Document of The World Bank · PDF fileDocument of The World Bank FOR OFFICIAL USE ONLY Report No: ... Partial Assessment Deepa Sankar ... Anna Victoria Gyllerup Senior Operations Officer

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Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: PAD362

INTERNATIONAL DEVELOPMENT ASSOCIATION

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT

IN THE AMOUNT OF SDR29.8 MILLION (US$46 MILLION EQUIVALENT)

AND

A PROPOSED GRANT

IN THE AMOUNT OF SDR3.2 MILLION

(US$4.9 MILLION EQUIVALENT)

TO THE

REPUBLIC OF MALAWI

FOR

SKILLS DEVELOPMENT PROJECT

May 28, 2014 Education Sector Department for East and Southern Africa (AFTEE) Africa Region This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank’s policy on Access to Information.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective March 31, 2014)

Currency Unit = Malawi Kwacha (MK) MK392.50 = US$1

US$1.54563 = SDR1

FISCAL YEAR July 1 – June 30

ABBREVIATIONS AND ACRONYMS

ACE Africa Centers of Excellence AfDB African Development Bank ARAP Abbreviated Resettlement Action Plan BP Bank Policy CAS Country Assistance Strategy CDSS Community Day Secondary School CHANCO Chancellor College DLI Disbursement Linked Indicator DLR Disbursement Linked Result DP Development Partners DTVT Department of Technical and Vocational Training EEP Eligible Expenditure Programs EIA Environmental Impact Assessment ERP Economic Recovery Program ESC Environmental and Social Clauses ESIP Education Sector Implementation Plan ESMF Environmental and Social Management Framework FM Financial Management HDI Human Development Index HIPC Heavily Indebted Poor Countries ICT Information and Communication Technology IDA International Development Association IFMIS Integrated Financial Management Information System IFR Interim Financial Report IHS Integrated Household Survey IIP Institution Improvement Plan IMF International Monetary Fund IPC Internal Procurement Committee IPF Investment Project Financing IRR Internal Rate of Return

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IT Information Technology JCE Junior Certificate of Secondary Education GDP Gross Domestic ProductGER Gross Enrollment Ratio GoM Government of Malawi GPE Global Partnership for Education GPI Gender Parity Index LUANAR Lilongwe University of Agriculture and Natural Resources M&E Monitoring and Evaluation MANEB Malawi National Examination Board MDG Millennium Development Goals MGDS Malawi Growth and Development Strategy MK Malawi Kwacha MoEST Ministry of Education, Science and Technology MoF Ministry of Finance MoL Ministry of Labor MSCE Malawi Secondary Certificate of Education MZUNI Mzuzu University NCB National Competitive Bidding NCHE National Council for Higher Education NEA National Environmental Agency NESP National Education Sector Plan NPV Net Present Value NQAF National Quality Assurance Framework NSS National Statistical Survey ODL Open and Distance Learning ODPP Office of Director of Public Procurement OM Operation Manual ORAF Operational Risk Assessment Framework PDO Project Development Objective PER Public Expenditure Review PIM Project Implemetation Manual PPA Project Preparation Advance PPP Public Private Partnership PqTR Pupil Qualified Teacher Ratio PSDI Participating Skills Development Institutions PSLCE Primary School Leaving Certificate Examination RBM Reserve Bank of Malawi RFP Request for Proposal ROR Rate of Return RPF Resettlement Policy Framework SBD Standard Bidding Document SC Steering Committee SDB Standard Bidding Documents SDP Skills Development Project SDR Special Drawing Right

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SEFP Social and Environment Focal Point SOE Statement of Expenditure SPGA Sub-Project Grant Agreement SPU Specialized Procurement Unit SW Staff Week TA Technical Assistance TC Technical Committee ToR Terms of Reference TPV Third Party Validation / Verification TEVET Technical, Entrepreneurial and Vocational Education and Training TEVETA Technical, Entrepreneurial and Vocational Education and Training Authority TTL Task Team Leader UNESCO United Nations Educational, Scientific and Cultural Organization UNILIA University of Livingstonia US$ United State Dollar WB World Bank WDI World Development Indicator

Regional Vice President: Makhtar Diop Country Director: Kundhavi Kadiresan

Sector Director: Tawhid Nawaz Sector Manager: Sajitha Bashir

Task Team Leader: Deepa Sankar Co-Task Team Leader: Nobuyuki Tanaka

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MALAWI

SKILLS DEVELOPMENT PROJECT (SDP)

Table of Contents

I. STRATEGIC CONTEXT .................................................................................................1

A. Country Context ............................................................................................................. 1

B. Sector and Institutional Context ..................................................................................... 2

C. Higher Level Objectives to which the Project Contributes ............................................ 3

II. PROJECT DEVELOPMENT OBJECTIVES ................................................................4

A. PDO ................................................................................................................................ 4

B. Project Beneficiaries ....................................................................................................... 4

C. PDO Level Results Indicators ........................................................................................ 4

III. PROJECT DESCRIPTION ..............................................................................................5

A. Project Components ....................................................................................................... 5

B. Project Financing ............................................................................................................ 8

C. Lessons Learned and Reflected in the Project Design ................................................. 10

IV. IMPLEMENTATION .....................................................................................................10

A. Institutional and Implementation Arrangements .......................................................... 10

B. Results Monitoring and Evaluation .............................................................................. 12

C. Sustainability ................................................................................................................ 13

V. KEY RISKS AND MITIGATION MEASURES ..........................................................14

A. Risk Ratings Summary Table ....................................................................................... 14

A. Overall Risk Rating Explanation .................................................................................. 14

VI. APPRAISAL SUMMARY ..............................................................................................14

A. Economic and Financial Analysis ................................................................................ 14

B. Technical ...................................................................................................................... 15

C. Financial Management ................................................................................................. 15

D. Procurement .................................................................................................................. 16

E. Social (including Safeguards) ...................................................................................... 16

F. Environment (including Safeguards) ............................................................................ 17

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Annex 1: Results Framework and Monitoring .........................................................................19

Annex 1.A: Logical Framework and Results Flow Diagram ........................................... 19

Annex 1.B: Results Framework ........................................................................................ 20

Annex 1.C: Results Framework and Monitoring .............................................................. 24

Annex 1.D: DLI Verification Protocol ............................................................................. 27

Annex 1. E: Disbursement Linked Results (DLRs) Indicators (DLIs) ............................. 33

Annex 1.F: Institution specific Disbursement Linked Indicators ..................................... 49

Annex 2: Detailed Project Description ......................................................................................56

Annex 3: Implementation Arrangements ..................................................................................62

Annex 4: Operational Risk Assessment Framework (ORAF) .................................................78

Annex 5: Implementation Support Plan ....................................................................................84

Annex 6: Economic and Financial Analysis ..............................................................................87

Annex 7: Current Support to Skills Development ..................................................................101

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.

PAD DATA SHEET

Malawi

Skills Development Project (P131660)

PROJECT APPRAISAL DOCUMENT .

AFRICA

AFTEE

Report No.: PAD362.

Basic Information

Project ID EA Category Team Leader

P131660 B – Partial Assessment Deepa Sankar

Lending Instrument Fragile and/or Capacity Constraints [ ]

Investment Project Financing Financial Intermediaries [ ]

Series of Projects [ ]

Project Implementation Start Date Project Implementation End Date

24-June-2014 30-June-2019

Expected Effectiveness Date Expected Closing Date

01-Aug-2014 30-June-2019

Joint IFC

No

Sector Manager Sector Director Country Director Regional Vice President

Sajitha Bashir Tawhid Nawaz Kundhavi Kadiresan Makhtar Diop .

Borrower: Republic of Malawi

Responsible Agency: Ministry of Finance

Contact: Mr. Newby Kumwembe Title: Secretary to the Treasury

Telephone No. +265-1789529 Email: [email protected] .

Project Financing Data(in US$Million)

[ ] Loan [ ] Grant [ ] Guarantee

[ X ] Credit [ X ] IDA Grant [ ] Other

Total Project Cost: 50.90 Total Bank Financing: 50.90

Financing Gap: 0.00 .

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Financing Source Amount

BORROWER/RECIPIENT 0.00

International Development Association (IDA) Credit 46.00

International Development Association (IDA) Grant 4.90

Total 50.90.

Expected Disbursements (in US$Million)

Fiscal Year 2015 2016 2017 2018 2019

Annual 17.21 8.42 10.15 7.49 7.64

Cumulative 17.21 25.62 35.78 43.26 50.90 .

Proposed Development Objective(s)

The development objective of the proposed project is to increase access, market relevance, and results orientation of supported skills development institutions in agreed priority areas. .

Components

Component Name Cost (US$Millions)

Strengthening Institutional Performance through Sub-Project Grants Agreements (SPGA)

40.00

Technical Assistance for System Strengthening and policy reforms

4.90

PPA Refund 1.50

Unallocated 4.50 .

Institutional Data

Sector Board

Education .

Sectors / Climate Change

Sector (Maximum 5 and total % must equal 100)

Major Sector Sector % Adaptation Co-benefits %

Mitigation Co-benefits %

Education Tertiary education 80

Education Vocational training 20

Total 100

I certify that there is no Adaptation and Mitigation Climate Change Co-benefits

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information applicable to this project. .

Themes

Theme (Maximum 5 and total % must equal 100)

Major theme Theme %

Human development Education for all 30

Human development Education for the knowledge economy 70

Total 100 .

Compliance

Policy

Does the project depart from the CAS in content or in other significant respects?

Yes [ ] No [ X ]

.

Does the project require any waivers of Bank policies? Yes [ ] No [ X ]

Have these been approved by Bank management? Yes [ ] No [ ]

Is approval for any policy waiver sought from the Board? Yes [ ] No [ X ]

Does the project meet the Regional criteria for readiness for implementation? Yes [ X ] No [ ] .

Safeguard Policies Triggered by the Project Yes No

Environmental Assessment OP/BP 4.01 X

Natural Habitats OP/BP 4.04 X

Forests OP/BP 4.36 X

Pest Management OP 4.09 X

Physical Cultural Resources OP/BP 4.11 X

Indigenous Peoples OP/BP 4.10

Involuntary Resettlement OP/BP 4.12 X

Safety of Dams OP/BP 4.37 X

Projects on International Waterways OP/BP 7.50 X

Projects in Disputed Areas OP/BP 7.60 X .

Legal Covenants

Name Recurrent Due Date Frequency

Institutional Arrangements X CONTINUOUS

Description of Covenant

x

The Recipient shall maintain at the national level, throughout the project implementation period, a Steering Committee and a Technical Committee with terms of reference satisfactory to the Association and with adequate resources to carry out its functions under the Project. The Recipient shall also appoint and maintain throughout the project implementation period, an environmental and social safeguards focal person attached to the Technical Committee, with qualifications and terms of reference acceptable to the Association.


Institutional Arrangements X CONTINUOUS


The Recipient shall ensure and cause each of the Participating Skills Development Institutions to maintain throughout the project implementation period, Project Implementation Teams with staffing, terms of reference satisfactory to the Association and with adequate resources to carry out its functions under the Project.


Annual Work Plan and Budget X CONTINUOUS


The Recipient shall, not later than May 30 of each year prepare and furnish to the Association, an annual program of activities proposed for implementation under the Project during the following Fiscal Year, together with a proposed budget for the purpose.


Independent verification agency Dec 30, 2014


For the purpose of carrying out the independent verification of DLIs, the Recipient shall engage in accordance with the provisions of Section III of Schedule 2 of Financial Agreement, an independent verification agent referred to under Part B (6) of the Project, under terms of reference, qualifications and experience satisfactory to the Association.


Fiduciary arrangements X CONTINUOUS


The Recipient shall, within three (3) months of the Effective Date, ensure and cause the National Council for Higher Education (NCHE) to appoint and thereafter maintain throughout the project implementation period a procurement specialist and a financial management specialist, all with qualifications and terms of reference satisfactory to the Association to support the implementation of the Project.


Internal Audit X CONTINUOUS


The Recipient shall, within three (3) months of the Effective Date, ensure and cause the

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University of Malawi to appoint and thereafter maintain throughout Project implementation, additional internal audit staff, all with qualifications and terms of reference satisfactory to the Association to support the implementation of the Project.


Internal Audit X CONTINUOUS


The Recipient shall, within three (3) months of the Effective Date, ensure and cause LUANAR and Mzuzu University to appoint and thereafter maintain throughout Project implementation, internal audit units, with an institutional framework, staffing and terms of reference satisfactory to the Association, and with adequate resources to carry out their responsibilities under the Project. .

Conditions

Team Composition

Bank Staff

Name Title Specialization Unit

Andreas Blom Lead Education Economist Higher Education and TEVET AFTEE

Hocine Chalal Lead Env. Specialist Environmental Safeguards AFTN1

Trust Chamukuwa Chimaliro FM Specialist Financial Management AFTME

Anna Victoria Gyllerup Senior Operations Officer Operations MNADE

Nalin Jena Senior Education Specialist TEVET/ Higher Education SASED

Deepa Sankar Senior Edu. Economist TTL AFTEE

Nobuyuki Tanaka Education Economist Co-TTL; Economic Analysis AFTEE

Muna Salih Meky Senior Education Specialist TTL till January 2014 SASED

Barbara Weber Senior Operations Officer Operations AFTEE

Pazhayannur K. Subramanian Lead FM Specialist Fiduciary Safeguards AFTME

Knut Opsal Lead Social Dev. Specialist Social Safeguards AFTCS

Steven Maclean Mhone Procurement Specialist Procurement Specialist AFTPE

Cheikh A. T. Sagna Sr. Social Dev. Specialist Social/Env. Safeguards AFTCS

Deliwe Ziyendammanja Team Assistant Team Assistant AFMMW

Stephen Mugendi Mukaindo Counsel Counsel LEGAM

Christiaan Johannes Nieuwoudt

Finance Officer Finance Officer CTRLA

Michael N. Mambo Consultant Education Policy/Planning AFTEE

Shashi K Srivastava Consultant Higher Education AFTEE

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Jamil Salmi Consultant Higher Education AFTEE

Ricardo Reich Albertz Consultant Institutional Planning AFTEE

Jutta Franz Consultant TEVET AFTEE

Neil Butcher Consultant IT AFTEE

Hastings Mumba Consultant Safeguards AFTEE

Marina Novelli Consultant Tourism AFTEE

Non Bank Staff

Name Title Office Phone City

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I. STRATEGIC CONTEXT

A. Country Context

1. Malawi is a low income country, with a GDP per capita of US$2531 (2012). Though Malawi has registered a GDP growth rate above 5 percent since 2006, this has not translated into equitable growth. Poverty remains widespread and concentrated in rural areas. More than half of Malawi’s 16 million people live in poverty2. Income is unevenly distributed and the Gini coefficient of Malawi has deteriorated from 0.39 in 2004/05 to 0.45 in 2010/11. The economy’s dependence on a narrow range of primary commodities for growth, coupled with its high aid-dependency, has made the country vulnerable to unpredicatable aid inflows and adverse economic shocks. In addition, inadequate development of infrastructure has also hindered economic growth.

2. Concerns about weak governance and financial management in the country have led to an uncertain economic outlook. Recent revelations of financial mismanagement and misappropriation of funds in Government of Malawi (GoM) through the abuse of Integrated Financial Management Information System (IFMIS), has eroded the credibility of the country’s systems and has resulted in an uncertain economic outlook. Addressing these issues will become key priorities for the new government following elections in May 2014. Going forward, the Bank's overall policy dialogue and Technical Assistance will be centered on strengthening broader governance and Public Financial Management systems in Malawi.

3. Malawi’s development challenges are further aggravated by its poor human development. Malawi ranked 170 among 187 countries in the UN’s Human Development Index (HDI) in 2012. High population growth rates and high HIV/AIDS prevalence exacerbate poverty. While Malawi is poised to meet a few of the Millenium Development Goals (MDG) reducing child mortality and combating HIV/AIDS, Malaria and other diseases, the country is unlikely to meet the MDGs related to primary education, gender equity and maternal health.

4. The heavy reliance of the population on subsistence farming indicates a lack of skills for diversification to other jobs and sectors. As the World Development Report (2013) concludes, jobs are the main escape route from poverty in developing and developed countries alike.3 In 2011, Malawi’s youth unemployment rate was around 16 percent. 81 percent of Malawi’s workforce was in subsistence farming, 9 percent were in the informal sector and only 10 percent were in paid jobs. About 81 percent of those with professional and technical skills and 74 percent of university graduates have wage employment, while more than 80 percent of those with no secondary education and around 62 percent of those with secondary education are engaged in agriculture4.

5. The Malawi Growth and Development Strategy (MGDS-I: 2006-11 and MGDS-II: 2011-17) has identified priority areas for economic growth and development. The priority areas identified are: agriculture, mining and extractive industries, engineering and construction, education etc. Diversification of agricultural production is vital to increase agricultural export base and to enhance job opportunities for people from the most vulnerable groups, in rural areas.

1 Malawi GDP per capita is US$857 in purchasing power parity (PPP) terms in 2012. 2 Third Integrated Household Survey (IHS3 2010/11). 3 World Bank 2012. World Development Report 2013. Jobs. Washington. 4 National Statistical Survey (2012): Welfare Monitoring Survey 2011.

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The mining sector is forecasted to contribute 3.5 percent to GDP on average over the next five years, while, tourism is expected to grow by 6-7 percent per annum over the next decade. MGDS-II also recognizes the role of an educated and skilled population in reducing poverty, decreasing inequality and ultimately boosting economic growth.

B. Sector and Institutional Context

6. Malawi’s enrollment rates in skills development institutions and programs is among the lowest in the world. Malawi’s school education sector is marked by poor primary completion rates (around 35 percent), even poorer secondary enrollment rates (GER of <20 percent) and poor learning outcomes5. Malawi’s tertiary GER is around 0.4 percent, one of the lowest even in Africa, characterised by a low gender parity index (GPI) of 0.34 in Universities and 0.53 in public TEVET (2011). Only 35 percent of secondary school graduates are absorbed in the higher education/TEVET system (32 percent in universities and colleges and 3 percent in TEVET programs). Low transition rates between education cycles and extremely high dropouts rates in primary and secondary education among students from poor and marginalized families accentuate the prevailing inequities in tertiary education.

7. Improving access to tertiary education and skills programs in Malawi will require an approach beyond the traditional mode. Without scientific and technological capacity, Malawi will miss out on opportunities to diversify its economy and improve growth. The existing infrastructure in most skills development institutions, designed for small classes and general programs, has limited scope for expansion, both in public and private institutions. Marginalized groups, such as youth from poor households, school drop-outs and those in the rural areas face considerable problems in accessing relevant skills development programs due to limited supply of skills development programs and households’ fnancial constraints. From a public resource perspective, an effective strategy for tertiary education expansion is diversification of access through different types of providers (public and private) and methods (campus-based/ distance education, use of ICT etc.) as well as financing (different types of student financing).

8. The higher education system suffers increasingly from insufficient resources and inefficient use. Though 75-85 percent of the recurrent expenditures of the higher education institutions come from Government allocations, it is inadequate to support these Universities financial needs. The recurrent costs recovered through tuition fees are also low (around 4-14 percent of the total recurrent costs of institutions). The biggest expenditure under the recurrent budget is on salaries and student services, with less that 10 percent devoted to education and research. Skills development institutions are also predisposed towards investing available resources on new physical infrastructure instead of on program development or capacity building. Continuous under-investments in program development such as curriculum reviews and staff development puts skills development institutions at high risk of delivering low quality and irrelevant programs. A results based financing approach could motivate and incentivise skill development institutions to invest in strengthening programs relevant for national goals and for addressing labor market demands.

5 Southern and Eastern Africa Consortium for Monitoring Education Quality (SACMEQ) studies puts Malawi at the bottom in learning levels even among African countries.

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9. Government’s Skills Development Policy Framework: GoM’s MGDS-II recognizes the role of an educated and skilled population in reducing poverty, decreasing inequality and ultimately boosting economic growth. The National Education Strategy Plan (NSEP: 2009-17) and Education Sector Implementation Plan (ESIP II: 2012-17) recognizes that future investments in the post-secondary education sector need to focus on improving access and increasing the responsiveness of skills development institutions to the labor market.The NESP prioritizes a mix of demand and supply side interventions aimed at expanding access, quality and relevance and institutional strengthening. Reforms introduced include: (i) delinking university enrollments from “bed space” (residential courses) policy to one linked to classroom space; (ii) expansion of TEVET programs targeting informal sector employment; (iii) introducing a policy aimed at balanced distribution of students by district and gender in universities and TEVET; (iv) establishing the National Council for Higher Education (NCHE) whose role will be, among other things, to ensure quality assurance in higher education institutions; and (v) setting up a National Qualifications Authority to oversee the establishment of a National Qualifications Framework. GoM has requested World Bank support for implementing its reform program. The proposed Skills Development Project (SDP) is a response to this request.

C. Higher Level Objectives to which the Project Contributes

10. The proposed Skills Development Project (SDP) is fully aligned with the World Bank’s as well GoM’s strategies. The World Bank’s strategic twin goals aim to eradicate extreme poverty and promote shared prosperity by fostering income growth of the bottom 40 percent of the population in every country. As noted in the “Prosperity for All – Ending Extreme Poverty” (The World Bank Group Spring Meetings 2014 Note), “jobs are essential to lifting people out of poverty”6. By scaling up training of semi-skilled persons and expanding skilling opportunities for a number of currently underserved groups including rural communities and school dropouts from poor families, the project will work towards these twin goals in Malawi. The project is also aligned to World Bank’s Malawi Country Assistance Strategy (Report No.: 74159-MW, December 17, 2012) in its goal of enhancing human capital and reducing vulnerabilities.

11. The proposed project builds on the World Bank’s New Education Strategy 2020 and the IDA’s “Skills toward Employment and Productivity” (STEP) framework, which proposes a sequenced combination of education, training, and labor market activities to improve skills needed for productivity and economic growth. The project also tries to address a continuum of skills, from technical/ vocational to higher education, to enable new types of jobs to emerge as a result of economic diversification. The project aims to promote equitable opportunities for skill development to rural youth from poor and vulnerable backgrounds. The project supports the development of different occupational categories within priority areas, such as professionals, middle level and vocational occupations. This approach is also expected to ensure greater synergies between the skills development and academic/education sectors and pave the way to life-long learning and better labor market outcomes.

12. Several operations in the Malawi World Bank portfolio will have close linkages to activities of the SDP. This includes: (i) a US$80 million Nutrition & HIV/AIDS Project (2012 – 2016); (ii) a US$140 million Project to Improve Education Quality (2010-2015), funded by

6 World Bank 2014 “Prosperity for All, Ending Extreme Poverty, A note for the World Bank Group Spring Meetings 2014; page 10.

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IDA and the Global Partnership for Education (GPE), supporting expansion of access to and quality of education for children in basic education. The project will also link to IDA’s ongoing support to mining, agriculture, tourism as well as the regional communication and infrastructure project that supports ICT development. In preparation of the proposed project, policy notes on Higher Education and TEVET provided recommendations for developing Malawian institutions that produce market- relevant skills and promote sustainable, diversified, and inclusive growth.

13. The SDP will work closely with development partners and the private sector to ensure complementarity of external/DP support in key strategic policy and programmatic interventions areas as outlined in the NESP. The Bank has been coordinating with the AfDB (support to Universities/Technical Training Colleges); the EU (who have supported curriculum review of mining sector learning programs at the Polytechnic); Norway (training with a focus on nutrition); and UNESCO (who have supported, study tours and improved training for construction and agri-business). (Annex 7 gives a detailed list of partner support).

II. PROJECT DEVELOPMENT OBJECTIVES

A. PDO

14. The Project Development Objective (PDO) is to increase access, market relevance and results orientation of supported skills development institutions in agreed priority areas.

B. Project Beneficiaries

15. The main beneficiaries of SDP include:

Students in universities, low level artisans, and unemployed youth from underserved areas who will benefit from increased access to skills development institutions and more market relevant education and training programs;

University staff and administrators who will benefit from the faculty development program and institutional strengthening;

Students, administrators, and teachers who will benefit from improved management of the TEVET system;

Private sector and employers who will benefit from a higher number of better quality graduates with market relevant skills;

NCHE which will benefit from increased capacity to execute their mandate for quality assurance of Universities; and

The Government of Malawi, particularly Ministry of Education, Science and Technology (MoEST) who will benefit from a more efficient system to manage various components of Higher Education and TEVET.

C. PDO Level Results Indicators

16. Progress towards meeting these objectives will be assessed by the following indicators:

Access

(i) Number of direct project beneficiaries7.

7 This indicator is defined as the total of the number of students who are enrolled in supported priority areas in participating universities, rural artisans enrolled in technical training institutions, faculties and staff in universities and institutions, staff at the NCHE and the Ministries and thus benefit directly from this project.

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Percentage of females in project beneficiaries.

(ii) Number of skills trainees from rural areas.

Market Relevance8 and Results Orientation

(iii) Proportion of new intakes in priority areas to the overall new intakes in the participating institutions

(iv) Proportion of students who pass the annual assessment9. (v) Improvements in Employer satisfaction levels with the skills and knowledge of Higher

Education/ TEVET graduates in priority areas10.

III. PROJECT DESCRIPTION

A. Project Components

17. The SDP plans to achieve the PDO through two components: Component 1 will support participating institutions in implemeningt Sub-Project Grant Agreements (SPGA), focusing on results related to increasing access to and market relevance of programs, while component 2 will focus on systems strengthening and policy design in the skills development areas. Component 1 is to support strategic interventions at the institutional level to ‘increase access, market relevance, and results orientation of supported skills development institutions in agreed priority areas”. The main instrument for implementing this component will be Sub-Project Grant Agreements (SPGA) between the MoF and selected skills development institutions participating in the project (called participating institutions). The SPGAs will specify each institution’s distinct mission, the scope and focus of its educational provision, the labour market areas for which each institution prepares graduates, and expectations of its performance (access, relevance and efficiency).

Component 1: Strengthening Institutional Performance (US$40 million)

18. Component 1 consists of:

Carrying out a program of specific activities to improve access and market relevance of engineering programs offered at the University of Malawi- The Polytechnic, including inter alia: (a) construction and rehabilitation of infrastructure including workshops, laboratories, classrooms, lecture theaters, tutorial and design rooms, library facilities and office space; (b) supply of equipment; (c) development of new engineering programs at diploma and undergraduate levels; and (d) upgrading staff qualifications to deliver on the new programs: all through the provision of results based grants.

Carrying out a program of specific activities at Mzuzu University to: (a) increase access to secondary teacher training programs, including inter alia, establishing new satellite learning centers at Karonga, Lilongwe, Mulanje and Balaka; developing curriculum for open and distance learning programs; supplying equipment; strengthening the capacity of staff in the

8 This encompasses issues related to quality and internal efficiency of the new program. 9 Annual assessment involves testing of students/trainees at the end of an academic year for their skills and knowledge based on the new program developed in consultation with the private sector. The framework and tools for assessment will be developed in the first year of program implementation through a TA supported by NCHE. 10 This will be measured using tracer studies carried out after the first set of graduates of a program is out in the labor market, depending on the institution and years of the course.

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development of open and distance learning materials and upgrading staff skills to deliver on the programs: (b) increase access, market relevance, sustainability and cost efficiency of hospitality and tourism courses including, inter alia, establishing a skills development center, supplying equipment, and upgrading staff skills to deliver the programs, all through the provision of results based grants.

