Report No. PID10008

Project Name Mozambique-Higher Education Project

Region Africa Regional Office

Sector Tertiary Education

Project ID MZPE69824

Borrower(s) GOVERNMENT OF MOZAMBIQUE

Implementing Agency

Address MINISTRY OF HIGHER EDUCATION,

SCIENCE AND TECHNOLOGYContact Person: Lidia Brito, Minister

Tel: Mobile: 258-82-322026

Email: Lbrito@zebra.uem.mz

Environment Category C

Date PID Prepared February 22, 2001

Projected Appraisal Date June 5, 2001

Projected Board Date October 15, 2001

1. Country and Sector Background

Background:Education and poverty: Mozambique is one of the poorest

countries in the world, with a per capita income of US $260 (1999). The

latest census figures confirm that 70 percent of the population live in

total poverty. Two issues are of fundamental importance for the future of

the Mozambican people. The first is the attainment of economic growth,

which in turn will increase national income and employment, the second is

the reduction of poverty. These issues are interrelated and education is

crucial for achievement of both goals. The principal concern is the

overall level of education in the population and labor force. 60 percent

of those aged 15 and over are illiterate, including 56 percent men and 85

percent women. As part of the Government's National Policy for Education

(1995) and Strategic Plan for Education 1999-2003 supported by the Bank

under the US$700 million sector wide Education Sector Strategic Program,

over the last several years basic education has received significant

attention and funding. As a result enrollment into primary education has

almost doubled and increased by 900,000 children since 1993. In 1998 theprimary gross enrollment rate was 92w, one of the highest in the region,

but only one out of five children completes grade 5. However, substantial

efforts are underway to improve the quality of teaching and learning. A

similar steady trend is evident at the lower secondary level and the upper

secondary pre-university level which again the Bank is supporting.

Nevertheless, the education system and the country as a whole continues

to suffer from a very limited number of higher level graduates. Only 3

percent of the population have attended secondary school, technical

education or higher education. Although, the enrollment into upper

secondary education have increased almost ten times since 1993, with about

9,000 students enrolled, the demand for secondary graduates remains high.

Aside from the shortage of professionals in the economy such as doctors,

accountants, engineers etc., the education system itself is suffering from

the lack of teachers with a college degree to teach at the post primary

levels. The lack of skilled professionals is a major concern of the

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Government. With progress being made on basic education, but facing

