The GOL i s interested in aligning i t s priorities with sub-sectoral allocations. GOL will increase the share o f the M O E T recurrent budget to primary and secondary education from the current 63% in 2003/04 budget to 70% by 2007 (including the share o f budget devoted to NMPS). Since the overall resources envelope for education i s l ikely to remain constrained, gains must be found by improving the efficiency o f the sector. The project will therefore support the updating o f the education PER every two years, activities related to MTEF preparation and submission, and improvement o f the Ministry’s financial management and procurement system;

Donor Coordination. MOET will establish a better mechanism for donor coordination. The ministry i s currently in the process o f investigating various options for enhanced donor coordination including, amongst others, Sector Wide Approach (SWAP).

Strengthening Education Planning Unit. The functioning o f the Education Planning Unit was weakened by (a) vacancies not filled (planners are lured away by other higher-paying jobs after having obtained training at the expense o f the MOET) and (b) lack o f technical capacity in reseach, pol icy development, planning, and monitoring and evaluation. The new Director o f Planning i s committed to upgrade the Planning Unit through (a) creating new positions and filling vacant ones, (b) more relevant short-term training o f staff on specific tasks, including training o f education staff in planning to reduce the risk o f losing the trained staff and (c) re-organizing the structure o f the Planning Unit along critical functions such as policy development, planning, monitoring and evaluation including EMIS. I t i s the intention o f both the Ministry and IDA that as soon as the Planning Unit i s strengthened in these areas (as evidenced by outputs produced such as timely and quality EMIS and pol icy briefs), arrangements can be made so that the Project Coordination and Support Unit i s brought back to the Planning Unit. Finally, Phase I1 will continue to support the Education Management Information System (EMIS) so data are produced in a more accurate, integrated, and timely manner.

Subcomponent 3 : MOET Staff development and training (including district based staff). Phase I1 will continue to support the training o f MOET staff (in addition to EPU as decribed above) in policy development, planning, monitoring and evaluation. In particular, a training plan for the 4 years o f ESDP I1 Phase 11 will be drawn and approved by the MOET senior managment and IDA. Priorities o f training will be given to district-based education staff, professional and technical staff in the MOET Headquarters.

Subcomponent 4: HIV/AIDS. The spread o f HIV/AIDS i s increasingly recognised as an urgent anti-development issue and not one which concerns the health sector alone. MOET has established a HIV/AIDS unit and the education MTEF also requires that 1-2% o f total education budget wil l be allocated to addressing issues related to HIV/AIDS. The ESDP I1 APL2 will support the development o f an HIV/AIDS policy on education. NCDC will continue to develop HIV/AIDS education material for incorporation into primary and secondary school curricula. H IV/AIDS awareness wil l also be infused in a l l aspects o f school l i fe. The project wil l finance

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an impact assessment o f HIV/AIDS on the sector; explore mitigation and prevention strategies as we l l as training replacement teachers, introducing counseling as a requirement o f teacher education. MOET will hrther explore the possibility o f having a workplace programme on HIV/AIDS.

Project Component 5 - US$1.31 million Project Implementation. The proposed project will continue to support the functioning o f Project Support and Coordination Unit, including (a) salaries and benefits for staff in project accounts and the Education Facility Unit; (b) ongoing technical assistance in project coordination and procurement; (c) selected training in project management, financial management, and procurement; and (d) procurement o f integrated financial and procurement management system

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Annex 3: Estimated Project Costs LESOTHO: Second Education Sector Development Project (Phase II)

1. Primary Education 1.1 Classroondfumiturelequipment 1.2 Targetted equity-based program 1.3 TeachingAeaming materials 1.4 Primary inspectionladvisory 1.5 Primary school management 1.6 Distance Teacher Education Project 1.7 Curriculum and assessment

2.1 Classroondfumiture/equipment 2.2 Targetted equity based program 2.3 Teaching and leaming materials 2.4 Secondary Inspection/advisory services 2.5 Secondary school management

3. Lifelong learning in ECCD/TVET/Higher/NFE 3.1 ECCD 3.2 TVET 3.3 Higher education 3.4 Non-formal education

4.1 District education management 4.2 MOE policy/planning/M&E 4.3 Staff development and training 4.4 HIVIAIDS in education

2. Secondary Education

4. MOE Institutional Strengthening

5. Project implementation Total Baseline Cost

Physical Contingencies Price Contingencies

Total Proiect Cost; Total Financing Required

2.57

8

0.3 1

1.08

0.25 5.89 0.00 0.3 1 6.20 6.20

10.90

3.97

1.74

2.34

1.05 20.00

0.00 1 .oo

21.00 2 1 .oo

Total US $million

13.47

5.65

2.05

3.42

1.30 25.89

0.00 1.31

27.20 27.20

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Works Goods Consultants Training, Workshops, and Study Tours Bursaries Operating Expenses U nallocated Local Staff SalarylBenefits

Total Project Costs Total Financing Required

0.86 0.35 0.15 0.00 1.40 0.16 0.16 3.12 6.20 21.00 27.20 6.20 2 1 .oo 27.20

7.70 3.20 1 S O 4.00 1.40 1.40 1 .80 0.00

I lion 8.56 3.55 1.65 4.00 2.80 1.56 1.96 3.12

ldentifiable taxes and duties are 0 (USSm) and the total project cost, net o f taxes, is 27.2 (US$m). Therefore, the project cost sharing ratio i s 77.21% o f total project cost net o f taxes.

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Annex 4 Economic and Financial Analysis LESOTHO: Second Education Sector Development Project (Phase II)

Within Lesotho In RSA Total Including Those In RSA Economically active 745.8 103.5 849.3 population Employed population 5 14.1 103.5 6 17.6 Employment rate (%) 68.9% n.a. 72.7% Unemployment rate (%) 31.1% n.a. 27.3%

A. Economic and Social Benefits o f Education in Lesotho

Paid Employees Government Parastatal Private

Economic Ben efts

23.2 8.1 1.8

13.3

1. Employment status of Lesotho’s labor force. The most recent year for which a Labor Force Survey i s available i s 1999. The Survey i s l imited to the territory o f Lesotho, but households are asked to identify household members who are citizens o f Lesotho but who are working in the Republic o f South Africa. (Persons living in South Africa, but not working, evidently are not included in the data.) On that basis, in 1999 Lesotho’s labor force was estimated to have been about 849,000, as shown in Table 4.1 below. The distribution o f these 849,000 persons was roughly as follows: employed within Lesotho, 5 14,000; employed in RSA, 103,000; unemployed (within Lesotho), 232,000.

Private, self-employed - 8.0 Subsistence farming 68.8 Total 1oo.o

2. or 27%, if Lesotho citizens working in RSA are included within the measure o f the labor force. The high level o f unemployment i s obviously a major economic and social problem for the country.

The unemployment rate i s either 3 1%, if the measure i s l imited to the territory o f Lesotho,

Table 4.1: Labor Force, Employment, and Unemployment in 1999 (thousands, unless stated otherwise)

3. As illustrated by Table 4.2, only 23% o f employed persons are wage and salary employees, while 69% were employed in subsistence farming, and 8% were self-employed (in occupations other than subsistence farming).