Carrying out a program of specific activities at University of Malawi-Chancellor College to increase access to science teacher education and enhance capacity for science education delivery including inter alia: (a) constructing lecture theatres, and laboratories and rehabilitation of classrooms; (b) supplying of equipment and installing of information and communication technology facilities; (c) developing curriculum for computer science teacher education; and (d) upgrading the capacity of academic and support staff in science teacher education and delivery; all through the provision of results based grants.

Carrying out a program of specific activities at Lilongwe University of Agriculture and Natural Resources (LUANAR) to increase access, market relevance and gender responsiveness of programs including, inter alia: (a) establishing an open and distance learning center in Lilongwe city, at the University campus and two (2) remote satellite centers in Mzuzu and Blantyre; (b) developing open and distance learning programs; (c) expanding library facilities; (d) installing information and communication technology infrastructure; and (e) upgrading staff capacity to develop and deliver open and distance learning programs including supporting study tours to relevant institutions; all through the provision of results based grants.

Carrying out a program of specific activities at the Technical, Entrepreneurial and Vocational Education and Training Authority (TEVETA) to improve capacity for quality assurance in the TEVET system and increase access to and broaden the range of market oriented skills programs including, inter alia: (a) training of master craftsmen; (b) supplying of equipment and training of staff in selected institutions offering informal sector training in rural areas; (c) developing curriculum for short skills upgrading programs in selected training institutions offering skills training in rural areas; and (d) providing equipment and upgrading staff capacity in selected institutions offering technician level programs, all through the provision of results based grants.

Component 2: Technical Assistance for System Strengthening and Policy Reforms (US$4.9 million)

19. Component 2 consists of: Carrying out a program of activities to strengthen the capacity of the National Council for

Higher Education for Project implementation, such program of activities to include (a) training members of the council on their quality assurance and Project implementation roles; (b) strengthening the capacity of the secretariat at the National Council for Higher Education in project coordination, reporting and communication, project planning, project monitoring and evaluation and fiduciary management; and (c) provision of equipment.

Developing and installing a management information system at the National Council for Higher Education and providing associated training.

Developing monitoring and evaluation systems and piloting new monitoring tools at the National Council for Higher Education and Participating Skills Development Institutions.

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Providing technical assistance for the development and implementation of a student financing scheme.

Designing and setting up of verification mechanisms, and conducting verification of outputs and results of the activities supported under the Project.

Carrying out independent verification of outputs and results of the activities supported under the Project.

Table 1: Proposed programs – Skill Development Institution wise Institution Priority areas The Polytechnic

4 new undergraduate level engineering programs in Mining, Metallurgy, Geology and Bio-medics; 5 years duration, first cohort intake to happen in year 1 of project implementation (2014-15); so the first cohort of graduates is expected at the end of year 5 (2019-20).

10 technician level engineering training (diploma) program in Quantity Surveying, Mining, Mineral Processing, Metallurgy, Geological Engineering, Bio-Medical Engineering, Occupational Health and Safety, Land Economy, Construction Technology, Telecommunication and Electronics Engineering; program duration is 3 years; first cohort of graduates to enter in year 2 of implementation (2015-16) and expected to graduate at the end of 2017-18.

Mzuzu University

ODL programs for training secondary school teachers in Science and Language subjects at Bachelors and Diploma levels; Bachelors is 5 years program with a Diploma after 3 years; Bachelors/Diploma program to start in year 1 (2014-15). First cohort of students to graduate in the 5th year while the diploma teachers will be available by end 2017-18.

Upgrading ongoing Hospitality and Tourism programs: Certificate programs in Tourism and Hospitality to be one year programs, to be starting in year 3 (2017-18); first cohort of graduates to graduate in 2020.

Diploma in Tourism and Hospitality areas are designed to be 2 year programs starting in year 3 (2016-17); Same course imparted through ODL methods are 3 year programs, Tourism courses starting in year 2 (2015-16) and Hospitality in year 4 (2017-18).

Bachelor programs in Tourism and Hospitality are for 4 years; admission starting in first year of program implementation (2014-15); first cohort graduates to be available in year 2019.

1-2 weeks short programs planned every year in Tourism and Hospitality. LUANAR ODL programs in Agriculture subjects -Agricultural Extension, Agricultural

Innovations, Agribusiness Management; and Agricultural Economics; all at Bachelors level, for four years and starting in year 2 (2015-16); first cohort of graduates expected by 2020.

TEVETA Priority areas are Building Construction, Agriculture, Agro-Processing, and Manufacturing; upgrading the skills of master craftsmen; expand rural based training programs; pilot technician programs. Diploma programs are for a year (starting in year 2) while Master craftsmen certificate programs are for 6 months (starting in year 1).

Chancellor College

Expanding training of secondary school teachers in Science subjects through regular face to face, 4 year degree program which starts in year 1 (2014-15).

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B. Project Financing

1. Lending Instrument

20. The proposed project is a US$50.9 million Investment Project Financing (IPF) to support skills development programs in participating institutions. This approach is a cautious step towards a financing approach based exclusively upon results. Given the limited operational implementation capacity of the MoF and other stakeholders, and the need for a gradual learning process for pricing and monitoring results, an IPF where part of the disbursements are linked to results indicators would be most appropriate. The IDA credit will be disbursed against (a) Eligible Expenditure Programs (EEPs) under participating Institutions’ budget contingent upon achievement of the agreed set of DLIs with respect ot Component 1; and (b) other specified categories of expenditures using the traditional disbursement approach with respect to Component 2 – Technical Assistance.

21. The DLIs under this project include the following characteristics. First, the selected DLIs reflect the priority elements in the Government’s development strategy and reform agenda. Second, they reflect the Institutional Improvement Plans (IIP) developed by each skills development institution. Third, they include intermediate results, implementation performance targets or institutional change indicators that build incrementally over the life of the Project to improve the conditions of teaching, learning, training and research in participating institutions. Fourth, the results represented in the DLIs are critical to achievement of the PDO. Fifth, they are independent of each other from a disbursement point of view. Non-compliance with one DLI in a period will not affect disbursement against other DLIs. The six DLIs are given below (See Annex 1.C-F for details on DLIs). Disbursements for Component 1 against the finalized list of EEPs will be based on: (i) expenditure reports; and (ii) quarterly and annual implementation progress reports to track accomplishment of agreed DLIs. The World Bank’s guidelines on FM and procurement will be applicable to EEPs11. Proposed EEPs include a range of recurrent expenditures. The largest EEPs are salaries in skills development institutions.

Table 2: Disbursement Linked Indicators DLI Description

DLI 1 Participating Skills Development Institution has developed and adopted its Institution Improvement Plan (IIP).

DLI 2 Student enrollment in agreed skills development programs increases.

DLI 3 Each Participating Skills Development Institution achieves its infrastructure development targets as set out in the Institution Improvement Plan

DLI 4 Each Participating Skills Development Institution develops and implements the agreed skills development programs in consultation with the private sector

DLI 5 Each Participating Skills Development Institution achieves its staff development targets as set out in the Institution Improvement Plan

DLI 6 Each Participating Skills Development Institution carries out and publishes tracer studies on on-going and new skills development programs

11 The EEPs to be supported by the Project account for approximately 37 percent of MoEST Higher Education and TEVET program11 expenditures.

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2. Project Cost and Financing

22. Total project financing requirements from IDA are estimated at US$50.9 million (SDR 33 million). The financing is structured in two portions – US$46 million (SDR 29.8 million) is under regular IDA credit; and (b) US$4.9 million (SDR 3.2 million) made available as an IDA grant. The IDA grant will be fully utilized to support Category 2 (Technical Assistance for Implementation of SPGA and system strengthening). Of the US$46 million IDA credit, US$40 million will be disbursed based on the agreed DLIs (component /category 1 of strengthening institutional performance). Of the remaining, US$4.5 million is unallocated, and US$1.5 million is for PPA refund.

23. US$1.5 million is used for the refund of the Project Preparation Advance (PPA) already approved. The PPA suppports activities in MoEST, NCHE and TEVETA. The main activities that will be supported by the PPA include: (a) study tour for people at MoEST, NCHE, and universities/ institutions to other regional higher education models to expose them to the functioning of the models and learn from their experiences; (b) review of student financing mechanisms in higher education in Malawi; and design of a student financing management system, including repayment mechanisms (data base, infrastructure etc.) for higher education in Malawi; (c) development of NCHE strategic plan; (d) development/strengthening of ODL program designs; (e) development of infrastrcuture improvement plans; (f) development of EMIS etc; (g) review of apprenticeship system in TEVETA; (h) TEVET financing; and (i) support to rural institutions.

24. The unallocated funds are reserved mainly for financing emerging opportunities to participate in regional programs like the Africa Centers of Excellence (ACE)12 regional project during program implementation. If any of the institutions do not participate in the ACE project, the funds will be allocated to SDP, through a Level 2 restructuring of the project at a later stage. Detailed information on costs and financing of the project is provided in Annex 3. It must be noted that there is no additional cost to the government on account of this project.

Table 3: Project Financing

Cat

egor

y

Project Components Project Cost

IDA Credit Financing

IDA Grant Financing

% IDA Credit

Financing

% in IDA Grant

Financing

1 Strengthening Institutional Performance through Sub-Project Grants Agreements (SPGA)

US$ 40.0 US$ 40.0 100%

2 Technical Assistance for Implementation of SPGA and System Strengthening

US$ 4.9 US$ 4.9 100%

Other 3 PPA Refund US$ 1.5 US$ 1.5 100% 4 Unallocated US$ 4.5 US$ 4.5 100%

TOTAL US$ 50.9 US$ 46.0 US$ 4.9 90.4% 9.6% 12 The objective of the ACE project is to support the recipient countries to promote regional specialization among participating universities in areas that address regional challenges and strengthen the capacities of the universities to deliver quality training and applied research. At present eight Western African countries participate in the project.

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25. For the project to make a real contribution, it is important that the project resources are in addition to Government transfers. The MoF, in discussion with MoEST and Ministry of Labor (MoL) is expected to ensure that there is no crowding out of government resources from the institutions on account of project financing. The Bank will track budget allocations to higher and technical /skills development institutions in general and those for the participating institutions in particular. If needed, the Bank will also provide policy support to government on how public spending could be better aligned to promote the sector’s objectives.

C. Lessons Learned and Reflected in the Project Design

26. SDP is envisaged as a pragmatic and coherent project. The planning and preparation process was participatory and iterative, and was built upon lessons learned from local and global experience, rigorous analytical work as well as learning that occurred during the planning process itself. These key lessons include: (i) the need for a collaborative process in preparing analysis that identifies required key reforms and structural bottlenecks in skills development institutions; (ii) importance of high-level discussion and agreement on the reform agenda; (iii) the need for implementing agencies to prepare realistic working plans; and (iv) recognition of the effectiveness of government structures, rather than reliance on stand-alone project implementation units to stimulate dialogue between the government and implementing institutions on national and institutional priorities.

27. Limited participation. In spite of high demand, only five institutions were invited to develop SPGA, mainly in line with the priority areas identified. The project will cover primarily courses that support a sustainable increase in access and market-relevant training.

28. A robust M&E system with independent verification of results is critical to achieving results. This underscores the importance of a realistic and simple design and the need to identify a limited number of DLIs that are well-defined, and measurable.

29. Targeted and selective training approaches. International experience has shown that centrally designed standard training programs tend to be supply-driven and not attuned with specific and localized labor market requirements. In addition, untargeted capacity building support does not assist institutions in re-orienting their training to labor market needs. Therefore this project will provide support for specific training programs that respond to established market needs and contribute to the country’s development objectives.

30. Implementation of project at the institutional level. The Institutions are responsible for developing and implementing IIPs, which should improve the institutional ownership and commitment, needed for smooth implementation.

IV. IMPLEMENTATION

A. Institutional and Implementation Arrangements

31. The Project will be implemented both at the national and institutional levels, building on existing institutional structures of participating institutions. Capacity building will be provided because performance based financing and use of DLIs is new in Malawi. A Project Implementation Manual (PIM) detailing project implementation arrangements is under preparation. (See Annex 3 for details).

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32. Ministry of Finance (MoF): The MoF will be responsible for the overall implementation, coordination, and monitoring of reforms under the project. It will sign the Credit Agreement with the World Bank on behalf of GoM, and the Sub-Project Grants Agreement (SGPA) with all participating institutions. It will also appoint a Steering Committee (SC) which will assume overall responsibility for implementation of the project on its behalf. The Department of Debt and Aid in the MoF will take the lead.

33. Steering Committee (SC): In executing its overall responsibility for the project the MoF will be assisted by a SC. SC will include members from MoF, MoEST (under which universities fall), MoL (under which the technical colleges fall and which is also the parent Ministry for TEVETA), and four private sector/Civil Society representatives (to ensure relevance of programs to the needs of the labor market). The SC will provide overall strategic guidance in the implementation of the project. It will be responsible for reviewing the IIPs of participating institutions based on set criteria (as in PIM). It will also review implementation reports of the Projects prepared by the participating institutions, assisted by a Technical Committee. It will also facilitate the removal of bottlenecks in the implementation of the Project and keep the stakeholder groups informed about the project. The SC will be chaired by the MoF. It will be expected to meet at least once each quarter.

34. Technical Committee (TC): The TC will comprise the NCHE, one member each from the MoEST and MoL (operational level), four private sector/civil soceity representatives and technical assistants (TA). The TC will provide guidance on the finalization of the IIPs. The Chairperson of the NCHE, assisted by the Secretariat, will have overall responsibility for the oversight, coordination, and M&E of project activities in participating institutions. Specifically the Committee will be responsible for: (i) establishing a MIS; (ii) providing capacity building to the participating Universities based on identified needs; (iii) facilitating information exchange and lessons learned across participating institutions; and (iv) liaising with the World Bank in carrying out its role in the implementation of the Project.

35. Ministry of Education, Science and Technology (MoEST) and Ministry of Labor (MoL): MoEST will oversee the development and finalization of the IIPs and provide support to the institutions during implementation as and when required. MoEST and MoL will participate in the SC and TC at different levels.

36. Participating Institutions: The five participating institutions will be responsible for selecting a Plan Implementation Team with a Team Leader. The team will be responsible for developing the Improvement Plan for their institutions in consultation with the institution’s community. Implementation Team will be responsible for implementing the approved Improvement Plan. It will follow guidelines specified in the Project Implementation Manual (PIM).

37. The participating institutions will be required to prepare: Sub-Project Grant Agreements, Improvement Plans, Procurement Plans, and Implementation Progress Reports.

Sub-Project Grants Agreements (SPGA): The SPGA is a performance agreement that spells out the responsibilities and obligations of the MoF and the participating institutions, and provides conditions for release of IDA funds. Each institution’s SGPA will describe its strategy for: (i) sustainable and cost-efficient expansion; and (ii) improved market relevance of one to two priority programs in line with the Government’s growth agenda and the

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institution’s comparative advantage. Each SPGA will include a set of DLIs which will trigger disbursements to each participating institution.

Improvement Plans: Participating institutions will develop Institutional Improvement Plans (IIP) that will reflect the areas for which they are seeking support, based on an analysis of the labor market and discussions with the private sector. In addition, the participating institutions will prepare an annual program of activities proposed for implementation under the Project during the following year.

Procurement Plans: Participating institutions will produce procurement plans that will detail civil works, goods and consultancy services to be procured in the implementation of the Improvement Plans. The Procurement Plan will also include the bidding processes to be used in the procurement.

Annual and Quarterly Implementation Progress Reports: Institutions will prepare an Annual Progress Report summarizing the activities undertaken, results achieved and expenditures incurred. The Technical Committee will consolidate the findings of the Annual Progress reports received from five participating institutions and will prepare the SDP Annual Progress Report for submission to the SC.

38. Capacity Development. The TA will be provided to NCHE to support capacity development in both NCHE and the institutions to effectively implement performance based funded projects. At the NCHE capacity will be developed in quality assurance and accreditation of higher education institutions, fiduciary management through staff training and related hardware and software, and monitoring program implementation at the institutions level through strengthening its M&E systems. In each participating institution, capacity will be developed in program planning and implementation, fiduciary management through staff training, strengthening of M&E systems, and as agreed between the NCHE and the institutions. The Project has already started to support the required capacity building support through a Project Preparation Advance (PPA).

39. Implementation Readiness: The GoM has met several conditions that were discussed during the Appraisal mission for the project to be made effective. At the central level, a National Council for Higher Education (NCHE) has been established and key staff have been hired. Ministry of Finance (MoF) has also initatied the process of setting up a Steering Committee (SC) and Technical Committee (TC) and started resourcing these entities with required staff. A Project Implementation Manual (PIM) is prepared using the PPA.

B. Results Monitoring and Evaluation

40. The project will establish and strengthen the monitoring of results in the Skills Development Sector at national and institutional levels. To provide continuous feedback on progress towards the achievement of the PDO level targets, and intermediate outcome (output and process levels) targets, the GoM, institutions and the World Bank, have agreed on indicators as outlined in the Results Framework (Annex 1). The Results Framework describes project target results, related performance indicators, and arrangements for results monitoring. Six DLIs will be reported at two levels: (i) at the individual institution level, for detemination of achievements of DLIs for each participating institution; and (ii) for the project as a whole, in an aggregate manner (i.e. two DLIs as part of the PDO Indicators, and three as part of the list of Intermediate Outcome Indicators) to show overall performance progress. Both baseline and target values

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related to Component 1 will be set based on Sub-Project Grants Agreements signed between GoM (MoF) and participating skills development institutions.

41. Component 2 will support existing data collection systems in participating institutions and at the central level. An Education Management Information System (EMIS) specifically designed for higher education/skills development programs will be established that will collect and compile information from the participating institutions on a regular basis on a range of indicators, including project implementation related processes. The NCHE will be in charge of national level compilation and analysis of higher education and skills development program information and publications. This data will be used to produce more detailed and disaggregated analysis and diagnosis to inform program monitoring as well as annual planning.

42. In addition to the institutions-based monitoring and evaluation mechanism, the project will support independent Third Party monitoring and Verification (TPV), to be selected competitively by Steering Committee (SC) on behalf of Ministry of Finance (MoF). Data from the TPV will be used to trianguate and verify the results emerging from the Project M&E mechanism.

43. The World Bank and the Steering Committee (SC) will meet bi-annually to review and discuss overall progress for the previous financial year and agree on implementation of the Project for the remainder of the project. In addition, quarterly monitoring meetings will be held between the MoF, NCHE, participating institutions and Bank team to provide continuous feedback on project implementation. The World Bank team will undertake at least two field missions every year to each participating institution to review and facilitate implementation.

C. Sustainability

44. The sustainability of the Project will be enhanced by several factors: (i) Government’s commitment to improving skill development is enhanced by their commitment and ownership; (ii) ownership of the initiative is crucial for the sustainability and extensive consultations with government, university staff, TEVETA, and employers during project preparation to ensure that the proposed project supports areas that are essential for improving access and market relevance of skills development institutions; (iii) the strong institutional and technical capacities that will be developed through the project should assist in creating a culture to plan, manage, monitor more effective service delivery and focus on performance and accountability in the skills development system as a whole. This is expected to continue and improve beyond the life of the project. The strengthened capacity of the NCHE in monitoring and evaluation through project interventions should ensure that it is able to effectively continue monitoring the performance of the universities as part of its mandate. The private sector collaboration is expected to improve institution-industry interface and this is expected to direct future prioritization and reprioritization of skills development programs. The TA for the project will be supporting development of a student financing scheme which should bring in renewed focus on results and additional resources to the sector; (iv) Policy reforms envisaged in the higher education student financing mechanism and the apprenticeship and skills assessment systems will contribute to increased cost-effectiveness and cost-sharing in skills development. The Project will also encourage greater private sector contributions to sustainability and try to ensure that any increases in recurrent expenditure incurred as a result of the implementation of the Project are kept to a minimum. It is anticipated that lessons learned from this project will enable the

14

Government to develop a more results-focused funding approach to skills development institutions in the future.

V. KEY RISKS AND MITIGATION MEASURES

45. Potential risks are summarized below and detailed in the Operational Risk Assessment Framework (ORAF) in Annex 4. The proposed overall risk rating for the project for implementation is rated as substantial.

A. Risk Ratings Summary Table

Risk Category Rating Stakeholder Risk Moderate Implementing Agency Risk 1.Capacity Substantial 2.Governance Substantial

Project Risk 3.Design Substantial 4.Social and Environmental Moderate 5.Program and Donor Moderate 6.Delivery Monitoring and Sustainability Substantial

Overall Implementation Risk Substantial

A. Overall Risk Rating Explanation

46. The overall risk rating is Substantial given the innovative design of the project within the country context. While there is strong commitment to the project development goals from government and participating institutions, the overall risk rating is affected by some specific risks. The most pertinent ones are: (i) limited capacity in government and participating institutions to plan, implement and absorb large scale programs for results using Disbursement Linked Indicators (DLIs); (ii) low fiduciary capacity and weak internal controls leading to potential leakage; (iii) lack of effective monitoring of public finances. These risks will be mitigated through enhanced project design, capacity building efforts and increased monitoring of project activities and outcomes during the implementation stage. The design and implementation arrangements under the project already include a number of risk mitigation measures to enhance governance, accountability and capacity. The project design uses a results based grants approach (DLIs) for component one. The project will not be using government accounts, but the designated accounts of institutions for disbursing funds.

VI. APPRAISAL SUMMARY

A. Economic and Financial Analysis

47. Private and Social Rates of Return (RoR) to education in Malawi are high. It is estimated that the private rate of return to university education and technical education are 29.1 percent and 19.7 percent respectively13. The social rate of return to higher education is estimated to be 23 percent and that for technical education is 35 percent (World Bank 2010). Based on the discount

13 Estimated from IHS3 (2011) data.

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rate of 11.8 percent for the benefits and costs stream for the Project, it is estimated that the Net Present Value (NPV) is MK190.6 billion. The Internal Rate of Return (IRR) associated with this NPV is 29.9 percent.

48. The results of cost-benefit analysis suggest that the SDP is expected to yield significant economic returns and thus to be very sound. These are conservative lower bound estimates, given that they do not account for other potential benefits including the social benefits of education. The total economic and social impact on the project is likely to substantially exceed the economic benefits, which are nonetheless very considerable.

B. Technical

49. The technical design of the Project is based on the Government’s comprehensive reform priorities. The analytical underpinnings of the Project are fourfold. First, the World Bank’s in-depth review of the higher education and TEVET sub-sectors (2013) as requested by Government revealed major constraints for the development prospects of the country and tertiary education/skill development sectors. The analysis also highlights that balanced enrollment growth can be achieved through a strategy that includes: (i) development of good quality non-university tertiary institutions; (ii) closer linkages between skills development institutions and the productive sectors; (iii) development of distance education institutions and programs; and (iv) a sustainable financing strategy including cost-sharing with matching financial aid for needy students, and performance-based allocation mechanisms. Second, the project design has also benefitted from numerous consultations with stakeholders and technical discussions with national and international experts. Third, the design draws heavily on international experience and best practices in higher education and training reforms carefully contextualized. Fourth, it builds upon the lessons learned from implementation of projects with similar designs in a number of countries. The project design addresses the constraints and delays experienced in similar skills development projects. The project addresses these issues by: (i) providing financial resources to the institutions based on performance; and (ii) building the capacity needed for effective implementation.

C. Financial Management

50. The overall financial management residual risk for the project is Substantial. Considering the current governance and fiduciary challenges in the country PFM systems, this project will, as far as possible, route IDA funds directly to beneficiaries on the basis of DLIs. A financial management assessment of the implementing entities (participating institutions) was conducted. All the participating institutions except NCHE have robust computerized accounting systems and have appropriately qualified and experienced personnel. The project’s FM will be coordinated by NCHE including flow of funds and reporting. NCHE is in the process of recruiting additional staff including the head of finance in order to strengthen the FM arrangements. NCHE is a semi-autonomous government entity that operates independently from government in terms of financial management, especially accounting, flow of funds and reporting. NCHE’s coordinating role was agreed upon since the central government’s FM system is currently in the process of being strengthened after its weaknesses were exposed in the light of massive theft conducted through IFMIS which had very weak access controls, vulnerable audit trails and databases. The system may take some time before it is reliably stabilized. The details of the project financial management arrangements are included in Annex 3. The main risks identified are: (i) weak internal audit capacity which is likely to affect the timeliness of follow up

16

of remedial actions identified in audits and also weak or no follow up on compliance with policies and procedures; (ii) weak internal controls manifested in poor reconciliations and other control elements; (iii) inadequate management information systems other than the accounting system that may affect the accuracy of DLIs; and (iv) inadequate funding of the university colleges that does not provide adequate resources for planned activities; (v) weak FM arrangements at NCHE due to inadequate staffing, lack of accounting package for transaction processing and reporting, and lack of experience in managing World Bank funded projects.

51. A number of risk mitigation measures have been considered and are recommended for implementation. These measures include: (i) strengthening the capacity of internal audit at Polytechnic, Chancellor College, LUANAR and setting up an internal audit department at Mzuzu University; (ii) an improvement in internal control compliance through increased staff awareness and training and compliance monitoring by internal audit; (iii) an improved management information system that can produce reliable information on DLIs; (iv) having a separate and exclusive bank account for project funds to avoid mixing up with other funds; (v) strengthening budgetary and policy frameworks for the skills development sector; (vi) ensuring that work plans and budgets are supported by requisite resources; (vii) recruitment of additional staff at NCHE; (viii) acquisition and installation of accounting package at NCHE; (ix) training project’s FM staff in FM and disbursement procedures; and (x) carrying out semiannual compliance audits on top of frequent reviews by Bank staff and internal audit.

52. The conclusion of the assessment is that the financial management arrangements meet the World Bank’s minimum requirements under OP/BP10.00. The overall residual risk rating for Project is Substantial. The financial management action plan outlines the mitigating measures, which, if implemented, would strengthen the financial management arrangements.

D. Procurement

53. Procurement under the Project will be carried out in accordance with the Bank Procurement Rules. Procurement for the TA component which will provide implementation and policy support under the project will be carried out in line with Guidelines: Procurement of Goods, Works and Non Consulting Services under IBRD Loans and IDA Credits & Grants by World Bank Borrowers; January 2011; and "Guidelines: Selection and Employment of Consultants IBRD Loans and IDA Credits & Grants by World Bank Borrowers”, January 2011 and the provisions stipulated in the Legal Agreement. The overall risk of the universities to carry activities under the project is Moderate for the universities as they have qualified staff that undertake procurement activities under the project using World Bank guidelines and procedures. On the other hand it is Substantial for TEVETA as they do not have qualified staff and the procurement section needs strengthening by recruiting more qualified staff to ensure that there is sufficient capacity to meet procurement demands. The Bank’s “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants” dated October 15, 2006 and updated January, 2011, shall apply to the project. Details on capacity assessment are attached as Annex 3.