competing demands for the limited number of higher education graduates,

the Government has had little choice but to accelerate the development of

a strategy for higher education to ensure that social and economic

achievements are sustained. The economy, prospects for growth and poverty

alleviation: Since the first free elections in 1994 the Mozambican economy

has been one of the fastest growing economies in the world. Buoyed by good

agricultural seasons, recent economic performance has been impressive,

though it represents recovery from very low base levels. GDP growth

averaged 5.5 percent annually between 1987 and 1996 and 11 percent

annually between 1997 and 1999. At the same time, investor confidence has

grown. Between 1996 and 1998, consumption grew by an average of 9 percent

annually, and investment by 13 percent annually. Merchandise exports

increased by 42 percent from 1996 to 1998. Foreign direct investment

(FDI) has also increased, and as a result of large investment associated

with the Mozal aluminum smelter it reached US$213 million in 1998. This

represents a tenfold increase over FDI in the early 1990s and, at about

3.3 percent of GDP over 1996-98, it is high relative both to the size of

the economy and to other African countries. While recent figures may

reflect a peaking of infrastructure investments, signs suggest that

foreign investor confidence is growing rapidly and FDI sources are

becoming more diverse and Mozambique is expected to continue to grow at 7

to 8 percent per annum over the next five years. Reducing poverty will

depend on the success in maintaining these high economic growth rates,

supporting investment in new areas, expanding employment opportunities and

increasing national income and government revenues. Increasing revenues is

the basis for increasing provision of public services and addressing

inequities especially in the social sectors. However, the potential for

increasing revenues depends on the composition of the labor force and its

taxable base, and the contribution of the economic sectors to GDP and

national revenues. In 1998, the formal sector accounted for more than one

third of the gross domestic product of US$3.5 billion and about 60 percent

of domestic revenues (World Bank, Growth Prospects Paper, 2000). In the

short term an increase in revenues can be achieved by expanding the fiscal

base, but in the longer term income growth will be dependent on the rate

of expansion in the economy. Mozambique's prospects for long term growth

are strengthened by the country's untapped natural resources. However, the

lion's share of future growth and revenue will continue to be generated

from the formal modern sector and depend on foreign investor confidence

and investments -- areashighly dependent on the availability of high level

managerial and professional skills. Labor force: structure, demand and

supply: The National Statistical Institute (INE) estimates that the labor

force is expected to reach 9.7 million by the year 2000, an increase of

about 60 percent since 1990. Approximately 9 percent, or about 800,000

people, are employed in the formal modern sector. Informal labor market

surveys show that there are essentially no Mozambicans employed in middle

and higher level management positions in the largest foreign companies.

Many industries are currently facing the need to replace an aging stock of

educated professionals trained in the period preceding the civil war, and

now nearing retirement. Thus far, the country has relied on imported labor

to meet labor market demands for either professional or highly trained

staff. This strategy has not only failed to build capacity in the country,

but has pushed the government to limit the employment of foreigners in

companies, thus, possibly jeopodizing future investments, if the number of

Mozambican professionals is not increased. Further evidence of excess

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labor market demand is provided by frequent anecdotal reference to

students from the engineering and economic faculties of UEM leaving for

employment before completing their thesis and formally graduating. In the

public sector (totalling 120,000 people (excluding the armed forces))

about 30 percent of employees have a post-secondary degree. Assuming, very

conservatively, that only 10 percent of the formal sector labor force are

higher level professionals, that attrition due to retirements or death is

only 1 percent, and with no allowance for any expansion in the economy,

Mozambique would still have to replace about 800 professionals every year

to fill the available jobs. In comparison, in 1999, total enrollment in

higher education was 11,600, but the total number of new higher education

graduates in Mozambique was only 483 in 1998 (World Bank, Education Cost

and Financing Study, 2000, Strategic Plan for Higher Education, GoM,

2000). This represents the high level manpower stock from which national

and international companies and the public sector must recruit future

leaders, managers and professionals. Under a more positive and realistic

growth scenario, evidenced by the current level of investment, the

shortfall of trained professionals will be even more severe and the demand

for graduates and high level professionals correspondingly greater.

Finally, in addition to demand for normal replacement the prevalence of

HIV/AIDS is likely to have a severe impact on overall attrition rates.

Higher education investment: The current project in support of higher

education has to be seen and justified against this picture. It could be

argued that the country's state of poverty and the slowly changing

enrollment profile provide little basis for investment in higher education

at this time. Neither the Government nor the Bank share that view for

several reasons. First, efforts are being made to by the government, the

Bank and external partners to expand enrollment and improve quality and

relevance at the basic and secondary levels. In this context support for

higher education does not diminish investment at the lower levels, but

rather complements it as envisaged under the sector wide approach. These

investments are not substitutable. Second, the extent and severity of

Mozambique's shortage of highly trained professionals for managerial and

economic policy leadership is unique in Africa and an impediment to growth

and investment and to national leadership of it. The shortage of

capacity is so great that the country is re-importing sizable numbers of

expatriates to take-up leadership in the private sector. The social and

political implications of this situation have led government to legislate

the number of such individuals who can be employed. Third, reform of

Mozambique's university degree structure will bring it into line with

higher education elsewhere in the region and the world, providing

expanded access to international facilities and scholarship, and

permitting the country to become a partner in the creation and exchange of

global knowledge. Fourth, a major goal of the government is to create a

national system of education and, within this, an integrated higher

education sub-sector is an important component. While a coherent system

of higher education can not solve problems of inefficiency at the basic

and secondary levels, or redress equity problems arising from

geographical and historical disparities at those levels, it can reinforce

efforts being made at the lower levels and contribute to an efficient,

functional and equitable system. Fifth, while it is difficult to

demonstrate how any university reform program makes a direct contribution

to the alleviation of poverty, there can be little doubt that in

Mozambique an increase in the number of well trained and committed

doctors, teachers and lawyers will provide the potential human resource

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pool for the delivery of services previously inaccessible to poorer

