AFRICAN DEVELOPMENT FUND · AFRICAN DEVELOPMENT FUND SKILLS AND HUMAN RESOURCE DEVELOPMENT PROJECT (PDCRH) COUNTRY : REPUBLIC OF CONGO APPRAISAL REPORT November 2014 Review Team Management

AFRICAN DEVELOPMENT FUND

SKILLS AND HUMAN RESOURCE DEVELOPMENT PROJECT (PDCRH) COUNTRY : REPUBLIC OF CONGO APPRAISAL REPORT November 2014

Review Team Management

A.F. NDEM, Education Economist, OSHD.2 A. EYEGHE, Social Development Specialist, OSHD.1 D. MARINI PIRACIEL, Procurement Specialist, ORPF.1 V.-A. LOSSOMBOT, Financial Management Specialist, ORPF.2 Regional Director: M. KANGA, ORCE Sector Director: A. SOUCAT, OSHD Officer in Charge: J. E. PORGO, OSHD.2

Peer Reviewers S. ILBOUDO, Principal Education Analyst, OSHD.2 B. FOKO, Education Economist, OSHD.1 K. AMOUZOUVI, Education Economist, OSHD.2 A. R. OUEDRAOGO, Social Development Specialist, OSHD.2 T. DJOGOYE, Socio-economist, OSHD.2

AFRICAN DEVELOPMENT FUND

SKILLS AND HUMAN RESOURCE DEVELOPMENT PROJECT (PDCRH) COUNTRY : REPUBLIC OF CONGO APPRAISAL REPORT

OSHD

December 2014 Translated Document

TABLE OF CONTENTS Currency Equivalents, Fiscal Year, Weights and Measures, Abbreviations and Acronyms, Project Brief,

Project Summary, Results-Based Logical Framework, Implementation Schedule …………… i - vii

I. STRATEGIC THRUST AND RATIONALE --------------------------------------------------------------------- 1

1.1 LINKAGES WITH COUNTRY STRATEGY AND OBJECTIVES ------------------------------------------------------- 1 1.2 RATIONALE FOR BANK’S INTERVENTION ------------------------------------------------------------------------- 2 1.3 AID COORDINATION -------------------------------------------------------------------------------------------------- 4

II. PROJECT DESCRIPTION ------------------------------------------------------------------------------------------ 5

2.1 PROJECT COMPONENTS ---------------------------------------------------------------------------------------------- 5 2.2 TECHNICAL SOLUTIONS ADOPTED AND ALTERNATIVES EXPLORED ------------------------------------------ 6 2.3 PROJECT TYPE --------------------------------------------------------------------------------------------------------- 7 2.4 PROJECT COST AND FINANCING ARRANGEMENTS --------------------------------------------------------------- 7

III. PROJECT FEASIBILITY………………………………………………………………………… ..11

3.1 ECONOMIC AND FINANCIAL PERFORMANCE……………………………………… ……………….. .11 3.2 ENVIRONMENTAL AND SOCIAL IMPACT…………………………………………………. ……………11

IV. IMPLEMENTATION ----------------------------------------------------------------------------------------------- 13

4.1 IMPLEMENTATION ARRANGEMENTS ----------------------------------------------------------------------------- 13 4.2 PROJECT MONITORING AND EVALUATION ---------------------------------------------------------------------- 16 4.3 GOVERNANCE ------------------------------------------------------------------------------------------------------- 17 4.4 SUSTAINABILITY ---------------------------------------------------------------------------------------------------- 17 4.5 RISK MANAGEMENT ------------------------------------------------------------------------------------------------ 18 4.6 KNOWLEDGE BUILDING -------------------------------------------------------------------------------------------- 18

V. LEGAL FRAMEWORK ------------------------------------------------------------------------------------------- 18

5.1 LEGAL INSTRUMENT ------------------------------------------------------------------------------------------------ 18 5.2 CONDITIONS ASSOCIATED WITH BANK INTERVENTION ------------------------------------------------------- 18 5.3 COMPLIANCE WITH BANK POLICIES ----------------------------------------------------------------------------- 19

VI. RECOMMENDATION --------------------------------------------------------------------------------------------- 19

ANNEX I: COMPARATIVE COUNTRY SOCIO-ECONOMIC INDICATORS

ANNEX II: ACTIVE PORTFOLIO AS OF 31 JULY 2014

ANNEX III: MATRIX OF DEVELOPMENT PARTNERS' ACTIVITIES

ANNEX IV: ADMINISTRATIVE MAP OF THE REPUBLIC CONGO

LIST OF TABLES

TABLE 2.1: PROJECT COMPONENTS --------------------------------------------------------------------------------------- 6

TABLE 2.2: PROJECT ALTERNATIVES EXPLORED AND REASONS FOR REJECTION --------------------- 7

TABLE 2.3: PROJECT COST COMPONENT (IN UA THOUSAND) --------------------------------------------------- 8

TABLE 2.4: SOURCES OF FINANCING (IN UA THOUSAND) -------------------------------------------------------- 8

TABLE 2.5: PROJECT COST BY EXPENDITURE CATEGORY (IN UA THOUSAND) -------------------------- 8

TABLE 2.6: EXPENDITURE SCHEDULE BY COMPONENT (IN UA THOUSAND) ----------------------------- 8

TABLE 2.7: PROJECT COST BY EXPENDITURE CATEGORY AND SOURCE OF FINANCING (IN UA THOUSAND) ------------------------------------------------------------------------------------------------------------------------ 8

LIST OF FIGURES

FIGURE 1: OIL SECTOR GROWTH AND OVERALL GROWTH BETWEEN 2000 AND 2012 ----------------- 1

FIGURE 2: RELATION BETWEEN GDP PER CAPITAL AND THE INCIDENCE OF POVERTY ------------- 1

FIGURE 3: RATE OF UNEMPLOYMENT AMONG YOUTHS AGED 25-34 YEARS BY EDUCATION LEVEL -------------------------------------------------------------------------------------------------------------------------------- 3

FIGURE 4: ETPFQ SCHOOL COVERAGE ---------------------------------------------------------------------------------- 3

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Currency Equivalents (June 2014)

Currency Unit = XAF UA 1 = XAF 742.62204 UA 1 = EUR 1.13212 1 EUR = XAF 655.957

Fiscal Year

1 January – 31 December

Weights and Measures 1 metric tonne = 2204 pounds 1 kilogramme (kg) = 2.200 pounds 1 metre (m) = 3.28 feet 1 millimetre (mm) = 0.03937 inch 1 kilometre (km) = 0.62 mile 1 hectare (ha) = 2.471 acres

ABBREVIATIONS AND ACRONYMS

ADF : African Development Fund AFD : French Development Agency AfDB : African Development Bank CPIA : Country Policy and Institutional Assessment CSI : Core Sector Indicator CSP : Country Strategy Paper EU : European Union EUR : Euro IMF : International Monetary Fund INS : National Institute of Statistics JAS : Joint Assistance Strategy M&E : Monitoring and Evaluation METPFQE : Ministry of Technical and Vocational Education, Skills Training and Employment NDP : National Development Plan OPSCOM : Operations Committee OSHD : Human Development Department OSVP : Vice Presidency, Sector Operations PCN : Project Concept Note PDCRH : Skills and Human Resources Development Project PIP Public Investment Programme PNPM : National Procurement Procedures RAS : Regional Assistance Strategy SNPM : National Procurement Systems TFP : Technical and Financial Partners UA : Unit of Account USD : United States dollar WB : World Bank

ii

Project Information

Client Information BORROWER : Republic of Congo EXECUTING AGENCY : Ministry of Technical and Vocational Education, Skills Training and Employment (METPFQE) Financing Plan

Source

Amount

Instrument

ADF

UA 7.5 million

ADF Loan

Government UA 13.204 million Counterpart funds

TOTAL COST UA 20.704 million Information on ADF Financing

Loan Currency

UA

Interest Type * 1% (fixed)

Interest Rate Margin* Not applicable

Commitment Fee* 0.5% on the undisbursed loan amount 120 days following the signing of the Loan Agreement

Service Charge 0.75% yearly on the disbursed but unreimbursed loan amount

Tenor 30 years maximum

Grace Period 5 years with effect from the date of signature of the Loan Agreement

Timeframe – Main Milestones (expected)

Concept Note Approval June 2014

Appraisal June 2014

Project Approval December 2014

Effectiveness June 2015

Mid-Term Review January 2018

Completion June 2020

Last Disbursement December 2020

iii

PROJECT SUMMARY Project Overview Project Name: Skills and Human Resource Development Project (PDCRH). Geographic scope: Nationwide The expected overall results are: (i) the introduction of new streams in vocational training related to mining and woodwork; (ii) trainers’ training; (iii) enhancement of girls' participation in vocational training; (iv) conduct of an experiment on monitoring vocational training and assessment of the impact of the experiments; and (v) conduct of studies. General schedule: 60 months, from 1 July 2015 to 30 June 2020 Funding: UA 20.704 million, including UA 7.5 million from the ADF and UA 13.204 million in national counterpart funding Over the entire lifespan of the training centres, the PDCRH will directly benefit nearly 7 500 young people, including 3 750 girls who will receive basic training at the training centres established. The project will also directly benefit the private sector through the continuous training that will be provided at the training centres and also by strengthening employers' organisations and artisan groups that will receive support to improve their structuring. The project will also help to build the capacity of the National Institute of Statistics (INS), especially in the area of impact assessment. It will indirectly benefit the young people who will be involved in the impact assessment exercise, through internships in enterprises. Students - the primary beneficiaries of the project - will participate in its implementation by virtue of their representation on the Steering Committee. Needs Assessment The country recorded an average annual economic growth rate of 4.5% between 2000 and 2012, but its economy remains dependent on the oil sector. In 2012, the oil sector accounted for 65% of Gross Domestic Product (GDP) and overall growth hinges mainly on the sector’s growth. Meanwhile, the oil sector contributes very little to job creation (less than 1% of employment), which is needed to promote inclusive growth (despite a GDP per capita of more than USD 3 000, 46% of the population lives below the national poverty line). Diversifying the economy is necessary to develop employment-generating sectors. The Skills and Human Resource Development Project will extend training opportunities to forestry and mining sectors. Moreover, while Technical Education, Vocational and Skills Training (ETPFQ) should prepare young people for the jobs they will occupy, it is observed that in 2011, 30.6% of young ETPFQ beneficiaries were unemployed. Thus, the project will also help to improve the employability of young people leaving the ETPFQ sub-sector as a whole by strengthening the autonomy of training centres, ensuring greater private sector involvement in the delivery of training services and in performance-based funding.