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Table 4.3: Education and Employment Status (in thousands)

Labor Force Educational Attainment

Employed Unemployed Unemployment Rate ~

one 133.6 103.0 30.6 22.9% Std 1-7 542.6 393.8 148.8 27.4% Form 1-5 148.3 99.6 48.7 32.8% A Level 16.7 14.2 2.5 15.0% B.A. or higher 8.1 6.9 1.2 14.8% Total 849.2 617.5 231.7 27.3%

3. Relationship between education and employment. As shown in Table 4.3 above, Basotho with only some primary education, or with some secondary education, have high rates o f unemployment, 27% or more. However, Basotho who have completed A level have a much lower rate o f unemployment, 15%.

4. greatest chance o f escaping poverty. Education has a powerful effect on an individual’s l ikelihood o f obtaining paid employment. Only 40% o f those without any education or with Standards 1-7 education are in paid employment. 50% o f those with Forms 1-7 education are in paid employment, while more than 80% o f those with A level or higher are in paid employment.

Poverty analysis suggests that households with individuals in paid employment have the

M e d i a n i n c o m e b y educat ion

N o of y e a r s of e d u c a t i o n

5. Relationship between education and earnings (wage and salary earners only). Education i s an important factor in determining the earnings o f wage and salary employees. However, as shown in the Chart above, the relationship i s not linear. Rather, earnings increase marginally with schooling until about 11 years, after which they rise steeply, and then level off again.

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Social benefits of education

6. understand health issues better, and therefore to lead healthier lifestyles. The education o f females benefits not only themselves, but also their children, as manifested by lower infant mortality and better nutritional status.

In addition to enabling people to earn larger incomes, education enables people to

7. In the case o f Lesotho, the fol lowing observations from existing materials are relevant:

The Report on the Population Census o f 1996 found that the average number o f children ever born was 2.42 for the adult female population as a whole. The average number o f children ever born was 3.36 for adult females with no education, 2.65 for adult females with only primary education, and in the range 1.72-2.65 for adult females with varying levels o f post-primary education. ” The Core Welfare Indicators survey o f 2002 found that education was positively correlated with awareness o f how HIV/AIDS i s transmitted (Table 1 1 .5) , as follows: some primary, 29%; primary completed, 59%; some secondary, 69%; secondary completed, 7 1 %.

0

”The census report did not report on Total Fertility Rate correlated with education. The TFR i s the sum o f age-specific fertility rates (ASFRs), if a woman were to survive up to age 45. The Children Ever Born (CEB) statistic i s always lower than the TFR, because some of the respondent women will have additional children in the future.

8. I t would be worthwhile for the Core Welfare Indicators survey to be analyzed further, to assess relationships between mothers’ education and children’s nutritional status, and between mothers’ education and infant mortality.

B. Fiscal Implications of Expanding Enrollment and Improving Quality o f Education

Government expenditure in the macroeconomic context

9. Lesotho’s GDP - an estimated 48% in 2002/03, and a projected 45% in 2003/04.. By contrast, among Sub-Saharan Afr ican countries generally, Government expenditure i s only 27% o f GDP.

As can be seen from Table 4.4, Government expenditure absorbs a very large share o f

10. Lesotho’s high level o f Government expenditure i s enabled by the high ratio o f Government revenue to GDP - 37% in Lesotho, versus only 21% in the average SSA country. The high ratio o f international trade to GDP, and the income f rom the Lesotho Highlands Water Project, have contributed to Lesotho’s high levels o f Government revenue.

1 1. Despite the favorable revenue situation, expenditure i s so elevated that Lesotho i s incurring budget deficits amounting to 5% o f GDP. Over the medium term, i t wil l be important for levels o f expenditure and deficit financing to be curtailed, to enable a larger share o f national income to be devoted to private sector investment and growth.

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Table 4.4: Government Budget Operations (millions o f Maloti)

Revenue and grants Revenue Grants

Projected 2002/03 Proposed Budget 2003104 3316 3496 3056 3203 260 293

Expenditure and net lending Recurrent expenditure

3704 3946 2995 3117

rinterest payments Non-interest recurrent expenditures Cauital exuenditures and net lending

22 1 209 2774 2908 709 829

I r a n t s I 3.4% I 3.4% I

Overal l defici t - 388 450

/Memorandum item: GDP I 7710 I 871 1 I

Revenue and grants Revenue

Education Sector’s Share

(as YO o f GDP) 43.0% 40.1% 39.6% 36.8%

12. plus bursaries administered through the National Manpower Development Secretariat absorbs 32% o f Government recurrent expenditure, excluding interest payments, and 28% o f total Government expenditure. Government expenditure on education amounts to 12% o f GDP, substantially greater than in most Afr ican countries.

In Lesotho, the education sector, consisting o f the Ministry o f Education and Training

Recurrent expenditure Interest payments

Capital expenditures and net lending Non-interest recurrent expenditures

Overal l defici t

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48.0% 45.3% 38.8% 35.8% 2.9% 2.4% 36.0% 33.4% 9.2% 9.5%

5.0% 5.2%

Table 4.5: Education Sector Expenditure as a Share of the Government Budget, and as a Percentage o f GDP

Government Expenditure on Education Ministry o f Education - recurrent

NMD S (bursaries)

Total recurrent, excl. interest Total caoital

Ministry o f Education - capital

Total Govt. Expenditure, excl. interest

Proposed Budget 2003/04 1047 748 101 198

2908 829

g3J

Education Sector’s Share: O f recurrent expenditure, excl. interest O f total expenditure, excl. interest

32.5% 28.0%

Issues in the composition of Government expenditure on education, andfiscal planning for the sector

13. as follows: basic education, 40%; secondary education, 17%; TVET, 6%; higher education, 29%; teacher training, 3%; administration and supporting services, 5%. In relation to other African countries (and despite the FPE policy which has shifted some costs formerly bome by parents, onto the Government budget), Lesotho s t i l l spends a relatively small share on basic education, and an unusually high share on tertiary education. The diff iculty o f achieving “economies o f scale” at the National University o f a country with a small population helps explain the latter observation.

As can be seen in Table 4.6, the distribution o f education sector recurrent expenditure i s

14. Medium Term Expenditure Framework, covering 2003/04 through 2005106, with the assistance o f a consulting firm. MTEF will become a routine activity o f the Ministry. Thus, the next MTEF will be for 2004/05 through 2006/07. In that context, the fol lowing factual and pol icy issues are relevant:

Under Phase I, the Ministry o f Education and Training prepared the first-ever sectoral

0 It has become apparent that the demographic projections upon which the Ministry relied during the Phase I period reflected two flaws: (a) they were for the total citizenry o f Lesotho, including those living in South Africa, whereas for education sector planning purposes (certainly for primary and secondary) the relevant population are those living within Lesotho; (b) the HIV/AIDS epidemic was not reflected. New projections responding to these points have been prepared by demographers outside Lesotho, and the Bureau o f Statistics intends to prepare i t s own new projections. Future education sector planning should reflect updated demographic projections.

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Table 4.6: Ministry o f Education Proposed Expenditures, 2003/04

MTEF Proposal MTEF Proposal (M million) (Percent Dist.) MoE only MoE only

Central - 15 2.1% Administration Basic Education 361 50.1%

Primary teachers'

Proposed Budget Proposed Proposed (M million) Recurrent Recurrent MoE only Budget (YO Dist.) Budget (% Dist.)