segments of the population. Finally, there is a public good argument,

going beyond market demand, for investment in the higher levels of

education in Mozambique: for a country with a painful colonial and post

colonial history, in a continent itself torn by strife, ethnic cleavages

and mismanagement, the university system can play an important unifying

and leadership role in helping to define the identity of Mozambicans and

the mission of the Mozambican nation. Higher education issues:The central

sector issues for the higher education sector are described in detail in

the Government's Strategic Plan for Higher Education, 2001-2010, Working

Document 1. Among key issues are the following:Inadequate supply and

limited access: The higher education system reflects the country's

history. At first there was only one university, Eduardo Mondlane

University (UEM), offering courses modeled on the Portuguese system, with

a rather long period of study leading to a single qualification

(licenciatura). During the civil war many areas were cut off from the

capital and most Mozambicans had no access to higher education. In 1990,

77T of a total of 3,750 higher education students were in UEM. Even after

the peace agreement in 1992 UEM remained the main provider of higher

education, accounting for about 75t of total enrollment. By the end of

1995 there were only three higher education institutions in Mozambique

with a total of 6,844 students, of whom 76t were in UEM and only 25

percent were women. New admissions remained fairly stable between 1992 and

1995, at around 1,000. Only recently has the system begun to expand and

diversify, but on a very weak financial basis. There are currently six

HEIs in Mozambique: Eduardo Mondlane University (UEM), Pedagogical

University (UP), the Higher Institute for International Relations (ISRI),

the Higher Institute of Science and Technology of Mozambique (ISCTEM),

the Advanced Polytechnical University Institute (ISPU) and the Catholic

University of Mozambique (UCM). By 1999 total enrolment had increased to

11,619 and new admissions doubled from 1,088 in 1995 to 2,155 in 1999. At

the same time the number of applicants to HEIs continues to be ten times

that of the available vacancies (Strategic Plan for Higher Education,

Working Document, GoM, 2000). Concurrently, there are certain programs or

areas of education that are not offered, but are in high demand by both

the public and private sectors -- such as accountancy (there is no

national accountancy institute), tourism (there is no tourism schools or

programs), programming or business management. Other sectors are in a dire

need for graduates, such as teacher trainers for the teacher training

colleges. Low graduation rate and low internal efficiency: The number of

new graduates remained stagnant at around 260 a year between 1992 and

1994, increasing slightly to 398 graduates in 1995 and 483 graduates in

1998. Expressed as a proportion of total student numbers however, the

graduation rate is very low, at only around 5t per year. The low level of

graduation points to a high degree of wastage and low efficiency of the

system. This combined with internal inefficiencies of institutional

governance and management resulting in low utilization of staff and

facilities has resulted in the low graduation rates and high costs per

graduate. The average expenditure per student is at par with average per

capita spending in Anglophone and Francophone Africa (in Mozambique the

average expenditure per student represents 6.4 times per capita GNP,

compared with an average of 6.3 in Anglophone and 5.6 in Francophone

countries). But because of the low internal efficiency the cost per

graduate is very high.Poor quality and inadequate relevance: Another cause

and effect of the low graduation rate is the situation that most courses

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and programs offered at HEIs, particularly the public HEIs, are outdated,