E. Social (including Safeguards)

54. Social Safeguards (O.P/BP. 4.12 - Involuntary Resettlement). The project is a category B with partial assessment of the project activities. The overall social impacts of the project implementation in the country are expected to be positive as it will improve both the

17

quality of infrastructure while maximizing the accessibility potential, with the inclusion of gender and vulnerable groups. Since details of the project footprints are yet to be known, to mitigate any possible social impacts to be caused by the proposed civil works activities, the GoM has prepared a Resettlement Policy Framework (RPF) to comply with OP/BP 4.12 core requirements. The RPF provides the basic principles and prerogatives to be followed once detailed characteristics of the project location are known on possible land acquisitions, consultations with both project impacted and/or affected persons, preparation of a site specific resettlement and/or compensation plans (wherever needed), methods of valuation of affected assets, grievances redress mechanisms and participatory monitoring and evaluation mechanism. The RPF was reviewed and cleared by both the GoM and the World Bank, and ultimately disclosed both in-country and at the InfoShop in December 27, 2013 prior to appraisal. As prescribed in the OP/BP 4.01 policy on Environmental Assessment, and clearly specified in the ESMF, during project implementation, all sub-projects will undergo systematic screening, sub-categorization and disclosure process to determine whether there will be social impacts (land acquisition that would lead to the loss of property, assess or access to these assets, etc.) that would require additional safeguards instruments (i.e. Resettlement Action Plan - RAP). Once determined, the RAP will be prepared, consulted upon and disclosed prior to the physical implementation of the related activity (i.e. no civil works should start prior to ensuring the last RAP is fully paid off). The RPF recommendations will be captured in the Project Implementation Manual (PIM) as well as in the legal documents for easy follow up during project implementation.

55. Equity Consideration: Consideration of gender, youth and vulnerable groups (disabled, elderly, etc.) in World Bank financed operations, is key to ensuring investment benefits are equally shared with all subgroups of the recipient population. To address the equity and skills gap in the key economic sectors concerned, the project will support mainstreaming non and informal skills development for currently underserved groups. Equitable access to skilling opportunities for the high number of school dropouts in primary and secondary education from poor families will be improved through scaling up training of semi-skilled persons since there is limited scope for improving equity in higher education currently. The project will support establishing a targeted student financing system including loan recovery in universities. Adopting a financing practice that addresses inequities in gender, youth and vulnerable groups is critical for pro-poor public spending and laying the foundation for equal education opportunities for all.

F. Environment (including Safeguards)

56. Environmental Safeguards (O.P/BP 4:01 Environmental Assessment). The SDP is category B project due to the negligible/low level and site specific location of its foreseen environmental and social impacts. It proposes to finance expansions and rehabilitation of infrastructure and facilities at participating institutions in order to expand student intake and increase the range of training programs to address skills deficits in the economy. Details of the proposed sites for sub-projects to be financed are not known and thus anticipated environmental (and social) impacts cannot be fully ascertained at this stage; therefore, in compliance with OP/BP 4.01 core requirements, the GoM has prepared an Environmental and Social Management Framework (ESMF). The ESMF was reviewed and cleared both by the GoM and the World Bank and disclosed in-country and at the InfoShop on December 27, 2013. The ESMF provides specific guidance on environmental and social screening, subcategorization and disclosure

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process of sub-projects to adequately guide the preparation of site specific environmental and social management plans (ESMPs) for sub-projects. In addition to the Environmental and Social Screening form (ESSF), the ESMF also provides a set of environmental and social clauses (ESC) to be embedded in all constructors contracts for consideration during implementation of civil works. The project will also build on the already existing pamphlet of environmental and social clauses prepared in 2009 for the MoEST, and distributed to all districts and contractors. The ESMF recommendations will be captured in the Project Implementation Manual (PIM) as well as in the legal documents for easy follow up during project implementation. More specifically, during the construction phase, all sub-projects will undergo environmental and social screening to determine whether there is any environmental and social impact expected from the project. Once determined, measures will be put in place for enhancing positive impact while mitigating negative impact. GoM will ensure that all contractors have strictly followed the guidelines included in the ESCs this being a condition for final payments.

57. Elaboration of both the ESMF and the RPF involved extensive and participatory stakeholder consultation in all project targeted areas. Recipient communities were able to voice their concerns which were taken into consideration in the final versions of the two stand-alone safeguards instruments. Recipient communities will continue to be consulted throughout the project lifecycle.

58. Safeguards Implementation Arrangements: The GoM will work closely with the World Bank to ensure adequate and timely supervision of the implementation status of the core recommendations included in the social and environmental safeguards instruments and the legal documents. A devoted person within the TC – Social and Environmental Focal Point (SEFP) - will be trained and guided by the World Bank safeguards team to ensure due diligence on both social and environmental safeguards and gender, youth and vulnerable groups. The SEFP will work closely with the Environmental Affairs Department (EAD) and the District Environmental Sub-Committee (DESC) to ensure adequate safeguards compliance. S/He will ensure quaterly reports on both social and environment as well as gender and vulnerable groups are prepared and sent to the World Bank for review and follow up; and finally a detailed report covering all of the above will be sent to the Bank at least three weeks prior to each implementation support mission. The World Bank Safeguards Specialists, will, at least twice a year depending on the urgency, undertake implementation support missions to better verify the findings through both desk review and field visits.

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ANNEX 1: RESULTS FRAMEWORK AND MONITORING

Annex 1.A: Logical Framework and Results Flow Diagram Country: Malawi

Project Name: Skills Development Project (P131660)

Impact areas Access Market Relevance Results Orientation

PDO level Indicators

Direct Project Beneficiaries (# of students enrolled in priority areas in participating institutions)

o % of Female Beneficiaries Number of skills trainees from

rural areas

The Proportion of students/trainees who pass the annual assessment

Proportion of new intakes in priority areas to the overall new intakes in the participating institutions.

Improvements in employer satisfaction levels with the skills and knowledge of graduates in higher education/ TEVETA in priority areas

Intermediate Indicators

Number of (annual) new intakes in the priority areas.

Proportion of infrastructure targets met by participating institutions as per agreed IIP.

Development of targeted and functional student loan scheme as per action plan by year 3.

Number of programs developed / curriculum revised with private sector participation as per IIP.

Proportion of faculties selected for Staff Development Programs returned to the institution after completing their training programs and resumed teaching.

Published Tracer studies as per action plan.

A National Quality Assurance Framework (NQAF) developed

Timely preparation of Annual Progress Reports by participating institutions reflecting the analysis of performance on agreed results and tartgets, especially in priority areas.

Timely submission of annual implementation progress report by NCHE, detailing analysis of performance against targets.

Interventions

TA Infrastructure plan

implementation

TA Consultations with private sector Staff Development Plan

implementation

TA Sub-Project Grant Agreement /

IIP M&E, Planning etc.

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Annex 1: Results Framework and Monitoring

Country: Malawi

Project Name: Skills Development Project (P131660) Annex 1.B: Results Framework

Project Development Objective Indicators

Indicator Name Description (indicator definition etc.)

1. Direct Project Beneficiaries

Direct beneficiaries are defined here as the number of students who are enrolled in supported priority areas in participating universities, rural artisans enrolled in technical training institutions, faculties and staff in universities and institutions, staff at the NCHE and the Ministries and thus benefit directly from this project.

This indicator is an aggregate indicator for all five skills development institutions, but also presented institution wise and priority areas wise.

This indicator is tracked for all years of Project.

Priority areas for each institution are as follows (for further details, see Annex 2):

POLY: Engineering degree and diploma level courses in Mining, Construction etc CHANCO: Science Teachers for Secondary Education LUANAR: Agriculture related courses MZUNI: (i) Secondary Teacher Training through ODL; and (ii) Tourism TEVETA: Artisan Training in Technical Training Colleges

Percentage of Female Beneficiaries Percentage of females among direct beneficiaries. This is aggregated for all five participating institutions and priority area enrollments

2. Number of skills trainees from rural areas This indicator gives the number of students from rural areas attending technical/skills development courses in rural technical institutions under the TEVETA.

3. Proportion of new intakes in priority areas to the overall new intakes in the participating institutions

This indicator reflects the increase in enrollments in priority areas as compared to overall enrollments in the five participating institutions each year. This indicator is expressed in percentage. = (# of new intakes in priority areas/# of total intakes in the participating Skills Development Institutions)*100

4. The Proportion of students/trainees who pass the annual assessment

The annual assessment is here defined as the assessment of skills and knowledge based on the curriculum specified for each year of the course, which is developed/

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revised in consultation with private sector.

This is a proxy indicator for completion rate for each year of the course.

The new assessment tools and modalities will be developed in the first year through a TA provided by NCHE. The new assessment will include both written examinations as well as practical examinations. The benchmark for passing a student in the exams will also be specified in the new assessment system.

This indicator will be provided as aggregate for all five skills development institutions and for all courses as well as disaggregated by institutions and courses. This indicator is to be tracked for all years of the project.

5. Course graduation / completion rate

This is measured only in the final year of the course. This is measured as total number of students in a particular cohort who complete the final year of a particular course divided by the number of students enrolled in a course in the first year

=(number of students in a cohort who passed the final year exams /number of students in the cohort who enrolled in the course in the first year)*100

6. Improvements in Employer satisfaction levels with the skills and knowledge of graduates in higher education/ TEVETA in priority areas

This indicator is to be measured through tracer studies. The methodology for tracer studies will include a tool for measuring employer satisfaction levels. The tracer study report is to present employer satisfaction levels. Since tracer studies will be done in year 1, 3 and 5 for MZUNI, CHANCO, LUANAR and POLY, the results for employer satisfaction levels are expected to be available at the end of year 1, 3 and 5. For TEVETA, tracer studies are to be conducted every year. The tracer studies to be carried out by the institutions in the first year will focus on those graduated from institutions from existing programs. This will become the baseline data for the indicator.The employer satisfaction will be measured using indicators /scales using internationally standard questionnaires. The second tracer study for all participating institutions (other than TEVETA) will be in the third year and it will focus on some short term courses apart from existing courses in their analysis.The tracer study in year 5 will focus on graduates from both new courses in priority/ supported areas as well as the graduates from traditional /existing courses. A comparison between baseline and endline will help us to analyze market relevance of new courses compared to traditional courses as well as improvements if any, in the traditional courses,during the project period, due to spill over (indirect) effects of instittuional infrastructure and other capacity improvements and new loan schemes.

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Intermediate Results Indicators

Indicator Name Description

1. Number of (annual) new intakes in the priority areasThis indicator shows the number of students newly enrolled every year in a program. This is presented both in terms of consolidated from all five institutions as well as seperately for institutions and priority area courses.

2. Number of (annual) total students enrolled in priority areas

This indicator shows the number of students enrolled in the priority areas in the institutions in a year (total of all currently enrolled cohorts). This is presented both in terms of consolidated from all five institutions as well as seperately for institutions and priority area courses.

3. Proportion of Infrastructure targets met by participating institutions as per agreed institutonal improvement plan (IIP) [aggregate from DLI 3]

The overall infrastructure requirements are determined based on the priority area programs and its curriculum requirements. Infrastructure targets are determined in each institution’s institutional improvement plan and detailed in the DLIs. This indicator is for CHANCO, LUANAR, MZUNI and POLY, not for TEVETA.

4. Number of programs developed/curriculum revised with private sector participation as per institutional improvement Plan and imparted during implementation period [aggregate from DLI 4]

This is an indicator that shows the number of programs newly developed or revised with private sector consultations. Private sector is used here in a broad manner and it includes any market player in the sector.

5.Proprotion of faculties selected for Staff Development Programs returned to the institution after completing their training programs and resumed teaching. [aggregate from DLI 5]

Based on human resources (HR) capacity reviews against capacity requirements emerging from the curriculum review process, the institutions to develop tailored professional development plans for each program. The targets are determined in agreed improvlement plans and detailed in the DLIs. The institution specific progress report will also specify the number of staff benefited from specific programs.

6. Published Tracer studies as per action plan [aggregate from DLI 6]

Number of published tracer studies in existing and supported priority areas as per action plan. This indicator is for all five skills development institutions. While for institutions like MZUNI, CHANCO, LUANAR and POLY, the tracer studies are to be published by the end of year 1, year 3 and year 5, for TEVETA, they are supposed to be bringing out tracer studies every year.

7.Timely preparation of Annual Progress Reports by participating institutions and NCHE, reflecting the analysis on the performance on agreed results and tartgets, especially in priority areas.

This indicator is for measuring behavior change towards results orientation of the institutions – through this indicator, the institutions’ improvement towards collecting data, verifying it, analysing the data and creating an evidence base for further planning and monitoring is looked at. The indicator will be reported by institutions at institutional level and by NCHE at national level. This means the 5 participating institutions and NCHE collect data on

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outcomes, outputs and process levels and carrying out a detailed critical analysis of the progress in institution level targets and achievement. Timeliness here is defined as the completion of the final Annual Progress Reports by August 30th every year (within 2 months of FY year ending).

The indicator will be reported on a scale depending on the achievement of the following criteria:

The score assigned to the achievement of each target in the criteria is given in brackets. The total scale is 0-5

Criteria for evaluating the report Lowest Highest The institution has prepared an Annual Progress Report

No (0) Yes (1)

The quality report is reviewed to be highly satisfactory (to a Third party evaluator) in terms of the level and quality of analysis/diagnosis of results and disaggregation (as per the framework developed by NCHE for reporting annaual progress)

Not satisfactory

(0)

Moderately Satisfactory

(0.50)

Satisfactory (1)

Highly Satisfactory

(2)

The report was produced in a timely manner (within the stipulated time)

No (0)

Delayed by more than 6

months (0.25)

Delayed by 3 months

(0.50)

Timely submission

(1)

The report is disseminated to government, NCHE, private sector etc through the institutions web-site, work shop at the institution etc.

Not disseminated

to public (0)

Disseminated through reports (0.50)

Disseminated through

website and newspaper reports (1)

TOTAL SCORE IN THE SCALE 0 5

8. Development of targeted and functional students’ loan scheme as per action plan by year 3.

‘Development’ includes ‘policy in place’, ‘act in place’, ‘procurement of equipment’, ‘implementation guideline developed’, ‘loan application form developed’, ‘loans board in place’ etc. This indicator is for MoEST.

9. A National Quality Assurance Framework (NQAF) developed

This is an indicator for NCHE.

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Annex 1.C: Results Framework and Monitoring Project Development Objectives PDO Statement: The development objective of the proposed project is to increase access, market relevance, and results orientation of supported skills development institutions in agreed priority areas These results are at Project level

Annex 1.C. Project Development Objective Indicators

Year 0 2013-

14

Cumulative Target Values

Indicator Name Core Unit of

Measure Year 1 2014-15

Year 2 2015-16

Year 3 2016-17

Year 4 2017-18

End of Proj.2018-19

Frequency Data Source/ Methodology

Responsibility for Data collection

ACCESS and EQUITY

1. Direct Project Beneficiaries # 0 1,780 3,180 4,590 5,650 7,200 Annual MIS/

Progress reports

NCHE

Proportion of Female beneficiaries % 0 37 39 40 42 44 Annual

MIS/ Progress reports

NCHE

2. Number of Skills Trainees from rural areas # 0 320 1,100 2,100 3,000 4,100 Annual


NCHE

QUALITY AND MARKET RELEVANCE 3. Proportion of new intakes in

priority areas to the overall new intakes in the participating institutions

% 0 12% 19% 25% 31% 37% Annual MIS/

Progress reports

NCHE

4. The proportion of students/ trainees who pass the annual assessment

% 0% 50% 55% 60% 65% 70% Annual MIS/

Progress reports

NCHE

5. Course graduation / completion rate % 0% 0% 0% 0% 60% 65% Annual


NCHE

6. Improvements in Employer satisfaction levels with the skills and knowledge of graduates in priority areas

% 34%14 40% 50% 60% In

alternative years

Tracer studies NCHE

14 Baseline is from the 2008 tracer study of all HE and TEVET graduates

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Year

0 2013-

14


Indicator Name Core Unit of Measure

Year 1 2014-15

Year 2 2015-

16

Year 3 2016-

17

Year 4 2017-

18

End of Project 2018-19



Intermediate Results Indicators ACCESS and EQUITY 1. Annual intake (enrollments) in

the priority areas # 0 1,680 1,705 2,155 2,155 2,500 Annual MIS NCHE

2. Proportion of Infrastructure targets met by participating institutions as per agreed IIP (agregate from DLI 3)

% 0

Procurement plan

developed & at least

20% contracts signed

100% Contracts

signed

50% of infrastruc

ture targets

met

100% of infrastruc

ture targets

met

- Bi-annual Institution’s

progress reports, TPV

NCHE

QUALITY AND MARKET RELEVANCE 3. Number of programs developed

/curriculum revised with private sector participation as per IIP and imparted during implementation period (aggregate from DLI 4)

# 0 34 Programs designed

Initiated Implementation of

24 programs

+ 5 programs designed

Initiated 39

programs and

implemented

39 Programs

under implemen

tation

39 Programs under

implementation

Annual Institution’s


NCHE

4. Proportion of faculties selected for Staff Development Program returned to the institution after completing their training programs and resumed teaching [aggregate from DLI 5]

% 0

All staff dev.t plans agreed &

25% of staff proceeded for training

At least 20% of

the staff / faculty training

completed, and

resumed work

At least 50% of staff / faculty training

completed, and

resumed work

80% of staff / faculty training

completed, and

resumed work

All staff training

completed, and resumed

work

Annual Institution’s


NCHE

RESULTS ORIENTATION

5. Published Tracer studies as per action plan [aggregate from DLI 6]

# 0

5 Tracer study

conducted on ongoing programs & published

1 (TEVETA) tracer

study published

5 Tracer study

conducted and

published

1 (TEVETA) tracer

study published

5 Tracer study

conducted on new/ old programs & published

1,3, 5th years for 4

institutions, every year

for TEVETA

Institution’s progress

reports, TPV NCHE

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Year 0

2013-14


Indicator Name Core Unit of Measure

Year 1 2014-15

Year 2 2015-

16

Year 3 2016-

17

Year 4 2017-

18




6. Timely submission of annual implementation progress report by NCHE, detailing analysis of performance against targets

Scale of 0-5;

5 highest

0 2 3 4 5 5 Annual Institution’s


NCHE

7. Development of targeted and functional students’ loan scheme as per action plan by year 3.

Y/N No No No Yes Yes Yes One time NCHE NCHE

8. A National Quality Assurance Framework (NQAF) developed Y/N No Yes Yes Yes Yes Yes One time NCHE NCHE

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Annex 1.D: DLI Verification Protocol Annex 1.D. DLI 1: Participating Skills Development Institution has developed and adopted its Institution Improvement Plan (IIP).

Definition/ Description of achievement

Scalability (Y/N)

Protocol to evaluate achievement of the DLI and data/result verification Data source/

agency Verification

Entity Procedure

Related information to be verified

Each of the Participating Skills Development Institutions has developed and adopted its Institutional Improvement Plan (IIP). Institutions prepare IIP which is reviewed and agreed with the Ministry of Finance through a Sub-Project Grant Agreement (SPGA) (through Steering Committee). The IIPs of participating institutions describe the priority areas for improvement in the institutions (like Engineering, Mining and Construction, Tourism, Agriculture, and teacher training). The main activities that the IIPs should include: (i) to improve access, number of seats offered in priority areas of study, expansion and rehabilitation of infrastructure and facilities that are relevant for each institution’s priority areas (some including scaling up of ODL and e-learning initiatives). To increase the market-relevance of programs, IIPs to include the following key activities: (i) development and revision of curriculum, (ii) provision of appropriate equipment and teaching and learning materials; and (iii) staff development.

N Institutional Improvement

Plans Sub-Project Grant

Agreement

Steering Committee (assisted by

TC) World Bank

TT

SC, through MoF, submit Institutional Improvement Plan and related Sub-

Project Grant Agreement to the

Bank

Institutional Improvement Plan; Targets set for the results related 5 DLIs

(described in the next 5 DLIs)

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Annex 1.D DLI 2: Student enrollment in agreed skills development programs increases

Definition/ Description of achievement

Scalability (YN)

Protocol to evaluate achievement of the DLI and data/result verification

Data source/ agency Verification

Entity Procedure Related information to be verified

Student enrollment in agreed skills development programs increases Each participating institution will enroll students in priority degree /diploma program each year as per the targets set in in IIP and agreed in Sub-Project Grants Agreement (SPGA) Institutions through their improvement Plans, proposed to admit certain # of students each year

If institutions meet DLI targets by:

DLI amount to be disbursed

80% & above 100% 70-80% 90% 60-70% 80% 50-60% 60%

Specific amounts for achievements are given in table Annex 1.E Each year, the target is cumulative. If the institutions do not meet 100% target in the stipulated year, then they are paid according to the percentage achieved and DLI value attached to it. If the institutions achieve 100% target in subsequent years, the balance amount is paid in the year of achievement

N Admission register compiled in Institutions’ EMIS (and submitted to SC)

Quarterly progress reports submitted by institutions to SC

Annual Progress Reports prepared by institutions and submitted to SC

Third Party verification through institutional visits and comparison of MIS data

World Bank’s biannual review mission (including verification by field visit to institutions)

Steering Committee (for MoF)

Third party appointed by SC (with support from TC/NCHE) for verification and triangulation

World Bank Review teams

Institutions furnish admission data through MIS (within the first quarter of admission); Institutions’ quarterly progress reports and Annual Progress reports

SC verifies enrollment figures through MIS, institution visits

TC appoints a Third Party to verify the admissions

Third party’s ToR includes visit to institutions at least twice a year

Third party to submit their report to SC before WB missions Third party to submit their report to SC before WB missions

Specifications of information that needs to be additionally looked at while verifying the enrollment figures are: Proportion of girls in admitted Proportion of students rural areas

admitted in the course % of students from Community

Day Secondary Schools (CDSS) admitted to the course

Related information to be checked: Number of applications to the

course in the year Criteria used /method of shortlisting

and selecting students to the course # Students who did not apply to the

course, but were selected /assigned to the course

Efforts made by Institution to increase awareness among applicants about these courses and counseled.

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Annex 1.D. DLI 3. Each of the Participating Skills Development Institutions achieves its infrastructure development targets as set out in the Institution Improvement Plan

Definition/ Description of achievement Scalability (Yes/ No)



Entity Procedure

Related information to be

verified Each of the Participating Skills Development Institutions achieves its infrastructure development targets as set out in the Institution Improvement Plan

Year

If institutions meet DLI targets by:

DLI amount

to disburse

I

Final Procurement Plan agreed, and at least 20% of contracts signed

100%

Final Procurement Plan agreed 80% Final Procurement Plan reviewed 60%

II

100% contracts signed 100% 80-100% Contracts signed 80%

60-80% of Contracts signed 60%

III & IV

Targets met (with required quality in construction)

(amount for year III & IV together)

80%+ target for year III& IV met 100% 70-80% of target (yrs. III+IV) met 80% 60-70% of target (yrs. III+IV) met 60% 50-60% of target (yrs. III+IV) met 50% 40-50% of target (yrs. III+IV) met 40% 30-40% of target (yrs. III+IV) met 30%

N First year (2014-15): Final Procurement

Plan / draft Procurement Plan

Third Party (Consultant) evaluation of Procurement Plan feasibility

Second Year (2015-16) Copies of Contract

signed submitted to SC / NCHE

Third Party (Consultant)’s evaluation of contracts

Third & Fourth Year (2016-17 and 2017-18) Institutions’ Quarterly

Progress report on construction progress

Institutions’ Annual Progress Report

Third Party evaluation of progress + quality of construction

World Bank Biannual review mission reports

SC First & Second year: Independent Consultant (Procurement Specialist) contracted by SC for evaluating Procurement Plan World Bank

Procurement Specialist reviews the documents

Third & Fourth year: An Independent Party to review construction progress and its quality World Bank

biannual review mission’s field visits

First Year: Institutions/TC submit: Minutes of the meeting with TC

wherein the Final Procurement Plan was approved

Final/ draft Procurement Plan Procurement Review report Independent Procurement

Consultant reviews the documents and submit assessment to SC/WB

Second Year: Institutions submit copies of

Signed contracts (and bidding evaluation documents) to SC

Independent Procurement Consultant reviews contracts / bidding evaluation documents and submit evaluation report to SC

World Bank Procurement Specialist reviews the procurement related documents

Third / Fourth Year: Institutions submit Quarterly

Progress Reports on construction activities

Institutions submit Annual Progress Report

Third Party contracted by SC visits construction sites four times a year to review the progress in construction and quality of construction

Third Party also reviews institutional reports on progress

First Year: Whether

Procurement Plan is in alignment with the Institutions’ Improvement Plan

Second Year: Whether

Contracts satisfy the WB procurement rules

Third & Fourth Year: Quality of

construction / materials procured

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Annex 1.D. DLI 4: Each of the Participating Skills Development Institution develops and implements the agreed skills development programs in consultation with the private sector

Definition/ Description of achievement Scale (Y/N)



Entity Procedure Related information to be verified

Each of the Participating Skills Development Institutions develops and implements the agreed skills development programs in consultation with the private sector:

Year

If institutions meet DLI targets by: DLI

I

All Agreed programs designed revised and finalized for implementation

100%

60-80% of all agreed programs designed/revised and finalized

80%

At least half of the agreed programs designed/revised and finalized and for the consultations with private sector / market players completed for the rest 50%

60%

II

Half of the agreed programs (target for second year) introduced in the form of new courses in existing/ new curriculum and has been in implementation for at least 6 months

100%

1/4th of the agreed programs (half of the target for second year) introduced in the existing courses / new courses and has been in implementation for at least 6 months and for all targeted (half of total programs) agreed design and plan for implementation in place

60%

III

All the agreed programs introduced in the form of new courses in existing / new curriculum & has been in implementation for at least 6 months

100%

At least 3/4th of the programs introduced in the form of new/ part of existing courses /curriculum & has been in implementation for at least 6 months

80%

At least 1/2 of the programs introduced in the form of new/ part of existing courses /curriculum & has been in implementation for at least 6 months

60%

N First year: Program/curriculum

documents Minutes/Reports of

the Consultation meeting discussions and agreements with private sector / market players for each of the agreed programs

Third party reports of verification with private sector about course / curriculum revision consultations

Second /Third Year: Institutions’ Quarterly

Reports to TC about program implementation

Institutions’ Annual Progress Report to SC on implementation

Third Party verification Report in institutions about implementation

World Bank’s Biannual review mission reports

Third party appointed by SC World Bank’s biannual Review mission reports

First year: SC entrusts Third party

(Consultants) to verify minutes /reports of consultations and agreements reached as reflected in new curriculum / program documents

Consultants consult with the private/market sector players to verify that the curriculum reflects their concerns/suggestions

The Consultant reviews the appropriateness of curriculum/program courses

Second and third year: TC appoints a third party to

review the documents submitted by Institutions regarding progress in new curricula implementation

The Third Party (Consultants) visit the institutions and hold discussions with institutions (faculty and students) to verify the courses are indeed being implemented

World Bank’s Biannual review based on institutions visit also verifies that the courses are indeed been part of the institutions program

Third Party/Consultant will review the programs and its implementation for the following: detailed breakdown of courses to be

provided within each program (and modules within courses where appropriate);

proposed teaching and learning strategies for each program/course;

breakdown of the content; defined student support models; comprehensively defined educational

delivery models, description of proposed ICT architecture

for each proposal linked explicitly to teaching and learning models;

teaching, learning, and assessment approaches and methods that will underpin the content;

list of infrastructure required to deliver the program;

comprehensive list of equipment and facilities needed to deliver the program;

clear delineation of the labor market niche being addressed by the program and job opportunities for graduates of the program;

staff development plans based on human capacity needs;

projections of operating costs (including staff costs) and fee income;

partnerships that have been developed with key labor market stakeholders and their roles in the program review and implementation; and

networking (Collaborative) initiatives in the delivery of the program (local and external).

