world bank document · dif development credit agreement ... tvet technical and vocational education...

Document of

The World Bank

Report No: ICR00001285

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-39840)

ON A

CREDIT

IN THE AMOUNT OF SDR 27.3 MILLION

(USD 40.0 MILLION EQUIVALENT)

TO THE

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

FOR A

POST SECONDARY EDUCATION PROJECT

May 26, 2010

Human Development Unit AFCE3 Africa Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective May 31, 2004)

Currency Unit = Birr US$1 = 8.6 Birr SDR1 = US$ 1.46275

FISCAL YEAR

July 6-July 7

ABBREVIATIONS AND ACRONYMS

AM Aide Memoire CAS Country Assistance Strategy DCA DIF

Development Credit Agreement Development Innovation Fund

DOC DIF Oversight Committee ESDP FM

Education Sector Development Program Financial Management

FMR Financial Management Report GER Gross Enrollment Ratio GOE Government of Ethiopia HEI HESC

Higher Education Institution Higher Education Strategy Center

HEPCO Higher Education Project Coordination Office ICR Implementation Completion Report IDA International Development Association IDG Institutional Development Grant MA Master of Arts MOE MTR

Ministry of Education Mid-Term Review

NPRC National Pedagogical Resource Center OP Operational Manual PA PAD

Performance Agreement Project Appraisal Document

PDO Ph.D.

Project Development Objective Doctor of Philosophy

PPD Planning & Programming Department (Ministry of Education)PRC Proposal Review Committee PSEP Post Secondary Education Project SOE Statement of Expenditure SSU System Support Unit TOR Terms of Reference TVET Technical and Vocational Education and Training USD United States Dollar

Vice President:Obiageli Ezekwesili

Country Director:Kenichi Ohashi

Sector Manager:Christopher J. Thomas

Project Team Leader:Rajendra Dhoj Joshi

ICR Team Leader:Rajendra Joshi

ICR Primary Author:Jacob Bregman

Federal Democratic Republic of Ethiopia Post Secondary Education Project

CONTENTS

Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph

1. Project Context, Development Objectives and Design...............................................12. Key Factors Affecting Implementation and Outcomes ..............................................63. Assessment of Outcomes ..........................................................................................105. Assessment of Bank and Borrower Performance .....................................................13Annex 1. Project Costs and Financing..........................................................................17Annex 2. Outputs by Component..................................................................................18Annex 3. Economic and Financial Analysis .................................................................20Annex 4. Bank Lending and Implementation Support/Supervision Processes.............21Annex 5. Beneficiary Survey Results ..........................................................................23Annex 6. Stakeholder Workshop Report and Results...................................................24Annex 7. Summary of Borrower’s ICR and/or Comments on Draft ICR.....................25Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders .......................33Annex 9. List of Supporting Documents ......................................................................34Annex 10: Detailed Project Procurement and Financial Management Performance ...35MAP

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A. Basic Information

Country: Ethiopia Project Name: Post Secondary Education Project

Project ID: P078692 L/C/TF Number(s): IDA-39840

ICR Date: 05/26/2010 ICR Type: Core ICR

Lending Instrument: SIL Borrower: GOVERNMENT OF ETHIOPIA

Original Total Commitment:

XDR 27.4M Disbursed Amount: XDR 14.8M

Revised Amount: XDR 14.8M

Environmental Category: C

Implementing Agencies: Ministry of Education

Cofinanciers and Other External Partners: B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 09/26/2003 Effectiveness: 04/04/2005 04/04/2005

Appraisal: 02/03/2004 Restructuring(s): 12/12/2008

Approval: 09/16/2004 Mid-term Review: 10/12/2006 12/11/2006

Closing: 09/01/2009 09/01/2009 C. Ratings Summary C.1 Performance Rating by ICR

Outcomes: Moderately Unsatisfactory

Risk to Development Outcome: Moderate

Bank Performance: Moderately Unsatisfactory

Borrower Performance: Moderately Unsatisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings

Quality at Entry: Moderately Unsatisfactory

Government: Not Applicable

Quality of Supervision: Moderately Unsatisfactory

Implementing Agency/Agencies:

Not Applicable

Overall Bank Performance:

Moderately Unsatisfactory

Overall Borrower Performance:


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C.3 Quality at Entry and Implementation Performance IndicatorsImplementation

Performance Indicators

QAG Assessments (if any)

Rating

Potential Problem Project at any time (Yes/No):

No Quality at Entry (QEA):

Satisfactory

Problem Project at any time (Yes/No):

Yes Quality of Supervision (QSA):

None

DO rating before Closing/Inactive status:


D. Sector and Theme Codes

Original Actual

Sector Code (as % of total Bank financing)

Central government administration 10 10

Tertiary education 80 90

Vocational training 10

Theme Code (as % of total Bank financing)

Education for the knowledge economy 67 100

Improving labor markets 33 E. Bank Staff

Positions At ICR At Approval

Vice President: Obiageli Katryn Ezekwesili Callisto E. Madavo

Country Director: Kenichi Ohashi Ishac Diwan

Sector Manager: Christopher J. Thomas Laura Frigenti

Project Team Leader: Rajendra Dhoj Joshi Gary L. Theisen

ICR Team Leader: Rajendra Dhoj Joshi

ICR Primary Author: Jacob Bergman F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document) To improve human resource development capacity at the post secondary education level. Revised Project Development Objectives (as approved by original approving authority)

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(a) PDO Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Increase in capacity of universities to support tertiary programs

Value quantitative or Qualitative)

Number of DIF proposals submitted and successfully implemented = 0; Number of IDG awards = 0

Number of DIF proposals submitted and successfully implemented = 250 IDG = 36

Number of DIF proposals submitted and successfully implemented = 227 IDG = 22

Number of DIF proposals submitted and successfully implemented = 187IDG awards = 22

Date achieved 03/23/2005 09/01/2009 12/12/2008 09/01/2009 Comments (incl. % achievement)

DIF proposals submitted and successfully implemented = 73%; IDG awards = 100%; Reliable data on number of degrees awarded annually not available. This indicator dropped during the restructuring.

Indicator 2 : Percentage of undergraduate students completing on time, by gender. Value quantitative or Qualitative)

M= 75 F =62

M = 92 F = 82

M = 92 F = 82

N/A


Data not available.

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised

Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Number of pre-accredited and accredited institutions and programs

Value (quantitative or Qualitative)

Pre-accredited institutions: 0 Pre-accredited programs: 0 Accredited institutions: 0 Accredited programs: 0



Date achieved 01/04/2005 09/01/2009 09/01/2009 Comments (incl. % achievement)

The achievement rates for pre-accredited institutions and programs are 55% and 29% respectively, and for accredited institutions and programs are 77% and 75% respectively.

Indicator 2 : Number of faculty/instructors and university administrators/managers upgraded through short-term and degree training with PSEP funds

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Faculty/instructors: ST= 0; LT= 0 University administrators/ managers: ST=0; LT=0

Faculty/instructors: ST=1139; LT= 298 University administrators/ managers: ST=92; LT=110

Faculty/instructors:ST=556; LT= 164 University administrators/ managers: ST=117; LT= 52

Date achieved 01/04/2005 09/01/2009 09/01/2009

Comments (incl. % achievement)

The achievement rates: faculty/ instructors: ST = 49%, LT = 55%; university administrators/managers: ST = 127%, LT = 47%

Indicator 3 : Institutional Development Grant Conditions


Graduate tax

Graduate tax; accreditation; block grants; strategic plans; EMIS/FMIS

Graduate tax; accreditation; strategic plans; EMIS/FMIS

Graduate tax; accreditation; strategic plans; EMIS/FMIS


Block grant trigger deleted during the restructuring. All others triggers met.

G. Ratings of Project Performance in ISRs

No. Date ISR Archived

DO IP Actual

Disbursements (USD millions)

1 11/30/2004 Satisfactory Satisfactory 0.00 2 12/02/2004 Satisfactory Satisfactory 0.00 3 12/22/2004 Satisfactory Satisfactory 0.00 4 05/16/2005 Moderately Satisfactory Satisfactory 0.00 5 12/19/2005 Unsatisfactory Unsatisfactory 3.50 6 12/28/2005 Moderately Satisfactory Moderately Satisfactory 3.50 7 06/06/2006 Unsatisfactory Unsatisfactory 3.50 8 02/06/2007 Unsatisfactory Moderately Satisfactory 5.12 9 06/21/2007 Moderately Satisfactory Moderately Satisfactory 5.78

10 12/28/2007 Moderately Satisfactory Moderately Satisfactory 7.81

11 07/26/2008 Moderately

Unsatisfactory Unsatisfactory 11.17

12 08/31/2008 Satisfactory Unsatisfactory 12.79





15 09/03/2009 Moderately Unsatisfactory 21.88

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Unsatisfactory H. Restructuring (if any)

Restructuring Date(s)

Board Approved

PDO Change

ISR Ratings at Restructuring

Amount Disbursed at

Restructuring in USD millions

Reason for Restructuring & Key Changes Made

DO IP

12/12/2008 N S U 15.87

Overall portfolio restructuring to redeploy resources from unsatisfactory projects to Global Food Crisis Response Project. TEVT component dropped. SDR 9.5m equivalent to US$15m cancelled.