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Bank’s Value Added Having supported many countries in the region in terms of vocational training, the Bank has garnered experience that is reflected in the PDCRH. The Bank's value added consists especially in supporting the improvement of governance to ensure better youth employability. In fact, the Bank has conducted several studies on linkages between education and the labour market in Morocco, Cameroon and Rwanda, as well as multinational analyses. These studies highlight the need to develop flexible training systems that can adapt to economic trends and induce changes with regard to skills needs. At the operational level, the Bank has examined numerous operations designed to strengthen linkages between the education and productive sectors (Training-Employment Matching Support Programme in Morocco, Skills, Employability and Entrepreneurship Programme in Rwanda, Development of Skills for Industry Project in Ghana, Technical Vocational Education and Training, and Teacher Training Project in Tanzania). Knowledge Management Knowledge building will be at the centre of the PDCRH, given the various assessment activities and studies planned. Assessment activities relate to the establishment of a system for monitoring the integration, initially, of those trained by the system that will be set up under the project and, later, of graduates of the entire education and training sector. They also concern the impact assessment that will be conducted to determine the relevance of actions planned, in an effort to enhance the flexibility of the vocational training provided by public institutions, as well as linkages with the private sector. Lastly, knowledge will also be built on technical, vocational and skills training as part of studies on sector financing, management procedures and performance. The knowledge thus generated will both guide national policies, consideration of future operations in the education sector in Congo and consolidate a knowledge database on technical and vocational education and skills training in Africa.

v

Republic Congo: Skills and Human Resource Development Project Results-Based Logical Framework

Country and Project Name: Republic of Congo – Skills and Human Resources Development Project (PDCRH) Project Goal: Contribute to greater inclusive growth through improvement of the relevance of vocational training

RESULTS CHAIN PERFORMANCE INDICATORS

MEANS OF VERIFICATION

RISKS/MITIGATION MEASURES Indicators

(including CSI) Baseline Target

IMP

AC

T Youth

unemployment reduced

Unemployment rate among youths aged 25 to 34

17.6% for men and 28.9% for women in 2011

10% for men and 18% for women in 2025

NIS Statistics

OU

TC

OM

ES

Improvement in employability of training centre graduates

Unemployment rate among youths aged 25 to 34 leaving the ETPFQ

18.1% for men and 42.5% for women in 2011

12% for men and 30% for women in 2020

NIS Statistics

Risk: Lack of ownership of the outcomes of the studies and impact assessment Mitigation: Dissemination of research findings and policy dialogue

OU

TP

UT

S

Component 1: Diversification of Training Opportunities

Risk: Low demand for new streams Mitigation: Communication strategy to upgrade the streams created

Training centres are set up, equipped and operational

Numbers of training centres built or expanded, equipped and functional

0 in 2014 3 in 2017 METPFQE reports

Trade-Skills benchmarks are prepared

Number of Trade-Skills benchmarks are prepared

0 in 2014 At least 3 in 2016 METPFQE reports

Number of training benchmarks are prepared


Certification benchmarks are prepared

Number of certification benchmarks are prepared


Teachers are trained in the streams offered

Number of teachers trained, including percentage of women

0 in 2014 60 teachers, of whom at least 50% women in 2017

METPFQE reports

Training is provided in training centres

Number of youths trained, including percentage of girls

0 in 2014 450 youths, of whom at least 50% girls in 2019

METPFQE statistics

Component 2: Enhancement of the Match between Training and Employment Risk: Government's unwillingness to involve the private sector in the management of training centres Mitigation: Promotion of dialogue between the Government and the private sector, experimentation and evaluation Risk: Inadequate dialogue among stakeholders Mitigation: Strengthening of the National Council for Technical and Vocational Education, Skills Training and Employment (CNETPFQE)

The ETPFQ sector strategy is updated

Adoption of a new national ETPFQ strategy

Not available in 2014

Prepared in 2016 METPFQE reports

The impact of the autonomy of training centres is assessed

Number of training centres where autonomy has been assessed

0 in 2014 20 in 2019 METPFQE and INS reports

The effect of private sector involvement in the ETPFQ is assessed

Number of training centres where private sector involvement in the ETPFQ is assessed


The effect of performance-based funding on the ETPFQ is assessed

Number of training centres where performance-based funding is assessed


The integration monitoring system is set up

Number of surveys to monitor the integration of ETPFQ graduates


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Country and Project Name: Republic of Congo – Skills and Human Resource Development Project (PDCRH) Project Goal: Contribute to greater inclusive growth by improving the relevance of vocational training

RESULTS CHAIN PERFORMANCE INDICATORS

MEANS OF VERIFICATION

RISKS/ MITIGATION MEASURES Indicators

(including CSI) Baseline Target

Component 3: Project Management Risk: Low capacity of the Directorate-General of Skills Training and Employment (DGFQE) to manage Bank-financed projects Mitigation: Technical assistance, continuing training of project staff on Bank rules, performance contracts, preparation of a procedures manual for the project.

Procurement activities carried out

Procurement Plan (PP) Prepared in 2014

PP updated at least once/year

PP

Project activities carried out

Disbursement rate 0 % in 2014 20% per year on average

SAP system

Financial management carried out

Audit reports Audit Firm recruited in 2015

5 annual audit reports approved

Progress reports

Monitoring and evaluation implemented

Monitoring-Evaluation System

Set up in 2015 20 quarterly reports and one final report

Mission Aide Memoire

COMPONENTS RESOURCES

Component 1: Diversification of Training Opportunities Sub-Component 1.1: Establishment of Training Centres Construction and equipment of training centres Vocational training (VT) and skills training (ST) awareness campaign Sub-Component 1.2: Training of Trainers and Quality Development of training content Training of Trainers Sub-Component 1.3: Gender Campaign to raise awareness about gender in VT and ST Scholarships Component 2: Enhancement of the training/employment match Sub-Component 2.1: Management Support Studies and strategy Enhancement of the statistics capacity of the METPFQE Structuring of the private sector and public-private partnership Exchange of experiences on VT and ST management Sub-Component 2.2: Experimentation and Impact Assessment Experimentation: Autonomy aspect Experimentation: Private sector involvement aspect Experimentation: Performance-based financing aspect Impact assessment Enhancement of national impact assessment capacity (INS) Component 3: Project Management

ADF: UA 7.5 million Counterpart Funds: UA 13.204 million Component 1: UA 14.303 million Component 2: UA 5.029 million Component 3: UA 1.373 million Total: UA 20.704 million

vii

Project Implementation Schedule

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MANAGEMENT’S REPORT AND RECOMMENDATION TO THE BOARD OF DIRECTORS CONCERNING THE SKILLS AND HUMAN RESOURCE

DEVELOPMENT PROJECT IN THE REPUBLIC OF CONGO Management hereby submits this report and recommendation concerning a proposal to grant a UA 7.5 million ADF loan to the Republic of Congo for financing the Skills and Human Resource Development Project. I. STRATEGIC THRUST AND RATIONALE 1.1 Linkages with Country Strategy and Objectives

1.1.1 The Republic of Congo recorded an average annual economic growth rate of 4.55% between 2000 and 2012, but the economy remains dependent on the oil sector. In 2012, the oil sector accounted for 65% of GDP and overall growth is mainly determined by the growth of this sector (see Figure 1). Meanwhile, the oil sector contributes very little to the job creation (less than 1% of employment) needed for inclusive growth. 1.1.2 On the social front, it is worth noting that in 2011, 46.5% of the population lived below the poverty line, whereas in theory this proportion should have been 28%. Indeed, the need for greater inclusion may be illustrated by relating the national income (average per capita) to the incidence of poverty (see Figure 2 below). Given the relationship between these two variables, it may be observed that the incidence of poverty is significantly higher than it should be, given the GDP per capita.

1.1.3 Therefore, the National Development Plan (NDP) 2012-2016, focuses on the diversification of the national economy, with an industrialisation strategy based on the following seven "clusters": (i) agriculture and the agro-food chain; (ii) forestry and timber processing and marketing; (iii) oil and hydrocarbons; (iv) mining; (v) building and building materials; (vi) tourism and hospitality; and (vii) financial services. This cluster-based industrialisation strategy requires the availability of qualified or re-qualified human resources that can contribute to the development of priority economic sectors of the NDP.