MoE only incl. NMDS 12 1.6% 1.3%

&l 50.9% 40.3% 220 29.4% 23.3%

Free Primary I 1158 121.1% 116.7%

Suuuort and Suuvlv

Lesotho College o f Education Other

17 2.3% 1.8%

7 0.9% 0.7%

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Higher Education Natl. Univ. o f

103 14.3% 119 15.9% 28.9% 117 15.6%

Recurrent- NMDS Recurren t-Educ. sector Capital Budpet-MOE

198

946 100.0%

101

Note: For 2003,04, it is assumed that NMDS bursaries are distributed in the same proportions as observed in 2000/01, namely: university students, 78%; TVET students, 17%; secondary school students, 5%

0 I t would be desirable to simulate the evolution o f primary enrollments necessary to achieve the Mi l len ium Development Goal o f universal primary completion, no later than by 2015. The Ministry intends to reduce class size at the primary level, and to increase the proportion o f trained teachers at the primary level. These factors wil l increase the cost to the Government o f primary education.

and deserves scrutiny.

secondary level. On the other hand, secondary education displays inefficiency - teachers teach too few class periods, and pupilkeacher ratios are low. The experience o f other countries where Government budget allocations to universities have been cut, without any other reforms, i s that the institutions slide into illiquidity, and quality suffers. There i s a need for strategic planning (including financial planning) at NUL that i s consistent with the Government’s intentions concerning long-term support for higher education. Bursaries are means-tested for secondary students, but not for tertiary students. This seems inconsistent. One way to free up a greater share o f the budget for primary and secondary education would be to introduce means-testing for tertiary student bursaries.

0

0 The share o f the budget going to the non-instructional purpose o f feeding i s substantial,

One likely consequence o f primary enrollment expansion i s increased enrollment at the 0

0

0

These issues will be the subject o f dialogue between the Ministry and the Bank supervision team during the supervision stage o f Phase 11.

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Annex 5: Financial Summary LESOTHO: Second Education Sector Development Project (Phase It)

Years Ending

I Year1 I Year2 I Year3 I Year4 I Year5 1 Year6 I Year 7 Total Financing Required

Project Costs Investment Costs 5.2 6.3 6.3 5.2 4.2 0.0 0.0

Recurrent Costs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Costs 5.2 6.3 6.3 5.2 4.2 0.0 0.0 Total Financing 5.2 6.3 6.3 5.2 4.2 0.0 0.0

Financing I6 RDllDA 4.0 5.0 5.0 4.0 3 .O 0.0 0.0 Government 1.2 1.3 1.3 1.2 1.2 0.0 0.0

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

Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 User FeeslBeneficiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Financing 5.2 6.3 6.3 5.2 4.2 0.0 0.0

Investment Costs Recurrent Costs

Total Project Costs Total Financing

Financing IBRDllDA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Government 0.0 0.0 0.0 0.0 0.0 0.0 0.0

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

Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 U er FeeslBeneficiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Financing 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Main assumptions:

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Annex 6(A): Procurement Arrangements LESOTHO: Second Education Sector Development Project (Phase II)

Procurement

Procurement o f goods, works and consulting services for al l IDA financed components o f the project will be carried out in accordance with the Bank's Guidelines for Procurement under IRBD Loans and IDA credits (January 1995, revised in January and August 1996, September 1997, and January 1999). Consulting services by f i rms or individuals financed by IDA will be awarded in accordance with the Bank's Guidelines Selection and Employment o f Consultants by Wor ld Bank Borrowers (January 1997, revised in September 1997, January 1999 and M a y 2002). The management o f the procurement o f goods and equipment , c iv i l works and consulting services under the project will be the responsibility o f the Project Coordinating and Supporting Unit (PCSU) under the Ministry o f Education and Training (MOET). The PCSU has gained considerable experience during previous Bank-financed ESDP I and I1 Phase I and can count on qualified procurement specialists and c iv i l engineers, supported by experienced international consultants. The Bank has requested the Borrower to review and renew most o f the contracts for the present staff and to consider the recruitment o f an overall coordinator

Two General Procurement Notices (GPN), one for consulting services and one for c iv i l works and goods, will be published in the United Nations Development Business, immediately after Bank approval. The project, however, i s already we l l known to international contractors and suppliers since it follows without interruption presently ongoing ESDP I1 Phase I. Tendering therefore can be continued without any interruption. The GPNs wil l be updated at least once a year and submitted to IDA for review. GPNs will describe a l l outstanding I C B for goods and works contracts, as wel l as consulting assignments. The procurement plan presently in use wil l be updated. The plan will include relevant information o n goods, works and consulting services as wel l as the timing o f each milestone in the procurement process and the critical path. The procurement plan wil l be updated every three months and reviewed by IDA at three-months intervals. The procurement plan i s part o f the Project Implementation Manual (PIM) and be updated and reviewed by IDA as one o f the three components o f the Financial Monitoring Report. The plan will be later complemented by the inclusion o f packages to be co-financed by other donors in case a sector-wide approach wil l be adopted.

Civil Works

Civ i l works contracts, financed by IDA for the construction o f primary and secondary schools and hostels, that are estimated to cost more than US$750,000 equivalent for contract, wil l be procured through International Competitive Bidding (ICB) procedures.

Contracts for c iv i l works estimated to cost less than US$750,000 equivalent may be awarded through National Competitive Bidding (NCB) using national procedures including review o f the evaluation committee's decisions by the Lesotho Tender Board.

Contracts for small works estimated to cost less than US$50,000 equivalent per contract, up to an

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aggregate contract o f US$ 1.5 mi l l ion equivalent, may be procured either under (i) "community participation" methods subject to Bank approval o f the procedures to be used OR (ii) under lump-sum, fixed-price contracts awarded on the basis o f quotations obtained f rom three qualified national contractors invited in writing to bid. The invitation shall include a detailed description o f the works, including basic specifications, the required completion date, a basic form o f agreement acceptable to IDA, and relevant drawings where applicable. The awards will be made to the contractors who offer the lowest price quotation for the required work, provided they demonstrate they have the experience and resources to complete the contract successfully. Contracts under "community participation" and "price quotations" wil l be mostly for works relating to small constructions such as small primary schools and classrooms in remotte areas, teachers houses and rehabilitation o f existing school facilities in rural areas.

Goods

Procurement for goods will be bulked where feasible into packages valued at US$ 100,000 equivalent or more and wil l be procured through competitive methods.

Contracts estimated to cost more than US$lOO,OOO will be procured through International Competitive Bidding (ICB) procedures. Bank' standard bid documents for the procurement o f goods and Bank's standard Form o f Evaluation should be used for al l contracts to be procured under ICB.

Textbooks for primary and secondary schools for an estimated amount o f US$1.4 mi l l ion imported from abroad wil l be procured either through I C B (for textbooks which can be procured from the international market) or L imi ted International Bidding (LIB) procurement methods since the number o f publishers represented in Lesotho i s small and there i s l i t t le interest for other f i rms to compete for relatively small contracts. Individual contracts wil l be usually below the threshold o f US$200,000 equivalent.

School furniture and other goods available locally and estimated to cost less than US$lOO,OOO equivalent for contract may be procured through NCB procurement method..