I. Disbursement Profile

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1. Project Context, Development Objectives and Design 1.1 Context at Appraisal

1. Education and Training Policy, announced in 1997, was the road map for the long-term development of the education sector of Ethiopia. Drawing upon this policy the Government of Ethiopia (GOE) launched Education Sector Development Plan (ESDP) I from 1997/98 to 2001/02, and ESDP II from 2002/03 to 2004/05. ESDPs aimed at rapid expansion of the education sector. Access to post-secondary education in Ethiopia had significantly improved between 1990/91 and 2002/03, when enrollments rose from around 18,000 to over 100,000. Non-agricultural technical and vocational education and training (TVET) enrollments also grew from less than 3,000 students in 1995/96 to an estimated 54,000 in 2002/03, while aggregate enrollments in Grades 1-12 rose at about 9 percent a year between 1992/93 and 2001/02.

2. Despite improvements in the enrollment across the education sector during the decade preceding the preparation of the Post Secondary Education Project (PSEP), significant challenges remained. University and TVET enrollments were only about 0.8 percent and 1.4 percent respectively of the corresponding age cohorts. The upsurge in primary enrollments was already generating pressure for expansion of secondary education. In order to accommodate this growth, post-secondary institutions needed capacity development to produce more teachers, administrators and support staff. Curricula at both university and TVET levels were generally acknowledged to be in need of improvement. Faculty numbers and quality also needed to be enhanced. Performance and accountability measures needed strengthening as well to improve planning and administration of educational services.

3. In 2003/04, the Government issued the “Higher Education Proclamation” that paved the way for granting extensive autonomy to Higher Education Institutions (HEI), strengthening their accountability and enhancing academic freedom. Staff administration, including employment, financial administration and procurement, and establishment of relations with local and international counterparts, were devolved to HEIs.

4. The International Development Association (IDA) was one of the few donors1

to fund higher education through the ESDPs at a significant level. IDA funds had been used to expand university libraries, construct classroom buildings, establish and expand teaching hospitals, and build laboratories for physical science faculties. As important as these investments were, they were insufficient to enable Ethiopia to keep pace with the need for graduates with higher level skills. Government’s planned expansion of TVET involved a ten-fold increase in public TVET over four years at a capital cost of US$210 million for the construction of 71 new TVET facilities and five colleges. It was imperative that an investment of this magnitude produced individuals with skills that are relevant to the labor market.

1 Other donors with significant involvement in higher education were Netherlands and Germany.

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5. The 2003-05 Country Assistance Strategy (CAS) for Ethiopia highlighted human capacity development as one of its two main pillars, the other being good governance. In particular, transforming from a predominantly agrarian economy to one more focused on industry and services. The Higher Education and TVET sub-sectors were to provide the necessary skilled graduates. In addition, one of the cross-cutting themes in the CAS was decentralization. As such, increased autonomy, and accountability to standards within post-secondary institutions were perceived as important areas of focus for future capacity development.

1.2 Original Project Development Objectives (PDO) and Key Indicators

6. The Project Development Objective as stated in the Project Appraisal Document (PAD) is: “The development objective of the project is to increase the human resource development capacity of Ethiopia at the post-secondary education level.” The PDO statement in the Development Credit Agreement (DCA) is consistent with that in the PAD. The key indicators in the PAD are consistent with those in the DCA except for the exclusion of the indicator related to the enrollment in the DCA. The key indicators are as follows:

Within higher education:

1. Percentage of age cohort enrolled in: (a) undergraduate programs; (b) graduate programs; and (c) TVET programs, all disaggregated by gender;

2. Post-graduate enrolment levels disaggregated by gender;

3. Percentage of entering students finishing on time, disaggregated by gender;

4. Number of M.A. and Ph.D. awarded annually, disaggregated by gender;

5. Number of institutional administrators and managers upgraded through training programs and apprenticeships;

6. An estimated 250 comprehensive Innovation Proposals submitted and completed satisfactorily (150 - level 1; and 100 - level 2);

7. Number of faculty/ instructors upgraded through short-term and degree training, disaggregated by gender;

8. Number of accredited programs and institutions;

9. Benchmark policy triggers completed as scheduled; and

10. System Support Units (SSUs) strengthened with 90% of the work defined in Annual Plans completed within Work Plan period.

Within TVET:

1. Twenty course curricula revised and improved;

2. Six regional trade and testing centers established and functioning;

3. 1,250 institution and department level administrators upgraded through short-term and degree training;

4. Twenty-five short-term courses/workshops offered;

5. Trade certification standards established in five technical fields;

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6. Seven tracer studies and labor market assessments conducted;

7. Equipment at TVET teacher training centers upgraded;

8. 150 teachers and experts trained at M.A./M.Sc. level (80% male and 20% female); and

9. 100 teachers and experts trained at advanced diploma level (80% male and 20% female).

1.3 Revised PDO and Key Indicators, and reasons/justification

7. At the request of the GOE, the PSEP’s DCA was amended on December 12, 2008, in conjunction with overall portfolio restructuring to redeploy resources from unsatisfactory projects to the Global Food Crisis Response Project. The PDO was not revised. The amended DCA reflects: (a) cancelling the TVET Innovation Program component because very little implementation progress had been reported since the start of the Project; (b) reducing the scope of the University Component by cancelling some IDG and DIF sub-projects which were stalled or had not yet started; (c) updating key indicators for the University Education component; and (d) modifying the Project’s institutional arrangements based on the new structure established after the Project became effective. The updated performance indicators, as reflected in the DCA Amendment of December 2008, were as follows:

1. Number of pre-accredited and accredited institutions and programs;

2. Number of comprehensive DIF proposals submitted and successfully implemented, disaggregated by level;

3. Number of Master’s and Doctoral degrees awarded annually, by gender;

4. Number of faculty/ instructors upgraded through short-term and degree training by gender;

5. Number of university administrators and managers upgraded through short-term and degree training by gender, with project funds;

6. Percentage of entering undergraduate students finishing on time, disaggregated by gender;

7. Completion of draft Strategic Plan for System Support Units (SSU);

8. Completion of Strategic Development Plan for the participating universities;

9. Application of cost sharing (graduate tax) to students entering undergraduate class;

10. Review/revision of system of the block grants; and

11. Implementation of Institutional Accreditation System.

8. The main changes in the updated indicators were as follows: (a) the indicator related to enrolments were deleted, as the project would not meaningfully influence the change in enrolments; (b) monitoring of students completing courses on time extended to undergraduate programs only; (c) addition of the number of pre-accredited programs and institutions; and (d) streamlining of the definition of benchmark policy triggers.

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1.4 Main Beneficiaries

9. The Project was to benefit the following groups under the University Education component: (a) students, faculty, and administrators and managers at nine public universities- Addis Ababa, Haramaya (formerly Alemaya), Arba Minch, Bahir Dar, Gondar, Hawassa (formerly Debub), Jimma, Makele and Adama (formerly Nazareth College of Technical Teacher Education); (b) three newly established SSUs - the Higher Education Strategy Center (HESC, formerly the Ethiopian Higher Education Strategy Institute), Higher Education Quality and Relevance Assurance Agency (HERQA, formerly the Quality and Relevance Assurance Agency) and National Pedagogical Resources Center (NPRC); and (c) higher education functions within the MOE. Under the TVET component, which was cancelled during the project restructuring, the following groups were to benefit: (a) students, teachers and managers of public TVET institutions; and (b) TVET functions within the MOE and regional offices.

1.5 Original Components:

10. Component 1: University Education (US$35 million). This component comprised of three sub-components:

(a) Institutional Development Grants (US$16 million). This subcomponent supported basic capital expenses of eligible institutions to supplement the Government’s financing to universities. The PSEP would provide annual allocations of US$4 million beginning from 2004, with each allocation triggered by policy benchmarks (DCA, Schedule 4, section 7b; and Annex 6 PAD) derived from the Higher Education Proclamation. The IDG-linked policy triggers were: (i) commencing from FY2004/05, establish a graduate tax to entering undergraduate students; (ii) appoint the DIF Area Review Panels during 2004/05; (iii) during FY2005/06, approve and implement formula for determining block grants for each university; (iv) during FY2006/07, implement the institutional accreditation system; (v) during FY2007/08, review the cost-sharing scheme and the block grant formula; and (vi) have the inter and intra university education information system and financial management reporting systems operational in FY2007/08. The investment list includes: staff development, management training, pedagogical materials, library holdings, instructional equipment, technical assistance, visiting lecturers, and information and communications technology.

(b) Higher Education System Support Units (US$4 million). This subcomponent supported the HESC, HERQA, the NPRC and the MOE for capital expenses, research, seminars, publications, and technical assistance. The objectives of the SSUs were to: (a) facilitate decentralization of university management; (b) improve institutional finance mechanisms; (c) increase institutional autonomy and foster the development of a valid accreditation and accountability system; and (d) improve access to and use of instructional resources.