1.1.4 With regard to technical, vocational education and skills training, the NDP focuses on teaching methods and partnerships with the productive sector. It provides notably for: (i) the rehabilitation and building of additional infrastructure to improve the spatial coverage and diversify training delivery; (ii) the renovation of teaching methods to ensure the development of technical and vocational skills through revision of curricula and training content, the definition of new vocational qualifications and the enhancement of trainers' skills; (iii) the development of a modern and dynamic partnership with the productive sector by signing partnership agreements relating to the management of technical, vocational education and skills training, the improvement of the school counselling system through rehabilitation of

Figure 1: Oil sector growth and overall growth between 2000 and 2012

Source: Data from the International Monetary Fund

Figure 2: Relation between GDP per capital and the incidence of poverty

Source: Data from World Development Indicators (WDI)

y = 0,254x + 4,6996R² = 0,7213

GD

P g

row

th (

%)

Oil GDP growth (%)

y = -9,615ln(x) + 106,85R² = 0,3966

0

10

20

30

40

50

60

70

80

0 5 000 10 000 15 000 20 000 25 000

Inci

denc

e of

pov

erty

(in

%, n

atio

nal

thre

shol

d)

GDP per capita in 2010 (in USD)

2

the corps of career counsellors; and (iv) the encouragement of girls' enrolment for training courses, especially in the agricultural and industrial streams, by setting quotas. 1.1.5 PDCRH will diversify vocational and skills training opportunities, and improve youth employability. The project is in line with the NDP, which emphasizes the need to train human resources for the development of sectors that are considered as a priority for the diversification of the economy, including forestry, timber processing and marketing, and mining. The project is also in line with the objectives of the Ten-Year Plan 2008 -2017 for the recovery and the development of technical and vocational education. The latter aims to: (i) increase the flexibility of training opportunities; (ii) ensure institutional, legal and regulatory adaptation to encourage rapprochement between the various vocational branches and institutions (conventions, training benchmarks and map, continuing training, integration, etc.); (iii) implement a new teaching approach based on alternation with and use of corporate trainers; and (iv) ensure information and communication in the public space.

1.1.6 The project is also in line with the Country Strategy Paper (CSP) 2013-2017 of the Republic of Congo. It is consistent with Pillar 2 of the CSP 2013-2017, which aims to “improve human resources and the business environment to promote inclusive growth.” The Bank's interventions under this pillar should help to: (i) reduce the cost of doing business; (ii) develop skills and human resources; and (iii) improve the SME financing. Overall, the Bank's assistance through the two pillars of the current CSP should help to reduce unemployment and poverty, as well as stimulate green and inclusive growth.

1.1.7 Lastly, the project is in line with the Bank's 2013-2022 strategy, the human capital strategy and the gender strategy. In fact, qualifications are among the five operational priorities of the 2013-2022 strategy, which states that the Bank will support programmes aimed at providing each and every one with the skills required to become part of the productive workforce of the formal and informal sectors. For its part, the human capital strategy provides that the Bank will develop operations to address deficit problems and issues related to the mismatch between skills and the needs of key sectors of the economy. The human capital strategy also highlights the need for the Bank to continue to enhance dialogue with its Regional Member Countries concerning the environment in which the skills are produced, with a view to promoting regulatory and sector policy reform aimed at improving the responsiveness of education and training systems to the changing needs of the labour market, including private sector needs that should be met by ensuring the relevance of skills. Lastly, the gender strategy proposes the implementation of best practices, including scholarship programmes and mentoring that would help to reduce gender inequality in the area of skills.

1.2 Rationale for Bank’s Intervention

1.2.1 The project aims primarily to diversify training through the introduction of new vocational training streams relating to woodworking and mining. Congo's forest economy accounts for nearly11 000 direct jobs and approximately 5 000 induced jobs (NDP), and these numbers are expected to grow as a result of the increased rate of timber processing at national level and greater control of the value chain. In the mining sector, the NDP projects a 38.4% growth in production between 2013 and 2016, and this expansion should create 25 000 jobs, of which two-thirds will be generated by the sector's direct activities and the rest by support activities. Despite this employment potential, training opportunities in trades related to these two areas are currently non-existent or very limited, and labour supply is often imported. The country has a forest economy training school (the Mossendjo National Forestry School), but the training offered is mostly geared towards forestry and related trades, and not to wood processing. As for the mining sector, it does not yet have a training centre. Therefore, the new branches that will be introduced will meet existing labour demand, with a very high probability of employment for those trained.

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1.2.2 The project also aims to strengthen the match between education and employment through greater flexibility in the delivery of technical and vocational training (given the need for training to adapt to changes in the economy that may affect trends not only in related sectors and occupations, but also in the manner in which existing trades are performed, with the introduction of new techniques and equipment). The increased flexibility will help to improve the employability of persons trained in all existing training courses through greater involvement of companies in the training, including as training service providers, within a framework defined and regulated by the State. 1.2.3 Whereas technical education and vocational training (ETPFQ) are supposed to ensure the employability of young people and prepare them for labour market jobs, ETPFQ graduates face a higher unemployment rate than other youths. The unemployment rate for youths aged 25-34 years who left technical or vocational training institutions stood at 30.6% in 2011, compared 24.9% for those who went through general secondary education (23.7% average). Given the poor performance of the technical education and vocational training sub-sector in terms of employability of persons trained, the implementation of measures aimed at strengthening governance in the sub-sector, with the ultimate objective of improving the employability of those trained, is desirable. 1.2.4 The number of young Congolese undergoing technical education and vocational training is higher than the African average. According to data from the Directorate-General of School Administration (DGAS) of the Ministry of Technical and Vocational Education, Skills Training and Employment (METPFQE), enrolment in the public sector technical education and vocational training institutions currently stands at 36 945 students (including 19 035 girls). This number represents nearly 17% of those enrolled in general secondary education, which is higher than the 8.4% average observed in Africa. The high enrolment in technical education and vocational training in the Republic of Congo is also reflected by the number of students per 100 000 inhabitants. In Congo, there are about 1 000 ETPFQ students per 100 000, compared to the African average of 480.

1.2.5 Despite a favourable budgetary arbitration, unit training costs are significantly low compared to those applicable in most African countries, considering the high education coverage mentioned above. Funding for technical education and vocational training is considered a high budget priority in education sector spending, relative to the rest

Figure 3: Rate of unemployment among youths aged 25-34 years by education level

Source: Calculations based on ECOM 2011 data

Figure 4: ETPFQ school coverage

Sources: Pole de Dakar Education Sector Analysis and calculations based on data from UNESCO Institute of Statistics and DGAS/ METPFQE

0

5

10

15

20

25

None Primary Gen. Sec. 1 Gen. Sec. 2 ETFP Higher Combined

Un

emp

loy

men

t ra

te (

%)

Education levels

Unemployment as defined by ILO Unemployment broadly defined

969

480

16,8

8,4

0

2

4

6

8

10

12

14

16

18

0

200

400

600

800

1 000

1 200

Congo Africa

Number of ETFP students per 100 K inhabitants

ETFP students as a % of general secondary enrolment

4

of Africa. Technical education and vocational training expenditures represent 15% of the education sector spending, compared to the African average of 5%. The unit cost of training in Congo represents 62% of GDP per capita, compared with a unit cost of training equivalent to 168% of GDP per capita on average in Africa. These low unit costs impact negatively on the quality of the training provided in that they entail low salary levels for teachers and low allocations for materials (in 2005, the average salary in Congo was estimated at twice the GDP per capita, whereas the figure relative to GDP per capita stood at 5.7 in Benin, 8.8 in Burkina Faso, 8.4 in Djibouti and 6.6 in Madagascar in 2006). 1.2.6 To enable the technical and vocational education system to produce qualified young people, the General Policy Strategy Paper (DOSTRAPOGE) proposes a sector recovery plan that comprises several pillars, some of which are included in the PDCRH, namely: (i) adaptation of the institutional, structural, legislative and regulatory framework; (ii) training and building of the technical and operational capacity of Ministry staff; (iii) adoption of a new vocationally-oriented pedagogic approach; and (iv) development of partnerships with the private sector through the drafting of benchmarks, agreements with professional sectors, co-management of training centres, internships, etc. 1.2.7 The Bank's intervention will contribute to the efforts of the Government of the Republic of Congo in terms of skills development. The National Development Plan 2012-2016 envisages a cluster-based activity diversification strategy whereby operators will be organised by integrated sectors to identify the conditions required for their development, particularly from the standpoint of infrastructure, human resources, financial services and institutional support. This cluster-based industrialisation strategy requires appropriate skills to contribute to the economic vitality and the full use of human resources. The Bank has a comparative advantage, given that it has funded the construction of training centres, the training of teachers and the development of training programmes within the context of the Project to Support the Socio-economic Reintegration of Disadvantaged Groups (PARSEGD).