of limited relevance and poor quality and do not respond to the demands of

a fast growing economy and to specific needs in individual provinces or

emerging sectors. The limited capacity (and incentives) among academic and

administrative staff in HEIs to improve teaching and learning, devise new

courses and deliver them to an expanded number of students, and similar

limitations of management capacity in the new Ministry charged with

leading higher education reform, have led to a lack of relevance and

responsiveness to changing needs. The UEM has undertaking the

implementation of a curriculum reform. But with the anticipated reforms

under the PEES and continuing changes in the economy the curriculum will

further have to be updated, not just at UEM, but in all institutions. In

general research facilities, library and educational materials are limited

and out of date negatively affecting the overall quality of the learning

environment.Low integration of sector and weak capacity for policy design

and implementation: Another important feature is the fact that the HEIs

are not well integrated with limited (or no possibilities at all) for

students to move across comparable programs. Furthermore, general policy

coordination and monitoring of sector performance is weak if not totally

absent. Finally, in the absence of a definitive legal framework, there is

an inadequate demarcation of responsibilities and articulation between the

new Ministry and the HEIs.Weak external efficiency: Equally important for

understanding the development of higher education in Mozambique is the

fact that for many years the university system operated under a centrally

planned economy, paying limited attention to internal and especially

external efficiencies and such issues as allocation and management of

resources. The failure of current policies on institutional financing,

cost recovery, subsidies and student support to ensure equity of access

and resource distribution and financial sustainability has further

contributed to this. The lack of responsiveness to changing external needs

is further evidenced by the fact that while the labor force is estimated

to have increased by 3.7 million people over the past decade and as stated

before the economy has been growing at 9t, the number of university

graduates have only increased to about 500. Inequity in access and

socio-economic disparities: In Mozambique, there are still severe

geographical disparities of access between Maputo and most other

provinces, resulting from a concentration in the south of HEIs, leading to

unequal opportunities for access and subsequent employment; between 1990

and 1999 about 60 W of students were from Maputo or the South, compared

with only 109 from the North and 309 from the Central (and poorest)

provinces. This is of course further exacerbated by the existence of a

dominant, traditional and highly respected university (UEM) which has

tended to monopolize the production of graduates. The UEM operated until

recently under a privileged status with a sizable public subsidy, but with

outdated course structures, antiquated curricula and centralized

management systems which combine to produce internal inefficiencies,

notably high drop out and repetition rates, and a lack of responsiveness

to new labor market needs. However, with increasing demand for higher

education, in the last seven years this has resulted in the emergence of a

differentiated system of public, private and non-profit institutions

which have begun to compete with UEM in terms of relevance, equity,

efficiency and cost. Nevertheless, this expansion continues to benefit the

higher income groups (Education Costs and Financing Study, 2000) and the

weak financial solidity of the newer private HEI points to the inadequacy

of resources among students.These issues and facts help to explain the

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reality of a rather rigid and unresponsive higher education system, and

the current recognition of the need for reform so that the system can

better serve its students, teachers and the country as a whole.Government

strategyThe Government of Mozambique recognizes that improving and

expanding higher education is vital in order to meet the demands of the

labor market and to supply the professionals required for economic

management and policy leadership, and that if economic growth is

constrained by a shortage of professional skills, it will undermine long

term prospects for poverty alleviation.Signaling the seriousness of its

intent and awareness, the government formed a new Ministry of Higher

Education Science and Technology (MiHEST) in early January 2000. Together

with the higher education Task Force established in October 1999, this

accelerated the preparation of a National Strategic Plan for Higher

Education (PEES). The rapid development of a national strategy for higher

education therefore demonstrates the Government's awareness of the

problem, and its determination to address the challenge of the severe

shortage of professionals. The Plan, one of the more impressive of its

kind in the region, has been the subject of extensive consultations

throughout the provinces and was refined in a major national seminar in

July 2000 opened by President Chissano. It is national in scope and its

main points of focus are to expand access, to increase regional and gender

equity, to reduce costs per graduate and to improve the internal

efficiency of the whole sub system. Government and universities alike

recognize that a critical part of the strategy is to reduce the length of

the undergraduate degree course by instituting a new bachelor level

degree and speeding up the time taken to complete degree programs, thereby

providing the expanding formal modern sector and the economy as a whole

with the graduates and professionals needed. The task of turning the

Strategic Plan into an operational document, which can be the basis for a

Bank project, has already begun. Implementation will be in regions or

zones and an inventory of existing institutions in each province is

already underway. To ensure the necessary articulation between higher

education and lower levels of education, particularly with policies and

strategies for pre-university and technical and professional schools, the

Government has contracted with the government of the Netherlands for

assistance in this task. It is intended that both public and private HEIs

that establish permanent university-level activities in the Provinces

should receive state support, in terms of resource allocation, fiscal

stimuli and import and customs facilities, but the provincial governments

will also have to contribute fiscal resources from the province itself.

Leading and coordinating this reform process is a complex task for a new

Ministry. The Minister's intention is for all programs to be implemented

at the institutional level, leaving the Ministry to deal with overarching

issues such as planning, resource allocation, monitoring and evaluation.