(c) Development Innovation Fund (US$15 million). This subcomponent was designed as a flexible mechanism to stimulate innovation, promote modernization and reward quality-enhancing effort within universities. The

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DIF included three windows through which proposals were submitted: (i) Window I (US$7.5 million) for undergraduate program proposals; (ii) Window II (US$4.5 million) for post-graduate program proposals; and (iii) Window III (US$3.0 million) for institutional leadership and management proposals. Eligible inputs included graduate training, short-term training, distance education, technical assistance, staff exchanges, visiting professors, teaching equipment, textbooks, scientific journals, research activities, computers, seminars, and institutional linkages.

11. Component 2: TVET Innovation Program (US$4 million). This component comprised of the following three subcomponents:

(a) Professional and Skill Development (US$3 million). This subcomponent aimed to support a professional and skill development program that consisted of: (i) in-country Master’s degree level training in high priority skill areas; (ii) advanced diploma programs (one-year overseas study and training); and (iii) short-term in-country training in the form of workshops and seminars.

(b) Monitoring, Evaluation and Research (US$375,000). This subcomponent aimed to support MOE and regional offices to undertake studies in particular occupational areas to define training needs, shape curricula with more accuracy and quality, develop and field test new curricula and assessment methodologies, and to validate testing and certification procedures.

(c) New Program Development (US$425,000). This subcomponent planned to: (i) enable the MOE, regional offices and TVET institutions to design and test new instructional programs; (ii) develop training curricula for new areas of post graduate studies to build the capacity of TVET personnel at policy and implementation levels; and (iii) revise the existing middle level training curricula to incorporate new service standards and accreditation requirements and to ensure that they are compliant with certification norms and expectations for learning outcomes.

1.6 Revised Components

12. TVET Innovation Program component was eliminated from the Project in December 2008 in course of the project restructuring. And the following changes were made in the University Education component: (a) dropping the trigger of implementing block grant funding of universities from the IDG subcomponent. The allocation for this component was reduced from SDR10.94 million (equivalent to US$16 million) to SDR5.17 million (equivalent to US$8.3 million) due to the slow progress; and (b) the DIF allocation was decreased from SDR10.30 million (equivalent to US$15 million) to SDR9.57 million (equivalent to US$15.40 million), and 32 DIF projects that were not making satisfactory progress were cancelled.

1.7 Other Significant Changes

13. After the project restructuring in December 2008, the MOE Higher Education Projects Coordination Office (HEPCO) assumed greater responsibility for project

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implementation taking over some responsibilities from the MOE Planning and Programming Department (PPD).

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry

14. Soundness of the background analysis. The preparation of the project was backed by a solid analytical work. Nevertheless the project preparation Team did not succeed in clearly identifying key sector issues and then chose the issues to be addressed by the project. This is reflected in the formulation of a vague PDO. Bulk of the project funds were allocated to IDG, which implies that supporting reforms was one of the major objectives of the project. Among IDG triggers are the following three triggers related with major reforms: implementation of cost sharing, accreditation system and block grant financing. The PAD contains only sketchy details about these reforms. It does not make a distinction between pre-accreditation and accreditation though the former was already in practice for private institutions before the project. Similarly, it does not discuss the distinction between private and public institutions in terms of accreditation.

15. The following conclusions were drawn from a review and analysis of lessons learned from previous Bank-financed tertiary education projects to inform the design of the project: (a) consultation with institutions and stakeholders is essential for effective project design and implementation; (b) incentives generate more significant and lasting reforms than do conditionalities; (c) universities are generally stronger, better endowed and more capable than other public sector institutions; (d) apply lessons learned from social investment funds in other countries (on which DIF is patterned); (e) project objectives need to be scaled to take into account local implementation capacity; and (f) TVET training works best when it is competitive, flexible and adjustable to changing output requirements. But the design has not fully used these lessons. Particularly, the project objectives did not correspond to the local implementation capacity.

16. Assessment of the project design. The PDO was not specific enough to guide the project design including the formulation of the results framework. Though cost sharing was one of the three reforms supported by the project, the results framework did not contain any indicator that monitors the progress in this area. There are some differences between the key performance and outcome indicator framework in the main text and Annex 3 of the PAD. Annex 3 identifies twelve conditions for release of IDG, but these are not discussed adequately in the PAD. There was also confusion between the PDO, indicators and activities.

17. The design team may not have fully used the lessons drawn from the international experience. For example, assigning a substantial role in DIF coordination to the PPD was not compatible with the lesson that universities are generally stronger, better endowed and more capable than other public sector institutions. Similarly, the assumption that the project employing innovative funding modalities like DIF could be completed in four years in spite of the low implementation capacity may not be compatible with the lesson that project objectives need to be scaled to take into account the local implementation capacity.

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18. The original design of the project envisaged financing of US$60 million, which was reduced to US$40 million, just before the negotiations. Apparently because of the reduction in the amount of the Credit, the duration of the project was reduced from five years to four years. Given the project was aimed at changing the culture of universities, the original duration of five years would have been more appropriate. It also appears that retaining TVET component in spite of the significant reduction in financing may not have been a good choice.

19. While IDG resources were used to fund development activities identified at the institutional level, the DIF resources were used for activities identified at individual or group levels. The PAD does not discuss if the activities identified at individual or group levels would result in institutional transformation. During the implementation it became evident that in a number of cases individual initiatives did not become shared initiatives and DIF projects had to be discontinued after the team leader abandoned the project.

20. The absorption capacity of universities, in terms of the use of IDG and DIF, were very different, and it depended on their initiative and commitment. While some universities were able to fully use these funds, others struggled to use it. The project did not envisage allocating more funds to those universities which had higher absorption capacity. This was one of the reasons for the slow disbursement.

21. In retrospect it is clear that the inappropriate implementation arrangement is one of the main reasons behind the unsatisfactory outcome of the project. The project employed an implementation arrangement led by the PPD of MOE in spite of the fact that the project team did not think it was the right approach. This was the outcome of the project negotiations, which could have been avoided.

22. Assessment of Risks. The PAD identified three critical risks: (a) multiple concurrent executions of education projects could lead to implementation delays; (b) introduction of unfamiliar funding mechanisms through the DIF could require considerable training and leadership; and (c) institutional weaknesses in procurement capacity. However, mitigation measures and risk levels were not discussed. Thus it is not clear whether the project design incorporated counter-measures. Other essential risks that were not indentified were: (a) insufficient project management and administration capacity within the MOE and its institutions, combined with high staff turnover; (b) the lack of integration of PSEP activities with existing institutional systems, thus remaining tangential to mainstreamed programs and activities; and (c) lack of staff incentives for MOE and participating universities.

2.2 Implementation

23. Soon after the effectiveness of the project, the State Minister for Higher Education, who was actively involved in the design of the project, was replaced. In addition, there was a significant change in the staffing of the MOE. Because of the learning curve needed for the new team as well as changed priorities, the project implementation was affected seriously. The new team was keen to support new universities, established after the start of the project. The project was not able to come to an amicable solution with respect to this priority of the new team, and as a result the MOE ownership of the project was compromised.

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24. The poor ownership of the project by the Government persisted almost to the end of the project. Although the problems with the implementation arrangements were clearly evident, the project team proved to be helpless to address these problems throughout the project.

25. Although the DCA envisaged a Mid-Term Review (MTR) in March 2006, it took place only in December 2006. The MTR did not, in any appreciable way, address the problems being faced by the project. Restructuring of the project, which was long overdue, started in June 2008 and was completed in December 2008; about eight months before the Closing Date. The key outcomes of the restructuring were the cancellation of US$15 million, dropping of the TVET component, revision of the key performance indicators, and assignment of a greater role in project implementation to HEPCO - away from PPD. The restructuring was too late to have a meaningful impact on the project implementation.

26. The delays in establishment of SSUs played a detrimental role in project implementation. Similarly, reluctance to grant due autonomy to SSUs, at the initial stage, also hampered project implementation.

27. Staff involved in implementation of the project expected additional incentives since the project activities, particularly DIF, were not perceived as a part of their regular job. High staff turnover, together with the dissatisfaction due to the lack of additional incentives, hampered project implementation.

28. “Quality Assessment of Lending Portfolio (QALP)” conducted in November 2008 concluded that achievement of the PDO was Unlikely.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization

29. The design of monitoring and evaluation system was not satisfactory, and the PAD did not contain baseline values for the indicators. As the PDO was defined in a vague way, it is not possible to assess the adequacy of the indicators based on the PDO. The adequacy of indicators has been assessed here based on the components. Implementation of the block grants funding to universities and cost sharing (graduate tax) were two of the three major reforms agendas of the project. Yet there are no indicators associated with the progress in these areas.