1.3 Aid Coordination

Sector or Sub-Sector* Vocational Training Stakeholders–Public Expenditure

Government (average 2008 to 2012)

Donors Amount Duration

0.386% of GDP WB USD 10 million 2011-2016

AFD CFAF 3.9 billion 2013-2016

Aid Coordination Level

Existence of thematic working groups No

Existence of an overall sector programme for vocational training Yes

AfDB’s role in aid coordination Member

1.3.1 In addition to the Bank, other key partners involved in technical education and vocational training in Congo are the World Bank (Skills Development for Employment in Congo Project - PDCEC - USD 10 million) and France (Vocational Training System Overhaul Project - PARSEF - CFAF 3.9 billion). The Bank's physical presence on the ground through the effective deployment of the Country Economist since February 2014, enables it to participate more effectively in TPF coordination and should allow it to establish a strong relationship with active partners in Congo. However, coordination between the Government and partners, which had improved in recent years with the establishment of the TFP Consultation Framework and Thematic Groups (TGs), need to be strengthened through

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stronger Government leadership, administrative capacity building and acceleration of the on-going revival of the TFP Consultation Framework and Thematic Groups (TGs), which were adversely affected last year following the vacancy of the post of Resident Coordinator of the United Nations System, the Chair of the TFP Group. 1.3.2 The PDCRH was prepared in close coordination with the AFD and the World Bank. Systematic discussions were held with various stakeholders during the project preparation, including the World Bank and the AFD and, to a lesser extent, the European Union and UNDP. This coordination resulted in a clear division of labour whereby the Bank’s project focused on the timber and mining sectors, while the AFD focused on the building/construction and industrial maintenance sectors, and the World Bank on the integration of vulnerable youths and micro-entrepreneurs. 1.3.3 As with the PDCRH, the interventions of other partners in technical education and vocational training (PDCE by the World Bank and PARSEF by AFD) is in line with the objective of developing the skills needed to diversify the national economy, in conjunction with the various clusters identified in the NDP. There is also a very strong community of approach between the PDCRH and PARSEF, given that the focus of the two projects is on redefining the management and control mechanisms of technical education and vocational training, particularly by strengthening partnership with the private sector in this area. Synergies with AFD in this project also fall within the overall framework of cooperation in the education and training sector, to coordinate and leverage the various forms of support. 1.3.4 The PDCRH is complementary to the interventions of other partners involved in technical education and vocational training. As with the PDCRH, the Vocational Training System Overhaul Support Project (PARSEF) is in line with the objective of developing the skills needed to diversify the national economy, in conjunction with the “Building and

Construction Materials” cluster of the NDP and trades of the industrial maintenance sector. For its part, the Skills Development for Employment in Congo Project lays emphasis on functional literacy and skills training for out-of-school youths, as well as on entrepreneurship. Therefore, the various interventions are consistent with the development of skills for employment purposes, involving support in different areas or beneficiaries of various profiles. II. PROJECT DESCRIPTION 2.1 Project Components 2.1.1 The project objective is to contribute to more inclusive growth by improving the relevance of vocational training. It aims to: (i) create new vocational training streams; and (ii) improve ETPFQ governance to tailor training to the needs of the economy. It comprises the components and activities summarized in Table 2.1 below:

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Table 2.1: Project Components Component Cost Description

1. Training diversification support

UA 14.303 million

This component aims to ensure: (i) the construction or expansion and equipping of three (03) vocational and skills training centres specialized in woodworking and mining; (ii) the establishment of benchmarks for job-skills training and certification; and (iii) the training of trainers. It also aims to enhance the image of vocational and skills training within the national population. Lastly, the component will help to strengthen the participation of girls in vocational and skills training, especially in industrial sectors, through specific awareness campaigns and the introduction of training scholarships.

2. Strengthening of the match between training and employment

UA 5.029 million

The second component will enable: (i) experimentation with new management methods for vocational and skills training in connection with the autonomy of training centres, private sector involvement and performance-based financing; (ii) the establishment of a system for monitoring the employment of training centre graduates; (iii) the assessment of the impact of these management methods on training graduate employment; and (iv) the conduct of studies and updating of the ETPFQ strategy.

3. Project management

UA 1.373 million

This component provides for the establishment of an appropriate mechanism for the overall coordination and monitoring of project implementation. The mechanism is described in §4.1.1 below and in Annex V. The main activities are: equipment, technical assistance, monitoring and evaluation, auditing and project operation.

2.1.2 The most important characteristic of technical education and vocational training is probably the flexibility of the training provided. Given that the economy is marked by constantly changing trends in the goods and services produced and consumed, training must adapt to these changes in the economy, which may concern developments in related sectors and occupations, or developments in the manner of performing existing occupations due to changes in technology. 2.1.3 The first element considered regarding educational flexibility is the pedagogic and financial autonomy of training centres. Pedagogically, autonomy is essential because it allows each individual training centre to adapt its courses to the needs of the local economy and to make changes in the training provided so as to reflect the changes in its environment (establishment of new economic actors and new production units, disappearance of certain occupations, etc.). Financially, autonomy is important, given that it enables centres to ensure the quality of the training offered. It can enable them to mobilise the resources required to involve private sector professionals in training activities, as well as renew their equipment, finance their goods and services production activities, etc. 2.1.4 The second factor taken into account is the private sector involvement in the training. In addition to the interest that private sector involvement generates for the continuing redefinition of training programmes, the private sector enables the public sector to have a number of equipment at low cost. This is very important, especially since equipment changes as technology evolves. In this sense, the non-involvement of the private sector in training delivery compels the public sector to assume the task of equipment renewal, which is not always possible, given the high investment cost that that entails. 2.1.5 The two key components of the project take into account guidelines of the ETPFQ General Policy Strategy Paper on Recovery and Development, which focuses on the adaptation of the institutional and regulatory framework to strengthen its ties with the productive sector and on work-linked training. 2.2 Technical Solutions Adopted and Alternatives Explored 2.2.1 In preparing the project, various options were discussed, firstly, regarding the project objectives and, secondly, in connection with the modalities for implementing the new vocational training streams. Concerning the project objectives, the Ministry of Forest Economy and Sustainable Development expressed the wish that account should be taken of its

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concerns relating to the development of an information system on timber, forest certification and a timber market study. Given that all these aspects, although relevant to the development of the forest economy, are not consistent with a skills development-oriented project, it was decided that they should be considered within the context of subsequent consultations where they could be streamlined into a forest governance project. Regarding the modalities for implementing the new vocational training, it was envisaged that focus should be on strengthening existing training centres as opposed to building new ones. The latter option was rejected, since it is desirable for training centres to be located close to the place of operation of the economic activities to which the training relates. The framework adopted will promote the involvement of productive sectors in training delivery, the organisation of practical activities and internships, and ultimately the employability of the training graduates. 2.2.2 Table 2.2 below shows the project alternatives explored and reasons for their rejection.

Table 2.2: Project Alternatives Explored and Reasons for Rejection Alternative Name Brief Description Reasons for Rejection

Consideration of all needs related to the forest economy.

Establishment of a timber information system, support for forest certification and study of the timber market.

No consistency between these activities and a project focused on skills development.

Strengthening of existing training centres.

Introduction of new streams in existing training centres instead of building new centres.

The need for training to be offered close to the places where economic activities related to such training are carried out in an effort to foster the employability of persons trained.

2.3 Project Type The PDCRH is an investment project financed by an ADF loan. It is part of the effort to create the skills needed to diversify the national economy through the development of sectors identified in the NDP. The project will help to diversify training opportunities and improve the employability of youths leaving the technical and vocational education and skills training system, through activities related to knowledge building and the establishment of policy and performance assessment systems. 2.4 Project Cost and Financing Arrangements The total project cost is estimated at UA 20.704 million, of which UA 8.722 million will be in foreign exchange (42.13%) and UA 11.981 million in local currency (57.87%). This funding is shared between the Bank and the country at the rate of 36.23% and 63.77%, respectively. The costs were determined based on unit and fixed prices consistent with similar services in the Republic of Congo. Construction costs were determined based on the costs of vocational training centres recently funded by the Bank under PARSEGD. The costs include a 5% provision for physical contingencies and a provision for price escalation representing 1.9% of the base cost for both foreign exchange and local currency expenditures. Detailed costs are presented in Technical Annex B2.

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Table 2.3: Project Cost Component (in UA thousand)

Components Foreign

Exchange Local

Currency Total

Foreign Exchange

% 1. Training diversification 6 686 6 850 13 536 49.39%

2. Enhancement of the match between training and employment

593 3 990 4 583 12.94%

3. Project management 915 332 1 246 73.40%

Base cost 8 159 11 207 19 365 42.13%

Physical contingencies (5 %) 408 560 968 Price escalation (1.91 %) 156 214 370 Total project cost 8 722 11 981 20 704

Table 2.4: Sources of Financing (in UA thousand)

Sources of Financing Foreign

Exchange Local Currency Total % Total

ADF 1 574 5 926 7 500 36.23%

Government of the Republic of Congo 7 148 6 056 13 204 63.77%

Total project cost 8 722 11 981 20 704

Table 2.5: Project Cost by Expenditure Category (in UA thousand)

Categories Foreign

Exchange Local

Currency Total

Foreign Exchange

% Works 3 366 4 621 7 988 42.14%

Goods 2 692 646 3 338 80.64%

Services 1 640 5 550 7 190 22.81%

Operation 515 334 849 60.61%

Base cost 8 159 11 207 19 365 42.13%

Physical contingencies (5 %) 408 560 968 Price escalation (1.91 %) 156 214 370 Total project cost 8 722 11 981 20 704

Table 2.6: Expenditure Schedule by Component (in UA thousand) Components 2015 2016 2017 2018 2019 Overall

1. Training diversification 11 778 998 465 295 0 13 536

2. Enhancement of the match between training and employment

1 082 1 345 1 104 1 023 30 4 583

3. Project management 414 243 223 183 183 1 246

Base cost 13 273 2 587 1 792 1 501 213 19 365

Total project cost 13 937 2 798 1 996 1 722 251 20 704

Table 2.7: Project Cost by Expenditure Category and Source of Financing (in UA thousand)