Photocopies, computers, office equipment that are estimated to cost less than US$30,000 equivalent per contract, up to an aggregate o f US$300,000 equivalent, may be procured through either International Shopping procedures (for goods not available o n the local market) or National Shopping procedures (for goods available locally) in accordance with Bank Guidelines for procurement.

The Inter-Agency Procurement Services Office o f the U N D P (IAPSO) may be used for urgent purchases and goods which cannot be packaged with similar goods due to scheduling o f the purchase.

Consultant Services

Consulting services that are estimated to cost more than US$75,000 equivalent for contract wil l

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be selected through competition among qualified short-listed f i r m s based on Quality and Cost Based selection (QCBS) procedures by evaluating the quality o f the proposals before comparing the cost o f the services to be provided.

Contract for consulting services o f estimated to cost less than US$75,000 may be awarded either through QCBS or, subject to Bank no objection to i t s use, through Least-Cost Selection (LCS) procedures.

Consultants for financial audits and other repetitive services estimated to cost less than US$75,000 equivalent for contract, up to an aggregate o f US$200,000 equivalent, may be selected through Least-Cost Selection method.

Consulting services estimated to cost less than US$50,000 and contracts for twining arrangements, for an aggregate cost o f US$2.5 mi l l ion equivalent for which the need for preparing and evaluating competitive proposals may not be justified, may be awarded based on Consultants Qualzjkations (CQ) method. The selected institutions wil l be required to submit a combined technical and financial proposal and then invited to negotiate the contract.

Individual consultants need for procurement, financial management, contracts supervision, curriculum development, teacher development, school-level management, planning unit, technical and vocational education, and non-formal education may be selected based on the Selection o f Individual Consultants method (IC); The consultants wil l be selected through comparison o f j ob description requirements against the qualifications o f those expressing interest in the assignment or those approached directly.

To ensure that priori ty i s given to the identification o f suitable and qualified national consultants, short-lists for contracts estimated to cost less than US$lOO,OOO equivalent may be comprised entirely o f national consultants in accordance with section 2.7 o f the Consultants Guidelines, provided that a sufficient number o f qualified individuals or f i r m s are available at competitive costs. However, if foreign f i r m s or individuals have expressed interest, they will not be excluded from consideration.

The Bank' Standard Request for Proposal (RFP) wil l be used for requesting proposals and for selection and appointments o f consulting f i rms under QCBS and LCS selection procedures. The RFO includes standard contracts for time-based and lump sum remuneration contracts for complex assignments under both QCBS and LCS.

Simplif ied contracts wil l be used for short-term assignments such as simple missions o f standard nature not exceeding six months carried out by individual consultants or f i rms. These contracts will be used mostly for consultants recruited under Qualifications and Fixed Budget selection procedures.

Training, Workshops, and Study Tours

Training within the country and abroad, including workshops and study tours, wil l be carried out on the basis o f IDA-approved programs. The Borrower will identify the nature o f training/

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study-tours/ workshops/ bursaries and personnel to be trained, the duration o f the training / study tours/ workshops and institutions where the activities would be conducted, cost estimates, content o f the courses. This information will be reviewed by IDA quarterly.

4 Training,workshops, and study tours 5. Bursaries

6. Operating Expenses

7. Project staff salaryhenefits

Procurement methods (Table A)

(1.5) (1.5)

(4.0) (4.0)

(1.4) (1.4)

(1.4) (1.4)

4.0 4.0

2.8 2.8

1.56 1.56

3.12 3.12

8. Unallocated

TOTAL

1.96

1.5 8.68 11.94 3.12 27.2 (1.8)

(1.35) (7.81) (10.04) (21)

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Table A I : Consultant Selection Arrangements (optional) (US$ million equivalent)

B. Individuals

Total

(1.00) (0.00) (0.00) (0.00) (0.15) (0.00) (0.00) (1.15) 0.00 0.00 0.00 0.00 0.50 0.00 0.00 0.50

(0.00) (0.00) (0.00) (0.00) (0.50) (0.00) (0.00) (0.50) 1.00 0.00 0.00 0.00 0.65 0.00 0.00 1.65

(1.00) (0.00) (0.00) (0.00) (0.65) (0.00) (0.00) (1.65) I\

Including contingencies

Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines), Commercial Practices, etc. N.B.F. = Not Bank-financed Figures in parentheses are the amounts to be financed by the Bank Credit.

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Prior review thresholds (Table B)

Individuals

Table B: Thresholds for Procurement Methods and Prior Review'

>$50,000 ALL

~ ~

"Thresholds generally differ by country and project. Consult "Assessment of Agency's Capacity to Implement Procurement" and contact the Regional Procurement Adviser for guidance.

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Annex 6(B): Financial Management and Disbursement Arrangements LESOTHO: Second Education Sector Development Project (Phase II)

Topic Risk Assessment 1

Financial Management

1. Summary of the Financial Management Assessment

Comments/recommendations I

The project i s to be implemented by the Ministry o f Education and Training (MOET), through i t s Education Planning Unit and supported by the Project Support and Coordination Unit (PSCU).

Inherent Risk country

Implementing Entity

Overall Inherent Risk

Accounting systems and the related pillars o f intemal control are already fully established. Competent staff with the experience o f running the previous Bank supported phase are being retained, as are the proven funds f low mechanisms used in that phase.

M

N

f l

L o w financial management capacity in general. Mitigated by use o f advisors.

previous phase o f the project. Moderate countrv risk well mitigated Der above.

Core staff already in place and experience in working with

A new computer software i s being introduced to enhance both control and the accuracy o f record keeping. Prior to this, record keeping was largely manual, with only certain reports being generated in Excel. All staff wi l l therefore require training in the use o f the new software, as well as general training on accounting in a computerized environment.

Control Risk

Funds Flow Implementing Entity

Staffing

Accounting Policies and Procedures Intemal Audit External Audit Financial Reporting and

In addition, the project will be required to produce Financial Monitoring Reports (FMRs). While the new software will go some way towards facilitating this, the present accounting staff will require some training and mentoring in the design and production o f FMRs.

N N N

N

N/A N N

Intemal control framework and org structure well established. Banking structure that works already in place. There i s enough qualified staff handling project financial matters. Policies and procedures already codified in a financial management manual, and intemal control systems adequate. There i s no Internal Audit function at the project.

Adequate quarterly and annual financial and other Clean audit report, although produced late.

The existing external audit arrangements are adequate, with a statutory audit carried out annually by the country’s Auditor General o n terms acceptable to the Bank.

Summary Risk Assessment:

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Monitoring

Information Systems M

Overall Control Risk N

Overall Risk Assessment: Low or negligible

Overall therefore, the review concluded that the systems, procedures and staffing of the PSCUsatisfy the Bank’s minimumj5nancial management requirements.

management reports are produced for use by the relevant stakeholders. Although this i s adequate, running on excel, activity to upgrade this to a proper accounting package i s in progress

Country Financial Issues

A Country Financial Accountability Assessment (CFAA) for Lesotho has not yet been carried out (projected for FY04). Based on country experience however, i t i s known that the country i s handicapped by a serious lack o f capacity in the area o f financial management. Whi le there i s a small number o f qualified Basotho accountants, these have tended to be wowed by richer rewards in neighboring South Africa. Bank assisted projects have therefore traditionally relied o n outside advisors to assist the projects in their implementation efforts. Subject to observations under ‘project management and coordination’ below, this arrangement i s expected to continue.