30. Incentives for accreditation are different for public and privates HEIs. It would have been better if the indicator for accreditation was segregated by private and public HEIs. During the restructuring, an indicator for pre-accreditation was added. This addition does not seem to have value added, as all private HEIs have to get permission for their operation, which essentially is the pre-accreditation. The project could have benefitted significantly if the impact of accreditation was assessed.

31. IDG and DIF were the main interventions of the project, that were aimed at improving quality and relevance of higher education. There were no indicators that could have adequately captured the impact of these objectives. It would have been useful to assess the impact of these interventions.

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32. Meaningful monitoring of the performance indicators did not take place. Towards the end of the project the indicators were revised and baseline established. The indicators were updated during the preparation of the MOE Project Completion Report.

2.4 Safeguard and Fiduciary Compliance

33. Safeguards. The project was classified as category C for the purposes of environmental assessment. The PSEP’s physical works, which were minor, did not include any resettlement or environmental disruption, nor construction or rehabilitation of buildings. All project supported activities took place on land already reserved for the universities.

34. Fiduciary Compliance. Although in compliance with the Bank’s fiduciary requirements, submission of consolidated Financial Monitoring Reports (FMRs) acceptable to the Bank was required under the legal covenants of the DCA, quarterly reports and FMRs were not submitted on a regular and timely basis throughout the life of the project. During appraisal, the Financial Management (FM) risk was assessed to be “Substantial.” The MOE submitted its first comprehensive FMR in December 2008. The PSEP suffered from data discrepancy and incompleteness due to the lack of information from some participating universities. In general, the quality of most FMRs was relatively poor and at times the Bank was forced to reject some reports. At the close of the project, the overall project risk was rated to be Substantial and the FM was rated Moderately Unsatisfactory. Reasons for these ratings were: (a) delays and poor quality of FMRs; (b) lack of adequate internal audit oversight; (c) low level of disbursements and instances of ineligible expenditures; (d) weaknesses in budget monitoring; and (e) delays in audit reporting.

35. Procurement. Overall monitoring of procurement and reporting was the responsibility of the MOE. However, the MOE could not provide sufficient and regular support to the participating universities. It also failed to hire consultants to provide these services. An international procurement consultant was contracted, but left too early to have provided adequate technical support. A procurement capacity-building workshop was organized during the first year of the implementation, but it was not repeated to address the high staff turnover. The Bank’s procurement support was also inadequate, notably during the early stages of the project implementation.

2.5 Post-completion Operation/Next Phase

36. No follow-on project has been identified, though higher education would require further support for enhancing its quality, relevance and financial sustainability. Reforms supported by the project – cost sharing and accreditation – are likely to continue, and there is little risk that physical and human assets created by the project will not be sustained.

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3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation

37. The PDO was linked to the CAS which supported Ethiopia’s ESDP III. The PDO remains relevant for poverty reduction through economic growth. Improving the quality of the labor force is seen as one of the keys to raising employment opportunities for Ethiopia’s young population by enhancing quality of education and skills. Improving linkages between the education and training system and the regional labor market is the main priority of Bank support. The PSEP design was certainly relevant to the government’s sector plan because it aimed to bring about institutional reform, promote innovation, and build capacity at the MOE and decentralized (university) levels. The project rightly aimed to create incentives and accountability mechanisms that would encourage faculty and administrators to focus on quality, efficiency and relevance.

3.2 Achievement of Project Development Objectives

38. Based on the description in Annex 4 of the PAD, the PDO of improving human resource development capacity at the post-secondary level may be interpreted as expansion of enrolment and quality enhancement. The indicator related to enrolment expansion was dropped during the restructuring of the project. Therefore, the achievement of PDO will be assessed based on the objective of enhancing quality. Annex 4 further elaborates the PDO by stating that the three guiding objectives for the higher education objectives are: boosting educational quality and relevance; supplementing the government’s budget for higher education till revenues from the graduate tax are colleted; and encouraging innovation and modernization of teaching and learning.

39. The project employed twin strategies for enhancement of the quality of higher education. First, rewarding the sector for undertaking reforms aimed at improving quality through IDG, and second, providing incentives for innovation through DIF. Accreditation and graduate tax were two key reforms rewarded by the project. HERQA, one of the SSUs supported by the project, has been conducting quality audits fairly well on a sustained basis. This audit established the culture of exposing HEIs, particularly public ones, to public scrutiny by disclosing audit reports. This is an important outcome resulting from the project. The target for number of pre-accredited and accredited institutions/programs was however not achieved.

40. The ICR team was informed that the MOE had conducted a review of the graduate tax, but it did not make the report available to IDA. The information received on the status of the collection of the graduate tax was contradictory. Though implementation of the graduate tax is an important step in terms of the introduction of cost sharing in higher education, MOE has not been meaningfully monitoring the progress in the implementation of the graduate tax.

41. The project had limited success in terms of supplementing the government resources during the period of massive expansion of higher education on the following counts: (a) the bulk of project resources available for the sector was not used; and (b) there is no basis to support the assumption that the revenues from the graduate tax will meaningfully substitute for the project resources once they start to be collected.

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42. Though little over 70% of the planned DIF proposals were implemented, it nurtured faculty level initiatives to improve quality of education. The Borrower’ Project Completion Report contains a number of success stories which clearly indicates that faculty initiatives mattered for improvement of universities. The shift from the culture of top down initiative to the culture of bottom up initiative, however small it may be, is an important outcome of the project that is likely to have lasting impact.

43. Summary of Borrower’s Project Completion Report (Annex 7) presents a full list of project achievements that should contribute to enhancing quality of education. In spite of all the odds, the project seems to have made significant contribution in strengthening higher education. Some of the major contributions are as follows:

• The entire range of their curricula, except in law and engineering, was revised.

• Forty nine new postgraduate and undergraduate programs were developed and implemented.

• One hundred ten laboratories, demonstration and experiment sites etc. were developed to improve the teaching-learning process.

• The project financed 350 research projects.

• Hundred and ninety faculty upgraded their qualifications to M.Sc./M.A. (142) and Ph.D (48).

3.3 Efficiency

44. The financial analysis, in PAD, showed an IRR of 14% for the project, because it was assumed that innovations financed by the project would result in cost savings. Financial analysis was not conducted as a part of the ICR, as it was not possible to calculate the cost savings directly attributable to the project.

3.4 Justification of Overall Outcome Rating

Rating: Moderately Unsatisfactory

45. The overall outcome has been rated as Moderately Unsatisfactory, as there are significant shortcomings in the achievements of development objectives. These shortcomings are as follows:

• The project succeeded in strengthening the quality assurance and accreditation system established just before the project by enabling it to conduct quality audits of a large number of private and public HEIs. But, HERQA significantly fell short of meeting the target for accreditation and pre-accreditation. In addition, instead of accrediting institutions/programs, it audited them.

• The implementation of the graduate tax started prior to the start of the project. Therefore, graduate tax cannot be attributed to the project outcome. The project did not succeed in monitoring the progress of the graduate tax.

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• A substantial part of the allocated funds for IDG and DIF could not be used. The impact of IDG and DIF was not accessed.

46. The Borrowers assessment for the achievement of the project outcomes is “Remarkably Satisfactory”

2

. This disconnect may be explained by the fact that while the Borrower has assessed the outcome in terms of the value of the money spent, whereas the Bank in terms of the achievement of the PDO.

3.5 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development

47. Although it is difficult to assess the broader contributions of the PSEP to the narrowing of the gender gap in the Ethiopian higher education, female-targeted projects were implemented by three of the nine participating universities. Approximately 50 female students who could not have had the opportunity to attend postgraduate programs were sponsored under the project (Haramaya -30, Hawassa -19 and Gonder - 1).

(b) Institutional Change/Strengthening

48. The higher education sector was set for a change following the Higher Education Proclamation in 2003. One of the main objectives of the Proclamation was institutional strengthening. The project helped HERQA develop quality assurance and accreditation system, and the universities to engage in quality audit and strategic planning.

(c) Other Unintended Outcomes and Impacts (positive or negative)

49. No significant unintended outcomes observed.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops

NA

4. Assessment of Risk to Development Outcome

Risk Rating: Moderate

50. The overall risk to sustaining the development outcome is rated as Moderate. The reversal of the major reforms supported by the project – graduate tax and accreditation – is unlikely. The institutional strengthening and quality enhancement gained through strategic planning, accreditation and DIF initiatives are unlikely to be lost. But the government may not be able to find resources for continuing IDG and DIF activities.

2 Refer to Annex 7.

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5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry


51. The Bank’s performance in ensuring quality at entry is rated Moderately Unsatisfactory. In retrospect the PDO was vaguely stated and overambitious. Indicators were inadequate to monitor achievement of PDO, and the baseline was not established at the beginning of the project. Lessons drawn were not fully utilized in the project design. There is no evidence that there was adequate preparation to support the key reforms: graduate tax, accreditation and block grants. The preparation team underestimated the challenges in project implementation.