ADF Government of the Republic

Congo Combined

Foreign

Exchange Local

Currency Total

Foreign Exchange

Local Currency

Total Foreign

Exchange Local

Currency Total

Works 0 0 0 3 535 4 853 8 387 3 535 4 853 8 387

Goods 0 61 61 2 828 618 3 446 2 828 679 3 507

Services 1 012 5 500 6 512 786 585 1 371 1 798 6 085 7 883

Operation 562 365 927 0 0 0 562 365 927

Total 1 574 5 926 7 500 7 148 6 056 13 204 8 722 11 981 20 704

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2.5 Project Target Area and Beneficiaries The project covers the entire national territory and the main beneficiaries are young people who will be trained. Various government services and private sector organisations that will be strengthened will also benefit from the project. Throughout the life span of the training centres (25 years), the project will benefit 7 500 young people, including 3 750 girls, who will receive initial training in the facilities. Strengthening the balance between training and employment will benefit all young people leaving the technical, vocational and skills training sectors, since the training will be more relevant. Various government services, including the Ministry of Technical and Vocational Education, Skills Training and Employment and the National Institute of Statistics, will receive institutional support in the field of statistics and impact assessment. Lastly, the project includes activities to support the structuring of the private sector, both for employer organisations and artisan groups. 2.6 Participatory Approach to Project Identification, Design and Implementation 2.6.1 Considering the PDCRH objectives, success will require the existence of a strong partnership between the public and private sectors with respect to vocational training, both in terms of project design and implementation. 2.6.2 During the design phase, consultations were held with the two main employer organisations and the Ministry responsible for SMEs and crafts. Private sector representatives considered the skills gap as one of the main obstacles to the development of activities. While acknowledging the relevance of the project, they raised concerns about: (i) the quality of the education and training system as a whole; and (ii) transparency and accountability in the use of the private sector’s financial contribution to vocational training (apprenticeship

tax). In addition, they expressed the wish that private sector organisations (employer organisations and artisan groups) should be provided capacity building so that they can contribute fully to the achievement of project objectives. In light of these discussions, the analysis of the sub-sector planned under Component 2 of the project will conduct a diagnosis on how the apprenticeship tax is currently used. The strategy also planned in Component 2 will make proposals aimed at improving transparency in the use of these funds. The project will finance activities to provide capacity building for employer organisations and the structuring of artisan groups. 2.6.3 During project implementation, the private sector will contribute significantly both in carrying out activities and in project management and evaluation. In the current situation, there is a formal framework for partnership between the public and private sector in training centres being established in Brazzaville and Pointe Noire with AFD financing. However, while the partnership concerns only the two training centres, the private companies involved are structured businesses since they are members of the two main employer organisations. Considering the small share of the formal sector in the national economy, the partnership planned with the private sector will be extended to the handicraft sector, whose organisations will be strengthened so that they may be able to play their role in the partnership. The private sector will be involved in the development of programmes in the new training streams and will contribute to the experimentation planned in Component 2. In this respect, the private sector will be associated in defining the content of training programmes and in implementing training courses, since public training centres will make use of professionals from the private sector. Lastly, the private sector will be more closely involved in technical education and vocational training monitoring and evaluation mechanisms. The project will help to strengthen the National Council of Technical and Vocational Education, Skills Training and

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Employment, which is the body responsible for defining guidelines in the sub-sector and in which the private sector participates. 2.6.4 The project’s participatory process also involves the consultation of youths trained. Training centres were visited during project preparation, and discussions held during these visits highlight the need for greater involvement of youths trained in the vocational training management framework. In the current situation, training centre graduates are not associated in the management of training centres, or that of the sub-sector. The project intends to bring them on board in the management committees of independent training centres. It also plans to include in the Project Steering Committee representatives of training centre graduates, who are the main beneficiaries of the project. Such representation will help gather information on beneficiary satisfaction and draw relevant lessons for the project and the ETPFQ sub-sector as a whole. 2.7 Key Performance Indicators The performance indicators identified and the expected project completion outcomes are listed in the Result-Based Logical Framework. The monitoring and evaluation specialist included in the project team will measure them. The monitoring and evaluation system will be defined from the project beneficiary structures. The key project performance indicators are presented in the following box. 2.8 Consideration of Bank Group Experience and Lessons from Project Design Project completion reports focus on four points and lessons learned are incorporated into the project design. They highlight: (i) capacity building of Project Implementation Units (PIUs) and the provision of technical assistance at the start of projects; (ii) strengthening of supervision missions and monitoring of performance indicators during these missions; (iii) coordination with other technical and financial partners (TFPs); and (iv) improving the quality of projects at entry. The implementation modalities provided take these recommendations into account. Therefore, technical assistance is expected to be recruited for the project team in the areas of procurement, financial management and monitoring/evaluation. Moreover, technical assistance was recruited with funding from Pillar III of the Fragile States Facility to conduct a study, including particularly the training centre construction programme

Box: Key Performance Indicators Impact Indicators The unemployment rate among young people aged 25-34 years drops from 17.6% in 2011 to 10% in 2025 for men and from 28.9% in 2011 to 18% in 2025 for women.

Effect Indicators The unemployment rate among young people aged 25-34 years leaving ETPFQ drops from 18.1% in 2011 to 12% in 2020 for men and from 42.5% in 2011 to 30% in 2020 for women.

Output Indicators

Three training centres are established, equipped and operational in 2017 At least three trade-skill, training and certification benchmark systems are developed in 2016 60 teachers of whom at least 50% are women are trained in the new streams proposed in 2017 450 young people of whom at least 50% are girls are trained in 2019 The new ETPFQ sector strategy is developed in 2017 The impacts on the employment of those trained, training centre autonomy, private sector

involvement and performance-based financing are assessed in 2019.

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(buildings needed, surface area, estimated cost, etc.) and to define the content of streams to ensure better quality at entry.

III. PROJECT FEASIBILITY

3.1 Economic and Financial Performance

Economic Performance

3.1.1 The project will have a significant impact on economic development since it will help to train the skilled labour needed for the development of new economic sectors. Through this project, key sectors for diversifying the national economy, particularly forestry and mining, will be strengthened so that they may be able to create jobs for young people and contribute to inclusive economic growth. The project will also support efforts aimed at developing and improving the employability of ETPFQ graduates. In the medium term, this will make it possible to reduce the risk of unemployment of all training centre graduates. Lastly, the project will enhance capacity building of private actors, especially employer organisations and artisan groups, which will contribute to private sector development and productivity improvement. 3.1.2 The project will foster the development of skills relevant to productive sector needs. The current status of the technical education and vocational training system is characterized by a high level of unemployment among graduates of the training system. Youth unemployment rate is high (23.7% for the 25-34 age range) and that of technical education and vocational training graduates is even higher (30.6% for the same age bracket). Therefore, it is necessary to give them the skills needed in economic sectors that offer jobs or could offer employment in the coming years, including entrepreneurial skills. Financial Performance

Table 3.1: Main Economic and Financial Data

30% of youths

trained are unemployed

20% of youths trained are

unemployed

10% of youths trained are

unemployed NPV (in CFAF billion, 12% discount rate)

24.596 28.109 31.623

TR = 𝑁𝑃𝑉−𝐼

𝐼 30% 49% 67%

I is the initial investment, corresponding to the project cost

3.1.3 PDCRH is financially profitable, with a Net Present Value (NPV) that, although underestimated, is higher than the project investment cost. The analysis focuses exclusively on the cost of introducing the new streams, which is 60.82% of the project base cost. In terms of investment, the analysis takes into consideration the infrastructure cost, depreciation and current cost of training. Income flows are represented by wages to be earned by the persons trained throughout their careers. The salary corresponds to the average wage of skilled workers, while the experience is based on performance as estimated from the 2011 ECOM survey of skilled workers. The lifespan of training centres is set at 25 years. Lastly, given that the total wage income depends on the unemployment rate of persons trained, the Net Present Value (NPV) and Rate of Return (RR) of the project are estimated using three unemployment rate scenarios: 30%, 20% and 10%. In these scenarios, the additional annual average income (cash flow) represented by the updated wages amount to CFAF 24.596 billion, CFAF 28.109 billion and CFAF 31.623 billion.