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Annex 1.D. DLI 5: Each of the Participating Skills Development Institutions achieves its staff development targets as set out in the Institution Improvement Plan

Definition/ Description of achievement Scalability (Y/N)

Protocol to evaluate achievement of the DLI and data/result verification Data source/

agency Verification

Entity Procedure

Related information to be verified

Each of the Participating Skills Development Institutions achieves its staff development targets as set out in the Institution Improvement Plan

Based on human resources (HR) capacity reviews against capacity requirements emerging from the curriculum review process, the institutions develop tailored professional development plans for each program. The targets are determined in agreed improvement plans and detailed in the DLIs.

Year

If institutions meet DLI targets by: DLI amount

I All Staff Capacity Development Plans approved as per SPGA; at least 25% of

training initiated 100%

All Staff Capacity Development Plans developed and approved as per SPGA

80%

II-V All staff/faculty completed training and

returned to institution

100% cumulative

for (yrs. 2-5) years

Cumulatively 80% of faculty completed training and returned to institution

80% cumulative


Cumulatively 60% of staff / faculty completed training and returned

60% cumulative


Cumulatively 50% of staff / faculty completed training and returned to

institution

50% cumulative


All staff training programs started and at 20% of staff /faculty training completed

and returned to institution

20% cumulative


N First Year: Institutions’ Staff

Development Plan

Institutions’ Human Resource capacity Review reports

Third party (independent) assessment report

World Bank’s mission /review reports

Third/Fourth Year: Institution-wise

compilation of report on staff training completed

Institutions’ Quarterly / Annual Progress reports on staff returned and engaged in lectures in priority areas or specific implementation related activities

Independent Consultant (Third Party appointed by SC)

World Bank’s bi-annual review mission reports

First year: SC entrusts Third party (Consultants) to

review whether the staff capacity Development Plans are in alignment with capacity requirements emerging from the curriculum review.

Consultants review documents related to new /revised curriculum and identification of capacity requirements

Consultants meet the institutions and hold workshop to review the capacity development plans

The Consultant reviews the skill development plans and its appropriateness for imparting curriculum /program

Third and Fourth years: The third party / consultants appointed by

SC reviews the documents submitted by Institutions regarding the implementation of staff capacity development plans and the consultant verifies that half of the staff/ faculty have completed training and are back in institutions and have resumed their duties.

The Third Party (Consultants) visit the institutions and meet staff/faculty who have returned after their training and resumed work and discuss their training program and its effectiveness

World Bank’s biannual review also verifies that the staff development plans are implemented, meet staff/ faculty returned to work after training and discuss with them about the efficacy of training

Third Party / Consultant will review the Staff capacity development program and its implementation: staff development plans

based on human capacity needs; and detailed breakdown of training programs planned for staff development

projections of operating costs (including staff costs) and fee;

partnerships that have been developed with key players for staff development and networking (Collaborative) initiatives in the delivery of the program (local and external).

Efficacy and effectivness of programs as perceived by participants (staff) and its impact as perceived by students and peer groups

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Annex 1.D. DLI 6: Each of the Participating Skills Development Institutions carries out and publishes tracer studies on on-going and new skills development programs

Definition/ Description of achievement Scalability (Y/N)


Data source/ agency

Verification Entity

Procedure Related information

to be verified

Each of the Participating Skills Development Institution carries out and publishes tracer studies on on-going and new skills development programs

Year

If institutions meet DLI targets by: DLI

amount

I

One tracer study conducted on ongoing programs published

100%

Tracer study conducted on ongoing programs and draft report is being reviewed

80%

Tracer study conducted on ongoing programs and draft report is under preparation

60%

Survey of graduates completed and data for Tracer study is being compiled and analyzed

50%

II For completing tasks that were not completed in first year

III

One tracer study conducted and results published 100% Tracer study conducted and draft report is being reviewed 80% Tracer study conducted and draft report is under preparation

60%


50%

IV For completing tasks that were not completed in third year

V

One tracer study conducted and results published 100% Tracer study conducted and draft report is being reviewed 80% Tracer study conducted and draft report is under preparation

60%


50%

Tracer study reports

Institutions’ own analysis of tracer study reports and lessons learned in the process as reflected in Annual Progress Reports; also analysis of processes involved as reflected in quarterly progress reports

Analysis of the quality and usefulness of tracer study by a third party / Consultant appointed by SC

World Bank biannual review of tracer study reports

Third party / Consultant contracted by SC

World Bank review mission team

Institutions submit tracer study reports to SC

Institutions also review tracer studies, assess the results and lessons learned from the process and reflect it in their Quarterly and Annual progress reports

SC contracts a third party / Consultant who reviews: (i) tracer study reports; and (ii) Institutional assessments of tracer studies as reflected in Annual and Quarterly reports;

Third Party / Consultant prepares a report on the quality of the report and soundness of methodology of tracer studies

The M&E expert in the World Bank team, during its biannual review missions, also reviews these documents and triangulate the findings of third party/ consultant

The third party / consultants reviews tracer studies on the following aspects:

Whether methodology follows the commonly agreed process and quality

The soundness/ appropriateness of sampling method that was followed

Quality of questionnaires / modules used in the study

Whether employers were surveyed for their assessment of satisfaction

Whether analysis was done appropriately;

Whether report writing was of good quality;

Assessment of participating institutions about their learning in the process

Assessment of institutions about the usefulness of tracer study results in rethinking about programs

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Annex 1. E: Disbursement Linked Results (DLRs) Indicators (DLIs) DLR values to be achieved at the end of FY

Results Orientation DLI Unit of

Measure

Year 0 (2014-15;

before implement

ation of IIP)

Year 1 2014-15

Year 2 2015-16

Year 3 2016-17

Year 4 2017-18


Total amount

% in total allocation

to institution

DLI 1: Participating Skills Development Institution has developed and adopted its Institution Improvement Plan (IIP).

$ $

The Polytechnic $ 1,500,000 1,500,000 15% Chancellor College $ 1,500,000 1,500,000 19% LUANAR $ 1,500,000 1,500,000 19% Mzuzu University $ 1,500,000 1,500,000 17% TEVETA $ 1,000,000 1,000,000 20%

TOTAL for DLI 1 $ 7,000,000 7,000,000

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Annex 1. E. DLI 2: PART:A Disbursement Linked Results and Indicators (DLRs & DLIs) (ACCESS DLI) DLI 2: Student enrollment in agreed skills development programs increases

DLR values

PART A Unit of Measure Year 1 2014-15

Year 2 2015-16

Year 3 2016-17

Year 4 2017-18


Total

The Polytechnic Total # 300 600 900 1,200 1,500

1,500 Increase by# 300 300 300 300 300

Chancellor College Total # 155 310 465 620 920

920 Increase by# 60 155 155 155 300

LUANAR Total # 600 700 800 900 1,100

1,100 Increase by# 600 100 100 100 200

Mzuzu University Total # 400 800 1,300 1,900 2,500

2,500 Increase by# 400 400 500 600 600

TEVETA Total # 320 750 1,100 1,000 1,100

4,100 Increase by# 320 750 1,100 1,000 1,100

TOTAL Total # 1,775 3,160 4,565 5,620 7,120

7,120 Increase by# 1,680 1,705 2,155 2,155 2,500

Pricing of DLI 2 $ The Polytechnic $ 425,000 425,000 531,250 531,250 212,500 2,125,000 Chancellor College $ 325,000 325,000 406,250 406,250 162,500 1,625,000 LUANAR $ 325,000 325,000 406,250 406,250 162,500 1,625,000 Mzuzu University $ 375,000 375,000 468,750 468,750 187,500 1,875,000 TEVETA $ 231,000 231,000 288,750 288,750 115,500 1,155,000

TOTAL for DLI 2 $ 1,681,000 1,681,000 2,101,250 2,101,250 840,500 8,405,000 Per DLR amount

The Polytechnic $ 1,417 708 590 443 142 1,417 Chancellor College $ 2,097 1,048 874 655 177 1,806 LUANAR $ 542 464 508 451 148 1,477 Mzuzu University $ 938 469 361 247 75 750 TEVETA $ 722 308 263 289 105 1,050 TOTAL $ 947 532 460 374 118 1,184 % each year in total allocation for DLI

The Polytechnic % 20% 20% 25% 25% 10% 100% Chancellor College % 20% 20% 25% 25% 10% 100% LUANAR % 20% 20% 25% 25% 10% 100% Mzuzu University % 20% 20% 25% 25% 10% 100% TEVETA % 20% 20% 25% 25% 10% 100%

35

Annex 1. E. DLI 2: PART:B: Disbursement Linked Results and Indicators (DLRs & DLIs) (ACCESS DLI) DLI 2: Student enrollment in agreed skills development programs increases

Note: Each year, the enrollment target (DLR) presented is cumulative. If the institutions do not meet 100% target in the stipulated year, then they are paid according to the percentage achieved and DLI value attached to it. If the institutions achieve 100% target in subsequent years, the balance amount is paid in the year of achievement. For example, if an institution meets only 80% target in enrollment in year 1, they are paid 90% of the amount. But in year 2, if they achieve 100%, it reflects that they had to additionally enroll 20% to meet the year 2 target. So in year 2, the institution is paid 100% of year 2 as well as 20% from year 1 amounts.

PART B Unit of


Year 2 2015-16

Year 3 2016-17

Year 4 2017-18


Total

The Polytechnic $ 425,000 425,000 531,250 531,250 212,500 2,125,000 If 80%+ targets met, 100% disbursement $ 425,000 425,000 531,250 531,250 212,500 2,125,000 If 70-80% targets met, 90% disbursement $ 382,500 382,500 478,125 478,125 191,250 If 60-70% targets met, 80% disbursement $ 340,000 340,000 425,000 425,000 170,000 If 50-60% targets met, 60% disbursement $ 255,000 255,000 318,750 318,750 127,500

Chancellor College $ 325,000 325,000 406,250 406,250 162,500 1,625,000 If 80%+ targets met, 100% disbursement $ 325,000 325,000 406,250 406,250 162,500 1,625,000 If 70-80% targets met, 90% disbursement $ 292,500 292,500 365,625 365,625 146,250 If 60-70% targets met, 80% disbursement $ 260,000 260,000 325,000 325,000 130,000 If 50-60% targets met, 60% disbursement $ 195,000 195,000 243,750 243,750 97,500

LUANAR $ 325,000 325,000 406,250 406,250 162,500 1,625,000 If 80%+ targets met, 100% disbursement $ 325,000 325,000 406,250 406,250 162,500 1,625,000 If 70-80% targets met, 90% disbursement $ 292,500 292,500 365,625 365,625 146,250 If 60-70% targets met, 80% disbursement $ 260,000 260,000 325,000 325,000 130,000 If 50-60% targets met, 60% disbursement $ 195,000 195,000 243,750 243,750 97,500

Mzuzu University $ 375,000 375,000 468,750 468,750 187,500 1,875,000 If 80%+ targets met, 100% disbursement $ 375,000 375,000 468,750 468,750 187,500 1,875,000 If 70-80% targets met, 90% disbursement $ 337,500 337,500 421,875 421,875 168,750

If 60-70% targets met, 80% disbursement $ 300,000 300,000 375,000 375,000 150,000 If 50-60% targets met, 60% disbursement $ 225,000 225,000 281,250 281,250 112,500

TEVETA $ 231,000 231,000 288,750 288,750 115,500 1,155,000 If 80%+ targets met, 100% disbursement $ 231,000 231,000 288,750 288,750 115,500 1,155,000 If 70-80% targets met, 90% disbursement $ 207,900 207,900 259,875 259,875 103,950 If 60-70% targets met, 80% disbursement $ 184,800 184,800 231,000 231,000 92,400 If 50-60% targets met, 60% disbursement $ 138,600 138,600 173,250 173,250 69,300

TOTAL for DLI 2 1,681,000 1,681,000 2,101,250 2,101,250 840,500 8,405,000 If 80%+ targets met, 100% disbursement $ 1,681,000 1,681,000 2,101,250 2,101,250 840,500 1,155,000 If 70-80% targets met, 90% disbursement $ 1,512,900 1,512,900 1,891,125 1,891,125 756,450 If 60-70% targets met, 80% disbursement $ 1,344,800 1,344,800 1,681,000 1,681,000 672,400 If 50-60% targets met, 60% disbursement $ 1,008,600 1,008,600 1,260,750 1,260,750 504,300

36

Annex 1. E. DLI 3: PART:A Disbursement Linked Results and Indicators (DLRs & DLIs) (ACCESS DLI) DLI 3. Each of the Participating Skills Development Institution (PSDI) achieves its infrastructure development targets as set out in the IIP

DLR Target / DLI monetary values

PART A Unit of


Year 2 2015-16

Year 3 2016-17

Year 4 2017-18

End of Proj 2018-19

Total

DLI 3. Each of the PSDI achieves its infrastructure development targets as set out in the Institution Improvement Plan

Ist & II Year: Yes / No

III & IV year: %

Procurement plan developed & at

least 20% contracts signed

100% Contracts signed

50% of infrastructure targets met


100% of infrastructure

targets completed

The Polytechnic % 100% 100% 50% 100% 100% 100% Chancellor College % 100% 100% 50% 100% 100% 100% LUANAR % 100% 100% 50% 100% 100% 100% Mzuzu University % 100% 100% 50% 100% 100% 100% TEVETA

TOTAL of DLR 3 % 4 Procurement

Plans ready 100% contracts

signed 50% 100% 100%

Pricing of DLI 3 $ The Polytechnic $ 425,000 425,000 637,500 637,500 - 2,125,000 Chancellor College $ 325,000 325,000 487,500 487,500 - 1,625,000 LUANAR $ 325,000 325,000 487,500 487,500 - 1,625,000 Mzuzu University $ 375,000 375,000 562,500 562,500 - 1,875,000 TOTAL for DLI 3 $ 1,450,000 1,450,000 2,175,000 2,175,000 7,250,000

Per DLR amount % The Polytechnic 6,375 6,375 21,250 Chancellor College 4,875 4,875 162,500 LUANAR 4,875 4,875 16,250 Mzuzu University 5,625 5,625 18,250 TOTAL 21,750 21,750 72,500

% each year in total allocation for DLI The Polytechnic 20% 20% 30% 30% 0% 100%

Chancellor College 20% 20% 30% 30% 0% 100%

LUANAR 20% 20% 30% 30% 0% 100%

Mzuzu University 20% 20% 30% 30% 0% 100%

TOTAL 20% 20% 30% 30% 0% 100%

37

Annex 1. E. DLI 3: PART:B Disbursement Linked Results and Indicators (DLRs & DLIs) (ACCESS DLI)

DLI 3. Each of the Participating Skills Development Institution achieves its infrastructure development targets as set out in the IIP Note: In the first and second year, disbursement is made according to the finalization and agreement of procurement plan and all infrastructure contracts signed. If the institutions do not achieve 100%, they will be paid according to their DLR achievement. If they achieve the results in the subsequent years, they are then paid the balance for that particular DLR. For example, if an institution completes preparation of procurement plan and got it reviewed, but not finalized or contracts not signed, they get 60% of the DLI amount. The rest 40% are paid in the subsequent year when the institution gets the procurement plan approved by Steering Committee /Technical Committee and get the contracts signed.


PART B Unit of


Year 2 2015-16

Year 3 2016-17

Year 4 2017-18


Total

Pricing of DLI 3 $ The Polytechnic 425,000 425,000 637,500 637,500 - 2,125,000 Final Procurement Plan agreed, and at

least 20% of contracts signed 100% 425,000

Final Procurement Plan agreed 80% 340,000

Final Procurement Plan reviewed 60% 255,000 100% contracts signed 100% 425,000

80-100% Contracts signed 80% 340,000 60-80% of Contracts signed 60% 255,000

80%+ target for year III& IV met 100% 1,275,000 70-80% of target(yrs. III+IV) met 80% 1,020,000 60-70% of target (yrs. III+IV) met 60% 765,000 50-60% of target (yrs. III+IV) met 50% 637,500 40-50% of target (yrs. III+IV) met 40% 510,000 30-40% of target (yrs. III+IV) met 30% 382,500

Chancellor College 325,000 325,000 487,500 487,500 - 1,625,000 Final Procurement Plan agreed, and at





80%+ target for year III& IV met 100% 975,000 70-80% of target(yrs. III+IV) met 80% 780,000 60-70% of target (yrs. III+IV) met 60% 585,000 50-60% of target (yrs. III+IV) met 50% 487,500

38

40-50% of target (yrs. III+IV) met 40% 390,000 30-40% of target (yrs. III+IV) met 30% 292,500

LUANAR 325,000 325,000 487,500 487,500 - 1,625,000 Final Procurement Plan agreed, and at





80%+ target for year III& IV met 100% 975,000 70-80% of target(yrs. III+IV) met 80% 780,000 60-70% of target (yrs. III+IV) met 60% 585,000 50-60% of target (yrs. III+IV) met 50% 487,500 40-50% of target (yrs. III+IV) met 40% 390,000 30-40% of target (yrs. III+IV) met 30% 292,500

Mzuzu University 375,000 375,000 562,500 562,500 - 1,875,000 Final Procurement Plan agreed, and at

least 20% of contracts signed 100%

375,000 Final Procurement Plan agreed 80% 300,000



80%+ target for year III& IV met 100% 1,125,000 70-80% of target(yrs. III+IV) met 80% 900,000 60-70% of target (yrs. III+IV) met 60% 675,000 50-60% of target (yrs. III+IV) met 50% 562,500 40-50% of target (yrs. III+IV) met 40% 450,000 30-40% of target (yrs. III+IV) met 30% 337,500

TOTAL for DLI 3 1,450,000 1,450,000 2,175,000 2,175,000 0 7,250,000

39

Annex 1. E. DLI 4: PART:A Disbursement Linked Results and Indicators (DLRs & DLIs) (RELEVANCE DLI) DLI 4: Each of the Participating Skills Development Institution develops and implements the agreed skills development programs in consultation with the private sector


PART A Unit of


Year 2 2015-16

Year 3 2016-17

Year 4 2017-18


Total

DLI 4: Each of the PSDI develops and implements the agreed skills development programs in consultation with the private sector

Number 34 Programs

designed

Initiated Implementation of 24 programs

+ 5 programs designed

Initiated 39 programs and implemented

39Programs under

implementation

39 Programs under

implementation

The Polytechnic # 8 4 8 8 8 8 Chancellor College # 5 3 5 5 5 5 LUANAR # 4 2 4 4 4 4 Mzuzu University # 7 5 3 7 7 7 TEVETA # 10 10 +3 13 15 15 15

TOTAL of DLR 4 # 34 24+5 39 39 39 39

Pricing of DLI 4 The Polytechnic $ 714,000 714,000 612,000 - - 2,040,000 Chancellor College $ 546,000 546,000 468,000 - - 1,560,000 LUANAR $ 546,000 546,000 468,000 - - 1,560,000 Mzuzu University $ 630,000 630,000 540,000 - - 1,800,000 TEVETA $ 312,500 312,500 312,500 312,500 - 1,250,000 TOTAL for DLI 4 $ 2,748,500 2,748,500 2,400,500 312,500 0 8,210,000

Per DLR Price The Polytechnic $ 89,250 178,500 76,500 Chancellor College $ 109,200 182,000 93,600 LUANAR $ 109,200 182,000 93,600 Mzuzu University $ 90,000 126,000 77,143 TEVETA $ 31,250 20,833 20,833 20,833

% each year in total allocation for DLI The Polytechnic % 35% 35% 30% 0% 0% 100% Chancellor College % 35% 35% 30% 0% 0% 100% LUANAR % 35% 35% 30% 0% 0% 100% Mzuzu University % 35% 35% 30% 0% 0% 100% TEVETA % 25% 25% 25% 25% 0% 100% TOTAL % 35% 35% 30% 0% 0% 100%

40

Annex 1. E. DLI 4: PART:B Disbursement Linked Results and Indicators (DLRs & DLIs) (RELEVANCE DLI)

DLI 4: Each of the Participating Skills Development Institution develops and implements the agreed skills development programs in consultation with the private sector Note: In the first year, DLR for all institutions is about developing new or improving existing curriculum for new / existing courses in consultation with private sector participation. If the institute is able to do that for all the agreed number of programs, they are paid 100% of the DLI. If they meet only targets below that in the first year, they are paid accordingly. But if they manage to finish the targets in subsequent years, the rest of the DLI is paid in that year of completion of DLR.


PART B Unit of


Year 2 2015-16

Year 3 2016-17

Year 4 2017-18


Total

Pricing of DLI 4 $ The Polytechnic 714,000 714,000 612,000 - - 2,040,000

All Agreed programs designed / revised and finalized for implementation

100% for 8 programs 714,000

3/4 of all agreed programs designed/revised and finalized

80% for 6 571,200 At least half of the agreed programs finalized and for the consultations with private sector /

market players completed for the rest 50%

60% for 4 finalised+4 consulted

428,400

1/2 of the agreed programs (target for second year) introduced in the form of new courses in existing courses/ or as new curriculum


1/4 of the agreed programs (half of the target for second year) introduced and for all targeted (half of total programs) agreed

design and plan for implementation in place

60% for 2 progr+impl plan for +2 programs

571,200

All agreed programs introduced in the form of new courses in existing / new

612,000

At least 3/4th of the programs introduced in the form of new or as part of existing courses

489,600

At least 1/2 all of the programs introduced in the form of new or as part of existing courses 367,200

Chancellor College 546,000 546,000 468,000 - - 1,560,000 All Agreed programs designed / revised and

finalized for implementation 100% for 5 programs 546,000




60% for 3 final+2consultations over

327,600

1/2 of the agreed programs (target for second 100% for 3 546,000

41

year) introduced in the form of new courses in existing courses/ or as new curriculum

programs



60% for 2 progr +impl plan for +3 programs

436,800


468,000

At least 3/4 of the programs introduced in the form of new or as part of existing courses

374,400


LUANAR 546,000 546,000 468,000 - - 1,560,000 All Agreed programs designed / revised and

finalized for implementation 100% for 4 programs

546,000


80% for 3 436,800

At least half of the agreed programs finalized and for the consultations with private sector /



327,600


100% for 2 programs

546,000



60% for 1 program+

impementation plan for+ 3 programs

436,800


468,000


374,400

At least 1/2 all of the programs introduced in the form of new or as part of existing courses

280,800

Mzuzu University 630,000 630,000 540,000 - - 1,800,000 All Agreed programs designed / revised and

finalized for implementation 100% for 7 programs 630,000





378,000



1/4 of the agreed programs (half of the target for second year) introduced and for all


42

targeted (half of total programs) agreed design and plan for implementation in place

+implementation plan for

4 more programs


540,000


432,000


TEVETA 312,500 312,500 312,500 312,500 - 1,250,000 All Agreed programs designed / revised and

finalized for implementation 100% for 10

programs 312,500 3/4 of all agreed programs designed/revised

and finalized 80% for 8 250,000

At least half of the agreed programs finalized and for the consultations with private sector /



187,500



1/4h of the agreed programs (half of the target for second year) introduced and for all

targeted (half of total programs) agreed design and plan for implementation in place

60% for 3 programs

+implementation plan for

7 more programs

250,000


312,500 312,500


250,000 250,000

At least 1/2 all of the programs introduced in the form of new or as part of existing courses 187,500 187,500

TOTAL for DLI 4 2,748,500 2,748,500 2,400,500 312,500 0 8,210,000

43

Annex 1. E. DLI 5: PART:A Disbursement Linked Results and Indicators (DLRs & DLIs) (RELEVANCE DLI) DLI 5: Each of the Participating Skills Development Institution achieves its staff development targets as set out in the IIP

Target values

PART A Unit of


Year 2 2015-16

Year 3 2016-17

Year 4 2017-18

End of Proj. 2018-19

Total

DLI 5: Each of the PSDI achieves its staff development targets as set out in the IIP

Ist Year: Yes / No

III & IV year:

Percentage

All staff dev.t plans agreed &

25% of staff proceeded for

training

At least 20% of the staff /

faculty training completed, and resumed work

At least 50% of staff / faculty

training completed, and resumed work

80% of staff / faculty training completed, and resumed work

All staff training completed, and resumed work

The Polytechnic 100% 20% 50% 80% 100% 100% Chancellor College 100% 20% 50% 80% 100% 100% LUANAR 100% 20% 50% 80% 100% 100% Mzuzu University 100% 20% 50% 80% 100% 100% TEVETA 100% 20% 50% 80% 100% 100%

TOTAL of DLR 5 5 staff dev.t

plans 20% 50% 80% 100% 100%

Pricing of DLI 5 $ The Polytechnic $ 357,000 357,000 446,250 446,250 178,500 1,785,000 Chancellor College $ 273,000 273,000 341,250 341,250 136,500 1,365,000 LUANAR $ 273,000 273,000 341,250 341,250 136,500 1,365,000 Mzuzu University $ 315,000 315,000 393,750 393,750 157,500 1,575,000 TEVETA $ 224,000 224,000 280,000 280,000 112,000 1,120,000

TOTAL for DLI 5 $ 1,442,000 1,442,000 1,802,500 1,802,500 721,000 7,210,000 DLR per unit The Polytechnic $ 17,850 17,850 17,850 17,850 Chancellor College $ 13,650 11,375 11,375 6,825 LUANAR $ 13,650 11,375 11,375 6,825 Mzuzu University $ 15,750 13,125 13,125 7,875 TEVETA $ 2,240 2,240 2,800 2,800

% each year in total allocation for DLI


44

Annex 1. E. DLI 5: PART:B Disbursement Linked Results and Indicators (DLRs & DLIs) (RELEVANCE DLI) DLI 5: Each of the PSDI achieves its staff development targets as set out in the IIP Note: If an institution does not achieve the stipulated result for that year, the amount which is specified for the level of achievement is paid in that year. When institutions complete their 100% of DLR, the rest of the amount is also paid.