52. A “Quality at Entry Assessment (QAE7)” was conducted by the QAG in July 2005. It rated the overall “Quality at Entry” as Satisfactory (except strategic relevance and implementation arrangements, which were rated Moderately Satisfactory). Bank inputs and processes were also rated Moderately Satisfactory. The Panel noted that the PAD did not do justice to the high quality of the PSEP design and background work. It also found the PDO “too broad” and its “intent not specified enough” by the indicators. The Operations Manual for the DIF was judged "best practice". The QEA7 panel also advised to clarify issues surrounding the Government’s capacity to implement the IDG and DIF sub-components.

(b) Quality of Supervision


53. Project supervision by the Bank team was rated Moderately Unsatisfactory. Supervision missions were conducted on a regular basis and Project Implementation Status Reports (ISRs) were regularly updated. The Bank’s Task Team did provide satisfactory strategic support by bringing international experts (in the areas of higher education reform, accreditation, labor market issues, and project management) to work with MOE. Initial Aide-Memoires indicate that procurement and financial management support provided by the Bank was unsatisfactory. Improved support to strengthen procurement and FM capacity was provided only after project restructuring towards the flag end of the project. Though implementation problems were evident since the start of the project, the Task Team was not able to take timely corrective actions. The MTR was delayed by about nine months, and when it took place, fell short of taking adequate measures to improve the implementation. The restructuring, completed nine months before closure, clearly could not have succeeded in turning the project around.

(c) Justification of Rating for Overall Bank Performance


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54. The rating for overall Bank performance is Moderately Unsatisfactory. The Bank should have insisted during project preparation and supervision that: (a) more detailed work- and action plans needed to be developed; (b) an adequate monitoring and evaluation of performance framework should have been in place early on; (b) more intensive capacity-building technical assistance support should have been insisted upon during the first year of implementation; and (d) a more thorough mitigation of risks (both identified and those emerging during implementation) should have been undertaken. During the MTR, the Bank should have insisted on a major restructuring of the project.

5.2 Borrower Performance

(a) Government Performance

NA

Rating:

(b) Implementing Agency Performance

NA

Rating:

(c) Justification of Rating for Overall Borrower Performance


55. In this case the Borrower performance is indistinguishable from the implementing agency performance. Therefore, only overall Borrower performance is assessed. Overall Borrower rating is Moderately Unsatisfactory. A major mistake was made when the capacity of PPD was overestimated and it was assigned the key role for implementation of the project. Further, the Government did not succeed in strengthening the capacity of PPD. The difficulty in communication between the PPD and universities was apparent from the beginning, and it persisted till the end of the project. The Government was not able to take an action to address this problem even when it was clear that this problem will have a detrimental effect in the project implementation. The project appeared abandoned, and it remained with this impression till the Closing Date.

6. Lessons Learned

56. Compromise should not be made on major issues. The Bank team envisaged assigning some key responsibilities for implementation of DIF to Ethiopian Institute for Higher Education Strategy (renamed later as the Higher Education Strategy Center). But MOE preferred PPD-based implementation of the project. Like-wise, the Bank team was not able to convince the MOE about the need for establishment of a DIF Coordination Unit, manned by experts within the PPD. During the negotiations, though the Bank team was not convinced, it agreed to PPD-based implementation. This proved to be a fatal mistake for the project.

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57. Universities do not like to be guided. Throughout the project period universities failed to provide reports to MOE on time. Universities enjoy significant autonomy worldwide. Universities, as a rule, resent frequent reporting to ministry officials on their activities. They prefer to be monitored on the basis of key outcomes rather than on details. The design of the project entailed building a supervisor-sub-ordinate relationship between the PPD and universities, which did not work.

58. Projects should respond to changes in Borrower’s priorities during the implementation. While PSEP was primarily targeted at enhancing the quality of education at the existing universities, soon after the beginning of the project, the GOE embarked on a massive expansion of the higher education sector. The failure of the project in responding to the changed priority resulted in the loss of the Borrower’s ownership, and as a consequence, unsatisfactory project outcomes. Had the project been able to respond to the changed priority, the outcomes of the project could have been better.

59. Projects promoting innovations and initiative of beneficiaries would be more successful if the allocations to beneficiaries are linked to their performance. The project did not allocate funds for predefined activities of universities but it allowed them to use predetermined IDG and DIF resources as per their own choice. As such the absorption capacity of universities was contingent upon their initative, commitment and capacity. As the initiative, commitment and capacity of universities differed, allocation of predefined resources to universities led to underutilization of funds in some universities and unmet demands in others. 61. The importance of project readiness should not be overlooked. PSEP is an innovative project, different from a traditional brick and mortar type. Such projects require a lot more preparation by virtue of the fact that the Bank does not have enough experience in such operations, and that deeper local knowledge is critical for such projects.

60. Project ambitions need to match with local constraints. There is nothing wrong in setting ambitious goals. But it is important to acknowledge that always there will be some binding constraints. Staff turn-over due to poor incentives or political interference, poor monitoring due to low per diems, and reluctance to use technical assistance are some of them. Given that most of these constraints have remained unaddressed or addressed marginally at the best across the portfolio for a long time, project designs need to be robust enough to operate under such constraints. The issue here is about acknowledging that the pace of development depends upon the local culture and capabilities.

61. Project aimed at transformational changes should be developed with extensive stakeholder participation. The introduction of formula-based block grant funding for universities was a radical reform to be supported by the project. Such a radical reform is difficult to force through without a broad stakeholder buy-in. The consultations that took place during the preparation of the project, in the form of a couple of meetings with the management of the university, did not prove to be enough for ensuring this buy-in. As a consequence, the IDG trigger of the implementation of block grant funding had to be dropped. If projects are to succeed in supporting the implementation of radical reforms, the project preparation should be backed by a sustained dialogue on reforms led by

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nationals of the country. This would be accomplished best when there are committed country staff and a country-based TTL.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners

(a) Borrower/implementing agencies

NA.

(b) Cofinanciers

NA.

(c) Other partners and stakeholders

NA.

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Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent)

Components Appraisal Estimate (USD millions)

Actual/Latest Estimate (USD

millions)

Percentage of Appraisal

1. U C 35.20 22.69 64.5

1.1. IDG 16.00 9.93 62.1

1.2. SSU 4.20 1.18 28.1

1.3. DIF 15.00 11.58 77.2

2. TVET C 4.30 0.00 0.0

3. U 1.00 0.00 0.0

Total Baseline Cost 40.50 22.69 56.0 Physical Contingencies 0.00 0.00 Price Contingencies 0.00 0.00

Total Project Costs 40.50 22.69 56.0 Front-end fee PPF 0.00 0.00 Front-end fee IBRD 0.00 0.00

Total Financing Required 40.50 22.69 56.0

(b) Financing

Source of Funds Type of Cofinancing

Appraisal Estimate

(USD millions)

Actual/Latest Estimate

(USD millions)

Percentage of Appraisal

Borrower 0.50 0.00 0.0 International Development Association (IDA)

40.00 22.69 56.0

Note: The total actual amount is a historically disbursed amount, and other actual amounts are prorated values. The actual total may not match with the amount in the datasheet, which is USD equivalent of the SDR amount for the applicable date of conversion from SDR to USD.

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Annex 2. Outputs by Component

The PAD does not contain a table on project outputs. The following table has been compiled identifying the key outputs of the project.

Component 1. University Education

Activity Target after restructuring

Achievement Original target

Remarks

Sub-component 1.1: Institutional Development Grants

Number of universities accessing IDG

9 9 9

Number of IDG awards 27 22 22

Allocation for IDG, SDR Million

5.17 5.83 10.94

Number institutions accredited (private)

31 (335) 40 Figures under the parentheses are from the Borrower’s Project Completion Report

Number of master’s degree programs accredited (private)

90 (921) 120

Number of MA supported for faculty/instructors

116 (104 partially financed)

Number of Ph.D. supported for faculty/instructors

48 (39 partially financed)

298

Number of short term training for faculty/instructors

556 1139

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Number of long term training for administrators/managers

117 298

Number of short term training for administrators/managers

554 452

Sub-component 1.2: System Support Units

Number of SSUs established

3 3 3

Sub-component 1.3: Development Innovation Fund

Allocation for DIF, SDR Million

9.57 5.88 10.30

Number of DIF projects successfully completed

227 187 250

Number of new programs started

Undergraduate – 18

Post-graduate – 22

Distance education - 22

Number of new curriculum developed

72

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Annex 3. Economic and Financial Analysis N/A. Economic and financial analysis not conducted as the benefit stream is hard to quantify with meaningful accuracy.