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3.2 Environmental and Social Impact 3.2.1 PDCRH is classified in Category 2 under the Bank’s environmental and social procedures, given its limited negative environmental impacts related primarily to the construction or expansion of vocational training centres. This issue is addressed in Component 1 of the project "Support for Diversification of the Provision of Vocational Training". Given the nature of activities related to the construction and expansion of training centres and the areas concerned, Operational Safeguards applicable to PDCRH are: OS-1 "Environmental Assessment", OS-3 "Biodiversity and Ecosystem Services", and OS-5 "Working, Health and Safety Conditions". However, not all of them are systematically triggered. The ESMP has mitigation measures to ensure project compliance with operational safeguards and Congolese regulations. 3.2.2 Environment: The activities planned will result in moderate and reversible adverse effects on the physical, biological and socioeconomic environment. The environmental impact of construction activities planned is expected to remain relatively moderate because of their concentration on the work sites and the average size of the areas concerned, taking into account the borrow areas of building materials. The project’s negative environmental impacts include: (i) destruction of soil and landscape degradation; (ii) pressure on water resources; (iii) soil and water pollution; (iv) deterioration of air quality as a result of dust production and noise pollution (noise and vibration); (v) deforestation and loss of vegetation; and (vi) loss, fragmentation and degradation of habitat, and disruption of animal migration routes and trails. However, the ESMP recommends mitigation measures for each project phase: (i) design phase - site selection and planning; (ii) construction phase; and (iii) operational phase. The Environment Directorate of the Ministry of Tourism and Environment will support the project in monitoring the ESMP implementation. The Ministry of Forest Economy and Sustainable Development and the Ministry of Mines and Geology will also play an active part since they are directly concerned by the duties of the vocational training centres. The ESMP is summarized in Technical Annex B.8. 3.2.3 Climate change: The training centre construction and expansion works planned under the project are not likely to alter greenhouse gas emissions in the Republic of Congo. According to WDI data, the level of CO2 emissions per capita in the country is among the lowest globally. The country produces about 0.5 tonnes of CO2 per capita per year, compared with a world average of 4.88 tonnes per capita per year. 3.2.4 Social: The project will contribute to skills development and employment of young people and women. Firstly, PDCRH aims to create new skills in the economic areas being developed, but in which there is a lack of expertise within the country. Secondly, the project includes many actions aimed at enhancing the linkage between education and the economic sector; such actions (training by professionals, sandwich courses, internships), are likely to foster youth employment. The project aims to develop capacity building activities for artisan groups and promote entrepreneurship through training content in an effort to enhance self-employment, youth and women’s leadership. It will help to improve the provision and quality of technical and vocational education in Congo. Although the project has major positive impacts, it will also have negative ones as well as potential risks that should be anticipated and mitigated. The positive impacts and potential positive impacts of the construction or expansion of training centres concern the three phases and mainly include: creating jobs, reducing unemployment and youth exodus, stimulating the local and regional economy, raising income and living conditions, and reducing poverty; improving access to drinking water, electricity and health services for local communities; improving school safety and the quality of teaching; opening up remote areas and improving the movement of local populations; improved

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integration of gender in all trades and streamlining of environmental and social issues in vocational training modules. The potential negative impacts on the socio-economic environment are: (i) risk of expropriation and friction in case of occupation of private lands; (ii) disruption of traffic and socio-economic activities during work; (iii) pollution and nuisance on the living conditions of local populations; (iv) risk of destruction of property on the sites; (v) risk of labour disputes for non-employment of local labour; (vi) health risks to residents and workers as well as the risks associated with construction accidents; and (vii) risk of deterioration of cultural relics. Those impacts will, however, be minimised through appropriate site selection and the implementation of mitigation measures proposed by the ESMP. 3.2.5 Gender: Women will directly benefit from facilities offered by the project and designed to help reduce the significant gender disparities existing both in training and employment. For a fact, vocational training is marked by an overall balanced participation in terms of gender, but it is particularly unbalanced depending on the different types of streams. Some courses essentially attract women, while others are almost exclusively for men. Data on participation in skills training clearly highlight this segmentation in access to streams by gender. While there are no boys in courses such as hairdressing, aesthetics, dressmaking, catering, cooking or baking, girls are virtually absent from training in the driving, refrigeration, plumbing, carpentry, masonry, electrics for construction work, and mechanical fields. There are also significant gender disparities in the field of employment, with an unemployment rate of 22.6% for women aged 15-59 years (28.9% for 25-34 years), compared to 14.7% for men in the same age group (17.6% for ages 25-35). The project will contribute to reducing these disparities not only through specific gender awareness actions in vocational training, but also by funding training grants for girls in training centres to be set up. With regard to women’s

employment, their greater enrolment in industrial-type courses provided in the project will contribute to the reduction of unemployment and an increase in their average income, given that average income is higher in industry than in agriculture or services. 3.2.6 Involuntary resettlement: Although activities related to the construction of training centre facilities will not result in any population displacement, this criterion should be taken into account in the choice of sites. IV. IMPLEMENTATION 4.1 Implementation Arrangements Project Coordination and Management

4.1.1 The project will be supervised by the Ministry of Technical and Vocational Education, Skills Training and Employment. Within the Ministry, the Project Coordination Unit (PCU), which was established since 2007 and is already running several projects funded by other technical and financial partners, will be responsible for the fiduciary execution (procurement and financial management) of the project. The PCU will work closely with the Directorate-General of Skills Training and Employment, which will be in charge of the technical implementation of project components. The PCU management team will be supplemented with the appointment by decree of the following officers by the line minister: (i) a Project Coordinator from the DGFQE; (ii) a Financial Officer from the DGFQE who will act as the accountant; and (iii) a national counterpart in charge of procurement. The DGFQE will be responsible for the overall coordination of project implementation. The Director-General of Skills Training and Employment will coordinate the preparation of quarterly progress reports and annual audit reports that METPFQE will forward to the Bank.

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4.1.2 The project implementation guidelines will be defined by a Project Steering Committee (PSC), which will include representatives of various ministries (Ministry of Economy, Finance, Planning, Public Portfolio and Integration, METPFQE, Ministry of Forest Economy and Sustainable Development, Ministry of Mines and Geology), employer organisations, artisan groups and two representatives of the graduates of training centres that are beneficiaries of the project, including a girl. The PSC will be chaired by the Minister of Technical and Vocational Education, Skills Training and Employment. 4.1.3 To build the capacity of the PCU and DGFQE to ensure proper project implementation, provision has been made to recruit technical assistance in the form of individual consultants in financial control (or internal audit), project financial accounting, procurement and monitoring/evaluation. The project team will be assisted by support staff consisting of a secretary and two drivers. The technical assistance and support staff (secretary and drivers) will be recruited on a competitive basis in accordance with Bank procedures. Compensation of support staff will be in the form of additional allowances paid to the PCU Director, the Director-General for Skills Training and Employment, the Project Coordinator, the Administrative and Financial Manager, the Accountant, the national counterpart in charge of procurement (based on their performance), on the one hand, and to technical assistance and support staff (secretary and drivers), based on contractual arrangements, on the other. Performance contracts will be signed between the METFPQE and project staff. Procurement Arrangements

4.1.4 All procurement of goods and works by International Competitive Bidding (ICB) and consultancy services financed by the Fund will be in accordance with the Rules and Procedures for the procurement of goods and works of the Fund, May 2008 edition revised July 2012, or Procedures for the Use of Consultants May 2008 edition, revised July 2012, using the Fund’s

standard bidding documents (SBD). All procurement using National Competitive Bidding (NCB) or through shopping will be in accordance with national procedures based on the procurement code Decree No. 2009-156 of 20 May 2009, using the standard bidding documents for National Competitive Bidding (SBDNCB) of the Borrower, subject to the provisions stipulated in Annex III of the Financing Agreement. Financial Management and Audit Arrangements

4.1.5 The assessment of the financial management systems of the executing agency through the METPFQ Project Coordination Unit (PCU) in the Republic of Congo was conducted from 22 to 28 June 2014, in accordance with the financial management policy relating to operations funded by the African Development Bank Group and the directives to promote the use of country public financial management (PFM) systems (February 2014). The purpose of this assessment was to determine if the entity selected to implement the project has the acceptable and appropriate capacity for the financial management of projects. This assessment allows the Bank to ensure that: (i) project resources are used for their intended purposes, as well as in a cost-effective and efficient manner; (ii) the project's financial reports are accurate, reliable and timely; and (iii) project assets are safeguarded.

4.1.6 Congo's public financial management systems are still fraught with risks that are deemed high or significant for all components, despite on-going reforms. Consequently, the use of country systems is not recommended for the implementation of PDCRH, under which the METPFQE’s capacity to ensure the financial management of development projects

will be strengthened. Financial management will be performed in accordance with the Directives governing the financial management of operations financed by the Bank Group (April 2014). However, the management of counterpart funds will be subject to the mechanisms

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in force in the Republic of Congo related to the preparation, execution and control of the State budget. Similarly, the General Inspectorate of Finance (IGF) may intervene as part of the review (including Bank supervision) and service certification missions conducted in accordance with its public mandate.

4.1.7 Based on the review conducted, the overall risk associated with the financial management of the project was assessed as substantial due to the lack of an appropriate and acceptable financial management system within METPFQE. Hence, the financial management of the project will be entrusted to the PCU established since 2007 at METPFQE. This unit has experience in the financial management of projects funded by donors (WB, EU and AFD) and an existing financial management mechanism, although the latter has a number of lingering weaknesses. Therefore, PDCRH will offer an opportunity to strengthen the PCU's capacity by providing the unit with the resources and tools required to support the DGFQE in the technical and financial implementation of the project. An administrative, financial and accounting procedures manual, funded from the project budget, will be prepared to define the roles and duties of each party under the new PCU configuration. An integrated financial management information system funded from the ADF loan resources will be set up within the PCU to ensure that the same tool is used for financial and accounting monitoring of the project and the management of contracts to be financed from loan resources and counterpart funds. The PCU financial staff will be supported by local technical assistance consisting of an internal auditor and an accountant to handle the project components. A budget line will be provided for the capacity building of finance staff, including those of the DGFQE, pending the fiduciary clinic phases that the Bank will organise in Congo. 4.1.8 Project disbursements will be carried out in accordance with the provisions of the Bank disbursement manual in force. Three disbursement methods will be selected for the project: (i) the direct payment method for contracts on expenditure for works, goods and services; (ii) the special account method for operating expenses; and (iii) the reimbursement method in case the Government incurs expenditure eligible for ADF financing, subject to justification of such expenditure after a favourable opinion from the Bank, especially for expenditure relating to the procurement of the administrative and financial procedures manual, the purchase of management software, the recruitment of technical assistance, including the fees for three (03) months. The use of national counterpart funds allocated to PDCRH will be subject to the control mechanisms of the Ministry of Economy, Finance, Planning, Public Portfolio and Integration, according to national financial management rules and in line with Bank procedures. 4.1.9 An independent audit firm will be recruited by the PCU, as per Bank procedures, at the latest within six (6) months of loan effectiveness. The terms of reference of the external project audit will be prepared to reflect the specific nature of PDCRH and approved at the negotiation phase. The external auditor's contract will span two successive years and will be renewed based on performance deemed satisfactory by the Bank. Each year's audit report, drawn up on the basis of the PCU’s annual financial statements and accompanied by a letter to Management, will be forwarded to the Bank within six months of the end of each fiscal year. In planning the auditor's missions, account should be taken of the project status so as to cover all project areas with a view to ascertaining the physical existence of assets procured by the project. The PCU will ensure regular transmission of audit reports to the Bank, in accordance with the set timeframes. The scope of the audit will also include counterpart financing. 4.1.10 Bearing in mind the risks identified at country level, the executing agency and the project, mitigation measures were proposed in the financial management action plan, with a view to bringing these risks to a moderate level from the implementation phase to the financial closure of the project. This action plan will be monitored to ensure that it is