For this purpose a crucial component of the project will be the

establishment of strong finance, planning , monitoring and evaluation unit(FMU) which will be responsible for project oversight. In addition, the

Ministry intends to initiate analysis of key issues, at both system-wide

and institutional level, in order to clearly understand underlying

problems such as low internal efficiency and inequalities of access, to

develop policies to address these problems and to explore the feasibility

of new forms of financing, including tuition fees, scholarships, student

loans and commercial credits for private institutions etc.

2. Objectives

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Phase I: The project will establish the physical and institutional

conditions and capacity to implement improved programs of teaching,

learning and research. Improving efficiency and the use of resources will

improve graduation rates, equity and relevance of education in higher

education institutions (HEI).Phase II: The project will expand coverage

and improve equity, along with the internal and external efficiency of the

system, by reducing repetition and drop out, increasing completion rates,

expanding access, lowering the cost per graduate and improving the overall

flexibility and diversity of programs and courses.

3. Rationale for Bank's Involvement

Beyond the injection of extensive inexpensive funding the Government

perceives several key dimensions of value that Bank involvement will

add. They include:Knowledge within the Bank team, and among consultants,

of experience from African and elsewhere of higher education systems that

have committed themselves to a similar reform process.Technical expertise

and practical experience in what is required for the successful design and

implementation of major higher education projects,Responsiveness and

flexibility in being able to provide support from the on going CBP project

and to speedily apply PHRD and Norwegian Trust funds to project planning

and preparation. Prior involvement in the CBP permits the application of

lessons learned and more important it has enabled the largest external

supporter of higher education in Mozambique to establish relationships of

trust and the experience of continuity amounting to a comparative

advantage that can now be extended to a project which involves the

national system.

4. Description

1. Project components (see Annex l)Component 1. Strengthening institutions

of higher education. This component will support the improvement of

academic quality and the relevance of training, improvements in

efficiency, as well as infrastructure rehabilitation/construction at

institution level. Specific activities will be identified through

preparation of mid-term development plans prepared by the HEIs and

approved by the Higher Education, Science and Technology Council (CESCT).

The component will include three windows. Window A. Academic quality and

relevance of training programs (ET).This window will provide support for

(i) strengthening staff academic capacities and (ii) improving the

quality and relevance of programs and courses. Specific activities will

include training of staff, support for mentoring arrangements, visiting

lecturers and academic exchange. Twinning arrangements between institutes

of higher education will be promoted. The institutions will be able to

include the following activities for their development plans:Strengthening

staff academic capacities:(a) training for faculty and staff; (b)

scholarships for faculty for academic training in new disciplines; (c)

stipends for visiting lecturers in key disciplines; (d) programs for

bringing business and public leaders to teach higher education courses;

(e) IT capacities and connectivity for faculty staff.Improving the quality

of programs and courses:(a) upgrading existing academic curricula and

courses; (b) introducing student-centered learning strategies; (c)

designing and starting short (one to two-year long) certificate or diploma

programs in new specialities [ TBDI, (d) designing and starting evening

programs in new specialities [TBDI; (e) designing new modular based

programs and courses.Window B. Capacity for internal efficiency

improvement (ET).This window will support efforts to reduce the time

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needed for successful completion of study (graduation), and reduction in

repetition and drop-out, thereby lowering the cost per graduate.

Activities to improve internal utilization of resources (faculty,

facilities, equipment) will also be supported. The component will support

the following activities:(a) introduction of "bridging" courses for

candidates to HEIs; (b) introduction of institutional incentives for

academic excellence; (c) design and implementation of activities to change

the culture of "failing students" on the basis of national analysis

undertaken under component... ; (d) training of management and

administrative staff of institutions; (e) design and introduction of

internal budgeting, financial planning, management and accounting systems;

(f) development of career advisory service and linkages with private

sector for facilitation of student placement.Window C. Institutional

expansion and infrastructure rehabilitation (ET).This widow will finance

the rehabilitation and expansion of facilities, equipment and library

upgrading in existing institutions, as well as setting up of new

facilities to expand the availability of programs in new locations. Both

existing academic programs and programs in new areas such as [TBD:

agriculture and farm management, finance, accounting, tourism/hotel

management and public administration] will be assisted. This will include

the following activities:(a) physical rehabilitation of existing buildings

and construction of new facilities; (b) provision of IT, communication and

laboratory equipment for teaching, reasearch and administrative purposes;