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Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

Names Title Unit Responsibility/ Specialty

Lending Luis A. Crouch Consultant LCSHS Getahun Gebru Sr. Operations Officer AFTED Samuel Haile Selassie Sr. Procurement Specialist EAPPR Southsavy V. Nakhavanit Temporary AFTSP Abdolreza B. Rezaian Sr. Energy Specialist AFTEG William Saint Consultant HDNEDGary L. Theisen Sr. Education Specialist AFTH3 Eshetu Yimer Sr. Financial Management Specialist AFTFM

Supervision/ICR Tafesse Freminatos Abrham Financial Management Specialist AFTFMTesfaye Ayele Procurement Specialist AFTPCAbiy Demissie Belay Financial Management Analyst AFTFMMarylou R. Bradley Senior Operations Officer AFTSP Halil Dundar Sr. Education Economist AFTEDGetahun Gebru Sr. Operations Officer AFTEDFekerte Getachew Program Assistant SARSQSamuel Haile Selassie Senior Procurement Specialist EAPPRJames Keith Hinchliffe Lead Education Economist AFTH3Deborah Newitter Mikesell Senior Operations Officer AFTEDJ. Roger Pearson Consultant MNSHDWilliam Saint Consultant HDNEDMulat Negash Tegegn Consultant AFTFMAbiy Admassu Temechew Procurement Analyst AFTPCGirma Woldetsadik E T Consultant AFTEDShimeles Worku Sr. Consultant AFTEDEshetu Yimer Sr.Financial Management SpecialistAFTFM

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(b) Staff Time and Cost Staff Time and Cost (Bank Budget Only)

Stage of Project Cycle No. of staff weeks USD Thousands (including

travel and consultant costs)Lending

FY03 12 109.04 FY04 51 239.60 FY05 41 120.93

Total: 104 469.57 Supervision/ICR

FY05 24 141.17 FY06 80 242.95 FY07 55 218.63 FY08 46 162.79 FY09 26 0.00

Total: 231 765.54

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Annex 5. Beneficiary Survey Results

NA.

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Annex 6. Stakeholder Workshop Report and Results NA.

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Annex 7. Summary of Borrower’s ICR and/or Comments on Draft ICR

Summary of Project Completion Report (PCR)

Introduction

1. Ethiopia continues to make strenuous efforts to achieve fast-track comprehensive development to overcome poverty and achieve a lower-middle income status. Expanding the access to good quality higher education and building an outcome-based system of skills formation to contribute directly to social and economic growth are among the key development efforts. The PSEP was aimed at supporting this specific Ethiopian effort. Project design took place during 2003-04 and its implementation began in April 2005. This report summarizes the achievements, challenges and the basic lessons of the project.

• Project Negotiations: May 2004 • Board Approval: July 2004 • Project Signing: January 2005 • Date of Effectiveness: April, 2005 • Disbursement Conditions met: April 2006 • Mid-Term Review: December 1-16, 2006 • Completion of Project Restructuring December 12, 2008 • Project End: March 1, 2009 • Project Closing: September 1, 2009 • End of Grace Period December 31, 2009

Project Development Objective

2. The Project Development Objective (PDO) was “To improve human development capacity at the post-secondary education level in Ethiopia.”

Project Description

3. The project was an IDA/WB Specific Investment Loan financed by a Credit of SDR 27.4 million, USD$40 million equivalent at the time of Board approval. Restructuring of the project reduced the Credit to SDR 17.9 million (US$25 million equivalent). The project components consisted of university education and TVET. Restructuring resulted in the cancellation of SDR 9.5 million (US$15 million equivalent) including the TVET component.

4. The university component, aimed at improving human resource capacity of undergraduate and graduate education, and comprised three sub-components: Institutional Development Grants, Development Innovation Fund and System Support Units and MOE. The original allocation of the Credit among the three subcomponents amounted to US$16 million for DIF, US$15 million for IDG, and US$ 4 million for SSUs and MOE.

5. The IDG and SSU approach allowed a more flexible use of funds, while the DIF earmarked budget would be committed to individual DIF proposals, passing through

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proposal appraisals, endorsement and approvals within the universities and at the level of the Ministry as well as finally a No-Objection from the Bank. Both IDG and DIF were awarded in three rounds. The SSUs and MOE were funded with block grants on presentation of the operational plans with budgets for each budget year.

Project Design

6. The Project design covered 13 entities: nine universities, three support units and MOE. The nine universities were to use the IDG and DIF funds, close to 89% of the original Credit.

7. The project design also provided for structures, procedures and policy triggers (conditionality) for the universities to tap the funds. The DCA required development of institutional strategic plans and annual work plans as benchmarks to access IDG funds. The universities had to submit SOEs both to account for the use of the grant and replenishment of funds. It also required the SSUs and MOE to submit detailed operational plans as part of the overall annual work plans.

8. DIF proposals had to pass through hierarchies of appraisals and approvals in each university and at the level of the Ministry: campus based Proposal Review Committee (PRC), Area Review Committee (ARC) and the DIF Oversight Committee. The PRC evaluated Level 1 proposals (with budget of up to US$20,000) and forwarded endorsed proposals to the academic vice president. ARC reviewed Level 2 proposals (budget range of USS$20,000 to 150,000) and submitted endorsed proposals to the designated academic officer. The DOC ensured the appropriateness of proposals in view of the objectives of higher education.

9. The DIF consisted of three “windows”, namely, undergraduate programs, graduate programs and institutional leadership and management. Financial resources for the windows were conceived to be 50%, 30%, and 20% respectively. In practice, this was too difficult to respect.

10. The academic vice presidents had to coordinate and lead the project at the universities. Directors/deputy directors of SSUs had similar responsibilities. The Ministry had to coordinate the whole project as well as use the funds allocated to it. This meant essentially that it had to manage flow of information and flow funds, interceding for the project, the implementers and the Bank.

Implementation: Major Achievements and Challenges

11. In three rounds, 27 IDG and 259 DIF awards were made. DIF funded awards based on the funding window consisted of the following: 73% supported innovation in undergraduate programs, 20% focused on postgraduate programs and only 7% for leadership and management. In terms of academic disciplines, agriculture took the major share (31%), followed by engineering and technology (18%), humanities and social sciences (17%), natural sciences and mathematics (15%), and health sciences (12%). The restructuring of the project affected 32 DIF projects fully and 34 partially. Affected IDG projects were 3 fully and 11 partially. The MOE itself cancelled 4 activities from its annual work plan of 2008/09.

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12. The major achievements of the project included human resource development, physical capacity building, curriculum development and opening of new academic programs, and others. The following summarizes the achievements:

x A total of 190 Academics upgraded their qualifications to M.Sc./M.A. (142) and Ph.D. (48);

x More than 180 Academics and professionals took educational tours in Africa, Asia, and some western countries. The tours were aimed a at benchmarking for institutional transformation, to acquire leadership and management experience and to improve the quality of the teaching-learning process. Some 310 Academics and a large number of students similarly visited industries, universities, various organizations, and hospitals within Ethiopia;

x About 2,800 Academics and other staff also benefited from a number of capacity building trainings largely in Ethiopia and some abroad;

x The Project helped the universities to strengthen their physical facilities, and focus on their core mission;

x The universities reviewed and redeveloped virtually the entire range of their curricula, except in law and engineering, which were funded from other sources. Over 1,700 Academics participated in curricula review and redevelopment of 72 fields of study. Through the process, the universities have opened at least 49 new postgraduate and undergraduate programs. They also developed educational materials and procured books;

x The universities established some 110 laboratories, centers, demonstration and experiment sites, etc. to improve the teaching-learning process, for research undertakings and community services;

x The universities undertook about 350 research initiatives; and

x The Project enabled the university leaders to benefit from capacity building to implement institutional transformation through regular interactions among themselves and with MOE and one of the SSUs.

The Challenges

13. Evidently, the project design conceptually predicated the success of the project on the efficiency of our universities, and ultimately on the ability of the academic vice presidents to coordinate implementation. At the same time, it depended on the ability of the MOE and SSUs. Secondly, the project’s procedures were premised on effective institutions, that is, as effective as the stringent procedural requirements of the Bank expressed in the DCA. It also assumed stable leaderships of the universities. On the contrary, our universities required fundamental reforms (institutional transformation) before they could digest an infusion of funds such as the project funds. Thirdly, the project design was new to the implementers and therefore required a learning curve of its own even under the best of institutional circumstance. There was no provision for piloting before embarking on full-scale implementation. Although not necessarily the PDO per se, certainly the project design (architecture, scope, procedures, approach and

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duration) was incompatible with the institutional realities of the universities and the MOE. These fundamentally conspired against successful implementation.

14. The fundamental challenge being as it is, it is also right to consider the following specific challenges that constrained implementation:

(a) Turnover of staff in the universities disrupted project implementation, both the process of project internalization and actual performance. Six of the nine universities experienced changes of their academic vice presidents during the project period. There were turnovers of PSEP coordinators, resulting in inconsistent direction, handover problems, reporting failures and breakdowns in communication. There was also staff turnover on the Bank’s side, making it hard for the new comer to appreciate the difficult context of the project implementation.

(b) Project financial management and reporting at the universities rested on existing structures. The MOE on the other hand hired two financial consultants, back in 2006, but had to be embedded in the existing structure, which was itself overdue for reform.

(c) Inherently, and partly due to staff turnover, there was very limited capacity for procurement, at MOE and the universities. The project provided for consultants, national and international. Attempts to hire an international consultant proved difficult. Hiring and retention of a national consultant also proved tenuous. The trainings that were given to build procurement capacity of implementers did help, but could not achieve institutional breakthroughs since the status quo required institutional transformation rather than mere training.