The other significant observation relates to the issue o f fraud and corruption involving donor funds: while the situation i s no where near rampant, a high profi le fraud and corruption trial involving one o f the Bank assisted projects in the country has recently been completed. The area identified as most susceptible to corruption was procurement, but it does involve finances at the end o f the day. To mitigate this, it i s recommended that internal audit be introduced at the project.

The Financial Management System

Stafjng of the Accounting Function

The finance function at the PSCU has a core staff o f a Financial Controller, a Chief Accountant, two Principal Accountants, and several support staff. The staffing levels appear adequate, although the position o f Chief Accountant has been vacant for a long period. I t i s accepted however that with the f i rst phase o f the project closing, some o f the vacancies may have not needed addressing. These positions can be revisited when the next phase becomes effective.

As indicated earlier, the function continues to enjoy the support o f the former advisor o n Financial Management, now Project Coordinator. The PSCU Financial Controller, under his tutelage, i s now fairly wel l versed in Bank procedures herself, although more training on the new FMR s will be required for the entire team. A new accounting software i s proposed (see below), meaning that accounting personnel wil l require training on this as well.

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Internal Controls including policies and procedures

The PSCU has taken a l l the necessary steps to ensure that the project complies with the relevant Bank policies (OP/BP 10.02). These include the establishment o f internal controls and proper accounting procedures and which were documented in an Operational Manual for the o ld project. The Manual includes, in addition to general administrative procedures, financial management procedures, staffing requirements, identification of accounting and auditing standards to be adhered to by the project, project reporting and monitoring, procurement procedures, procedures for banking, and procedures for the management o f cash.

I t i s expected that this manual will be updated to include operating in a computerized environment, and adopted for the new phase.

As was the case during the previous phase, and in line with government accounting, IDA and the related counter part funds wil l be accounted for on a cash basis.

Record Keeping

The current record keeping / filing system was found to be satisfactory. This system i s expected to be retained, but some tightening up wil l be required in the maintenance o f the Fixed Assets Register, as well as the Contracts Ledger.

Internal Audit

The project does not have internal audit at the moment. The project i s multi activity, meaning that payments wil l be made in large numbers for a relatively large number o f activities. To compliment the ‘payment authorization’ controls that are in place, it i s desirable to introduce internal audit into the system. Internal audit acts as a deterrent to crime (one may be discouraged from committing fraud simply by knowing that their books will be subjected to detailed scrutiny -the type one does not get f rom external audit). Internal audit also acts as a cure for crime - where an offence has been committed, it takes a skilled internal auditor to uncover the crime and present evidence o f the crime.

The internal audit department would also compliment physical project monitoring efforts, in the absence o f a dedicated project monitoring and evaluation department.

Financial Reporting and Monitoring

The PSCU wil l continue to maintain accounts for the Project and wil l ensure appropriate accounting for the funds provided. Although adequate monthly, quarterly, and annual financial and other management reports are currently produced for use by the relevant stakeholders, the formats o f these would need to be substantially modified to meet the requirements o f the new FMRs. The PSCU wil l be responsible for designing the appropriate financial monitoring reports (FMRs) and producing them (FMRs) on a quarterly basis.

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Budgeting and Planning

An adequate and thorough consultative process i s in use for the generation o f budgets, using the Medium Term Expenditure Framework (MTEF).

Computerized Accounting Systems

ESDP I1 Phase I has been operating on a spreadsheet (Excel) based accounting and reporting system. However a decision appears to have been made to replace this system, due to the existence o f several shortcomings identified with the spreadsheet based system. During ESDP I1 Phase 11, an off-the-shelf financial management system which has the capacity o f producing the agreed Financial Monitoring Report will be purchsed and installed. Relevant staff will be trained o n the use o f the new system and production o f the FMR reports by IDA’S financial management specialist.

Financial Management Action Plan

The format and contents o f FMRs were determined as part o f project appraisal, and agreed at negotiations. Reconstruction o f the present Fixed Assets Register was also completed by negotiations

Financial Covenants

The fol lowing covenants relate to financial matters:

0 The Government will cause the PSCU to have i t s records, accounts and financial statements audited each year, commencing with the accounts for the year ending March 2004; The PSCU will submit quarterly FMRs, starting with the f i rs t quarter after effectiveness. 0

Supervision Plan

The reports o f the progress o f project implementation will be monitored in detail during supervision missions. FMRs will be reviewed on a quarterly basis by the field based F M S and the results or issues followed up during the supervision missions. The project’s audit reports will be reviewed and issues identified will be followed up. The field based FMS would monitor the agreed action plan to ensure appropriate actions have been implemented by the PSCU.

Implementation Schedule

The project wil l be implemented over a four-year period.

2. Audit Arrangements I t i s expected that the PSCU will continue to be audited by auditors acceptable to the Bank, o n terms acceptable to the Bank (based on the ‘terms o f reference’ (TORS) o f the f i rst phase o f the

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project). Audited financial statements for the project would continue to be sent to the Bank within six months o f the end o f the financial year, accompanied by a detailed audit comments (management) letter.

Works Goods

3. Disbursement Arrangements

7.70 90 3.20 100% o f foreign expenditures and 90%

of local expenditures

The project i s expected to continue to operate three bank accounts as follows:

The Special Account (SA) (USD) held at the Lesotho Central Bank for withdrawals from the IDA Credit account, transfers to local currency account, and payments to foreign suppliers. Local currency (maloti) account at the Central Bank for receiving transfers from the Special Account, and making maloti payments to local suppliers. Local currency (maloti) account at the Central Bank for housing counter part funds.

o

o

ITraining, workshops, and study tours 4.00 100 Bursaries 1.40 50 Operating Expenses 1.40 100% o f foreign expenditures and 90%

Unallocated 1.80

Total Project Costs with Bank Financing 21.00

Total 2 1 .oo

o f local expenditures I

All three bank accounts will be reconciled with bank statements on a monthly basis. Reconciliations will be approved by the Financial Controller on a timely basis; identified differences wil l be expeditiously investigated.

Disbursement and withdrawal procedures for the credit will be based on the transaction-based disbursement method as detailed in the Wor ld Bank Disbursement Handbook. All disbursements are subject to the conditions o f the Credit Agreement and the procedures defined in the Disbursement Letter.

FMRs produced will essentially be a reporting tool until such time that the quality o f reporting i s deemed sufficiently high to support replenishment requests.

Allocation of credit proceeds (Table C)

Table C: Allocation of Credit Proceeds

1 Expenditure Category I Amount in US$million I Financing Percentage

I Consultants I 1.50 I 90 I

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Use of statements of expenditures (SOEs):

All applications to withdraw proceeds from the Credit account wil l be fully documented except for expenditures against contracts (i) with an estimated value o f $US750,000 each or less for works; (ii) with an estimated value o f US$200,000 or less for consulting f i r m s and goods; (iii) with an estimated value o f US$50,000 or less for individual consultants; and (iv) for al l training workshops and study tours, which may be claimed on the basis o f certified Statements o f Expenditure (SOEs). Documentation supporting expenditures claimed against SOEs will be retained at the PSCU o f the Ministry o f Education and will be available for review as requested by IDA supervision missions and project auditors.