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regularly updated during the project's lifespan through Bank supervision missions. METFQE's implementation of the proposed measures, through the PCU, should especially ensure that existing or established financial management arrangements are adequate and appropriate in terms of providing, with reasonable assurance, accurate and timely information on the physical and financial progress of the project, in accordance with Bank requirements. The assessment of the financial management risk is detailed in sections B4 and B6 of the Technical Annexes. 4.2 Project Monitoring and Evaluation 4.2.1 The project monitoring and evaluation system is part of a framework that needs to be strengthened. Contrary to what is generally observed in the education and training sector, METPFQE performs no regular and comprehensive data collection (school census type) on training centres and their students. Therefore, available statistical information on the sector does not allow for a detailed analysis of the training provided in a manner that would distinguish between existing streams, for instance, nor does it make it possible to study regional disparities in training delivery or gender disparities. METPFQE's statistical and monitoring/evaluation system also makes no provision for any sector performance monitoring activities in terms of employment of persons trained. In this context, the project includes activities designed to strengthen METPFQE in terms of data collection and information system. The support will not only ensure project monitoring and evaluation, but will also lead to the enhancement of METPFQE's structural capacity in this area. 4.2.2 The internal monitoring and evaluation of project activities and indicators of the project logical framework will be carried out by the DGFQE Department of Statistics and Information Technology. The choice of the Department of Statistics is due to the preponderance of statistical activities and evaluation issues included in the project. The DGFQE will prepare quarterly and annual project implementation reports, which it will forward to the Bank. All reports must comply with Bank formats. Gender-disaggregated data will be provided in the reports. Additional basic data will be collected, if need be, in accordance with performance indicators selected for the project. The training graduate integration monitoring system that will be introduced under the project will be incorporated into METPFQE's evaluation system as part and parcel of the sector performance assessment mechanism.

4.2.3 The external monitoring and evaluation system will be designed based on the outcome and output indicators defined in the logical framework. In addition, the Bank will field at least two supervision missions per year. After thirty months of implementation, the project will be reviewed at mid-term to measure the progress achieved against the logical framework indicators and annual activity plans. The project completion report will be prepared jointly by the Borrower and the Bank. The schedule of key activities is as follows:

Table 4.1: Monitoring Stages and Feedback Loop Duration Stage Monitoring Activities/Feedback Loop

December 2014 Board approval of the loan

Responses to questions from the Directors, notification to the Government, preparation of the project launch mission

March 2015 Launch mission Training of project team members

2015-2020 Implementation of activities

Management, procurement, supervision missions, disbursements and audit.

January 2018 Mid-term review Item on the progress of the project, changes to be made to the project.

June 2020 Completion report Review of project achievements, analysis of gaps between goals and achievements, lessons learned.

March 2021 Project completion Closing of accounts, cancelling of balances, return of special account balances to the Bank, where applicable...

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4.2.4 Impact assessment will be an integral part of monitoring and evaluation, to which will be devoted a project sub-component. To this end, the project will support the conduct of impact assessment in three areas of activity to enhance the flexibility of the training provided and improve the employability of those trained. The project will also contribute to the establishment of a system for monitoring the integration of ETPFQ graduates, which will make for the continuous tailoring of training to labour market needs.

4.3 Governance 4.3.1 The implementation of Bank projects in the Republic of Congo is satisfactory overall, but requires a number of strengthening measures. Moreover, METPFQE, which will be responsible for PDCRH implementation, has only limited experience in implementing projects funded by multilateral development banks.

4.3.2 The technical capacity of METPFQE services will be built in procurement, financial management, disbursement procedures and monitoring/evaluation. During PDCRH implementation, the Bank's usual control and audit system will be used throughout the project duration. Control of the use of project resources will be strengthened by recruiting a Financial Management Specialist who will play the role of internal auditor within the Project Coordination Unit. Other arrangements will be made under PDCRH to mitigate risks related to the project's fiduciary framework, particularly through Bank control of the procurement process, exercised by issuing no-objection notices in respect of bid documents, bid proposals, contracts, disbursement procedures, and supervision missions and external annual audits of project accounts. In addition, the Bank will organise training sessions in Congo on its procurement and financial management rules and procedures. Project staff will take part in this training. 4.3.3 Regarding the project’s financial governance, METPFQE will maintain separate project accounts using software procured with funds from the ADF loan. The software will allow for cost accounting and reporting, highlighting expenditure by component, category and source of financing. Project accounts will be audited annually by a firm hired for that purpose. Audit and financial reports will be submitted to AfDB within six months of closure of the accounting period. 4.4 Sustainability The political and financial priority that the National Development Plan (NDP) gives to skills development is the main factor of project sustainability. Among the NDP pillars, skills development appears to be the "basic economic infrastructure" for each of the clusters identified as drivers of national economic diversification. From the standpoint of training diversification, the project's sustainability is ensured by own resources generated by training centres and private sector participation in management such centres, including financing them. From the viewpoint of improving the employability of those trained, the experimentation approach will be followed, thanks to which only operations that are most cost-effective in terms of promoting the employment of persons trained and which can be more easily implemented in a sustainable manner will be retained.

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4.5 Risk Management Risk Level Mitigation Measures Lack of ownership of the outcomes of studies and impact assessment.

F Dissemination of research findings and policy dialogue.

Weak demand for the new streams. F Communications strategy to upgrade the created streams. Unwillingness of public authorities to involve the private sector in managing the training centres.

M Promotion of dialogue between the Government and the private sector, experimentation and evaluation.

Inadequate consultation among stakeholders. M Strengthening of the National Council for Technical and Vocational Education, Skills Training and Employment (CNETPFQE).

Limited capacity of the Directorate-General of Skills Training and Employment (DGFQE) in managing Bank-financed projects.

F Technical assistance, continuing training for project staff on Bank regulations, performance contracts, preparation of a procedures manual for the project.

The identified risks faced by the project relate to both the implementation and the achievement of development goals. The above table presents measures for mitigating identified risks. 4.6 Knowledge Building The project will enable METPFQE to benefit from impact assessment and a significant number of studies as well as technical assistance and exchange of experiences in various forms. These activities will lead to the acquisition of a large volume of information in various areas related to the development of technical and vocational education, and skills training, as well as employability of persons trained. Knowledge building will concern the financing of the sector, the institutional framework and partnerships with the private sector, the production functions of training services, employment of those trained, labour market and the national economy as a whole, in view of the need to strengthen the link between the training sector and the economic sector. V. LEGAL FRAMEWORK 5.1 Legal Instrument The financing instrument proposed to the Republic of Congo is an ADF loan totalling UA 7.5 million. A loan agreement will be signed between the Republic of Congo (the Borrower), on the one hand, and the African Development Fund (the “ADF”), on the other. 5.2 Conditions Associated with Bank Intervention 5.2.1 Conditions precedent to effectiveness of the ADF loan: The effectiveness of the loan will be subject to the fulfilment, by the Borrower, to the satisfaction of the ADF, of the conditions laid down in Article XII, Section 12.01 of the General Conditions Applicable to Loan Agreements and Guarantee Agreements of the Fund (Sovereign Entities). 5.2.2 Conditions precedent to first disbursement of loan resources: In addition to the effectiveness of this Agreement, disbursement of loan resources shall be subject to fulfilment, by the Borrower, to the satisfaction of the Fund, of the following conditions:

(i) Provide the Fund with evidence of the appointment of members of the DGFQE Project Team comprising a coordinator, a senior finance officer acting as an accountant and a national counterpart in charge of procurement; and

(ii) Forward to the Fund evidence of the opening of two (02) special accounts in one

or more banks deemed acceptable by the Fund, to receive the ADF loan resources (in foreign exchange) and Government counterpart funds.

19

5.2.3 Other Conditions: The Borrower shall also, latest six (06) months after the project launch: (i) submit to the Fund evidence of the preparation and adoption of an administrative, financial and accounting procedures manual funded from the project budget; (ii) evidence of procurement and installation of an accounting software; and (iii) transmit to the Fund evidence of recruitment of a procurement specialist. 5.2.4 Undertaking: The Borrower undertakes to forward to the Fund quarterly progress reports and annual audit reports on the status of the project. 5.3 Compliance with Bank Policies This project is consistent with applicable Bank policies. It will be implemented as part of the Bank's intervention strategy in the Republic of Congo defined in the CSP 2013-2017 and the Bank's Long-Term Strategy 2013-2022. VI. RECOMMENDATION Management hereby recommends that the Board approve the proposed ADF loan of UA 7.5 million to the Republic of Congo for the purpose and under the conditions set out in this report.