(d) The Ministry could not obtain properly crafted submissions of procurement proposals and reporting of accurate SOEs on time. . The Bank on its part delayed its responses, i.e., delay in offering “No Objection,” in replenishment of Withdrawal Applications and in transferring budget from IDG to DIF for the Third Round proposals. Release of funds from the Special Accounts to universities without receiving financial reports (SOEs) from them starved the Special Accounts. The shortage of funds in the Special Accounts hampered flow of funds to the universities, particularly in the second half the project.

(e) The character of the project and the institutional capacity of implementers were such that the project could not but make patience incumbent on the Bank, and persistence, with huffs and puffs, the daily life of the MOE’s project office staff. In these circumstances, to talk of consequences for non-compliance with project guidelines and consequently the loss of opportunity for institutional earning and early corrective measures would be academic, although bringing out the issues in reports as such should not be considered unnecessary.

(f) A stronger M&E system and greater supply of professionals to the project office could have probably improved performance. However, it is arguable whether this could have resulted in more than modest improvement in quantitative performance. In fact, a much greater nagging of the university leaders by the Ministers than was done could have resulted in far more improved quantitative performance. The trouble is there was a limit to how far the scales could be tipped in this direction, given the extraordinary circumstances the university leaders

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operated in, burdened as they were with institutional transformation, curriculum reform, managing academic and student affairs, and presiding over the many other mundane duties of their offices, while they experience staff turnovers at the same time.

(g) Conditions for disbursement were met exactly a year after the date of project effectiveness. Therefore the project’s effective life span was shorter than planned. The project’s performance must also be measured by shorter yardsticks. There were in fact suggestions early on that MOE should request for its extension by one more year. The Ministry found it difficult to argue for the extension of an admittedly difficult project.

(h) For some reason the Bank also failed to appreciate the Ministry’s request to use project funds to finance faculties studying in China, India and Russia as well as faculties studying through distance modes, delivered by Indian and South African institutions. We had to finance the above expenditures from scarce Ethiopian foreign currency earnings, while part of the Credit designed “To improve human resource development capacity at the post-secondary education level in Ethiopia” remained unutilized.

Lessons Learned

15. We have no other evidence for the design of the project, but the DCA itself. On the basis of the evidence and the challenges of the implementation, it would be right to conclude that the PSEP was ambitiously optimistic. It lacked an adequate reading of the institutional context and was therefore insufficiently rooted. On the other hand, the project proves how much good could be done in Ethiopia even in the context of design limitations and constraining institutional circumstances.

16. Within this framework, the following lessons could be learned from the project:

(a) Notwithstanding the limits of general statements and without prejudice to the attenuating circumstances, implementation of the PSEP was also constrained by inadequate systematic leadership from its immediate top supervisor. Projects such as PSEP require a systematic leadership attending also to details.

(b) It is improbable that we had achieved sufficient understanding and project ownership by implementing institutions during project design. The further weakness is that we neither appreciated nor addressed ourselves to the issue right up to the closing date of the project. Serious weakness in M&E has more meaning in this sense than in the frequency of field visits and the incompleteness of attempted monitoring visits. M&E, as well as Bank Missions and Mid-Term Reviews, should be approached from the quality side of the task rather than from its quantitative and routine sides.

(c) It is critical to recognize that projects such as PSEP that are novel to a given country, although probably tried out in other countries, require a good deal of investment at the stage of design, including full participation of all who could make a difference in its implementation, and must give room for pre-implementation that tests and makes subsequent adjustments on the basis of the lessons learned. Designs successfully implemented elsewhere require

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careful re-considerations in view of the new institutional contexts. The necessary time to complete the learning curve must be considered very carefully in this regard.

(d) It is proper that projects such as PSEP be embedded in the recipient institutions. How they could be embedded is, however, a matter of understanding the existing institutions (therefore the expertise and its modus operandi to understand the institutions) rather than the sum of the opinions of the recipients and the technical expertise of the Bank for design per Bank experience, norms and procedures. In other words, how to organize implementation is a function of expertly learning about and from recipient institutions as much as it is about transfer of relevant experiences from elsewhere in accordance with the norms and procedures of the Bank. A careful scrutiny of recipients (implementing institutions) should provide for carefully crafted strategies of implementation in a project design. In case this was overlooked, the MTR for instance should provide also for a rethinking of the project design and its modification to the extent the findings warrant. This should be included in the TOR of the MTR. However, if the findings were to go beyond the design itself, creating a box and then compelling the Bank and the Borrower to operate within the box is a contradiction in terms of attainment of the project development objectives.

(e) It is necessary to have mutual clarity beyond any reasonable doubt, at the designing stage, on the project development objective in view of what it is and in relation to the subject of its implementation. In the case of PSEP implementation there lurked in practice, as a consequence of the deficits in the design, the tension whether institutional capacity building via reform or that based on existing capacity was being aimed at.

(f) The idea that capacity building trainings should have been directed towards institutions, not individuals may well be true. It may be better stated about the PSEP experience however, that such trainings were merely focused on technical skills, leaving untouched the affective domains of the participants and insufficiently connected, if at all, to the wider picture of what was at stake. At the same time, such capacity building trainings should be owned by the institutions. These are important lessons for the Ministry, although perhaps not for the Bank.

(g) Implicitly, the project imposed a psychology of patience on the Bank and persistence with guarded, in a way, self criticism on MOE. Understandably, pushy incidents were not absent after the change of the Bank’s front personnel. Given the objective circumstances, however, there was everything to learn together, which we did not exploit, and nothing to unduly blame each other. Yoked together as we were, so to say, by the project we strove to do what we should, even though deadlines failed to be met, more frequently than occasionally. None of us desired such delays, but the project unfortunately had put us in this situation. This is not a lesson one would desire for, but it is a good lesson when circumstances rather than human attitudes dictate.

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Sustainability

17. The Bank mission, using the Bank’s parameters, has qualified the PSEP overall performance as a whole as “Moderately Unsatisfactory”. Given the complexity of the project, its achievements and the implementation challenges, however, it would be correct to advance the rival qualification that it was “Remarkably Satisfactory”. This is by way of a statement of facts focusing on what had been achieved in spite of the odds and appreciating the constrained results rather than basing one’s judgment on the character of the processes and the results in view of the script of the DCA.

18. There are now very strong signs of awakening in Ethiopian HEIs to live up to their core mission. This was not a consequence of the project, but the project did financially contribute to the processes that led to the awakening. The project gains would be sustained consequently. The paradox is, the PSEP is now absent when the universities would have required it most, implemented it more successfully, and would have contributed to its better design. A better designed PSEP would have now helped to speed up the tempo and enhance the quality of institutional transformation and development of our universities.

Ratings

1. Outcomes

19. On the basis of the PDO and considering the significant results of the key indicators of its achievement, outcomes are rated as satisfactory.

2. Borrower’s Performance

20. The overall implementation progress of the project is rated as “Moderately Unsatisfactory” primarily because most universities could not fully implement or complete the IDG or DIF activities by the Closing Date. After restructuring, completed IDG subprojects numbered 13 out of 22. In terms of volume of disbursement, however, it did reach 89.17%. The DIF component reached an implementation of 73.70%, while aggregate budget utilization by the SSUs and MOE reached only 58.88%. The TVET factor should not also be used to question the position, although the cancellation could have been done earlier than later.

3. Risk to Development Outcomes

21. It is rated negligible to low since the achievement will be sustained due to continuing strong government support and the increasingly conducive institutional ambiance of the universities for ownership as well as the relevant of the gains.

4. Bank Performance

22. The Bank’s performance rating is related to the extent to which it ensured quality at entry and supported effective implementation through appropriate supervision towards the achievement of the PDO. It is rated as moderately unsatisfactory. There are concrete

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examples that the Bank was lagging behind rather than acting promptly to achieve project execution, which are as follows:

(a) There were delays by the Bank in its response to withdrawal applications (examples: Application Numbers DIF 21, and IDG 29 took 37 days for replenishment).

(b) The delays in offering “No Objection” for ICB Procurement request by the project (example: ICB of Mekelle University).

(c) The unprecedented rejection of the procurement of vehicles for Jimma and Arba-Minch universities using IDG funds. It is to be remembered that the Bank had notified the MOE that the Bank’s review was required only for the first year of the IDG proposals (letter from Bank March 31, 2006). The rejection was made, even as the MOE sent the IDG projects to the Bank for review, and the Bank could have rejected the procurement of the vehicles at the time of the submission.

(d) The Bank did not accept faculty development activity in the Annual Work plan of the Ministry of the year 2008/09. This budget was supposed to support the Master’s and Ph.D. student tuition and other expenses that the MOE had committed to its postgraduate students, whose studies required expenses in foreign currency.