(c) provision of textbooks, learning and research resources in libraries

and subscriptions for information sources; (d) design and management of

institutional expansion programs. Component 2. Sector and institute

management reform and improved coordination and external linkages

(ET).This component will provide system-wide policy analysis, design of

specific reform initiatives, capacity building and training for effective

monitoring and coordination at system level, and for improved internal

management at institutional level.The objectives of the component will be

achieved through provision of technical assistance, training of staff,

procurement of IT, office and communication equipment and development and

implementation of strategies for information dissemination, communication

and promotion of labor market linkages. The component will support the

following activities:(i) analysis of policy issues (current and projected

relevance of produced skill mix , regional disparities in access, analysis

of low graduation, high repetition and drop out rates etc. ), design of

policy recommendations on the basis of these studies for higher education

reform;(ii) design and testing of funding formulae and resource allocation

mechanisms (capitation, institutional grants, etc) and revised financing

policies (strategies for cost sharing and targeted student financial

support);(iii) development and introduction of human resource management

policies in public higher education (contracting scheme for faculty staff

of the universities, evaluation principles etc.); (iv) building of

planning, budget and financial management capacity at MiHEST, including

design of guidelines, staff training, development of IT and communication

strategies and equipment procurement;(v) establishment of management

information system (MIS) for national higher education, including regular

surveys of HEIs to collect and analyze academic and financial information

for planning and monitoring at both the system and institutional

levels;Component 3. National academic excellence program.This component

will build academic capacity and capacity for academic program

certification; design and development of quality assurance mechanisms,

including monitoring of existing programs and accreditation of new courses

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and institutions. Activities will include:(i) design and development of

quality assurance mechanisms and monitoring and accreditation system(ii)

creation of a national program for faculty academic excellence

awards;(iii) design of a national program for student academic excellence

awards;(iv) design of and introduction of student-oriented

learning.Component 4. Higher education scholarship fund - national pilot

(ET). This component will finance the design, start up costs, initial

operation and evaluation of a Higher Education Scholarship Fund. The fund

will serve as a pilot instrument for allocation of public funding to HEIs

on a capitation basis, to improve responsiveness to student and employer

demand, and improve targeting of public funding to vulnerable groups. The

fund will offer individual scholarships for graduates of secondary schools

to finance tuition costs in various higher education training programs,

including both public and private institutions. The criteria for

eligibility, selection and allocation procedures will reflect: (i) the

need to support access to higher education for disadvantaged groups, and

(ii) labor market needs for technical skills in specific areas.

Possibilities for private sector sponsorship or financing of scholarships

will also be assessed and explored. Component 5. Program implementation

(ET).This component will provide support for overall program

implementation with the final aim of building national management capacity

in the higher education sector at national and institutional levels. It

will finance the following activities: (i) technical assistance to the

Ministry in coordination, administration and management of a national

higher education system; (ii) technical assistance in the area of

procurement; (iii) technical assistance for the setting up of monitoring

and evaluation mechanisms; (iv) support for program development.

Component 1. Strengthening institutions of higher education.

Component 2. Sector level management reform and improved coordination and

external linkages

Component 3. National academic excellence program

Component 4. Higher education scholarship fund (national pilot)

Component 5. Program implementation

5. Financing

Total ( US$m)Total Project Cost 80

6. Implementation

Overall project coordination and governance. The overall project strategic

coordination will be in the hands of Higher Education, Science and

Technology Council (CESCT) that will be established shortly as a strategic

entity to advise the Minister, assist with development of higher

education, science and technology policies and oversee implementation of

policies. The CESCT will have broad representation of the Government,

Institutes of Higher Education, also to include provincial and local

government, civil society, the productive sector (public and private),

academic and research community, secondary and technical and vocational

education sectors. The Council will be convened bi-annually to approve the

project annual budget, development plans and its execution, assess

progress towards project and component objectives and other project

strategic issues.A higher education operation and change committee and

financial management board (constituting the heads or directors of

planning and finance) would probably be the clearance house and monitoring

of day to day project implementation on which basis the FMU would release

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funds quarterly. The Financial Management Board would monitor the

execution of the program and report on problems with disbursement and

procurement. The procurement and financial management consultants would

report to the Board.Project implementation/institutional arrangements/PIU:

Two options for project implementation were considered: one included

establishing a financial management and planning unit under the Ministry

for Planning and Finance, which was rejected because of the lack of

educational ownership and control. Therefore, the second option is

currently under discussion. Under this option the project oversight will

be delegated to a Financial Management, Monitoring and Planning Unit (FMU)

to be placed under the MiHEST. The staff of the FMU will not be civil

servants, but externally hired consultants and will include component

coordinators, procurement and a financial management specialists. The FMU

will be accountable to the Minister of Higher Education and to

CESCT.Implementation at Institutional level. Existing and new HEI will be

involved in implementation of the project, including the Eduardo Mondlane

University (UEM), Pedagogical University (UP), the Higher Institute for

International Relations (ISRI), the Higher Institute of Science and

Technology of Mozambique (ISCTEM), the Advanced Polytechnical University

Institute (ISPU), the Catholic University of Mozambique (UCM). Overall

responsibility for the project implementation will be with the Rectors and

Academic Councils of these institutions and implementation will use

exisiting institutional structures. Each institution will appoint two key

contact persons for project implementation. Procurement and financial

management consultants will be hired in each HEI and integrated into each

institutions respective financial and administrative department (DAF). The

interrelation and contractual arrangement of the consultants and final

set-up will be determined during preparationDisbursement and audits:

Because of the complexity and cash flow requirements disbursement will be

based on LACI, with quarterly reporting and annual audits of each

institution and the FMU.Program period and implementing agencies: The

project will be implemented over a 7 year period, divided into two phases

of 3 and 4 years through the Ministry for Higher Education, Science and

Technology (MiHEST) and the HEIs.Monitoring and Evaluation: Project

implementation will be monitored on the basis of overall project

performance and component indicators. It will be done on the basis of

quarterly and annual project reports and indicators of higher education

sector performance to be developed within the project. Besides regular

monitoring indicators, special triggered for the next phase of the program

will be developed by the time of project appraisal. They will reflect both

progress toward achieving development objectives of the program as well as

internal project performance. The project will support development and

introduction of the sector performance monitoring system to be established

within MiHEST. Once established, it will be used for monitoring of the

project and overall system performance. Design of monitoring system will

be supported through one of the project components.

7. Sustainability

Financial sustainability: It is likely that policies supported by the

project activities will incur some additional fiscal expenditures. These

will be assessed during the project preparation and necessary

recommendations provided for MTEF. Additional budget expenditures would be

needed to finance additional salary costs of expanded higher education

system; any government shortfall in other items can be met from the phase

two and three of the credit. The size of this expanded envelope is

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expected to be minimal as soon as the project is concentrating on improved

efficiency in the use of existing staff and facilities, introduction of of

more effective modes of instruction and shorter courses and programs.

Introduction of elements of cost sharing will also reduce the dimension of

potential increase. Institutional sustainability: The project will support

development of Government capacity to fomulate policy, monitor and

coordinate sector perfromance. At institutional level training of

management staff, development of financial managment capacities and

introduction of improved governance procedures will ensure sustainability

of improved efficiency of institutional management. This will ensure that

the capacity and processes put in place will be utilized beyond the

project's life.Relevance of education and quality: Introduction of shorter

courses and programs in the areas of highest demand will improve relevance

of provided education, will improve relevance and develop linkages of the

sector with key employers and private sector at large. These linkages will

help improve sustainability of higher education institutions.To institute

sustainable reform in the sector is not a short term endevour. Therefore,

a 7 years project period that can be adapted is considered a suitable

approach for ensuring this.