I

Annex I: Comparative Country Socio-economic Indicators

Year Congo Africa

Develo-

ping

Countries

Develo-

ped

Countries

Basic Indicators

Area ( '000 Km²) 2011 342 30 323 98 458 35 811Total Population (millions) 2013 4,4 1 109,0 5 909,3 1 252,8Urban Population (% of Total) 2013 64,5 40,2 47,7 78,3Population Density (per Km²) 2013 12,1 46,9 70,7 23,5GNI per Capita (US $) 2012 2 550 1 719 3 815 38 412Labor Force Participation - Total (%) 2012-2013 39,2 37,4 67,9 72,1Labor Force Participation - Female (%) 2012-2013 48,4 42,5 38,6 44,6Gender -Related Dev elopment Index Value 2007-2011 0,594 0,502 0,694 0,911Human Dev elop. Index (Rank among 187 countries) 2012 142 ... ... ...Popul. Liv ing Below $ 1.25 a Day (% of Population)2005-2011 54,1 40,0 20,6 ...

Demographic Indicators

Population Grow th Rate - Total (%) 2013 2,5 2,5 1,3 0,3Population Grow th Rate - Urban (%) 2013 3,2 3,4 2,5 0,6Population < 15 y ears (%) 2013 42,5 40,9 28,3 16,4Population >= 65 y ears (%) 2013 3,4 3,5 6,1 16,8Dependency Ratio (%) 2013 79,0 77,9 52,4 49,9Sex Ratio (per 100 female) 2013 100,0 100,0 103,3 94,4Female Population 15-49 y ears (% of total population) 2013 23,6 24,0 53,1 45,2Life Ex pectancy at Birth - Total (y ears) 2013 58,8 59,2 68,4 77,8Life Ex pectancy at Birth - Female (y ears) 2013 60,2 60,3 70,3 81,2Crude Birth Rate (per 1,000) 2013 37,6 34,8 21,2 11,2Crude Death Rate (per 1,000) 2013 10,2 10,4 7,6 10,4Infant Mortality Rate (per 1,000) 2013 62,9 61,9 39,8 5,5Child Mortality Rate (per 1,000) 2013 96,3 97,4 56,3 6,6Total Fertility Rate (per w oman) 2013 5,0 4,6 2,6 1,7Maternal Mortality Rate (per 100,000) 2010 560,0 415,3 240,0 16,0Women Using Contraception (%) 2013 46,7 34,9 62,6 71,3

Health & Nutrition Indicators

Phy sicians (per 100,000 people) 2004-2011 9,5 47,1 117,8 297,8Nurses (per 100,000 people)* 2004-2011 82,4 132,6 202,7 842,7Births attended by Trained Health Personnel (%) 2005-2011 83,4 52,6 66,3 ...Access to Safe Water (% of Population) 2012 75,3 68,8 87,2 99,2Access to Health Serv ices (% of Population) 2000 83,0 65,2 80,0 100,0Access to Sanitation (% of Population) 2012 14,6 39,4 56,9 96,2Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2012 2,8 3,9 1,2 ...Incidence of Tuberculosis (per 100,000) 2012 381,0 223,6 144,0 23,0Child Immunization Against Tuberculosis (%) 2012 92,0 83,0 81,5 96,1Child Immunization Against Measles (%) 2012 80,0 74,0 83,0 94,3Underw eight Children (% of children under 5 y ears) 2005-2012 11,8 19,7 17,0 1,4Daily Calorie Supply per Capita 2009 2 056 2 481 2 675 3 285Public Ex penditure on Health (as % of GDP) 2011-2012 1,6 2,9 3,0 7,5

Education Indicators

Gross Enrolment Ratio (%)

Primary School - Total 2012 109,4 101,9 109,4 100,9 Primary School - Female 2012 113,4 97,9 107,6 100,6 Secondary School - Total 2012 53,7 47,4 69,1 100,2 Secondary School - Female 2012 49,8 44,0 67,8 99,7Primary School Female Teaching Staff (% of Total) 2012 53,5 46,6 58,0 84,3Adult literacy Rate - Total (%) 2011-2012 79,3 62,0 80,3 99,2Adult literacy Rate - Male (%) 2011-2012 86,4 70,7 85,9 99,3Adult literacy Rate - Female (%) 2011-2012 72,9 53,7 74,9 99,0Percentage of GDP Spent on Education 2010-2012 6,2 5,3 4,3 5,5

Environmental Indicators

Land Use (Arable Land as % of Total Land Area) 2011 1,5 7,6 10,7 10,8Annual Rate of Deforestation (%) 2000-2009 0,1 0,6 0,4 -0,2Forest (As % of Land Area) 2011 65,6 23,0 28,2 35,0Per Capita CO2 Emissions (metric tons) 2010 1,6 1,2 3,0 11,6

Sources: AfDB Statistics Department Databases; last update :United Nations Population Division, World Population Prospects: The 2012 Revision; World Bank: World Development Indicators; UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports.For any given interval, the value refers to the most recent year available during the periodNote : n.a. : Not Applicable ; … : Data Not Available.

COMPARATIVE SOCIO-ECONOMIC INDICATORS

Congo

mai 2014

0102030405060708090

2005

2006

2007

2008

2009

2010

2011

2012

2013

Infant Mortality Rate( Per 1000 )

Congo Africa

0

500

1000

1500

2000

2500

3000

2004

2005

2006

2007

2008

2009

2010

2011

2012

GNI Per Capita US $

Congo Africa

0,00,51,01,52,02,53,03,5

2005

2006

2007

2008

2009

2010

2011

2012

2013

Population Growth Rate (%)

Congo Africa

111213141516171

2005

2006

2007

2008

2009

2010

2011

2012

2013

Life Expectancy at Birth (years)

Congo Africa

II

Annex II: Active Portfolio as of 31 July 2014

Project Name Approv Date.

Signa-ture Date

Net Commitment. Amts (UA M)

Disb Rate. (%)*

Closing Date

Project Age

Perf. Score

Multi-Resource Forest Inventory for the Development of the Land Allocation Plan (CNIAF)

5Dec11 17 Feb.12

2.11 29.45 30Jun15 2.7 S

Sub-Total Environment 2.11 29.45 2.7

Rural Electrification Project 6Dec12 5Apr13 10.00 0.00 31Dec17 1.7 NA

Sub-Total Energy 10.0 0.0 1.7

Business Climate Support Project 14Oct10 3 Feb 11 3.44 10.75 31Dec15 3.9 S

National Skills Development Project 19Jul13 9 Sep 13 1.00 0.00 31Jul14 1.1 NA

Technical Assistance and Public Finance Capacity Building Project

24Jul13 9Sep13 1.25 0.00 31Jul14 1.0 NA

Sub-Total Multi-sector 5.7 6.5 2.0 Ndende-Dolisie Road and Libreville-Brazzaville Corridor

Transport Facilitation Project ® 18 Dec13

19 Feb 14 30.49 0.00 30Jun19 0.6 NA

Study on the Kinshasa-Brazzaville Bridge Project® 3 Dec08 13 May 09

5.00 48.15 30Jun14 5.7 PPP

Cameroun/Gongo: Ketta-Djoum Road Project (Phase I) ® 25 Sep09 11 Jan10 61.90 40.59 31Dec15 4.9 PPP

Study on the Ouesso-Bangui-N'djamena Road and River Navigation ®

1 Dec10 29 Apr 11 8.00 12.79 31Dec14 3.7 S

Sub-Total Transport 105.4 27.1 3.8

Brazzaville and Pointe-Noire Sanitation Project 16 Sep09 10 Nov 09 12.75 64.48 30Jun15 4.9 S

Study on Drinking Water and Water Sector Development Fund Sanitation (EAEPA) Centres Second. and Water Sector Development Fund (FDSE) Operation

4 Jan13 21 May 13

0.95 6.26 31Dec15 1.6 NA

Sub-Total Water and Sanitation 13.70 60.44 3.3

Total 136.89 27.63 2.9

Note: *SAP: PP (Problematic project); PPP (Potential problematic project); PAR (Project-at-risk = project classified PP or PPP); S (Satisfactory project) ® Regional Project

III

Annex III: Matrix of Development Partners' Activities

AfDB Group

Project Amount Period Project to Support the Socio-economic Integration of Disadvantaged Groups (PARSEGD)

UA 14.8 million 2006-2013

National Skills Development Project UA 1 million 2013-2015

World Bank

Project Amount Period Project to Develop Skills for Employment in Congo USD 10 million 2011-2016 Basic Education Support Project (PRAEBASE) USD 3.7 million 2010-2013

French Development Agency

Project Amount Period Project to Support the Overhaul of the Vocational Training System

CFAF 3.9 billion 2013-2016

V

Annex IV: Administrative Map of the Republic Congo

Disclaimer: This map was provided by the African Development Bank exclusively for the use of readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank and its members any judgment concerning the legal status of a territory nor any approval or acceptance of these borders.

Documents

AFRICAN DEVELOPMENT FUND · AFRICAN DEVELOPMENT FUND SKILLS AND HUMAN RESOURCE DEVELOPMENT PROJECT (PDCRH) COUNTRY : REPUBLIC OF CONGO APPRAISAL REPORT November 2014 Review Team Management