DLR values

PART B Unit of Measure

Year 1 2014-15

Year 2 2015-16

Year 3 2016-17

Year 4 2017-18


Total

The Polytechnic Max amount for each year

357,000 357,000 446,250 446,250 178,500 1,785,000

All Staff Capacity Development Plans approved as per SPGA; at least 25% of training initiated

100% 357,000


80% 285,600 All staff / faculty completed training and returned to institution

100% cumulative for (yrs. 2-5) years 1,428,000 (cumulative for 4 years; max per year as per DLR )


80% cumulative for (yrs. 2-5) years 1,249,500 (cumulative for 4 years; max per year as per DLR)


60% cumulative for (yrs. 2-5) years 856,800(cumulative for 4 years; max per year as per DLR)

Cumulatively 50% of staff / faculty completed training and returned to institution

50% cumulative for (yrs. 2-5) years 714,000(cumulative for 4 years; max per year as per DLR)

All staff training programs started and at 20% of staff /faculty training completed and returned to institution

20% cumulative for (yrs. 2-5) years

285,600 (cumulative for 4 years; max per year as per DLR)

Chancellor College 273,000 273,000 341,250 341,250 136,500 1,365,000 All Staff Capacity Development Plans approved as per SPGA; at least 25% of training initiated

100% 273,000





80% cumulative for (yrs. 2-5) years 873,600 (cumulative for 4 years; max per year as per DLR)








LUANAR 273,000 273,000 341,250 341,250 136,500 1,365,000 All Staff Capacity Development Plans approved as per SPGA; at least 25% of training initiated

100% 273,000

45


80% 218400 All staff / faculty completed training and returned to institution











Mzuzu University 315,000 315,000 393,750 393,750 157,500 1,575,000 All Staff Capacity Development Plans approved as per SPGA; at least 25% of training initiated

100% 315,000





80% cumulative for (yrs. 2-5) years 1,008,000 (cumulative for 4 years; max per year as per DLR)








TEVETA15 224,000 224,000 280,000 280,000 112,000 1,120,000 80%+ targets met 100% 224,000 224,000 280,000 280,000 112,000 1,120,000

70-80% targets met 80% 179,200 179,200 224,000 224,000 89,600 896,000 60-70% targets met 70% 156,800 156,800 196,000 196,000 78,400 784,000 50-60% targets met 60% 134,400 134,400 168,000 168,000 67,200 672,000 40-50% targets met 50% 112,000 112,000 140,000 140,000 56,000 560,000

TOTAL for DLI 5 1,442,000 1,442,000 1,802,500 1,802,500 721,000 7,210,000

15 For TEVETA, the indicator is “Achievement of annual target on training of master craftsmen as per agreed annual improvement Plan”.

46

Annex 1. E. DLI 6: PART:A Disbursement Linked Results and Indicators (DLRs & DLIs) (RESULTS ORIENTATION DLI)

DLI 6: Each of the PSDI carries out and publishes tracer studies on on-going and new skills development programs Target values

PART A Unit of


Year 2 2015-16

Year 3 2016-17

Year 4 2017-18


Total

DLI 6: Each of the PSDI carries out and publishes tracer studies on on-going and new skills development programs

Number

5 Tracer study conducted on

ongoing programs and

published

TEVETA tracer study published

5 Tracer study conducted and

published

TEVETA tracer study published

5 Tracer study conducted on new and old programs

and published

The Polytechnic # 1 0 1 0 1 3 Chancellor College # 1 0 1 0 1 3 LUANAR # 1 0 1 0 1 3 Mzuzu University # 1 0 1 0 1 3 TEVETA # 1 1 1 1 1 5

TOTAL of DLR 6 5 1 5 1 5 17

Pricing of DLI 6 $ The Polytechnic $ 85,000 - 170,000 - 170,000 425,000 Chancellor College $ 65,000 - 130,000 - 130,000 325,000 LUANAR $ 65,000 - 130,000 - 130,000 325,000 Mzuzu University $ 75,000 - 150,000 - 150,000 375,000 TEVETA $ 95,000 95,000 95,000 95,000 95,000 475,000

TOTAL for DLI 6 $ 385,000 95,000 675,000 95,000 675,000 1,925,000 Per DLR amount The Polytechnic $ 85,000 170,000 170,000 Chancellor College $ 65,000 130,000 130,000 LUANAR $ 65,000 130,000 130,000 Mzuzu University $ 75,000 150,000 150,000 TEVETA $ 95,000 95,000 95,000 95,000 95,000

% each year in total allocation for DLI


47

Annex 1. E. DLI 6: PART:B Disbursement Linked Results and Indicators (DLRs & DLIs) (RESULTS ORIENTATION DLI)

DLI 6: Each of the PSDI carries out and publishes tracer studies on on-going and new skills development programs Note: This DLI is for year 1, year 3 and year 5. So if the institutions do not achieve the completion of tracer studies in year 1, they can do so in year 2 and get the 100% allocated for year 1. Similarly in Year 3 as well. However, Year 5 tracer study needs to be completed in that year itself.

Target values

PART B Unit of


Year 2 2015-16

Year 3 2016-17

Year 4 2017-18


Total

The Polytechnic $ 85,000 - 170,000 - 170,000 425,000 One tracer study conducted & report finalized and published

100% 85,000 170,000 170,000

Tracer study conducted draft report reviewed

80% 68,000 136,000 136,000

Tracer study conducted on ongoing programs, analysis completed and draft report is under preparation

60% 51,000 102,000 102,000

Tracer study Survey completed and data being analyzed

50% 42,500 85,000 85,000

Chancellor College $ 65,000 - 130,000 - 130,000 325,000 One tracer study conducted & report finalized and published

100% 65,000 130,000 130,000


80% 52,000 104,000 104,000


60% 39,000 78,000 78,000


50% 32,500 65,000 65,000

LUANAR $ 65,000 - 130,000 - 130,000 325,000 One tracer study conducted & report finalized and published

100% 65,000 130,000 130,000


80% 52,000 104,000 104,000


60% 39,000 78,000 78,000


50% 32,500 65,000 65,000

48

Mzuzu University $ 75,000 - 150,000 - 150,000 375,000 One tracer study conducted & report finalized and published

100% 75,000 150,000 150,000


80% 60,000 120,000 120,000


60% 45,000 90,000 90,000


50% 37,500 75,000 75,000

TEVETA $ 95,000 95,000 95,000 95,000 95,000 475,000 Tracer study conducted draft report reviewed

$ 95,000 95,000 95,000 95,000 95,000


$76,000 76,000 76,000 76,000 76,000


$ 57,000 57,000 57,000 57,000 57,000

One tracer study conducted & report finalized and published

$ 47,500 47,500 47,500 47,500 47,500 10%

TOTAL for DLI 6 385,000 95,000 675,000 95,000 675,000 1,925,000

49

Annex 1.F: Institution specific Disbursement Linked Indicators Annex 1.F Table 1: Disbursement Linked Indicators for The Polytechnic

DLR: Target values

DLIs Unit of


Year 1 2014-15

Year 2 2015-16

Year 3 2016-17

Year 4 2017-18


Total amount

DLI 1: The Polytechnic has developed and adopted its IIP

Action completed

IIP finalized

Pricing of DLI 1 $ 1,500,000 1,500,000

Access DLIs DLI 2: Student enrollment in agreed skills development programs increases

Number

Increase by:300 Total:300

Increase by: 300

Total: 600

Increase by: 300

Total: 900

Increase by:300

Total: 1,200

Increase by:300

Total: 1500

Pricing of DLI 2 $ 425,000 425,000 531,250 531,250 212,500 2,125,000

DLI 3. The Polytechnic achieves its infrastructure development targets as set out in the IIP

Percentage

Procurement plan developed & at least 20%

contracts signed

100% Contracts

signed




targets completed

Pricing of DLI 3 $ 425,000 425,000 637,500 637,500 - 2,125,000

Relevance DLIs DLI 4: The Polytechnic develops and implements the agreed skills development programs in consultation with the private sector

Number

8 programs designed

Initiated Implementatio

n of 4 programs

Initiated 4 more programs; total

8 programs implemented

8 programs under

implementation

8 programs under

implementation

Pricing of DLI 4 $ 714,000 714,000 612,000 - - 2,040,000

DLI 5: The Polytechnic achieves its staff development targets as set out in the IIP

Percentage

Staff development

plans agreed & 25% of staff

proceeded for training



At least 50% of faculty training completed, and resumed work


All staff training

completed, and resumed work

Pricing of DLI 5 $ 357,000 357,000 446,250 446,250 178,500 1,785,000

DLI 6: The Polytechnic carries out and publishes tracer studies on on-going and new skills development programs

Number

tracer study on ongoing programs done/ published

No tracer study

tracer study done on technician programs and published

No tracer study

tracer study done on technician/ degree programs and published

Pricing of DLI 6 $ 85,000 - 170,000 - 170,000 425,000

Total pricing per year $ 3,506,000 1,921,000 2,397,000 1,615,000 561,000 10,000,000

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Annex 1.F; Table 2: Disbursement Linked Indicators for Chancellor College (CHANCO) DLR: Target values

DLIs Unit of Measure

Year 0 2014-15

Year 1 2014-15

Year 2 2015-16

Year 3 2016-17

Year 4 2017-18


Total amount

DLI 1: The Chancellor College has developed and adopted its IIP

Action completed

IIP finalized

Pricing of DLI 1 $ 1,500,000 1,500,000


Number

Increase by:60 Total: 155

Increase by:155 Total: 310

Increase by: 155 Total: 465

Increase by: 155

Total: 620

Increase by:300

Total: 920

Pricing of DLI 2 $ 325,000 325,000 406,250 406,250 162,500 1,625,000

DLI 3. The CHANCO achieves its infrastructure development targets as set out in the IIP

Percentage


contracts signed

100% Contracts signed




targets completed

Pricing of DLI 3 $ 325,000 325,000 487,500 487,500 - 1,625,000

Relevance DLIs DLI 4: The CHANCO develops and implements the agreed skills development programs in consultation with the private sector

Number

5 programs designed

Initiated Implementation of 3 programs

Initiated 2 more programs (total

5 programs implemented)

5 programs under

implementation

5 programs under

implementation

Pricing of DLI 4 $ 546,000 546,000 468,000 - - 1,560,000

DLI 5: The CHANCO achieves its staff development targets as set out in the IIP

Percentage

Staff development







80% of staff / faculty training

completed, and resumed

work

All staff training

completed, and resumed work

Pricing of DLI 5 $ 273,000 273,000 341,250 341,250 136,500 1,365,000

DLI 6: The CHANCO carries out and publishes tracer studies on on-going and new skills development programs

Number

1 tracer study conducted on


published

No tracer study


technician programs and

published

No tracer study

1 tracer study conducted on technician &

degree programs and

published

Pricing of DLI 6 $ 65,000 - 130,000 - 130,000 325,000


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Annex 1.F; Table 3: Disbursement Linked Indicators for Lilongwe University of Agriculture and Natural Resources (LUANAR) DLR: Target values

DLIs Unit of


Year 1 2014-15

Year 2 2015-16

Year 3 2016-17

Year 4 2017-18


Total amount

DLI 1: The Chancellor College has developed and adopted its IIP

Action completed

IIP finalized

Pricing of DLI 1 $ 1,500,000 1,500,000


Number Increase

by:600 Total:600

Increase by:100

Total:700

Increase by: 100 Total: 800


Increase by:200 Total:1,100

Pricing of DLI 2 $ 325,000 325,000 406,250 406,250 162,500 1,625,000

DLI 3. The LUANAR achieves its infrastructure development targets as set out in the IIP

Percentage


contracts signed

100% Contracts

signed



n/a

Pricing of DLI 3 $ 325,000 325,000 487,500 487,500 - 1,625,000

Relevance DLIs DLI 4: The LUANAR develops and implements the agreed skills development programs in consultation with the private sector

Number

4 programs designed

Implementation of 2 programs



4 programs under implementation


Pricing of DLI 4 $ 546,000 546,000 468,000 - - 1,560,000

DLI 5: The LUANAR achieves its staff development targets as set out in the IIP

Percentage

Staff development








All staff training completed, returned

to institution and resumed work

Pricing of DLI 5 $ 273,000 273,000 341,250 341,250 136,500 1,365,000

DLI 6: The LUANAR carries out and publishes tracer studies on on-going and new skills development programs

Number


ongoing programs & published

No tracer study


technician programs & published

No tracer study


technician & degree programs & published

Pricing of DLI 6 $ 65,000 - 130,000 - 130,000 325,000


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Annex 1.F; Table 4: Disbursement Linked Indicators for Mzuzu University Target values

DLIs Unit of Measure

Year 0 2014-15

Year 1 2014-15

Year 2 2015-16

Year 3 2016-17

Year 4 2017-18


Total amount

DLI 1: The MZUNI has developed and adopted its IIP

Action completed

IIP finalized

Pricing of DLI 1 $ 1,500,000 1,500,000


Number


Increase by:400

Total:800


Increase by: 600 Total:1900

Increase by 600 Total:2500

Pricing of DLI 2 $ 375,000 375,000 468,750 468,750 187,500 1,875,000

DLI 3. The MZUNI achieves its infrastructure development targets as set out in the IIP

Percentage


contracts signed

100% Contracts

signed




targets completed

Pricing of DLI 3 $ 375,000 375,000 562,500 562,500 - 1,875,000

Relevance DLIs DLI 4: The MZUNI develops and implements the agreed skills development programs in consultation with the private sector

Number

7 programs

designed (ODL: 2;

Tourism:5)

Implementation of 5

programs (ODL:2;

Tourism:3)

Initiated 2 more programs in

tourism (total 7 programs)

implemented


7 programs under

implementation

Pricing of DLI 4 $ 630,000 630,000 540,000 - - 1,800,000

DLI 5: The MZUNI achieves its staff development targets as set out in the IIP

Percentage

Staff development




faculty training

completed, resumed work




All staff training completed, returned to

institution and resumed work

Pricing of DLI 5 $ 315,000 315,000 393,750 393,750 157,500 1,575,000

DLI 6: The MZUNI carries out and publishes tracer studies on on-going and new skills development programs

Number



published

No tracer study

1 tracer study on technician program

conducted/ published

No tracer study

1 tracer study on technician/degre

e program conducted/ published

Pricing of DLI 6 $ 75,000 - 150,000 - 150,000 375,000


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Annex 1.F: Table 5: Disbursement Linked Indicators for TEVETA Target values

DLIs Unit of


Year 1 2014-15

Year 2 2015-16

Year 3 2016-17

Year 4 2017-18


Total amount

DLI 1: TEVETA has developed and adopted its Institution Improvement Plan (IIP)

Action completed

IIP finalized

Pricing of DLI 1 1 $ 1,500,000 1,500,000


Number

320 750 1,100 1,100 1,100

Pricing of DLI 2 $ 231,000 231,000 288,750 288,750 115,500 1,155,000

Relevance DLIs

DLI 4: The TEVETA develops and implements the agreed skills development programs in consultation with the private sector

Number

10 programs designed

Initiated Implementation of 10 programs,

5 more programs designed



Initiated 2 more programs (15 programs

under implementation

)


Pricing of DLI 3 $ 312,500 312,500 312,500 312,500 - 1,250,000

DLI 5: TEVETA achieves annual target on training of master craftsmen as per agreed IIP

Number

100 150 200 250 250

Pricing of DLI 5 $ 224,000 224,000 280,000 280,000 112,000 1,120,000

DLI 6: The TEVETA carries out and publishes tracer studies on on-going and new skills development programs

Number

1 tracer study

conducted selected

programs and

published

1 tracer study conducted selected

programs and published







Pricing of DLI 6 $ 95,000 95,000 95,000 95,000 95,000 475,000

Total pricing per year $ 1,862,500 862,500 976,250 976,250 322,500 5,000,000

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Arrangements for Results Monitoring

I. Institutional Arrangement

1. Skills Development Institutions (universities and TEVETA) prepare their M&E plans which identify the DLRs and results framework indicators for each outcome including baseline and targets, data sources, methods of data collection, frequency and instruments, and agreed indicators. This M&E plan is a part of the Sub-Project Grants Agreements (SPGA) or the performance agreement which is signed between the Government (MoF) and each skills development institution. During the implementation of the project each institution will monitor their performance and prepare an annual implementation progress report.

2. Technical Committee (TC) will be in charge of coordinating the overall Monitoring and Evaluation (M&E) system. It will collect and consolidate the information related to the project progress and implementation and achievement of outcomes with a regular monitoring of the indicators. The TC will coordinate the annual review of the results based on implementation progress report to be submitted by institutions annually.

3. Independent Third Party Verifications (TPV) will be carried out to review and validate the achievement of performance indicators agreed in SPGAs and assess key implementation activities based on implementation progress report, and will report validation results to the MoF.

II. Reports

4. Implementation Progress Report. Skills development institutions will prepare implementation progress reports annually. The report shall include performance indicators and key implementation activities.

5. Financial Report. The NCHE will prepare quarterly un-audited Interim Financial Reports (IFRs) for the project in form and content satisfactory to the World Bank, which will be submitted to the World Bank within 45 days after the end of the calendar quarter to which they relate. NCHE will prepare consolidated IFRs based expenditure reports from individual colleges and TEVETA. The format and content of the IFRs was agreed during the negotiation of the project. The projects annual financial statements will be prepared using International Public Sector Accounting Standards.

6. Reporting Schedule. The reporting and review schedules are summarized in Annex 1. Table 2 below.

III. Sources of Data

7. The use of timely and reliable data is critical to monitor progress. Data for the results framework will come from two sources: 1) implementation progress report that will be prepared by each skills development institution each year; and 2) progress report on the performance of the higher education students’ loans system by MoEST.

8. Institutional report. Each skills development institution will collect data by using their own M&E systems, and report it to the TC. The TC will compile all data from each institution for review by the SC.

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9. Quality of data. During preparation of the project, the importance of robust EMIS to measure achievement against performance indicator targets was emphasized. As a part of project preparation, M&E system in the MoEST, NCHE and skills development institutions was reviewed. To assure sufficient quality of data, each institution prepared its own M&E plan, including baseline and targets, data sources, methods of data collection, frequency and instruments. Technical Assistance will be provided under the project to implement these plans.

10. Third Party Validations. The MoF will commission the third party validation studies to validate key performance data and assess key implementation activities based on an annual implementation progress report prepared by each institution. These studies will serve as important external checks to supplement the internal monitoring system.

IV. Capacity Development

11. The objective of Component 2 of the project is to strengthen capacities for project implementation. The Skills Development Project will support the TC, NCHE and skills development institutions to strengthen their M&E and fiduciary systems through technical assistance.

Annex Table 2. Reporting Schedule Reports Period Submission Review Process

Review of Annual Implementation progress report

March - March16 March end The TC will coordinate the annual review of the results based on the Implementation Progress Report. Based on this meeting the MoF will determine on behalf of the GoM if the DLIs have been met.

World Bank’s biannual missions

April and October each year

This will have two parts: (i) Desk review of all available data and meetings with national level implementation agencies: SC, led by MoF, will meet with the Bank to present their findings; and (ii) Field visits to each of the institutions: WB team will visit institutions to review progress on ground

Un-audited IFRs July – September; Septembrer – December; January – March; & April – June

Within 45 days after the end of the calendar quarter.

Annual Financial Statements

July – June

16 For the first year of the project, the implementation period will be shorter (August – March).

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Annex 2: Detailed Project Description

MALAWI: SKILLS DEVELOPMENT PROJECT

I. Project Components

1. The project will follow a pragmatic, results-based approach to improve the availability of skilled labor at all levels (university, technician, and artisan for both formal and informal sectors) in priority sectors, as articulated in the NESP and MDGS II and the Economic Recovery Program (ERP). To ensure a results focus to these interventions, the SDP uses performance-based financing, a funding modality which reduces the direct role of government while introducing transparent and objective ways to disburse funds. Component 1 will finance Sub-Project Grants Agreements (SPGA) to support increasing access and market-relevance of participating institutions. Component 2 will focus on systems strengthening and policy formulation in the skills development areas including monitoring and evaluation, fiduciary reforms, and the establishment of a targeted and efficient student loan scheme.

Component 1: Strengthening Institutional Performance through Sub-Project Grants Agreements (SPGA)

2. The objective of this component is to increase access and relevance of programs delivered in skills development institutions. This component will be implemented using performance-based financing and will disburse against the achievement of agreed upon Disbursement Linked Indicators (DLIs).

3. The main instrument for implementing this component will be Sub-Project Grants Agreements (SPGA) between the MoF and participating skills development institutions: Mzuzu University, Malawi Polytechnic and Chancellor College (both constituent colleges of the University of Malawi), the Lilongwe University of Agriculture and Natural Resources (LUANAR); and TEVETA. The SGPAs will help clarify each institution’s distinctive mission, the scope and focus of its educational provision, expectations of its performance, and the labor market areas for which each institution prepares graduates. The SGPAs will include a set of initiatives in line with the institutions mission and comparative advantage in the areas indicated in the PDO. They will respond to the need for a sustainable increase in access and market-relevance.

4. Building upon the priorities set by government and the findings of rigorous analytical work this ccomponent responds to the following challenges in the skills development system: (i) limited and inequitable access; (ii) acute shortage of qualified faculty linked to both low initial credentials and limited opportunities for skill upgrading, (iii) curricula that are outdated and in many cases irrelevant to the economic development needs of the country; and (iv) weak links to industry.

5. To improve the capacity and capability of institutions to expand access the following key activities will be supported under the project: (i) expansion and rehabilitation of infrastructure; (ii) scaling up of open and distance initiatives to increase access to market related programs and application of ICT in program delivery; and (iii) provision of subsidies for needy students to access artisan training.

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Programs to be developed / revised in consultation with private sector and to be implemented by the participating institutions under the Skills Development Project Institution Program Level of

Study Duration of Program(Yr.s)

Year of first intake

CHANCO B.Ed (Science) Degree 4 Year 1 Malawi Polytechnic

BEng. in Mining Engineering Degree 5 Year 1 BEng. in Metallurgy and Mineral Processing Degree 5 Year 1 BEng. in Geological Engineering Degree 5 Year 1 BEng. in Biomedical Engineering Degree 5 Year 1 Quantity Surveying Diploma 3 Year 1 Mining Diploma 3 Year 1 Mineral Processing Diploma 3 Year 1 Metallurgical Engineering Diploma 3 Year 1 Biomedical Engineering Diploma 3 Year 1 Occupational Health and Safety Diploma 3 Year 1 Land Surveying Diploma 3 Year 1 Land economy Diploma 3 Year 1 Construction Technology Diploma 3 Year 1 Telecommunication and Electronics Engineering Diploma 3 Year 1

LUANAR (Agriculture)

BSc in Agricultural Extension, Degree 3 Year 2 BSc in Agricultural Innovations Degree 3 Year 2 BSc in Agribusiness Management Degree 3 Year 2 BSc in Ecotourism Degree 3 Year 2

Mzuzu University (ODL)

Bachelor of Education Degree 5 Year 1 Diploma in Education Diploma 3 Year 1 Bachelor of Tourism Degree 4 Year 2 Diploma in Tourism Diploma 3 Year 2 Bachelor in Hospitality Degree 4 Year 3 Diploma in Hospitality Diploma 3 Year 3

Mzuzu University (Tourism and Hospitality)

Certificate in Tourism (full-time) Certificate 1 Year 3 Certificate in Hospitality (full-time) Certificate 1 Year 3 Certificate in Tourism (part-time/ODL) Certificate 1 Year 4 Certificate in Hospitality Certificate (part-time/ODL) Certificate 1 Year 4 Diploma in Tourism (full-time) Diploma 2 Year 3 Diploma in Hospitality (full-time) Diploma 2 Year 3 Diploma in Tourism (part-time/ODL/ block release) Diploma 2 Year 3 Diploma in Hospitality (part-time/ODL/block release) Diploma 2 Year 3 BSc in Tourism (generic) Degree 4 Year 1 BSc in Hospitality (generic) Degree 4 Year 1 BSc in Tourism (part-time/ODL/block release) Degree 4 Year 3 BSc in Hospitality (upgrading full-time) Degree 2-317 Year 1 Honours in Tourism Honours 1 Year 3 Honours in Hospitality Honours 1 Year 3 Masters in Tourism Masters 1 Year 3 Masters in Hospitality Masters 1 Year 3 Specialized short courses 1 – 2 weeks

TEVETA Automobile Technician Diploma 1 Year 2 Master craftsmen Certificate 6 months Year 1 Information on the programs to be offered in the rural technical colleges will be known when the selected institutions submit their proposals for funding

17 This will depend on the prior level of the students who are already serving in industry.

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6. Component 1 will support the objectives and activities of the following institutions:

Malawi Polytechnic (Priority Areas: Increased production of quality engineers at degree and diploma level)

7. University Background: Malawi Polytechnic is a constituent college of the University of Malawi, established in 1964. It offers engineering and business programs at both undergraduate and postgraduate levels.

8. Improvement Plan: The programs to be offered include mining related undergraduate programs; technician (diploma) programs; and science and engineering postgraduate programs at Masters Level. Key activities include: (i) increasing infrastructure (through construction of multipurpose hall, engineering workshops; laboratories; classrooms, tutorial and design rooms, library facilities and office space) and providing modern equipment commensurate with the new and existing engineering programmes and to accommodate the increased enrollments and facilitate delivery of the new programs; (ii) developing new programs at the undergraduate level (Mining Engineering, Metallurgy and Mineral Processing, Geological Mining); technician (diploma) level in Civil and Mechanical Engineering; and (iii) improving staff qualifications (Masters Level, PhD Level and Technical Support Staff to facilitate delivery of the curriculum for the new programs).

9. Project Team: The Polytechnic will establish a Project Steering Committee comprising the Vice Principal, the Registrar, Projects Officer, College Finance Officer and all Deans; and Project Implementation Team comprising technical experts (building experts) procurement and finance. The internal audit office will audit financial management of the project.

Mzuzu University (Priority Areas: Teacher Training through ODL and Tourism)

10. University Background: Mzuzu University was established in 1999 being converted from a Teachers College. It started with education programs but has since expanded to offer Faculty of Education; Environmental Sciences; Information and Communication; Tourism and Hospitality Management; and Health Sciences and the Centre for Open and Distance Learning established in July 2006. Mzuzu University offers programs at certificate, diploma; graduate and postgraduate levels. Mzuzu University is the only public university offering courses in Tourism and Hospitality Management, following a specific request by the Ministry of Tourism to establish courses in this field.

11. Improvement Plan: The Improvement Plan for MZUZU comprises proposals from the Centre for Open and Distance Learning and the Faculty of Tourism and Hospitality Management.

Teacher Education: Mzuzu plans to increase access to secondary teacher training through ODL. Key activities include: (1) establishment of learning centers in existing education; (ii) developing ODL curriculum; and (iii) building capacity in developing ODL materials among the staff.

Tourism: Mzuzu plans to provide an increased number of highly skilled and versatile personnel for the tourism industry; improved market relevance of the programs; ensure program sustainability and cost efficiency. The faculty will offer programs at certificate, diploma, general degree, honours degrees, Masters and specialised short courses. Key activities include the establishment of a Skills Development Centre.

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12. Project Team: MZUNI will hire a Project Team to implement the Improvement Plan because of lack of capacity within the institution. The Project will include a Project Manager, planner with M&E expertise, finance manager and procurement manager. The project team will be accountable to University Administration.

Chancellor College (Priority Area: Production of Science Teachers)

13. University Background: Chancellor College is a constituent college of the University of Malawi and was founded on the philosophy of liberal education. It has five faculties: Education, Science, Law, Social Science and Humanities. These constitute a total of 25 academic departments currently offering degrees at undergraduate and postgraduate level. Given its faculty diversity it enrolls the largest number of students at university level.

14. Improvement Plan: The Improvement plan aims to: (i) increase access to science teacher education in Malawi including those living with disability in order to address the shortage of secondary school teachers; and (ii) enhance capacity for quality of program delivery.

15. Key activities include: increasing infrastructure through construction of 3 science laboratories, and associated ICT facilities, developing curriculum for computer science teacher education, upgrading of academic faculty in science teacher education, and training of 11 support staff to help in the effective delivery of science teacher education.

16. Project Team: Chancellor College will establish a Project Steering Committee comprising the Principal, Vice Principal, the Registrar, Projects Officer, College Finance Officer; and Technical Team chaired by the Vice Principal and comprises and all Deans; and Project Implementation Team comprising Registrar, Procurement Officer, Director of ICT, Dean of Education, Estates Development Officer, Projects Accountant, Monitoring and Evaluation Expert, and a Quality Assurance Expert all drawn from the staff of the College.