8. Lessons learned from past operations in the country/sector

Several lessons have been learned from the Capacity Building Project with

UEM which was the forerunner to this project. and have been included in

its design. Key lessons are: (i) an initial focus on institutional and

operational arrangements, including procurement and financial managment,

and capacity building (ii) integration of project implementation into the

HEI structure, (iii) flexibility in design and possibility of adaptation

to changing need (the appropriateness of an APL), (iv) early preparation

of implementation and procurement plans, (v) clear drafting of contracts

and managment set up for twinning arrangments, and (vi) longer term

planning of scholarships and study abroad activities.Other higher

education projects in the region, most notably Ghana, Kenya and Madagascar

offer useful lessons, for both design and implementation stages, while

outside the region the project in Vietnam is particularly instructive. All

are being taken account of in the preparation of this project and offer

pertinent lessons:n In recognition of the fact that in Mozambique, as in

Ghana, universities possess an organized and influential constituency of

staff students and alumni who can act as powerful interest groups, broad

and sustained consultation and institutional participation has been

adopted in project design and will be continued in implementation, despite

the more than normal supervisory attention that this requires.n Where, as

in the Mozambique project, enrollment expansion is a primary objective,

care will need to be taken to ensure that it does not become led by

political considerations in defiance of quality assurance. The Ghana

experience, as well as the cost differentials between HEIs, have

persuaded this project to adopt reduction in cost per graduate as the

main performance indicator for monitoring the balance between expansion

and quality as well as improvements in efficiency. n In the Mozambique as

in the Ghana project improvement in the quality of higher education is an

explicit project objective. On the basis of the Ghana experience relevant

performance indicators which measure student learning (e.g. standard

examination results) will be utilized or created.From the Kenya

Universities Investment Project come several pertinent lessons: n Both

Kenya and Mozambique are moving from a situation of a dominant national

university to an integrated system of multiple differentiated

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institutions. The Kenya experience underscores the importance of a

project design in Mozambique that provides for an appropriate balance

between decentralization of responsibilities to universities and central

coordination. n As the Mozambique project , like that of Kenya, involves

a lending operation in support of a small number of universities which are

self accounting organizations, it is planned on the basis of Kenya

experience to ensure that at appraisal there is a record of the structure

of the revenues and expenditures of the beneficiary institutions and

their unit costs, so that subsequent progress reports can routinely

monitor these aspects.n To the extent that the Mozambique project will

require the installation of equipment, the Kenya experience points to the

necessity of clear procedures and allocated responsibilities for receipt,

inspection acceptance and testing of such equipment.n Universities in

Mozambique, as in Kenya and Ghana, are on a path to becoming large-scale,

complex organizations with an increased market orientation. This will

require the inclusion in this project of correspondingly greater

attention than before to managerial training at all levels.The case of

Madagascar offers two general notes of encouragement arising from the fact

that with bank support the system in Madagascar has improved from a

dilapidated state, akin to that of Mozambique after the civil war, to a

functioning system of quality and relevance.n Madagascar underlines the

long term nature of education reform and innovation such as is being

contemplated by Mozambique and the need for continuity in bank staff

involvement.n It also confirms the key importance of a firm but flexible

policy framework, as is manifested in the Mozambique Strategic Plan which

will be operationalized through the harmonization of the development plans

of constituent institutions, the very process in which the Government of

Mozambique is now engaged for the preparation of this project. From

outside the region two useful lessons are suggested by the Vietnam

project:n The higher education project in Vietnam supports a regular

survey of all HEIs to collect data on universities' financial operations,

student teacher ratios, drop out, repetition and graduation rates and

other performance indicators, which are used to monitor institutional

performance and will also be used to monitor project implementation at HEI

level. It also supports a regular graduate tracer study and development

of career advisory services in HEIs to improve linkages with the labor

market. This project could support such development in Mozambique.n One of

the features of the Vietnam project is that HEIs that apply for investment

funds from the project have to demonstrate that they are using data

collected through the annual institutional and graduate tracer surveys in

their own internal strategic planning ,including curriculum reform and the

introduction of new courses to respond to labor market needs. This

project will pay particular attention to developing such incentives for

HEIs in Mozambique.

9. Program of Targeted Intervention (PTI) N

10. Environment Aspects (including any public consultation)

Issues None

11. Contact Point:

Task Manager

Soren Nellemann

The World Bank

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1818 H Street, NW

Washington D.C. 20433202-473-8294

12. For information on other project related documents contact:The InfoShop

The World Bank

1818 H Street, NW

Washington, D.C. 20433

Telephone: (202) 458-5454Fax: (202) 522-1500

Web: http:// www.worldbank.org/infoshop

Note: This is information on an evolving project. Certain components may

not be necessarily included in the final project.

This PID was processed by the InfoShop during the week ending March 2, 2001.

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