Special account: The authorized allocation for the special account (SA) will be US$l .5 mill ion, covering an estimated four months o f eligible expenditures financed by IDA. Upon credit effectiveness or as needed, an amount o f US$750,000 will be deposited in the SA. Subsequent deposits may be requested as needed once total disbursements from the Credit Account reach SDR3,000,000. Replenishment applications should be submitted regularly, preferably monthly, after monthly bank statements are received and reconciled, with appropriate supporting documents for local and foreign expenditures as required. Only IDA'S share o f eligible expenditures will be paid through the special account.

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Annex 7: Project Processing Schedule LESOTHO: Second Education Sector Development Project (Phase II)

Negotiations

Planned Date of Effectiveness

1 Appraisal mission departure I 03/10/2003 I 04/05/2003 I 05/01/2003 05/05/2003 09/01/2003

Prepared by: Lesotho Ministry o f Education and Training and the World Bank Task Team

Preparation assistance:

Bank staff who worked on the project Name

Xiaoyan Liang Bruce Jones Noel Kulemeka Francesco Sarno Jonathan Nyamukapa Lo r i Geurts Arvil Van Adams Hongyu Yang T. Mpoy-Kamulayi Modupe Adebowale Tesfaalem G. Iyesus.

nciuded: Speciality

Task Team Leader, AFTHl Senior Economist, AFTHl Senior Economist, AFTH1 Procurement Consultant, AFTQK Financial Management Specialist, AFTFM Program Assistant, A F T H l Lead Social Protection Specialist, AFTHD Operations Officer, HDNED Lead Counsel, LEGAF Senior Finance Officer, LOAG2 Senior Procurement Specialist, AFTQK

- 88 -

Annex 8: Documents in the Project File* LESOTHO: Second Education Sector Development Project (Phase II)

A. Project Implementation Plan

Project Implementation Manual Project Procurement Plan M O E Training Plan

B. Bank Staff Assessments Back to Office Report by David Court on Lesotho Higher Education

C. Other Teacher Development and Training (final report by Ciaran Sugrue) Lesotho Public Expenditure Review o f the Education Sector 2002 Lesotho Medium Term Expenditure Framework (2003-2005) submission Education Sector Strategic Plan Draft Draft Letter o f Education Sector Development Policy Lesotho ESDP I1 Phase I1 Environmental and Social Management Framework (ESMF) Lesotho ESDP I1 Phase I1 Resettlement Policy Framework

*Including electronic files

- 89 -

Annex 9: Statement of Loans and Credits LESOTHO: Second Education Sector Development Project (Phase II)

2 1 -May-2003 Difference between expected

and actual disbursements" Original Amount in US$ Millions

Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd P 0 5 2 3 6 7 2002 MALOTI-DRAKENSBERG CONSERV. a DEVELOP 0.00 0.00 7.32 0.00 7.86 1.22 0.00

PO70673 2001 Utilities Sector Reform Project

PO58050 PO53200 2000 Health Sector Reform Project PO56416 1999 SECOND EDU SEC DEVP

2000 Community Development Support Project

PO01402 1998 AG POL a CAP BLDG

PO01403 1996 ROAD REHAB a MAINT PO01409 1998 HILAND WATER IB

0.00 28.60 0.00 4.67 0.00 6.50 0.00 21.00 0.00 6.80

45.00 0.00 0.00 40.00

0.00 0.00 20.24 1.00 0.00 0.00 0.00 4.22 3.99 2.74 0.00 0.00 3.78 1.76 0.00 0.00 0.00 3.93 5.23 5.15 0.00 0.00 2.30 2.31 1.97 0.00 9.00 17.54 18.71 4.54

4.23 20.52 7.09 0.00 11.77

Total: 45.00 107.57 7.32 20.77 64.10 54.74 21.48

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LESOTHO STATEMENT OF IFC's

Held and Disbursed Portfolio Jun 30 - 2002

In Mil l ions U S Dollars

Committed Disbursed IFC IFC

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic

Total Portfolio: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic

Total Pending Commitment: 0.00 0.00 0.00 0.00

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Annex I O : Country at a Glance LESOTHO: Second Education Sector Development Project (Phase II)

POVERTY and SOCIAL Lesotho

2001 Population, mid-year (millions) GNI per capita (Atlas method, US$) GNI (Atlas method, US$ billions)

Average annual growth, 1995-01

Population (%) Labor force (%I Most recent estimate (latest year available, 1995-01) Poverty (% of population below national povelty line) Urban population (% of total population) Life expectancy at birth (years) Infant mortality (per 1,000 live births) Child malnutrition (% of chiidfen under 5) Access to an improved water source (% ofpopulation) Illiteracy (% of population age f5+) Gross primary enrollment (% of school-age population)

Male Female

KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1981

GDP (US$ billions) 0.43 Gross domestic investmenffGDP 37.6 Exports of goods and services/GDP 19.3 Gross domestic savingslGDP -60.1 Gross national savings/GDP 26.3

Interest paymentsiGDP Total debtlGDP Total debt sewice/exports Present value of debffGDP Present value of debffexports

Current account balance/GDP -65.9

1981-91 1991-01 (average annual growth) GDP 5.2 4.0 GDP Der Caoita 3.0 2.0

2.1 550 1 .I

1.6 1.9

29 44 91 16 91 16

104 99

108

1991

0.69 64.1 15.7

-50.0 28.9

-42.5 1.4

64.9 4.1

2000

3.3 1.9 1 .I

SU b- Saharan

Africa

674 470 31 7

2.5 2.6

32 47 91

55 37 78 85 72

2000

0.90 33.5 27.8

-25.7 22.1

-19.2 2.3

80.2 11.3 57.3 93.6

2001

4.0 2.6

Low- income

2,511 430

1,069

1.9 2.3

31 59 76

76 37 96

103 88

2001

0.80 35.7 42.0

-13.8 34.0

-12.2 2.6

92.1 11.2

2001-05

4.1 3.1

3.2 5.3

Development diamond*

Life expectancy

-

GNi Gross per primary capita nrollment

Access to improved water source

Lesotho Low-income group

-

Economlc ratios'

Trade

r\\ estment

I si I

Indebtedness

Lesotho Low-income group

- Exports of goods and sewices 6.1 8.9

STRUCTURE of the ECONOMY

(% of GDP) Agriculture industry

Services

Private consumption General government consumption Imports of goods and services

Manufacturing

(average annual growth) Agriculture Industry

S e rv i c e s

Private consumption General government consumption Gross domestic investment imports of goods and services

Manufacturing

1981

26.8 24.6 9.1

48.6

139.2 20.9

117.0

1981-91

2.9 5.0 8.4 6.0

3.1 3.2 7.8 3.8

1991

17.0 29.5 14.1 53.4

134.4 15.5

129.8

1991-01

2.7 7.5 5.8 2.7

0.0 5.6

-1.4 0.4

2000

16.9 39.9 16.0 43.2

107.4

87.0

2000

-1.9 16.8 4.1

-1.2

-8.0 0.8

2.7

I 8.3

-3.6

2001

16.3 42.0 16.8 41.7

97.2 16.6 91.5

2001

-1.6 7.9 7.0

-0.7

4.0 -3.1

-20.9 4.5

I Growth of investment and GDP (Oh) 15

0

-1 5

-30

Growth of exports and imports (%)

30 T

Note: 2001 data are preliminaly estimates. * T h e diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond wili be incomplete.