Lilongwe University of Agriculture and Natural Resources (Priority Area: Agriculture)

17. University Background: The Lilongwe University of Agriculture and Natural Resources was established in 2012 through the merger of the then Bunda College of Agriculture which was a constituent college of UNIMA and the Natural Resources College. Its main focus is agriculture. It has three faculties of Agriculture, Environmental Studies and Development Studies. It offers programmes at undergraduate and postgraduate levels.

18. Improvement Plan: The Improvement Plan aims to: (i) increase enrollment to LUANAR’s through introduction of ODL and mainstreaming gender in the programs; (ii) developing capacity of LUANAR staff to effectively deliver the ODL programs; and (iii) development of ODL programs relevant to the labor market. Programs to be offered are: BSc in Agri-business Management; BSc in Agricultural Extension; and a Diploma in Agriculture Innovation Systems.

19. Key activities include: (i) establishment of an ODL Centre on campus and an ODL remote satellite centre in Lilongwe; (ii) development of ODL programs; (iii) expansion of library; (iv) installation of ICT infrastructure; (v) capacity building of staff to develop and deliver ODL course; and (vi) study tours to learn how to operate ODL programmes.

20. Project Team: Overall management of the implementation of the Improvement Plan will rest with University Council which shall exercise general control and supervision over all the affairs of the ODL including its relations with the public. LUANAR will set up an

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Implementation team which will be chaired by the Vice Chancellor and comprise an ODL advisor, Program Coordinator (Team Leader), ODL Program leader, Director of Finance, and private sector partners from Malawi Telecommunication, Malawi Housing Cooperation will set up an ODL Advisory Committee which will provide guidance and review implementation of the project.

TEVETA (Priority Areas: Vocational Training and Certification)

21. Background: The TEVET Authority is an autonomous regulatory body for the TEVET sector, in charge of regulating and facilitating TEVET development in Malawi. It was established by the TEVET Act of 1999. Its main role is policy development, regulation, quality assurance and facilitation. It works very closely with all TEVET training institutions in both the formal and informal sectors.

22. Improvement Plan: The Improvement Plan aims to: (i) increase access to employment-oriented skills development programmes in rural areas; (ii) broaden the range of market-relevant programs at technician level in priority sectors in partnership with employers and industry; (iii) improve the capacity for quality assurance in the TEVET system; and (iv) impact evaluation to test the effectiveness of alternative interventions.

23. Key activities include: (i) training of master craftsman; (ii) improving quality of informal sector training through provision of equipment and training of staff in rural training institutions; (iii) developing curriculum for short upgrading courses in selected institutions training at the rural level; and (iv) provision of equipment and capacity development of staff in one institution selected to offer a technician level program.

24. Project Team: TEVET Improvement Plan Management Committee (PMC) comprising members from the MoL, MoEST, Ministry of Industry and Trade, a member representing industry and a member representing rural development organizations, will be established. The PMC also oversees the implementation of the Improvement Plan and monitoring activities. Project activities will be implemented by a team of dedicated TEVETA staff directly supervised and monitored by the PMC.

Component 2: Technical Assistance for System Strengthening and Policy Reforms

25. The objective of this component is to strengthen capacities for program implementation. Activities to be financed include: (i) capacity building for the NCHE and institutions in the areas of fiduciary management, MIS, program coordination and sector planning; (ii) development of a comprehensive, reliable and timely Higher Education Management Information System; (iii) M&E activities including third party validation studies; (iv) design and implementation of selected polices directly linked to the first component including resources; and (v) design and implementation of a targeted and efficient student loan scheme.

26. Capacity Building of NCHE. The NCHE is in the process of establishing a secretariat to support its activities. The secretariat will be expected to play a critical role in the work of the NCHE and in the implementation of the higher education elements of Component 1. The project will therefore support the following activities: (i) induction of the members of the council in their roles as a quality assurance entity and their role in the implementation of the project; (ii) capacity building of the secretariat in project coordination, reporting and communication, project planning, project monitoring and evaluation and fiduciary management; and (iii) provision of

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equipment needed to make NCHE effective in the implementation of its mandate and implementation of the project.

27. Management Information System. Skills development institutions face many challenges in providing information and data because of an absence of a management information system. The NCHE will need data and information to monitor the performance of the institutions during the project period and in carrying out its mandate. The project will therefore provide support in setting up a Management Information System (MIS) and inducting the secretariat in using the system. Support will extend to equipment and software for the MIS which will be critical for monitoring the implementation of the project and achievement of the DLIs.

28. M&E Activities. The project will support the NCHE and participating institutions to develop M&E structures and in the development and piloting of new monitoring tools (tracer studies, employer surveys, student satisfaction surveys). The M&E activities by the NCHE and participating institutions will be designed to improve performance and monitor achievement of targets and DLIs. It will be necessary during implementation to carry out validation studies by independent parties to ensure transparency and objectivity in the assessment of the performance of institutions in project implementation. The third party will be selected and appointed by the MoF.

29. Student Financing Scheme. Very little of the student loans disbursed over time have been recovered. Administration of the scheme has moved from the universities to the Public Universities Student Loan Trust and then to the Malawi Savings Bank and back to the MoEST. Moreover, GoM is keen to review overall student financing scheme in the Malawi higher education system, including student allowances. The MoEST is currently preparing a Student Financing Act and will need support to finalize and implement the approved scheme. The project will provide TA to the establishment of the Act and the consultation processes required in approving the Act and its implementation. The support will be based on international experience in the implementation of similar schemes.

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Annex 3: Implementation Arrangements

MALAWI: SKILLS DEVELOPMENT PROJECT

A. Project Implementation and Institutional Arrangements

1. Institutional and implementation arrangements for the project maintain and build on the existing institutional set-up of the participating institutions. Where required capacity building will be provided through the project. Performance based financing and use of DLIs is still new in Malawi, therefore a Project Implementation Manual (PIM) detailing Project implementation arrangements will be produced. The project will be implemented at the national and institutional levels by several stakeholders. The roles and responsibilities of the different national and institutional stakeholders are summarized in Table 1.

2. Ministry of Finance (MoF): The MoF will be responsible for the overall implementation, coordination, and monitoring of reforms under the project. It will sign the Credit Agreement with the World Bank on behalf of GoM, and the Sub-Project Grants Agreement (SGPA) or the Performance Agreements with participating institutions. It will also appoint the Steering Committee which will assume overall responsibility for implementation of the project on its behalf. The Department of Debt and Aid in the MoF will take the lead.

3. Steering Committee (SC): In executing its overall responsibility for the project the MoF will be assisted by a Steering Committee. SC will include members from MoF, MoEST (under which universities fall), MoL (under which the technical colleges fall and which is also the parent Ministry for TEVETA), and four private sector and Civil Society representatives (to ensure relevance of programs to the needs of the labor market). The SC will provide overall strategic guidance in the implementation of the project. It will be responsible for reviewing the Improvement Plans from the participating institutions based on set criteria. It will receive and review implementation reports on the Projects by the participating institutions provided by a Technical Committee (TC) comprising the NCHE and persons seconded from the MoL and MoEST supported by TA groups. It will also facilitate the removal of bottlenecks to the implementation of the Project and keep the stakeholder groups that they represent informed about the project and seek their support. The committee with be chaired by the MoF. It will be expected to meet at least once in each quarter.

4. Technical Committee (TC): The TC will be comprised of the NCHE, one member from the MoEST and one from MoL. The TC will provide guidance on the finalization of the Improvement Plans based on the agreed criteria and four private sector representatives. The Chairperson of the NCHE, assisted by the Secretariat, will have overall responsibility for the oversight, coordination, and M&E of project activities of the Improvement Plans for the higher education institutions. Specifically the Council will be responsible for: (i) establishing an MIS; (ii) providing capacity building to the participating Universities based on identified needs; (iii) facilitating information exchange and lesson learned across participating institutions; and (iv) liaising with the World Bank in carrying out its role in the implementation of the Project. The TC will be supported by World Bank as and when needed.

5. Ministry of Education, Science and Technology (MoEST): MoEST will oversee the development and finalization of the Improvement Plans and provide support to the institutions during implementation as and when required. It will also participate in the SC and TC at different levels.

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6. Participating Institutions: The five participating institutions will be responsible for selecting a Plan Implementation Team with a Team Leader. The team will be responsible for developing the Improvement Plan for their institutions in consultation with the institution’s community. The institution’s management will approve the Institution Improvement Plan. Implementation Team will be responsible for implementation of the approved Improvement Plan. It will follow the guidelines provided by the project Project Implementation Manual. Members of Plan Implementation Team will be expected to have the requisite skills required for their roles in the implementation of the Improvement Plans.

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Annex Table 3.1: Key Roles and Responsibilities by Stakeholders Involved in the Implementation of the SDP

Ministry of Finance Steering Committee (SC) Technical Committee (TC) Participating Institutions

World Bank (WB)

Overall authority over the implementation of the SDP.

Specifically: 1. Sign Financing Agreement

(FA) with the World Bank on behalf of GoM.

2. Sign Sub-Project Grants Agreement (SGPA) or the Performance Agreements with participating institutions on behalf of the Government.

3. Develop the Environmental and Social Management Framework (ESMF) and Resettlement Policy Framework (RPF) and submit to WB.

4. Constitute the Steering Committee (SC) and Technical Committee (TC).

5. Chair the Steering Committee.

6. Authorize NCHE to disburse funds to Participating Institutions upon verification of achievements as per Sub-Project Grant Agreements (SGPA or the Performance Agreements).

Overall strategic guidance for the implementation of the SDP.

Specifically: 1. Appraise and approve proposals

from participating institutions based on set criteria and recommendations from the Technical Committee (TC).

2. Review implementation progress of the Institution Improvement Plans based of progress reports produced by the NCHE.

3. Provide strategic and technical guidance on improving the implementation of the project components.

4. Represents the stakeholders groups, seek their support and adequately communicate with them on the Project.

5. Resolving major political and operational issues that may arise in the implementation of the Project.

6. The SC will also appoint an independent third party to assist with the assessment of the DLIs.

Membership 1. MoF. Director of Debt and Aid 2. MoEST, Principal Secretary,

Higher Education 3. MoL, Principal Secretary of

Labor 4. Four private Sector and Civil

Society Representatives.

Overall responsibility for the implementation, coordination, and monitoring of Improvement Plans on behalf of GoM.

Specifically: 1. Establish an MIS for the NCHE 2. Monitor and evaluate

implementation of Improvement Plans of the 5 participating institutions and compile reports for the Steering Committee.

3. Facilitate information exchange on best practices and lessons learned between and across participating institutions.

4. Provide capacity building to the institutions participating in the project as needed.

5. Monitor compliance with the Environmental and Social Management Framework (ESMF) and Resettlement Policy Framework (RPF).

6. Facilitate meetings of the Steering Committee.

Membership 1. NCHE 2. One staff each seconded from

the MoL and the MoEST 3. Four private sector

representatives 4. TA provided under the Project

Development and Implementation of Improvement Plans

Specifically: 1. Develop institutional

Improvement Plans in accordance with provided format and guidelines.

2. Sign Sub-Project Grants Agreements (SPGA) or the Performance Agreements with the MoF.

3. Institute Management and Implementation structures for the implementation of the Improvement Plans.

4. Implement Improvement Plans for their institution

5. Report to the TC in accordance with an agreed timetable.

6. Set up an MIS to provide real-time data needed for monitoring implementation of the Improvement Plan.

Participating Institutions 1. NCHE 2. Chancellor College 3. LUANAR 4. Malawi Polytechnic 5. Mzuzu University 6. TEVETA

1. Sign Financing

Agreement with GoM. 2. Disburse funds to

NCHE to disburse to institutions.

3. Facilitate the review of the proposals and negotiations with the participating institutions.

4. Support Government in drafting the OM, ESMR and RPF.

5. Support capacity building to NCHE and institutions as needed through Technical Assistance.

6. Assess fiduciary and procurement capacity of participating institutions.

7. Organize regular support missions to the Project including a Mid-term Review and Project Completion Report.

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Annex Chart 3.1: SDP Implementation and Fund Flow Arrangements

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B. Financial Management, Disbursements and Procurement

Financial Management Arrangements for the Project

7. In view of the ongoing governance and fiduciary challenges in the wake of the recent IFMIS fraud, this project will as far as possible route the IDA funds directly to beneficiaries (universities etc.) using direct payment method.

8. Budgeting Arrangements. The participating institutions (universities) use activity based budgeting based on agreed strategic plans as amended from time to time. However the actual funding from government and internally generated revenue fall short of the budgeted requirements, necessitating a scaling down of activities to match actually available resources. For the purposes of the proposed project, the government will need to commit adequate resources to the universities and TEVETA to enable them achieve the performance indicators required to trigger disbursement. To achieve this government and implementing agencies will need to agree on an annual basis, annual work plan and budgets required to meet the expected results and performance indicators The various departments, faculties of the colleges and TEVETA are experienced in preparing activity based budgets.

9. Accounting Arrangements. The participating institutions (universities as well as TEVETA) are using stand-alone computerized systems (which is separate from IFMIS at national level) for processing transactions and producing reports. Chancellor College, Malawi Polytechnic, Lilongwe University of Agriculture and Natural Resources and TEVETA are using ACC PAC ERP while Mzuzu University is using Sage Pastel. These accounting systems will be able to incorporate project requirements for both transaction processing and various reporting requirements. All the colleges and TEVETA have an adequate number of appropriately qualified staff. NCHE is currently using Excel.

Internal Control and Internal Auditing Arrangements

10. Internal Auditing. For the University of Malawi the internal auditing function is centralized at the University Office. However staffing is inadequate and as a result it is not able to cover all colleges on an annual basis. As a result routine audits are rare and much time is spent responding to investigations. For improved effectiveness of internal audit, the university will need to recruit additional staff. Mzuzu University does not have an internal audit department. There are plans to create one and the post of Internal Auditor has just been advertised. TEVETA has a well-established internal audit function which covers both financial and operational audits.

11. Internal Control Systems. All the institutions including NCHE are using written policies and procedures covering all routine accounting and administrative activities including applicable internal controls to ensure accuracy, completeness and integrity of accounting and other information. Review of management letters indicated the need to improve control arrangements in all the colleges.

Funds Flow and Disbursement Arrangements

12. Banking and Funds Flow: For Component 1, NCHE will request drawdowns from the Bank for direct credit into the implementing entities’ depository bank accounts as and when those institutions qualify for disbursements based on agreed DLIs. The implementing entities will provide the World Bank with banking details (Depository Bank Accounts) at their

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respective commercial banks into which disbursements will be deposited. For Component 2, NCHE will open a Dollar designated account and a Kwacha operating account with a commercial bank acceptable to IDA.

13. Financial Reporting Arrangements. NCHE will prepare consolidated IFRs based expenditure reports from individual colleges and TEVETA. The format and content of the IFRs were agreed with the bank during the negotiation of the Project. The Project’s annual financial statements will be prepared by NCHE using International Public Sector Accounting Standards. All university colleges have not yet produced audited financial statements for the fiscal year ended June 30, 2012. The audited reports were due on December 31, 2012. TEVETA produced their audited financial statements for year ended June 30, 2012 on time.

14. Auditing Arrangements. The audited financial statements will be submitted to the World Bank within six months after the end of the fiscal year along with the management letter. Audit terms of reference for the Project will be agreed between the government and the World Bank.

15. Conclusion of the Assessment. The conclusion of the assessment is that the financial management arrangements meet the World Bank’s minimum requirements under OP/BP10.02. The overall residual risk rating for the project is Substantial. The financial management action plan outlines the mitigating measures, which, if implemented, would strengthen the financial management arrangements.

Pricing of DLIs and Disbursement Schedule

16. Pricing of DLIs. Estimated disbursement schedule (DLI pricing) by institution, year and DLI for Component 1 is as shown in Table 2. On effectiveness and subject to the Bank’s “No Objection”, the participating institutions will receive an amount agreed for each institution (US$1.5 million for Polytechnic, Chancellor College, LUANAR, Mzuzu University respectively, and US$1 million for TEVETA) as a one-time advance. The amount granted as advance in Year 0 will be off-set against the total amount earned in Year 1 (see Annex 1 for further details of DLI pricing).

Table 2. Estimated Disbursement Schedule (USD) by Year and DLI for Component 1

Year 1 Year 2 Year 3 Year 4 Year 5

Total (years 1-5)

DLI 1 7,000,000 0 0 0 0 7,000,000

DLI 2 1,681,000 1,681,000 2,101,250 2,101,250 840,500 8,405,000

DLI 3 1,450,000 1,450,000 2,175,000 2,175,000 0 7,250,000

DLI 4 2,748,500 2,748,500 2,400,500 312,500 0 8,210,000

DLI 5 1,442,000 1,442,000 1,802,500 1,802,500 721,000 7,210,000

DLI 6 385,000 95,000 675,000 95,000 675,000 1,925,000

Total for All DLIs 14,706,500 7,416,500 9,154,250 6,486,250 2,236,500 40,000,000

17. Estimated Disbursement Schedule. Based on the DLI pricing table above, Table 3 shows estimated disbursements by component and year.

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Table 3: Estimated Disbursement Schedule (USD) by Institutions

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Total

Component 1

POLY 3,506,000 1,921,000 2,397,000 1,615,000 561,000 10,000,000

CHANCO 3,034,000 1,469,000 1,833,000 1,235,000 429,000 8,000,000

LUANAR 3,034,000 1,469,000 1,833,000 1,235,000 429,000 8,000,000

MZUNI 3,270,000 1,695,000 2,115,000 1,425,000 495,000 9,000,000

TEVETA 1,862,500 862,500 976,250 976,250 322,500 5,000,000

TOTAL

14,706,500 7,416,500 9,154,250 6,486,250 2,236,500 40,000,000

Component 2

NCHE 1,000,000 1,000,000 1,000,000 1,000,000 900,000 4,900,000

PPA refund 1,500,000 1,500,000

Unallocated 4,500,000 4,500,000

GRAND TOTAL

1,500,000 15,706,500 8,416,500 10,154,250 7,486,250 7,636,500 50,900,000

Agreed Action Plans

Issue Agreed Action By Who When 1. The university office has only two internal auditors covering the central office and constituent colleges.

Recruit additional internal audit staff at the University of Malawi

University Council

Within 3 months of Effectiveness Date

2. LUANAR and MZUZU Universities do not have internal audit units.

Establish internal audit departments at LUANAR and Mzuzu University

LUANAR Mzuzu University

Within 3 months of Effectiveness Date

3. FM staffing at NCHE is not adequate. They only have an accountant and one account assistant.

Recruit additional FM staff at NCHE

NCHE Within 3 months of Effectiveness Date

4. NCHE FM staff are not familiar with FM and disbursement for World Bank funded projects.

Train FM project staff World Bank During Project Implementation

5. Weak control environment that may lead to non-compliance with established controls and procedures.

Carry out semi-annual compliance audits in implementing entities

World Bank/MoF

Ongoing

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Procurement: Capacity Assessment of Skills Development Institutions to Carry Out Procurement under Skills Development Project

Introduction

18. This is an assessment of Polytechnic, Chancellor College, Lilongwe University of Agriculture and Natural Resources, Mzuzu University TEVETA and National Council for Higher education on their capacity to carry out the procurement to be undertaken for Skills Development Project. Assessment was undertaken between January 21 and February 5, 2013 for Malawi Polytechnic, Chancellor College, Mzuzu University and TEVETA whilst assessment for National Council for Higher Education and Lilongwe University of Agriculture and Natural Resources was undertaken on August 26 and 29, 2013 respectively. The scope of the report focuses on the four institutions and their responsibilities in the implementation of the project. The assessment is meant to identify the gaps that could impede the execution of the project with a focus on the conditions surrounding the carrying out of procurement, and the risks to the reputation of the Bank as a financier.

19. In the Skills Development Project procurement activities that relate to the provision of technical assistance which will be managed by NCHE and implemented by the NCHE, institutions and MoEST will be carried out in accordance with Guidelines: Procurement of Goods, Works and Non Consulting Services under IBRD Loans and IDA Credits & Grants by World Bank Borrowers; January 2011; and "Guidelines: Selection and Employment of Consultants IBRD Loans and IDA Credits& Grants by World Bank Borrowers, January 2011” and the provisions stipulated in the Legal Agreement.

Legal Aspects and Procurement Practices

20. Public Procurement in Malawi is governed by the Public Procurement Act of August 2003. The Act requires procurement regulations to provide, inter alia, threshold for use of various procurement methods, bidding and bid evaluation procedures and contract management. The Law further established the Office of Director of Public Procurement (ODPP) with oversight for public procurement. The Office became operational in 2005 with the appointment of the Director and other substantive officers. The Government also established Internal Procurement Committees (IPC) and Specialized Procurement Units (SPU) in all public procuring entities including institutions of higher education as the responsible bodies for procurement in the ministries and deapartments. Procurement regulations and desk instructions have been distributed to all procuring entities. The ODPP has also established a dedicated website for sharing of information, placing of adverts and notification of awards to the general public.

21. The ODPP issued a number of standard bidding documents (SBD), the use of which is mandatory, covering works, goods, and services. The Office further issued desk instructions, Request for Proposal (RFP) and form of contract for consulting services as well as request for quotations for goods, works and services. The World Bank had reviewed the documents which were found to be generally consistent with World Bank guidelines and may be used under National Competitive Bidding (NCB) procedures with due attention to some issues related to clarity of the evaluation criteria, award to the lowest evaluated responsive and qualified bidder, participation of foreign bidders, domestic preference and advocacy for artificial division of lots to promote participation of small enterprises in NCB and the Registration or Classification that should not be used as criteria for bidding.

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Organization, Functions and Staffing

22. Procurement under the Polytechnic, Chancellor College, Lilongwe University of Agriculture and Natural Resources, Mzuzu University, TEVETA and NCHE is governed by the Public Procurement Law, its regulations and desk instructions. The annual budgets and procurement plans provide a framework for checks and balances for the smooth running of procurement, disbursement and disposal system in accordance with Section (3) of the Public Procurement Act. Procurement is triggered by requisition from user sections for the required kind of goods or services.

23. All the six institutions have Internal Procurement Committees, which are chaired by senior staff members appointed by controlling officers of the institutions. The IPCs meet regularly to award contracts. Procurement Units provide secretarial support to the committees. The IPCs are as follows:

(a) Polytechnic. The IPC is chaired by the Director of Polytechnic Commercial and Technical Services. Members of the Committee are Assistant Registrar, Estates Development Officer, Finance Officer, Built Environment representative, Applied Sciences representative, representative from Accountancy Department and Procurement Officer is the Secretary to the Committee.

(b) Chancellor College. The IPC is chaired by the Vice Principal. Members of the Committee are College Registrar, Estates Development Officer, College Finance Officer, Dean of Studies, and Procurement Officer is the Secretary to the Committee.

(c) Lilongwe University of Agriculture and Natural Resources (LUANAR). The IPC is chaired by the Deputy Vice Chancellor. Members of the Committee are Director of Finance, Assistant Registrar Administration, Chief Works Supervisor, Catering Manager and representative of Academia and Procurement Officer is the Secretary to the Committee.

(d) Mzuzu University. The IPC is chaired by the Vice Chancellor. Members of the Committee are Deputy Vice Chancellor, Registrar, Estates Development Officer, Director of Finance, Dept. of Quality Assurance and Enhancement, and Chief Procurement Officer is the Secretary to the Committee.

(e) TEVETA. The IPC is chaired by the Director of Finance. Other members include Budget and Accounting Specialist, Regional Service Manager for the Centre, Head of Planning, Head of Quality Assurance and the Procurement Assistant is the Secretary to the Committee.

(f) National Council for Higher Education. The IPC will be chaired by Chief Executive Officer. Members will include Accreditation and Quality Assurance Department, Corporate Services Manager, Finance Officer and Procurement Officer will be Secretary of the Committee. Currently procurements are undertaken by Malawi University Development Programme secretariat which has an IPC chaired by the Acting Program Manager and other members of the IPC include the Accountant, Systems Analyst who is Secretary to the Committee.

24. The procurement units have permanent established posts with staff that have procurement qualifications and more than 10 years’ experience on average mostly in Malawi Public Procurement Law.

25. At the Polytechnic, the Procurement Officer has a Master’s degree in Supply Chain and

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Logistics Management whilst the Stores and Purchasing Officer has a Bachelor’s degree in Procurement. The Procurement Unit will be further supported by an Assistant Procurement Officer and Procurement Assistant which at the time of assessment had been advertised.

26. The Procurement Unit at Chancellor College is headed by a Procurement Officer who has a Bachelor’s degree and is supported by six Procurement Assistants, one secretary and one messenger. Chancellor College has got a Consultancy Bureau which is responsible for coordination of all consultancies undertaken by staff at the College including preparation of Terms of Reference.

27. The Procurement Unit at Lilongwe University of Agriculture and Natural Resources is headed by a Procurement Officer who has a Master’s degree in Supply Chain Management and is supported by an Assistant Procurement Officer and three stores clerks.

28. The Procurement Unit at Mzuzu University is headed by a Chief Procurement Officer who has a Master’s degree in Procurement and is supported by a Procurement Officer, two Senior Store Keepers and three Stores Assistants.

29. The Procurement Unit at TEVETA is headed by a Procurement Assistant who has a Diploma in CIPS. There are no other support staff.

30. The Procurement Unit at National Council for Higher Education is not functional as posts, although already approved by Government, are not yet filled. Currently procurements are undertaken by Malawi University Development Secretariat where there is an Internal Procurement Committee chaired by the Acting Program Manager. The Systems Analyst is handling procurement issues.

31. In all the universities, store’s departments are being phased out. Most services such as maintenance, catering, security, cleaning and landscaping services, which required lots of materials to be stocked, are being phased out and will be replaced by contract service providers.

32. The assessment of the current staff in terms of procurement requirements for the project is that the relevant staff in the participating institutions do not have adequate knowledge of World Bank procurement guidelines and procedures. In all institutions, there have been projects financed by IDA but the institutions have not participated fully in the procurement process as this was done centrally by MoEST.

33. There is need to embark on training of the current staff in World Bank procedures by attending short courses on procurement organised by ESAMI in Arusha Tanzania or GIMPA in Ghana. There is also need to include in the training program staff from other key departments such as academic staff who will be closely associated with the project to support procurement in terms of preparation of the required documents including provision of bid specifications and Terms of Reference.

Record Keeping

34. The assessment findings are that the procurement filing in the procurement sections is overall done in a satisfactory manner. Documents are filed and segregated according to procurements undertaken. Records are sorted following the chronology of the procurement processing. However, in order to make documentation complete there is a need to include in the records financial information (or rather copies thereof) on contract execution. With the exception of TEVETA, there are dedicated staff in charge of keeping records and most files are

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kept in good order.

Facilities and Support Capacity

35. In all the institutions, there is a need for more computers, photocopiers, printers, fax machines, filing cabinets, office furniture, and scanners for their proper functioning. ICT support is very critical in the institutions as there is no guarantee of full efficiency of the supporting infrastructure. In Chancellor College, and LUANAR, for example, there are no adequate servers, robust connectivity infrastructure or LAN systems to support the planned expansion of distance learning.

