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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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

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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 a