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Lesotho

PRICES and GOVERNMENT FINANCE

Domestic prices (% change) Consumer prices Implicit GDP deflator

Government finance (% of GDP, includes current grants) Current revenue Current budget balance Overall surDlus/deficit

TRADE

(US$ millions) Total exports (fob)

Clothing and other goods Machinery and transport equipment Manufactures

Total imports (cif) Food Fuel and energy Capital goods

Export price index (1995=100) import price index (1995=100) Terms of trade (1995=100)

BALANCE of PAYMENTS

(US$ millions) Exports of goods and services Imports of goods and services Resource balance

Net income Net current transfers

Current account balance

Financing items (net) Changes in net reserves

Memo: Reserves including gold (US$ millions) Conversion rate (DEC, local/US$I

EXTERNAL DEBT and RESOURCE FLOWS

(US$ millions) Total debt outstanding and disbursed

IBRD IDA

Total debt service IBRD IDA

Composition of net resource flows Official grants Official creditors Private creditors Foreign direct investment Portfolio equity

World Bank program Commitments Disbursements Principal repayments Net flows Interest payments Net transfers

1981

12.4 12.2

1981

1981

80 504

-424

293 -1 55

-286

287 -1

43 0.9

1981

10

1991

17.7 14.0

40.5 10.0 -8.9

1991

62

694

1991

114 884

-771

375 102

-293

251 42

123 2.8

1991

448 0

121

24 0 2

31 45

1

9 1 8 1 7

2000

6.2 8.6

40.8 2.9

-7.5

2000

214 25

6 7

736

2000

261 782

-521

220 128

-173

95 78

417 6.9

2000

721 58

203

62 10 3

8 45 -1

7 28 8

20 5

15

2001

7.1 5.7

40.1 5.3

-3.4

2001

286 23

6 6

675

2001

333 722

-390

175 118

-97

84 13

395 8.6

2001

734 58

217

63 10 5

5 21 -2

29 22 9

13 6 7

Inflation ( O h )

15 T

96 97 98 99 00 01 'I -GDP deflator *CPI I

Export and import levels (US$ mlll.)

11 250 T

1 95 96 97 98 99 00 01

Exports Imports

I 1 Current account balance to GDP (Oh)

-40 -

composition of 2001 debt (LIS$ mlll.)

F 5 , = : 7 A 5 8

A - IBRD B . IDA D .Other multilateral F. Private C . IMF

E - Bilateral

G . Short-term

ueveiopmenr economics Y l L J l V L

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Additional Annex 11 : Fulfillment of Triggers for Moving from APL Phase I to Phase II LESOTHO: Second Education Sector Development Project (Phase II)

The six triggers to qualify G O L to receive Phase I1 are stated on page 4 o f the Phase I PAD. The six triggers are repeated as “Performance Indicators” in Schedule 6 o f the Phase I DCA.

Some o f the triggers are worded as if they were “dated covenants ” in a legal agreement. The view taken here i s that, for triggers, similarly to tranche release conditions in adjustment lending, the critical question i s whether the quantitative objective has been achieved, or the action has been taken, even if later than the date mentioned. The status o f fulfillment o f the six triggers i s described below.

Trigger 1: “Net enrollment rate in Standards 1-7 increased from 68% to 73% by December 2002”. The primary Net Enrollment Ratio (the percentage o f children o f primary school age, 6- 12, who are enrolled in primary school) i s a statistic that can either be measured directly from household surveys, or estimated from a combination of administratively collected enrollment data (the numerator of the ratio) and a demographic estimate (the denominator of the ratio).

At the time Phase I was prepared and negotiated, the Ministry o f Education and Training had estimated the baseline NER (1996) to be 68%. During supervision, it became evident that the projections o f school-age population being relied upon were unsuitable, for two reasons: (a) GOL’s existing projections did not take into account the impact o f the HIV/AIDS epidemic on mortality; (b) the projections were for Lesotho’s de j u r e population (including Basotho absent in South Afr ica for extended periods o f time for reasons o f employment), rather then the de facto population (the population living within Lesotho’s territory), which i s what i s relevant for primary education purposes. Accordingly, new projections o f Lesotho’s de facto population have been prepared, taking into account AIDS-related mortality. The results are reflected in the Table below.

Table: Primary Net Enrol lment Ratio, 1996-2002

1996 1997 1998 1999 2000 2001 2002

Enrol lment of children ages 6-12 243 234 218 206 280 282 284 (administratively collected data)

Population of children ages 6-12 340 339 342 338 339 336 334

NER computed from the above 71% 69% 64% 61% 83% 84% 85%

NER from Lesotho Demographic I Survev 2001 86% I

The NER implied by the new demographic projection i s closely corroborated by two household surveys - the Lesotho Demographic Survey 2001, and the Core Welfare Indicators Questionnaire 2002, thereby supporting the validity o f the new demographic projection.

The data show that the NER had been o n a declining trend between 1996 and 1999, as indicated in the PAD for Phase I. The NER jumped by 22 percentage points when the Free Primary Education policy was introduced in the year 2000, and has been sustained at the relatively high

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level o f about 85% since. Trigger 1 has been surpassed, in terms o f both the level o f 2002, and the magnitude o f improvement between 1996 and 2002 (14 percentage points actual, versus 5 percentage points targeted).

Trigger 2: “MTEF used consistently; 70% of education recurrent budget (increased from 68%) allocated for and expended on primary and secondary education for fiscal year April 2001 and onward. ” This “trigger” actually strings together two triggers: a process trigger relating to MTEF, and an outcome trigger relating to budget allocations and actual expenditures.

MTEFprocess: Following completion o f a Public Expenditure Review in early 2002, the Ministry o f Education prepared i t s first-ever Medium Term Expenditure Framework toward the end o f 2002. As illustrated by Table 4.6 in Annex 4, the Ministry o f Education’s budget for 2003/04, as proposed to Parliament by the Ministry o f Finance, closely follows the what had been proposed for 2003/04 in the Ministry o f Education’s MTEF. The Bank staff consider that this demonstrates that the MTEF is being “used”, and that therefore this portion of Trigger 2 i s fulfilled. However, the fact that the MTEF process thus far has not embraced the bursaries administered through the National Manpower Development Secretariat i s a limitation.

BudgeUexpenditure percent distributions: As was the case with the Net Enrollment Ratio trigger, we also have a “baseline problem” with the “Percentage o f the Budget” trigger. The 68% f igure in the main text o f the Phase I P A D i s consistent with Annex 4 o f the Phase I PAD, where it i s stated that in 1996/97 the share o f primary was 45%, and the share o f secondary was 24% (if these numbers are rounded up, their sum could be 68%). However, considering that Phase I was negotiated in February 1999, the relevant base year should have been April 1998/March 1999.