36. Mzuzu University has no offices as the officers are located in a house turned into an office. Documents were lying on the floor as there are no lockable filing documents. At both TEVETA and LUANAR, there is need for more office space as there are small offices where the Procurement staff sit, with limited small filing cabinets.

Overall Capacity to Carry out Procurement under the Skills Development Project

37. The overall risk of the institutions to carry out activities under the project is substantial as currently staff do not have adequate experience in the use of World Bank guidelines and procedures. There is a need to train current procurement staff including academic staff in the use of World Bank guidelines and procedures before effectiveness of the project.

Issues to be Addressed

(a) Capacity Building. Due to the limited knowledge that the current procurement and academic staff have in World Bank guidelines and procedures, there is need for the Procurement Officers and academic staff associated with bid specifications/ToRs preparations to undergo training at institutions such as GIMPA in Ghana or ESAMI where training in the use of Bank procedures are undertaken.

(b) Procurement Planning. There is a need to have a provision, mandating the preparation of a Procurement Plan along the Annual Work Plan. The procurement plan should include as many contracts as possible that are planned to be processed within the following 18 month period. The 18-month procurement plan will include relevant information on all goods, non-consulting services, works, and consulting services expected to be procured, and their estimated cost; procurement or selection method as well as timing in the procurement/selection process. The overall procurement plans will be updated on an annual basis in conjunction with the preparation of the annual work program and budget in accordance with the regulations.

(c) Project Implementation Manual. There is a need for the preparation of a Project Implementation Manual by each institution to ensure successful project implementation. A Project Implementation Manual (PIM) is usually required by the project Executing Agency (EA) to guide managers, staff, and consultants responsible for implementation of the Project. The PIM provides step by step guidelines, tools, instruments and systems for agencies responsible and involved in carrying out the implementation of the project components. Specifically, the manual provides:

(i) A description of the project components and subcomponents; (ii) A detailed implementation schedule and timeline for achieving intermediate results and

outcomes;

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(iii) Roles and responsibilities of the implementing agencies; (iv) Fiduciary responsibilities; (v) Social and Environmental Safeguards responsibilities (including gender, youth and

vulnerable groups); (vi) A detailed road map and framework for implementation based-results; (vii) Steps and tools for establishing a monitoring and evaluation system; and (viii) Any other specific reporting requirements as may be required by the Bank.

(d) Fraud and Corruption. There have been increased cases of fraud and corruption including interference by politicians and public officials in implementation of projects. There is a need to safeguard the abuse of these resources through measures that ensure that fraud and corruption clauses are included in bid documents and recommends that contracts are awarded by oversight institutions such as the Internal Procurement Committee or the Office of Director of Public Procurement. Implementing agencies should have anticorruption charters with the anticorruption bureau and also include measures that encourage whistle-blowing.

38. The purpose of the annual procurement post review will be to: (i) verify that the procurement and contracting procedures and processes followed by the project were in accordance with the agreed grant; (ii) verify technical compliance, physical completion and price competitiveness of each contract in the selected representative sample; (iii) review and comment on contract administration and management issues as dealt with by executing agencies; and (iv) identify improvements in the procurement process in the light of any identified deficiencies.

National Competitive Bidding

39. For NCB, the World Bank rules will apply and local procurement law will be applicable subject to the following exceptions:

(a) No bidder or potential bidder shall be declared ineligible to bid for reasons other than those provided in Section I of the Procurement Guidelines;

(b) Bidding documents acceptable to the Association shall be used;

(c) The bidding documents and contract shall include provisions reflecting the Bank’s policy relating to firms or individuals found to have engaged in fraud and corruption as defined in the Procurement Guidelines;

(d) Each bidding document and contract shall provide that bidders, suppliers and contractors, and their subcontractors, agents, personnel, consultants, service providers, or suppliers, shall permit the Association to inspect all accounts, records, and other documents relating to the submission of bids and contract performance, and to have them audited by auditors appointed by the Association. Acts intended to materially impede the exercise of the Association’s inspection and audit rights provided for in the Procurement Guidelines constitute an obstructive practice as defined in the Procurement Guidelines;

(e) Unquantifiable criteria, such as local content, technology transfer, and managerial, scientific, and operational skills development, shall not be used in the evaluation of bids; and

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(f) Contracts may not be split into small lots, and their award may not be restricted to small enterprises for purposes of promotion of the participation of small enterprises.

Table 4. Summary Assessment of Capacity, Risk and Mitigation – Action Plan

Overall Assessment of Risk: Substantial Date of the Assessment: 16 and 18 January, 2013

Prior Review Thresholds Goods: $1,000,000 Works: $5,000,000

Prior Review Thresholds Consultancy Services Firms: $200,000 Individuals: $100,000

Actions to be taken

Analysis of Procurement

Capacity Issues/Risks Mitigation Measures By When/Who

1.Capacity Building for Procurement Staff

Staff are not conversant in undertaking procurement using World Bank guidelines, standard bidding documents nor have they prepared RFPs.

Training in particular in World Bank procedures is needed and a training plan to be agreed with IDA should be prepared by Polytechnic, Chancellor College, Mzuzu University, TEVETA, LUANAR and NCHE.

Polytechnic, Chancellor College, Mzuzu University, TEVETA, LUANAR and NCHE by effectiveness. This will happen during project implementation.

2. Lack of Procurement Planning

No Procurement Plan to manage procurement issues.

Addressed when procurement plan was prepared.

Polytechnic, Chancellor College, Mzuzu University, TEVETA LUANAR and NCHE

3.Lack of Guidance and Knowledge in Project Implementation

Delay in project implementation

Prepare a Project Implementation Manual which will provide guidance to staff implementing the project. This is to be clarified in the PIM

Polytechnic, Chancellor College, Mzuzu University, TEVETA LUANAR and NCHE

4. Lack of Procurement Capacity

Delay in processing of procurements

Recruit Procurement Specialist within three months of Effectiveness date

NCHE

IV. Environmental and Social (including Safeguards)

40. The Skills Development Project (SDP) has triggered two World Bank safeguards policies, namely: (i) OP/BP 4.01 - Environmental Assessment and OP/BP 4.12 - Involuntary Resettlement. Initial evaluation of scope of activities and potential scale of impact (from construction/expansion and rehabilitation activities) classified the project as a social and environmental category B project, with a partial assessment of impacts. As required by the above triggered World Bank safeguards policies, Borrower has prepared an Environmental and Social Management Framework (ESMF) to provide systematic guidance on screening, sub-categorization and management of potential environmental and social impacts for sub-projects; as well as a Resettlement Policy Framework (RPF) to guide screening and mitigation of potential negative socio-economic impacts related to the involuntary taking of land that could lead to loss of property, assets or access to these assets, and resulting in the resettlement of project affected persons (PAP), whether or not PAP have to physically move.

(i) OP/BP 4.01 - Environmental Assessment Policy

41. Project activities which may trigger environmental impacts include construction works of new lecture rooms/workshops/satellite learning centres and rehabilitation of existing

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facilities. Rehabilitation works will include conversion of existing facilities into training centres or rural polytechnics, maintenance of drainage works, ablution blocks and service infrastructure in order to improve the learning environment for TEVETA accredited programmes. Construction of lecture rooms and rehabilitation activities at colleges may generate a number of potential negative impacts such as clearance of trees, noise nuisance, soil erosion, dust emissions, solid and liquid wastes among others. There are also risks of spread of HIV/AIDS due to involvement of local unskilled labor or migrant labor force by contractors of civil works during construction periods.

42. The ESMF provides procedures for screening for typical anticipated environmental and social impacts for all project activities and preparation of site specific environmental and social management plan (ESMPs). The ESMF was prepared in light of the requirements of OP/BP 4.01 Environmental Assessment, and complements the National Environmental Policy and Guidelines for Environmental Impacts Assessment (EIA) in Malawi which requires environmental and social screening for developments projects.

43. The social and environmental screening process mainly consists of four steps: (i) review of environmental and social impacts checklist for projects; (ii) screening of impacts from the subprojects and sites; (ii) assignment of environmental and social categories and preparation of site specific environmental and social management action plans; (iii) review, approval and public disclosure of site specific environmental and social management action plans; and (iv) implementation of site specific environmental and social management plan. The screening process will be carried out using a social and environmental screening form (ESSF) provided in the ESMF. District Environmental Sub-Committee under the supervision of the District Commissioner will carry out the environmental and social screening processes, in close collaboration with the SEFP at the TCU level.

44. Particpatory, monitoring, evaluation and reporting on environmental and social management will be part of a project implement process and local authority reporting system. During rehabilitation/construction contractors will keep records of all activities done on project site (including data on gender, youth and vulnerable groups, number of direct/indirect non-skilled jobs created, etc.) which will be submitted to district council for consolidation. The District Environmental Inspectors will be responsible for monitoring at a local level on quarterly basis. Compliance with environmental and social safeguards will be generated from annual reports, evaluation reports and feedback meetings and implementation support missions.

45. Environmental and Social Safeguards Capacity Building/Training. The ESMF outlines provisions for environmental and social safeguards capacity building/training for contractors of civil works; and selected staff from the Planning Division of Ministry of Education, Science and Technology. Appropriate training would cover areas such as: social and environmental screening of sub-projects, policy and legal framework on environment and social aspects of construction activities, disposal of solid and liquid waste from premises, measures to prevent the spread and contraction of HIV/AIDS. Environmental and social clauses for contractors will be incorporated in all construction bids and contracts to enhance obligations on contractors. Last payment would always be commensurate with the successful completion of ESC requirements. Budget estimates have been incorporated in the ESMF(and the RPF) for technical assistance and capacity building activities

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46. Information Education and Communication materials (facts sheets, brochures, pamphlets) will be prepared to adequately guide subproject implementers and to improve the understanding of the proposed mitigation measures on negative environmental and social impacts.

(ii) OP/BP 4.12 - Involuntary Resettlement Policy

47. Under the Skills Development Project, the government will extend financial support activities implemented by National Higher Education Council and public university colleges. Most subprojects will be implemented within existing premises of public university colleges. However, Mzuzu University will require additional land acquisition for construction of new learning centres in six education divisions of the country. Incidences of land acquisition for construction of new facilities such as satellite learning centres may generate negative socio – economic impact to project affected people (PAP).

48. A Resettlement Policy Framework (RPF) has been prepared by the Borrower to guide possible land acquisition and resettlement issues. The RPF includes: (i) resettlement screening form and process; (ii) description of typical socio–economic impact; (iii) eligibility criteria for compensation and methods of delivery; (iv) methods of valuation of the affected properties; (v) preparation of resettlement action plan; (vi) provisions for preparation of checklists on resettlement and training in resettlement exercises; (vii) mechanisms to minimize resettlements and restrictions to access to assets; (viii) resettlement monitoring and evaluation systems; (ix) grievance redress mechanism; and (x) an estimated budget to ensure timely completion of resettlement requirements.

49. Resettlement Policy Framework has been prepared in light of the requirements of the World Bank Involuntary Resettlement Policy (OP/BP 4.12), and will complement the Malawi National Land Policy (2002) and Land Acquisition Act (57:04) which require a resettlement and compensation plan for development projects which may necessitate land acquisition with loss of properties and assets or loss of access to these assets. Any resettlement costs will be financed by the participating institutions or government.

50. Resettlement Screening Process: Just as for the ESMF, the resettlement screening process consists of four steps: (i) screening of the subprojects and sites; (ii) assignment of resettlement categories and preparation of resettlement action plan inclusive of host communities with due attention paid to gender, youth and vulnerable groups; (iii) review and approval of resettlement action plan; and (iv) payment of compensation. The screening process will be carried out using a screening form annexed to the RPF. The District Executive Committee under the supervision of the District Commissioner and in collaboration with the SEFP of the TCU will carry out the resettlement screening. Budget estimates have been included in the RPF for technical assistance and capacity building activities of stakeholders.

51. Monitoring, evaluation and reporting on resettlement issues will be part of project implementation processes and local authority reporting systems. Compliance with RPF requirements will be generated from annual reports, evaluation reports and feedback meetings and during implementation support missions.

52. Resettlement Training. The RPF outlines provisions for resettlement training for members of District Environmental Sub-Committee and selected staff from the Planning Division of MoEST, Department of Lands and Valuations, Department of Forestry (to understand the implications of resettlement exercises) and local communities. Appropriate

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training would cover areas such as: policy and legal framework on resettlement and compensation, screening, census of affected persons, use of screening forms, gender, youth and vulnerable groups issues, methods of valuation of assets, eligibility criteria, administration and delivery of compensation, grievance redress mechanism, monitoring and evaluation, etc.. Budget estimates have been incorporated in the RPF and ESMF for technical assistance to MoEST.

V. Monitoring & Evaluation

53. As summarized in Annex 1, the Technical Committee (TC) will collect, compile and provide the data related to project outcomes and results indicators. TC, in collaboration with the SEFP and the NEA will prepare a consolidated implementation progress report of key outcome and results indicators to monitor the progress of the project in terms of social and environmental compliance with due consideration of gender, youth and vulnerable groups, based on an annual implementation progress report to be submitted by each institution grounded with frequent/quarterly field visits to witness progress. A dedicated M&E team of TC (inclusive of the SEFP) will be responsible for the M&E aspects of the project. The project will further support the strengthening of the M&E capacity both for TC and skills development institutions through TA. An independent Third Party will be recruited by the MoF to provide validation reports on the achievement of the DLIs (especially DLI2) and targets.

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Annex 4: Operational Risk Assessment Framework (ORAF)

Malawi: Skills Development Project (P131660)

Project Stakeholder Risks

Stakeholder Risk Rating Moderate

Risk Description: Tertiary Education and TEVET sectors in Malawi includes a variety of stakeholders, including MoF, MoEST, MoL, NCHE, universities and colleges, TEVETA, private providers, the private sector, and students. (i) Coordination among the various stakeholders may not be smooth as the functional domain may overlap. Reforms in tertiary education sector, especially those supported through component 2 (for e.g, student financing scheme or a harmonizing assessment system) may be resisted by some of the stakeholders (ii) The Disbursement Linked Indicators (DLI) and Results-Based Financing (RBF) approach is a new instrument in Malawi and various stakeholders may need more time to understand it and move out of the traditional financing approach. (iii) A possible risk involves the project financing crowding out the government's traditional financing of these participating institutions (substitution of government funds with project funding).

Risk Management:

(i) As part of the project, a Steering Committee has been constituted to bring together various stakeholders on the same platform on a quarterly basis to ensure better coordination and discuss program implementation. The program’s Implementation Manual will define roles and functions of each stakeholder groups. Since the MoF will sign Sub-Project Grants Agreements (performance agreements) with each institution separately, the non-performance of one institution will not affect the prospects of other institutions. A nationwide outreach program will be designed by SC to increase awareness among public about the project and its components and build more consensus among people about new reforms

Resp: Status: Stage: Recurrent: Due Date: Frequency:

Client Not Yet Due Both

Risk Management:

(ii) During the Appraisal mission in December 2013, key stakeholders from the MoF, MoEST, MoL, NCHE, and five participating institutions participated in a two day long workshop to discuss in detail the project objectives, the use of disbursement-linked indicators, safeguards and institutional improvement plans. This was to ensure that stakeholders are on board with the DLI approach and the expected roles and responsibilities. Further, the team went to each institution in March 2014 to discuss the same in detail. The Bank is also providing PPA funding to NCHE to plan study tours to other countries that are implementing successful DLI- based programs in the education sector. The representatives from participating institutions and key officials from Ministry and NCHE will participate in the study tours to countries which have successfully designed and implemented the DLI approach, thereby building the capacity of the education sector project team.


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Client In Progress Both

Risk Management:

(iii) During project preparation, the MoF, MoEST and MoL assured that the annual allocations to institutions will be maintained following current practices. The World Bank will also review the government's budget allocations to the institutions annually to ensure that the project funding is used as additional resources and not substituted for existing support.



Implementing Agency (IA) Risks (including Fiduciary Risks)

Capacity Rating Substantial

Risk Description: Risk Management:

The capacity issues involve: (i) Many of the participating institutions may have only limited experience of designing, implementing and managing a higher education project on their own, or with the Bank. (ii) Even where there is prior experience, it is with respect to implementing mainstream /conventional investment projects and not a DLI /RBF type of project.

Two types of technical assistance will be provided through the project. First, technical assistance will be provided to both the NCHE and the institutions to develop the required capacity. Capacity to be developed at the NCHE will include: quality assurance and accreditation of higher education institution; fiduciary management through provision of staff training and related hardware and software; monitoring program implementation at the institutions level through strengthening its M&E systems. Secondly, at the institution level capacity will be developed in; program planning and implementation; fiduciary management through staff training; strengthening of M&E systems; and as determined by the NCHE in collaboration with the institutions. All TA will work closely with the NCHE and shared among the institutions based on their expertise.


Both In Progress Both

Governance Rating Substantial

Risk Description: The governance related risks involve:

Risk Management:

The Bank task team will work closely with the MoF, NCHE, SC, TC and implementing institutions to ensure better coordination.

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(i) The reliance on multiple institutions for success of the project poses a risk. Weak coordination among the institutions, as described earlier, deepens the issue. (ii) Reform Resistance: The program may experience insufficient follow-up on reforms. Reforms may be met with resistance from stakeholders. Implementation of the Government's skills development program, supported by the proposed Project, requires strong commitment and support from stakeholders in the process. (iii) Weak FM capacity in NCHE characterized by lack of a proper accounting package for transaction processing and reporting, inadequate accounting personnel and unfamiliarity with management of World Bank funded project



Risk Management:

The project reforms are based on GoM’s intended reforms for the tertiary education sector as enshrined in the National Education Sector Plan (NESP) and Education Sector Implementation Plan II. The Bank team will work with CMU, MoF and other stakeholders working on the project to ensure full understanding of, and agreement on the project reforms in alignment with national policies. The Steering Committee will also be tasked with identifying potential challenges and solutions. In addition, MoEST will initiate a communication strategy to engage the academic community and other stakeholders and clarify benefits expected from the reforms.



Risk Management:

The NCHE is in the process of recruiting additional staff and using PPA, it will acquire and install an accounting package to be used for processing transactions and reports for the project. The TA will be used to train staff in NCHE and in implementation institutions to do proper accounting, transaction processing and reporting. In addition, the study tour proposed for NCHE will also include learning from other countries as to how they manage accounting issues.



Risk Management:

The MoF will hire an independent firm to review the findings. Also the Bank team will hire a consultant to participate in the biannual reviews who will also check on the reported findings. In addition, the disbursement is scheduled in such a way that there is no disincentive for reporting actual results. It provides for partial achievements as well as deferred payments on full achievements. Any DLI(s), if not achieved or only partially achieved by the end of the year during which such DLI (s) were scheduled to be met, disburse, in whole or in part the amount of the Financing allocated to such DLI(s) at any

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later time when such DLIs are met.



Risk Management:

The Bank will be conducting frequent reviews supplemented by semi-annual compliance audits to ensure funds are only used for the intended purpose.


Bank Not Yet Due Implementation

Project Risks

Design Rating Substantial


The project funding modality is new: while Component 1 will be based on SGPAs which follows results based approach, Component 2 will be based on expenditure-based disbursements. The stakeholder understanding of results-based financing design and its operations may be weak; hence the team may not get the required level of input from stakeholders.

The Bank team will conduct regular stakeholder meetings and continue to work closely with implementers to ensure all parties understand the proposed project design and implementation modality. The Project Implementation Manual will clearly outline the project design. A strong M&E system will be used to reassure the project design effectiveness.



Social and Environmental Rating Moderate


The project will be required to follow Government regulation and IDA policies.

Following World Bank Policies and Government of Malawi regulations all sub-projects/civil works will undergo screening process to determine subproject fundability and whether or not there will be environmental and social impacts, need for land acquisition (especially for new satellite learning centers) resulting in the loss of properties, loss of valuable assets, or restricted access to these valuable assets. As outlined above in both the ESMF and RPF, once it is determined that the subprojects will generate environmental and social impacts, Borrower will prepare, consult upon and publicly disclose a detailed environmental and social management plan (ESMP) and/or a Resettlement Action Plan (RAP) prior to sub project physical implementation. The

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recipient ministry has an extensive experience in implementing World Bank funded operations. The respective implementing agencies as well as the SEFP and the representative from the NEA will benefit from continuous social and environmental safeguards training/capacity building delivered by the World Bank safeguards specialists. At least twice a year, the Social and Environmental Safeguards specialists will undertake supervision mission to ensure tangible follow up on the implementation of the recommendation as well as additional safeguards capacity strengthening.



Program and Donor Rating Moderate


Donor Coordination: At present, apart from the World Bank, African Development Bank is also supporting higher and skills development institutions. If the AfDB project is greatly delayed it may impact the ODL component, as AfDB is funding the computers and fiber link at the universities, and some needed infrastructure in Universities and Technical Colleges. Other donors like DFID have expressed interest in the project due to its results focus and results-based financing approach for Component 2 and may join the project later and provide additional funds.

The project team will continue to work closely with the AfDB to support the Government's program. Also the project has been designed such that if AfDB is unable to meet its outcomes, the project component will be able to continue implementation of its key components. In order to facilitate coordination between the designed project and new donors, new donors will be consulted and made aware of the features of the present project.



Delivery Monitoring and Sustainability Rating Substantial


Participating skills development institutions will need to be committed to the DLIs agreed upon with the SC. The SC will need to ensure quality monitoring data is provided. GoM will require sustained commitment to reforms.

Technical Assistance will be required to provide advisory support to NCHE, TEVETA, and participating universities. A strong M&E system will be established in NCHE and participating institutions to enable continuous reporting and monitoring of results and as well as program implementation. Regular supervision missions, video-conferencing to monitor project progress and identify any issues as they arise.


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Overall Risk

Overall Implementation Risk: Rating Substantial

Risk Description: The overall risk rating is Substantial given the innovative design of the project within the country context. While there is strong commitment to the project development goals from government and participating institutions, the overall risk rating is affected by some specific risks. The most pertinent ones are: (i) limited capacity in government and participating institutions to plan, implement and absorb large scale programs for results using Disbursement Linked Indicators (DLIs); (ii) low fiduciary capacity and weak internal controls leading to potential leakage; (iii) lack of effective monitoring of public finances. These risks will be mitigated through enhanced project design, capacity building efforts and increased monitoring of project activities and outcomes during the implementation stage.

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Annex 5: Implementation Support Plan

MALAWI: SKILLS DEVELOPMENT PROJECT Strategy and Approach for Implementation Support

1. The strategy for implementation support has been developed based on the nature of the project and its risk profile. It aims to make implementation support to the client flexible and efficient, and focuses mainly on implementation of the risk mitigation measures defined in the ORAF.

2. The World Bank’s approach to implementation support strongly emphasizes open and regular communication with all actors directly involved in the project (such as the four public universities and two Ministries, TC and TEVETA), constant information exchange, and adequate flexibility to accommodate the specificities of the country. During project preparation the Team developed communication channels, informal links, and trust with all implementing agencies, which are expected to facilitate World Bank supervision.

3. The implementation support strategy is based on several mechanisms that will enable enhanced implementation support to the Government, and timely and effective monitoring. The implementation support thus comprises: (a) Joint Review Missions; (b) regular technical meetings and field visits by the World Bank between the formal joint review missions; (c) TC reporting based on the Sub-Project Grants Agreements or the performance agreements; and (d) internal audit and FM reporting.

Implementation Support Plan

4. The World Bank will provide timely implementation support to the Project’s Components as well as guidance to the relevant agencies regarding technical, fiduciary, social, and environmental issues. Formal implementation support and field visits will be carried out as required, and will focus on:

a. Technical Inputs. The World Bank will count on the inputs from four international experts in Higher Education, infrastructure assessment and development, ODL, and TEVET, whose support will focus on both components of the project. In particular, close work with TC, universities and TEVETA is required for capacity building and fostering cooperation and synergy wherever possible, and for ensuring that implementation progresses adequately.

b. Fiduciary Requirements and Inputs. Training will be provided by the World Bank’s financial management specialist and the procurement specialist before Project effectiveness and during project implementation. This will allow capacity building among implementing agencies in matters of FM and procurement, particularly regarding World Bank procedures. Supervision of financial management arrangements will be carried out as required as part of the project supervision plan and support will be provided on a timely basis to respond to project needs. Procurement supervision will be carried out on a timely basis as required by the country.

c. Safeguards. The World Bank’s Social and Environmental Safeguards Specialists will ensure that training on both social and environmental safeguards is provided to both the SEFP and relevant counterpart staff. Field visits will be made as required, at least twice per year during each implementation support mission. While the social and environmental assessment will be run on all project activities; field supervision will mostly focus on civil

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works executed by institutions under Component 1, ensuring that they comply with the World Bank’s safeguards policies triggered by the project along with the core recommendations of the ESMF and RPF, and the national regulations. As stated above, the TCU, together with the SEFP and the NEA will provide the Bank with quarterly reports on the way social and environmental safeguards, including gender, youth and vulnerable groups are being adequately dealt with during project implementation. The World Bank Safeguards specialists will leave, after each implementation support mission (at least twice a year), a set of key safeguards recommendations to be followed by the TCU which will then report back to the Bank before each follow up mission.

d. Country Relations. The Task Team Leader (TTL) will coordinate the World Bank Team to ensure Project implementation is consistent with World Bank requirements, as specified in the legal agreements. Moreover, the TTL will meet with Government, the NCHE and senior officials of participating institutions on a regular basis to keep them informed of project progress and issues requiring resolution at their level. Constant channels for information exchange will be maintained with all major actors, taking advantage of trust and communication capacity built during Project preparation.

5. The main focus of implementation support is summarized below.

Time Focus Resource Estimate Staff Weeks

Partner Role

First 12 Months Technical Review / Support

Higher Education Specialist 4 None TEVET Specialist 4 ODL Specialist 4 M&E Specialist 2

FM training and supervision

FM Specialist 8

Procurement Management Procurement Specialist 4 Environment and Social monitoring & reporting

Environment Specialist 2 Social Development Specialist 2

Civil Works Support Infrastructure Specialist 8 Institutional arrangement, project supervision coordination and Team Leadership

TTL 12

12-48 months of implementation

Technical Review/Support Higher Education Specialist 4 None TEVET Specialist 4 M&E Specialist 2

Environment and Socialmonitoring & Reporting

Environment Specialist 1 Social Development Specialist 1

Civil Works Support Infrastructure Specialist 8 FM Disbursement and Reporting

FM Specialist 4

Procurement Management Procurement Specialist 4 Institutional arrangement, project supervision coordination and Team Leadership

TTL 12

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6. Staff skill mix required is summarized below.

Skills Needed Number of Staff Weeks Number of Trips Comments

Higher Education Specialist 4 Ws annually Two; including field trips Externally based TEVET Specialist 4 Ws annually Two; including field trips Externally based ODL Specialist 4 Ws annually Two; including field trips Externally based Infrastructure Specialist 8 Ws annually Four; including field trips Externally based M&E Specialist 2 SW annually Fields trips as required Country office based Procurement Specialist 4 SWs annually Fields trips as required Country office based Social Specialist 1 SWs annually Fields trips as required Country office based Environment Specialist 1 SW annually Fields trips as required Country office based FM Specialist 8 SWs annually Fields trips as required Country office based

Task Team Leader 12 SWs first year, then 12 SWs annually in the following years

Field trips as required Country office based

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Annex 6: Economic and Financial Analysis

MALAWI: SKILLS DEVELOPMENT PROJECT 1. The purpose of this annex is to address three key questions: (i) What is the development impact of the Skills Development Project? (ii) Is public sector provision or financing the appropriate program? (iii) What is the World Bank’s value added? Firstly, the annex briefly reviews the country context and macroeconomic background, and looks at participation, and costs and financing in skills development in Malawi. Secondly, the annex sheds some light on the relationship between skills development institutions and the labor market. Thirdly, the annex focuses on economic analysis of the project. Fourthly, the annex conducts a financial analysis of the project.