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Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders NA

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Annex 9. List of Supporting Documents

1. Post-Secondary Education Project Appraisal Document, Report No.: 28169-ET, IDA, World Bank, August 18, 2004.

2. PSEP Development Credit Agreement, Credit Number 3984-ET, IDA, January 4, 2005.

3. Amendment to Development Credit Agreement for the Post-Secondary Education Project (Credit No. 3984-ET), IDA letter to the Minister of Finance and Economic Development, December 12, 2008, IDA.

4. Quality Enhancement Review for the PSEP, IDA, January 27, 2004.

5. William Saint, Note for an Eventual ICR for the Ethiopia Post-Secondary Education Project, July 14, 2004.

6. Seventh Quality at Entry Assessment (QEA7) for Fiscal Year 2004-2005 for the PSEP, IDA, July 12, 2005.

7. Quality Assessment of Lending Portfolio (QALP-1) for the PSEP, IDA, November 3, 2008.

8. PSEP Aide-Memoires and ICRs, PSEP project files.

9. Monitoring and Evaluation Report of Post-Secondary Education Project in Ethiopia, Liz Reisberg, Laura Rumbley and Teshome Nekatibeb, Addis Ababa, 2009.

10. PSEP Completion Summary Report; MOE, Addis Ababa, 2009

11. Education Sector Development Plan III for 2005/06 – 2010/11; Program Action Plan, Ministry of Education, Addis Ababa, 2005.

12. Education Statistics Annual Abstracts (2007-08), Ministry of Education, Addis Ababa, 2009.

13. Achieving better Delivery through Decentralization in Ethiopia, Marito Garcia and Andrew Sunil Rajkumar, Africa Human Development Series, Working Paper No. 131, World Bank, 2008.

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Annex 10: Detailed Project Procurement and Financial Management Performance

Overall procurement performance

1. The procurement performance of the PSEP is rated Unsatisfactory. The overall monitoring of procurement functions and consolidation of procurement plans and reports was the responsibility of the MOE. The Procurement capacity of the MOE was insufficient and the MOE failed to play a major role in coordination and capacity building at the level of the universities and SSUs. The Bank’s procurement supervision and follow-up was rated as Unsatisfactory early in the implementation period.

2. In accordance with the different supervision and implementation support mission AMs and the FY2007/08 and FY2008/09 Post Procurement Review Reports (PPRs), it was concluded that the procurement management capacity limitations, especially at the participating Universities, were critical. At the national level, the Government had introduced a new Procurement Proclamation in July 2005, and subsequently, following the Procurement Act, directives and standard bidding documents were introduced. But the implementation of the regulations and standard procedures were not very effective. In the universities and SSUs procurement units were not staffed adequately by procurement-skilled professionals.

3. Lessons learned from the procurement perspective are:

(a) When decentralized entities are expected to be responsible for procurement planning, implementation and monitoring adequate arrangements, in terms of procurement staff assignments and implementation arrangements, should be in place before the effectiveness. . And the central entity with overall responsibility (in this case the MOE) should ensure adequate training and technical assistance for its core staff from the beginning.

(b) In projects that are implemented in a decentralized environment the Bank should consider assigning a full-time procurement specialist in the project team to minimize project implementation bottlenecks from the start.

(c) Procurement support at an early stage of implementation (within the first six months) would have maximum impact on project procurement and disbursement performance.

Overall Financial Management performance

Key Information on the Project: Project Name: Post Secondary Education Project

Project ID: P078692

IDA Credit/Grant No.: IDA Credit No 3984-ET

Implementing Agency: Ministry of Education

Effectiveness Date: April 4, 2005

Closing Date: September 1, 2009

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Application Deadline: December 31, 2009

Credit/Grant Amount: SDR 27,400,000.00

Program Duration 4.5 years

Disbursed Amount: SDR 14,773,244.30

Undisbursed balance at closing SDR 0.00

Cancelled Amount SDR 12,626,756 FM Risk Rating at appraisal:

• Inherent Risk • Control risk • Overall risk

SMS

FM Risk Rating at closing: • Inherent Risk • Control risk • Overall risk

SSS

FM ISR Rating at closing: MU

4. During the appraisal, the financial management risk on inherent risk was assessed to be Substantial and the control risk was assessed to be Moderate. The main strengths identified during the appraisal were the country’s overall budget discipline and compliance with regulations as well as the familiarity of some MOE planning and programming department staff with donor financed projects (including IDA.) The main weakness identified during appraisal was FM staffing (number and quality) in the MOE and in universities. Throughout the project life, FM supervision missions were undertaken as per Bank policies3.

5. FM Risk rating. At project closure, the overall project risk was rated to be Substantial and the FM was rated as Moderately Unsatisfactory in the ISR. The main reasons underlying the decision on the rating include: (a) delays and poor quality of FMRs; (b) the lack of adequate internal audit oversight; (c) the low level of disbursements and instances of ineligible expenditures; (d) the weaknesses in budget-monitoring; and (e) delays in submitting audit reports.

6. Based on IDA supervision missions, the overall FM ISR rating of the project deteriorated from Moderately Satisfactory to Moderately Unsatisfactory. While the project’s inherent risk remained Substantial throughout the life of the project, the control risk deteriorated from Moderate to Substantial. The FM supervision missions focused on the areas of budgeting, accounting, fund flow, internal control, financial reporting and external audit. Based on the implementation support missions conducted the following aspects were observed as challenges, strengths and problems on key FM aspects:

(a) Budgeting: The budget preparation process, notably at HEPCO, was in line with the GOE’s budget preparation process. Although the budgetary information and the utilization thereof were submitted to the MOE upon request, explanations and corrective action for variances were not taken (or not documented.) The situation was worse at universities’ level.

(b) Accounting. There was a computerized accounting system established in most implementation units with varying degrees of capability to use the system. Filing and record keeping mechanisms were good. The Financial Management Guidelines were distributed to most universities.

3 Guidelines issued by Financial Management Sector Board on June 30 2001 and revised on October 1 2003, OP/BP10.02, Financial Management manual issued on Nov 2005.

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(c) High staff turn-over . There was high staff turnover over the life of the project, but this was most apparent at earlier years of the project. Capacity building activities in the form of regular training and regular field visits from the MOE to the universities were inadequate.

(d) Internal control and audits. The overall internal control environment was relatively strong especially in terms of payment authorization and segregation of duties. However, the internal audit oversight of project activities was not satisfactory both at the MOE and at the participating universities. In most cases auditors did not review the project activities. If audits were performed (rarely), reports were often not produced and submitted to the management. The importance of an internal audit oversight was repeatedly highlighted by Bank supervision missions.

(e) Fund flow and disbursement. Generally, the disbursement of the project funds was not satisfactory. Of the original SDR 27.4 million SDR 12.6 million was cancelled and SDR14.8 million disbursed. At the MTR, in December 2006, only 11% of the Credit was disbursed. At the initial stages of the project, withdrawal applications were not sent to the Bank regularly, but this picked up later in 2008-2009.

(f) Fund flows to universities were also unsatisfactory. Universities were usually cash-constrained while performing project activities. They were forced in most cases to use other funds’ (at times of cash shortages). This was also confirmed during supervision visits and from audit reports. Some of the reasons for this were: (a) delays in project implementation (especially at earlier years of the project); (b) the lack of use of other disbursement methods of the Bank such as the “reimbursement” method; (c) delays in settlement of advances sent to universities; and (d) the lack of performance-based disbursement to universities. Some ineligible expenditures were identified during the project supervision, and the GOE was asked to reimburse these expenditures. .

(g) FM reporting. The project was to provide its FMR within 45 days of each quarter. However, there were considerable delays in providing acceptable FMRs to the Bank. In general, the quality of most FMRs was relatively poor and at times, the Bank was forced to reject some reports.

(h) Auditing. The Audit Services Corporation was the auditor for the project. The first audit report (up to the end of 2006) was delayed. Improved audit reports for 2007 and 2008 were submitted on time. Auditors gave an unqualified (clean) opinion on the project’s financial statements and the designated account for all past audit years. The final audit report for the period up to December 31, 2009 was submitted to the Bank.

7. Lessons learned from the perspective of Financial Management are:

(a) Regular refresher training courses for financial management procedures and Bank requirements in FM reporting and disbursement areas could have helped to improve FM and disbursement performance significantly.

(b) Support for universities by the MOE with “a trouble shooting and a hands-on approach” should have been provided from the start of implementation and this

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could have helped the universities to better understand detailed routine-technical issues.

Final Disbursement Status in SDR

Category Description Original Allocation

Allocation after Restructuring Disbursed

Totals 27,400,000 17,850,600 14,635,339

GOODS for SSUs 1,100,000 1,100,000 12,841

GOODS TVET 900,000 0Consultancy Services for SSUs 1,630,000

1,418,600 22,148

Consultancy Services for TVET 1,850,000

0

IDG 10,940,000 5,174,600 6,738,295

DIF 10,300,000 9,568,800 7,862,055

UNALLOCATED 680,000 588,60 0

Final Disbursement Status in USD

Historically Disbursed Original allocation, USD equivalent

Allocation after Restructuring, US$ equivalent

22,692,682.63 40,000,000 25,000,000

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ETHIOPIA

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

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