- 9 5 -

As shown in the Table, according to the recent Education P.E.R. the shares o f primary plus secondary amounted to 57% in 1998/99. (It i s possible that there are definitional differences between Phase I PAD Annex 4 and the Education P.E.R., but we cannot confirm this because Phase I P A D Annex 4 does not explain how i t s aggregate numbers were derived from the underlying data.) The P.E.R. data fol low a scheme for classifying expenditures on levels/subsectors, agreed between the Bank supervision team and the Ministry o f Education. TVET, which i s a mixture o f upper secondary and post-secondary programs, i s a separate subsector. Bursaries administered through the National Manpower Development Secretariat (which was part o f the Ministry o f Education at the time Phase I was appraised and negotiated, but was subsequently transferred to the Ministry o f Planning) are treated consistently throughout as part o f the GOL’s education sector expenditure. The percentage o f education sector expenditure devoted to primary plus secondary has been on an increasing trend, reaching 6 1% in the budget for the current fiscal year, 2002/03.

The annual budget for the fiscal year beginning April 2003 became available only during the appraisal mission. As far as the budget for the Ministry o f Education i s concerned, the Ministry o f Finance has largely adhered to the priorities set out in the MTEF. However, the budget for NMDS was not part o f the MTEF submission from the Ministry o f Education. The N M D S budget for the fiscal year beginning in April 2003 almost doubled as compared to the previous year, to Ma lo t i 198 mil l ion. When the N M D S budget i s included as total education sector budget, the share o f recurrent budget devoted to primary and secondary education dropped to 57.7% (rounded up to 58% in the Table). I t i s worth noting, however, that the share o f primary alone has increased over the period, from 36% to 40%. There has been reduction in the share o f secondary, a subsector which has been characterized in the past by inefficiencies and high costs arising f rom the teacher deployment and utilization practices.

In the view o f the Bank staff, progress in relation to the intent o f the second part o f Trigger 2, which was to increase the share o f the budget devoted to primary and secondary, relative to tertiary, has been inadequate.

Trigger 3: “At least 75% of School Advisory and Management Committees for primary and secondary schools functioning satisfactorily by December 2001 (assessed independently)”. MOE i s about to conduct an impact assessment.

Triggers 4 and 5: “Technical and Vocational Education Act in place by December 2000” and “A financial management and performance monitoring system for TVET in place by June 2002”. These two triggers will not be fulfilled by December 2003. Factors contributing to the unsatisfactory performance o f the TVET sub-sector, as stated in Section B 2.1 o f this PAD, include the lack o f a TVET reform champion, the lack o f sustained technical assistance, and the fact that reforms in TVET are complex and can take as long as 10 to 15 years. I t i s necessary to continue laying the foundation for TVET reform during Phase 11. Support for TVET in Phase I1 will be coupled with long-term technical assistance to the Ministry.

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Trigger 6: “NFE Act approved; operational guidelines issued and options deJirted by December 2001 ”. This trigger i s unlikely to be fulfil led. Prior to the introduction o f Free Primary Education, non-formal education was identified as a priority for the Ministry o f Education to achieve i t s EFA goals. The introduction o f FPE has successfully brought into the formal school system many o f the children who could not afford schooling before. There i s now a need to re-orient non-formal education from a predominantly literacy program for children who could not afford formal schooling to a sk i l l s development program for adults who are beyond the age o f formal schooling. IDA Phase I1 wil l continue to support the Learning Post pi lot in two districts, but now with an emphasis beyond basic literacy and numeracy.

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Additional Annex 12: Performance Indicators and Technical Notes LESOTHO: Second Education Sector Development Project (Phase II)

Outcomellmpact indicators

Share of total education recurrent budget increased (including NMDS) devoted to primary and secondary education increased

Develoment Objective/Impact Indicators wi th Baseline Data for ESDP I1 Phase I1

2002 2007 target 201 1 target (Baseline (end of (end of the

data) phase 2) program)

58% 65% 70%

3

4

I 2 IECCD coverage increased I 31% I 40% I 50% I Primary completion rate increased 77% 83% 90%

Primary net enrollment ratio increased 85% 90% 93% -~

5 Lower Secondary education coverage Form A-C (gross enrollment) increased 43% 50% 60%

Performance (overall mean) of national achievement test at primary education level in Math and Languages improved:

- Standard 3 Mathematics overall mean score improved

- Standard 3 English Comprehension overall mean score improved

44% 50% 57%

31 % 36% 40% I I I

- Standard 3 Sesotho Comprehension overall mean score improved

- Standard 6 Mathematics overall mean score improved

- Standard 6 English Comprehension overall mean score improved

71% 75% 80%

49% 55% 60%

45% 50% 55% I I 1

- Standard 6 Sesotho Comprehension overall mean score improved An adequate legal and regulatory framework conducive to a demand-driven TVET system in nlace

58% 65% 70%

Notes: 1. Enrollment/ Graduate data and test scores are all from the Ministry of Education. 2. Population data are from UNNVB projections by Carl Haub based on 1996 census de facto data

Definition and Technical Note for Outcome/Impact Indicators

1. Total education recurrent budget shall include the bursary budget which i s administered by the National Manpower Development Secretariat.

Share o f education recurrent budget devoted to primary and secondary education.

2. number o f children registered in ECCD centers countrywide plus total number o f children in the home-bases in four p i lo t districts divided by population age fkom 3-5.

ECCD (Early Childhood Care and Development) coverage rate i s defined as the total

3. primary education (in this case, the number o f students participate in the Lesotho PSLE), regardless o f age, expressed as a percentage o f the population at the Lesotho off icial primary graduation age (1 3).

Primary Completion Rate. The total number o f students completing the final year o f

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The purpose o f this indicator i s to measure the percentage o f al l children who complete the primary education cycle and track progress toward the goal o f Education for All (which i s to achieve universal primary completion by the year 2015.

4. official primary school age (6-12 in Lesotho), expressed as a percentage o f the population o f the same age group.

Primary Net enrollment Ratio i s the enrollment o f primary education who are the

Primary net enrollment ration (NER) shows the extent o f participation in primary education of children belong to the official age group at this level. A high NER denotes a high degree o f participation o f the official school-age population. The theoretical maximum values i s 100 percent. Increasing trends reflect improving participation at the specified level o f education. When the NER i s compared with the Gross Enrollment Ratio, the difference between ratios highlights the incidents o f under-aged and over-aged enrollment

5. Form A, B and C, regardless o f age, expressed as a percentage o f the official school-age (13-15 in Lesotho) in the given school year.

Lower Secondary Education Coverage (gross enrollment). The total enrollment in

The gross enrollment ratio (GER) indicates the capacity o f the education systems to enroll students o f a particular age group, and i s widely used to show the general leve l o f participation in a given level o f education. It i s used as a substitute indicator for the net enrollment ratio.

6. Standard National Assessment. The results used for this indicator are from the resent (February, 2003) national assessment conducted by the Curriculum and Assessment Department o f the Ministry o f Education. The assessment was to set a baseline for what students know and can do in Sesotho, English and Mathematics.

For mathematics, the items included adaptations f rom the Third International Mathematics and Science Study (TIMSS) as we l l as past papers o f the Lesotho Primary School Leaving Examinations (PSLE).

For English and Sesotho, the scheme and papers included composition, reading comprehension and language.

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Additional Annex 13: Letter of Sector Policy LESOTHO: Second Education Sector Development Project (Phase 11)

1" : _Phase I

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3

Targeted Equltylbsacd Program

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4

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5

4.

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6

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7

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9

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