A. Country Context and Macroeconomic Background18

2. Economic Context. Malawi is ranked 170th out of 186 countries surveyed in the United Nations Human Development Index of 2012. The Population of Malawi is estimated at 15.9 million in 2012, which has significantly increased from 11.5 million in 2001. Population growth rate remains high (2.86 percent in 2012) (WDI). Number of school age children is growing. High population growth, high population density, and high HIV/AIDS prevalence exacerbate poverty. According to the recent report of Malawi’s Third Integrated Household Survey (IHS3), absolute poverty has declined by less than 2 percent since 2004/05, to 50.7 percent. Although poverty in urban areas declined from 25.4 percent in 2005 to 17.3 percent in 2011, this gain was counterbalanced by worsening rural poverty from 55.9 percent to 56.6 percent. It appears from the stagnant rural poverty rate that despite an increase in per capita income, inequality in Malawi is rising. Poverty rates among female headed households are significantly higher than among male headed households, with their limited access to larger land holdings and failure to engage in cash crop production contributing to the higher household poverty.

3. Malawi, a landlocked agrarian economy, is poorly integrated into the region in terms of both trade and physical infrastructure. The concentration of its economy in a few primary commodities makes it vulnerable to weather and terms of trade shocks. The country is also highly aid-dependent. Poor management of public finances and frequent macroeconomic policy reversals make these economic vulnerabilities worse. In recent years, agriculture has been contributing about 28 percent to total GDP, services 33 percent, and a barely developed manufacturing sector, 10 percent. Minerals began to make a contribution only in April 2009 with the start of uranium mining at Keyelekera, though interest in Malawi’s mineral potential has since intensified. However, unlike neighboring South Africa, Tanzania, Zambia, and Mozambique, where the recent commodity boom has re-emphasized mining as strategic for the entire economy, it is still only nascent in Malawi. When and how much it will contribute to the economy is very uncertain.

4. Agriculture is the backbone of Malawi’s economy, accounting for about 85 percent of employment and about 80 percent of foreign exchange, around60 percent of which comes from tobacco alone. The structural transformation in agriculture that took place in the mid-1990s saw particularly rapid growth in smallholder tobacco farms. Smallholders are responsible for more

18 Information on economic context of this section mainly rely on Malawi Country Assistance Strategy (2012) and Program Document for Malawi Development Policy Operation I (2013).

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than 80 percent of Malawi's agricultural production, but this is predominantly subsistence farming, and reliance on rain leaves farmers vulnerable to bad weather. Investment in productivity enhancements is minimal. To sustain growth in the sector, crop diversification and agro-processing will be critical.

5. From 2006 to 2010, Malawi averaged a solid 7 percent growth in GDP annually, supported by a stable macroeconomic environment and large aid inflows. But this growth has not translated into higher living standards for most Malawians. The growth was largely driven by exports (mainly semi-processed burley tobacco, tea, and sugar); the emerging mining sector (with relatively large foreign investment in uranium mining since 2009); and fiscal expansion thanks to debt relief from the HIPC initiative in 2006, which helped to create the fiscal space Malawi needed to generate momentum for growth. Macroeconomic imbalances started to build up after the 2008 global crisis and the 2009 presidential elections, aggravated by multiple shocks (including adverse terms of trade, significant reductions in tobacco proceeds, and a drop in donor inflows, especially budget support - compounded by inappropriate policy responses). Together these shocks triggered a severe foreign exchange shortage which was beginning to severely choke the economy from 2011. Excess demand for foreign exchange led to increasing shortages of critical goods, especially fuel, and of other production inputs and essential drugs. The economy picked up in response to adjustments initiated by a new government under President Banda from early 2012. In the meantime, Malawi's exchange rate problems have significantly improved following the recent liberalization of the exchange rate regime, which has addressed the overvaluation of MK.

6. Malawi’s medium term economic outlook is positive with some downside risks related to weather and terms of trade shocks, upcoming elections, slowdown in global economy and fiscal slippages. Economic growth is projected to rebound to the pre-2010 levels in the medium term. This growth will largely be driven by sustained macroeconomic policy reforms, projected aid inflows, stronger performance in the agriculture sector (based on favorable international prices, additional investment and good weather) and the rebound in the manufacturing, trade, and construction sectors. In the event the above risks materialize and depending on their magnitude, the medium term outlook could be less favorable, rendering the proposed macroeconomic framework untenable.

7. Real GDP growth is expected to recover to 5.5 percent in 2013, driven largely by agrigultural production. The outlook for the current agriculture season is positive based on the expected recovery in tobacco production and production expansion in other cash crops including cotton and legumes. Tobacco production is expected to surpass 140 million kg in the 2012/13 season compared with 80 million kg in 2011/12, with about 80 percent of the crop produced under the Integrated Production System (contract farming) and tobacco prices are expected to be strong on the back of reduced global supply.19 Cash crops like cotton and legumes also registered significant production increase in 2013. Cotton production was being scaled-up from 40,000-50,000 metric tons to 100,000 metric tons in 2012 and was expected to reach 200,000 metric tons in 2013. This has stimulated interest from ginners to establish their base in Malawi.

19 Over the medium-to-long term, the reduction in the global demand for tobacco due to anti-smoking campaign would affect the Malawi’s economy, and restrictions to the tobacco industry enforced under the WHO Framework Convention of Tobacco (which was not signed by Malawi).

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8. Encouraging signs of economic recovery are being helped by a recovery in the external credit lines and increased availability of foreign exchange, which will support the recovery in sectors hardest hit by foreign exchange shortages in 2011, including tourism, manufacturing, transportation services, construction, and trade. For manufacturing, the sector is expected to start showing signs of a rebound during the second half of 2013 as supply chains begin to normalize. Mining and quarrying is projected to grow at an average 6 percent during 2013-2016, to be boosted by a projected increase in coal production in 2013-14 as well as the coming on stream of the niobium mining project at Kanyika by 2014 with construction beginning in 2013. Overall, real GDP growth is projected to average 6.4 percent during 2014-2016.

9. Inflation is also projected to start slowing down and to remain on a stable path in the medium term owing to expected stabilization of the exchange rate, good agriculture produce, and implementation of tight fiscal and monetary policies. Specifically, inflation is projected to start decelerating from the third quarter of 2013 with the onset of the harvest season as well as reflecting the lagged effect of tighter monetary and fiscal policies. The measures undertaken by the Reserve Bank of Malawi (RBM) to tighten monetary policy will also contain any second round effects of MK depreciation and increased fuel and electricity prices. Inflation is expected to return to the pre-2010 levels percent by 2015.

10. Government priority areas. In the MGDS-II 2011 – 2013, the government set 9 key priorities areas to achieve rapid economic growth and improvement in the well-being of Malawians: 1) Agriculture and Food Security; 2) Energy, Industrial Development, Mining, and Tourism; 3) Transport Infrastructure and Nsanje World Inland Port; 4) Education, Science and Technology; 5) Public Health, Sanitation, Malaria and HIV and AIDS Management; 6) Integrated Rural Development; 7) Green Belt Irrigation and Water Development; 8) Child Development, Youth Development and Empowerment; and 9) Climate Change, Natural Resources and Environmental Management. A focus on education is in the heart of MGDS-II 2011-2016. In the MGDS-II 2011-2016, GoM recognizes the role of an educated population as a necessary enabling environment for sustainable development. The government sets three medium-term expected outcomes: 1) expanded equitable access to education; 2) improved quality and relevance of education; and 3) improved management and governance of the education system. The government considers that tertiary and vocational education will play a vital role in complementing primary and secondary education, and tertiary and vocational education will focus on producing high quality professionals with relevant knowledge and skills that meet demands of the economy.

B. Skills Development in Malawi: Participation, Costs and Financing

11. Malawi’s Skills Development Sector (Universities and TEVET). The formal education system in Malawi consists of 8 years of primary, 4 years of secondary and typically 4 years of post-secondary or university level education. Students take the Primary School Leaving Certificate Examination (PSLCE) at the end of primary education, which determines their eligibility for entry into secondary school. Public secondary students attend either Community Day Secondary Schools (CDSSs) or Conventional Secondary Schools (CSSs). At the end of two years of secondary, students take the national Junior Certificate of Secondary Education (JCE) at the end of two years of secondary, and take the Malawi School Certificate Examination (MSCE) at the end of four years of secondary.

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12. The Malawi higher education sector is still relatively under-developed. It comprises three public universities, the University of Malawi, Mzuzu University and Lilongwe University of Agriculture and Natural Resources; and five private universities, the Catholic University of Malawi, Malawi Adventist University, the University of Livingstonia, Blantyre International University and Mangochi University. Together, these seven institutions enroll about 12,000 students. The University of Malawi comprises four constituent colleges: Chancellor College; College of Medicine; Kamuzu College of Nursing; and the Malawi Polytechnic.

13. The core of the public formal TEVET supply under the auspices of the Department of Technical and Vocational Training (DTVT) in the MoLVT is provided by seven technical colleges (TCs) and 13 other private and public colleges. The colleges offer training programs of two to four years intended to provide initial (pre-employment) vocational training to secondary school leavers. The dominant training program is the National Apprenticeship Programme, managed and subsidized by TEVETA. Training under the apprenticeship program is organized as cooperative training between the colleges and companies, with one year of initial full-time training in a college followed by three years split into two terms of in-company training and one term of college instruction each year. Beyond formal TEVET, the training supply in Malawi is diverse and provided through various public and private provider systems. In particular the training segment serving the informal and rural labor markets feature a broad spectrum of non-formal and informal skills development initiatives including rural training centres, training provided by mastercraftsmen, and on-the-job training.

14. Access to Universities and TEVET. At less than 1 percent, Malawi’s tertiary education enrollment rate is among the lowest in the world. It is well below the average for Sub-Saharan Africa. In 2011, it had only 80 students per 100,000 inhabitants, compared to 211 for the Region. With its present capacity, the sub-sector is able to absorb only a small fraction of Malawi Secondary Certificate of Education (MSCE) graduates who exit the secondary school system annually. The most recent gains in tertiary enrollment, due to the introduction of private provision, have eased some of the constraints to access. However the contribution of the private institutions is still relatively small, around 12 percent of total enrollment. The total enrollment in the TEVET system in Malawi is unknown. It is apparent, however, that the publicly financed programs provided in technical colleges only cater to a small fraction of the entire training supply in Malawi.

15. Source of Funding. There are three main sources of income for the universities. These are government subvention (for public universities), tuition fees, and other income which included funding for projects, grants and research which are externally funded. Universities have not been able to mobilize other resources much beyond government subvention apart from tuition fees whose levels they do not have much control over and contribute very little of total expenditure.

16. TEVET in Malawi, including the public TEVET system, is funded by multiple sources. Apart from public expenditure from the budget of the responsible line ministry MoLVT (formerly MoEST), TEVET is also financed by companies (notably through the training levy fund), other line ministries, donors, and private households through training fees. To a lesser extent, training institutions also recover parts of their cost through income-generating activities (other than training fees).

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17. Public Spending. The government contribution constitutes the largest percentage of the total revenue of universities, ranging from 75 to 85 percent of the recurrent budget. Tuition fees are minimal representing between 4 and 14 percent of the total cost. The importance of tuition fees is considerably higher in technical colleges and other artisan-level training institutions. The total subvention to public universities and University of Livingstonia (UNILIA)20 increased from MK5.89 billion in 2007/08 to MK7.460 billion in 2009/1021. As a percentage of the total allocation to education the subvention fell from 23.8 percent in 2007/08 to 21.8 percent in 2009/10 (This increased to 25.8 percent in 2011. This is high compared to some Sub-Sahara Africa countries.

18. Public Spending for Formal TEVET. Public expenditure for TEVET involves an allocation to the TCs to supplement the recurrent and development budget under the vote of the parent ministry22 as well as allocations to fund supportive and regulatory functions. The latter category comprises ministerial overheads for the DTVT, the government contribution to TEVETA, testing and examination (Trade Testing Services in the MoLVT), as well as allocations to Malawi National Examinations Board (MANEB) to fund activities related to Malawi Craft and Advance Craft (MCAC) examinations. Although increasing, public financing of TEVET remains very low. The resulting resource constraints in the public TCs contribute substantially to the quality problems mentioned above. In total, public allocations for TEVET under the MoEST budget have increased from MK275 million in 2008/9 to MK772 in 2011/12, representing only 1.5 percent of Malawi’s total education budget. Budget for higher education has increased from MK5.7 billion to MK9.4 billion (Table 1).

Table 1: Recurrent Education Sector Expenditure by Level of Education, 2008/9-2011/12 MK million %

2008/9 2009/10 2010/11 2011/12 2008/9 2009/10 2010/11 2011/12 Primary 12,783 14,424 20,910 26,186 48.2 46.5 48.5 51.3 Secondary 4,708 5,338 7,241 7,572 17.8 17.2 16.8 14.8 TEVET (formal) 275 381 625 772 1.0 1.2 1.4 1.5 Teacher Education 751 1,141 1,906 3,264 2.8 3.7 4.4 6.4 Higher 5,703 6,989 8,833 9,412 21.5 22.6 20.5 18.4 Management 2,293 2,715 3,603 3,851 8.6 8.8 8.4 7.5 Total 26,513 30,989 43,117 51,058 100.0 100.0 100.0 100.0

Source: Mambo/Cole/Ndala, 2012. Education Sector Plan Review Report. Submitted to MoEST September 2012. 19. TEVETA Levy. As pointed out above, public financing of TEVET remains very low. However, in Malawi, there is another funding scheme that funds flows into TEVET sub-sector thorough TEVETA. This is TEVETA levy, which is a large part of TEVETA’s income, and introduced in 2000/01 by the TEVET Act of 1999. The levy is set at one percent of the gross emoluments of employers. Private companies as well as public employers/government are levied. Actual nominal income from the combined public and private TEVET levy increased from MK15 million in the fiscal year 1999/2000 to MK1.034 billion in 2011/12, out of which about 30 percent is levy from public employers/government, and 70 percent is form private companies.

20 UNILIA was allocated MK70 million for the construction of a girls’ hostel and a bus in 2009/10. 21 The allocation for 2001 was 7.821 million and was 25.8 percent of the total education budget. 22 Although the responsibility for TEVET has been transferred to the MoLVT in 2012, public spending for 2012/13 will still be under the MoEST (Vote 250).

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20. Equity Perspective. The enrollment at secondary and tertiary levels is skewed towards richer groups. According to data from IHS3, at secondary level, 8 percent of secondary students come from the poorest quintile while 31 percent of secondary students come from the richest quintile. Disparity is more significant at tertiary level. Only one percent of tertiary students come from the poorest and only 3 percent come from the second quintile. Over 80 percent of tertiary students come from the richest quintile (Figure 1).

Figure 1. Distribution of Enrollment in Public Education, by Wealth Quintile, 2011

Source: IHS3 Survey.

21. Table 2 shows the enrollment in universities by gender from 2008 to 2011. In 2008, 5,537 male and 2,838 female students were enrolled in both public and private universities Students’ enrollments have increased for both male and female students since 2008, and share of female students has improved from 33.9 percent in 2008 to 36.2 percent in 2011.

Table 2. University students’ enrollments by gender Male Female Total % of Female

2008 5,537 2,838 8,375 33.9 2009 5,945 2,928 8,873 33.0 2010 6,129 3,255 9,384 34.7 2011 7,411 4,212 11,623 36.2

Source: Based on data provided by higher education institutions. 22. Student Loan at Universities. Malawi has been facing difficulties in setting up an efficient higher education loan scheme in terms of both operation (disbursement and repayment) and management. In light of the importance of a well-targeted student loan scheme, the SDP will provide technical assistance to develop a well-targeted and robust student financing scheme through the Technical Assistance component of the Project. However, the legal and policy framework as well as the capacity to handle the student loan scheme is currently not in place. A new Student Financing Act is yet to be approved by Parliament. Additionally, it would be important that key policies are clarified, notably: (i) targeting loans to needy students; (ii) making the loans available to all needy Malawian students of higher education, including students in private institutions; and (iii) recovery policies. The MoEST plans to take urgent steps

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Education Lavels

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to pass the Student Financing Act and establish an action plan outlining key policies for the development of the student loan scheme. Specifically, the MoEST will: (i) conduct consultations with relevant stakeholders on the draft Student Financing Bill in the month of April; and (ii) submit a revised Student Financing Bill for consideration in the upcoming Parliament session.

C. Education and the Labor Market in Malawi

23. Labor Market Entrants. Professional and technical skills in Malawi are provided by an array of institutions including technical colleges, universities, colleges, and various private suppliers (Table 3). There are seven public technical colleges and 56 private training institutions registered with the TEVETA plus over a hundred recorded but not yet officially registered private institutions. The University system is comprised of four public universities, (UNIMA), MZUNI, LUANAR and the Malawi University of Science and Technology (MUST) and eight private universities.

Table 3: Labor Market Entrants in Malawi

Labor Market Entrants Employment Status /

Sector Skills Development

Institution Qualification

Professional and Technician Skills (Degrees and Technician Diplomas)

81% are in Wage/Salary jobs

Universities PhD, Masters, Undergraduate/ Bachelors, Diploma

High Level Artisans 74% are in Wage/Salary jobs

7 public Technical Colleges and selected private institutions

TEVET certificates,

Low Level/Rural Artisans Family enterprise/Self-employment/contract work Agriculture

Private sector training programs, traditional apprenticeship training - On the job training, master craftsmen

Trade test certificates and non-formal training certificates; mainly short programs and recognition of prior learning

Primary/Secondary School Graduates/Leavers No specific technical skills Unqualified Workers

80% of primary school dropouts, 70% of primary school completers, and 62% of secondary school dropouts are in agriculture /family farming

Primary School, Secondary Schools, Continuous Basic Education programs, Adult Literacy Program

Primary or Secondary School Certificates No education

24. Education and the Labor Market. Figure 2 shows categories of work by education level. It indicates that more educated have wage employment. About 74 percent of university graduates have wage employment, 16 percent are engaged in non-firm household enterprises, and 10 percent are engaged in agriculture. On the contrary, 90 percent of non-completers of primary education and 85 primary education completers are engaged in agriculture.

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Figure 2. Employment Type by Education Level (%)

25. Table 4 shows monthly wages by education level in 2005 and 2011. Basically, when a person achieves higher levels of education qualification, the wages get higher both in the private and public sector. For instance, the average monthly wage for primary education completers in the private sector is MK8,500 in 2011 while the wage for university graduates is MK150,000.

Table 4. Monthly Wages by Education Level (MK1,000, %) 2005, 2011

Highest Educational Qualification Acquired

Private Sector Public Sector Private

Company Workers

Private Individual Workers

Private Sector Workers

(All)

Government Servants

Parastatal Workers

Public Sector Workers

(All) 2005 2011 2005 2011 2005 2011 2005 2011 2005 2011 2005 2011

None 6.1 8.0 4.7 7.2 5.3 7.5 6.2 8.9 5.4 11.4 5.9 9.3

(18.3) (12.2) (26.9) (18.7) (45.3) (30.8) (2.4) (3.0) (1.8) (0.7) (4.2) (3.7)

PSLC 7.9 8.9 6.0 8.1 6.9 8.5 7.9 11.4 8.9 12.7 8.2 11.6

(5.0) (4.3) (5.9) (4.6) (10.9) (9.0) (1.8) (1.9) (0.8) (0.4) (2.6) (2.3)

JCE 9.8 11.1 7.9 8.9 9.1 10.1 10.0 15.3 14.2 14.4 10.7 15.2

(6.3) (6.1) (4.2) (5.7) (10.6) (11.7) (4.9) (4.4) (1.1) (0.5) (6.0) (4.9)

MSCE 20.3 17.8 12.3 12.1 17.9 15.9 17.6 21.5 30.6 25.0 18.9 21.7 (4.6) (7.7) (2.2) (4.4) (6.8) (12.1) (7.8) (11.8) (0.9) (1.1) (8.6) (12.9)

Non-University Diploma

91.6 70.5 17.7 21.0 78.8 65.1 20.5 32.5 43.3 52.7 27.0 33.9 (0.9) (2.5) (0.2) (0.4) (1.0) (2.9) (1.1) (4.4) (0.3) (0.5) (1.5) (4.8)

University Degree 121.1 144.4 41.7 198.3 111.1 150.0 66.5 78.7 86.8 74.7 69.8 78.4 (0.8) (1.3) (0.1) (0.2) (0.9) (1.5) (0.8) (2.4) (0.2) (0.2) (1.0) (2.7)

Post-Graduate Degree 340.6 440.1 - 217.7 340.6 398.9 149.1 146.7 345.2 51.2 211.3 132.4 (0.3) (0.3) (0.0) (0.1) (0.3) (0.3) (0.3) (0.4) (0.1) (0.1) (0.4) (0.5)

All Levels 16.5 22.1 5.8 9.3 11.1 15.9 17.7 25.8 26.2 24.8 19.5 25.7

(36.1) (34.3) (39.6) (34.1) (75.7) (68.3) (19.1) (28.2) (5.2) (3.5) (24.3) (31.7) Source: IHS2 and IHS3.

30. Employment of Graduates. The Tracer Study of TEVET and Higher Education Completers in Malawi Report of 2008 and the TEVETA Labor Market Survey of 2008 reveal that, in general, 72.2 percent of the graduates had full-time employment or had set up their own business (2.1 percent). Eleven percent of the graduates had part-time employment while 10 percent were still looking for employment. The report further indicated that it took an average of 5.5 months for graduates to secure jobs. After six months, 75 percent of all employment seekers had a job.

31. To a certain extent the results of the 2008 tracer studies challenge the common perception of low relevance of TEVET programs by suggesting that TEVET graduates fare relatively well

0 20 40 60 80 100

University and higher

Post secondary technical

Upper secondary

Lower secondary

Primary

Pre-school/Primary not completedagricultrue

non-firm HHenterprise

wageemployment

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in the labor market. Both studies showed that overwhelmingly TEVET graduates found their training useful and had found employment in the professional fields, for which they were trained. The studies suggested that TEVET completers have generally good chances to find employment. 15 percent of completers of all TEVET programs and 9 percent of the graduates from the formal TEVET system remained unemployed.

D. Economic Analysis of the Project

26. Private Rates of Return to Education. Private rates of return were calculated using data from IHS3 and applying Mincerian regressions23. Table 5 shows the result of analysis by level of education. It is estimated that the private rate of return to university education and technical education are 29.1 percent and 19.7 percent respectively.

Table 5: Private Rates of Return to Education (%) Level of Education All

Primary 3.3 Junior Secondary 12.1 Senior Secondary 27.1 Technical College 19.7 University 29.1

Source: World Bank team calculation based on IHS3.

27. Benefits of education are observed not only at private level, but also at social level. World Bank (2010) calculated social rates of return to education by education level. Results indicate that the rate of return to higher education is 23 percent and that for technical education is 35 percent.

28. However, with regard to private return, not all youth are necessarily able to enjoy these high returns. As seen in Figure 1, only one percent of tertiary students come from the poorest quintile and only 3 percent come from the second quintile. Over 80 percent of tertiary students come from the richest quintile. This inequality is partly attributed to the low transition rate and high drop out rates at pre-tertiary levels. Only 35 percent of secondary school graduates are able to find a place in the higher education/TEVET system (32 percent in universities and colleges and 3 percent in TEVET programs). Marginalized groups, such as youth from poor households, school drop-outs and people living in the rural areas are further disadvantaged due to supply side restrictions in Malawi. This inequality is also partly attributed to an inefficient higher education student loan scheme that does not properly target needy students. Currently, there is no means-testing mechanism for students’ loan disbursement in Malawi. The government needs to review overall student financing mechanisms and review whether the government provides loans and other financial resources to needy students with proper targeting mechanisms.

29. Cost-Benefit Analysis of the Project. This section assesses costs and benefits associated with Component 1 of the proposed project. It uses the approach of comparing net value of cost with net value of benefit. The cost-benefit analysis of this project focuses on economic costs and benefits. Economic costs include total project cost and private cost (direct household contribution and opportunity costs for foregone income during schoolings). Benefits of this project are converted into economic value of wage premium of graduates. The objective of the SDP is “to increase access, market relevance, and the results orientation of supported skills

23 After calculating earnings function, the private rates of return to different levels of schooling were derived.

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development institutions in agreed priority areas.” The main sources of data used in the analysis come from IHS3.

30. Cost Stream. Costs include direct project costs and private costs (private contribution to education and opportunity cost of forgone income during schooling). Data from IHS3 is used for estimation of private costs. Annual private household cost per student for technical colleges and universities is estimated at MK108,105 and MK109,912 respectively. Opportunity cost of foregone income per year during schoolings is estimated at MK508,407.

31. Benefit Stream Wage Premium. Benefits of the project are estimated by increase in the number of graduates from technical colleges and universities and by higher productivity and life-time earnings. Data from IHS3 was used for estimating prospective wages of graduates. In 2011, average annual wage per graduate from technical college was MK508,407 and average wage per university graduate was MK1,107,770.

32. Limitation. Data on technical colleges and universities required for cost-benefit analysis of the SDP is limited in Malawi. Current data does not permit the analysis of economic returns to specific disciplines such as agriculture and engineering at technical and university ducation level. Therefore, although the Project focuses on specific priority areas, the cost-benefit analysis also includes data on programs that are outside the Project scope, because it is difficult to differentiate between SDP’s priority areas and others.

33. Assumption. The base-case analysis assumes an “average” individual that has completed secondary level education and is considering the decision to either begin a bachelor degree or technical college diploma, or enter the workforce. For this individual, the cost benefit analysis is conducted under the following assumptions. The analysis will take into account only quantifiable benefits. As a result, the team assumes that the internal rate of return (IRR) the team computes is a lower bound for the impact of the project.

Project cost and allocation over the project period. Out of total of US$50.9 million, US$40 million will be allocated to Component 1 over the project period as follows: FY2015: US$14.7 million; FY2016: US$7.4 million; FY2017: US$9.2million; FY2018: US$6.5 million; FY2019: US$2.2 million. Since Component 1 of the SDP applies result based financing modality, the funds will be distributed only when agreed targets are met. However; the project assumes all the funds will be disbursed based on full achievement of target.

Exchange rate: US$1 = MK400.

Direct costs. Direct costs cover student fees, books, and travel etc. The costs were estimated from IHS3 data.

Opportunity costs. Opportunity cost represents a loss of productive capacity measured as a loss of earning for the individual that enroll for technical colleges/universities. It assumes that a student would otherwise not be idle or unemployed. The benefits were estimated from IHS3data.

Duration of programs. The project assumes that an individual who attends university program takes three to five years to complete a program, and that an idividual who attends technical college program takes one year to complete a program.

Benefits. The salary of the graduate does not vary during the year. Annual earnings are calculated by multiplying daily earning by 365, weekly earnings by 52, and monthly earning by 12. The difference in the life-stream of both treatment and comparison group is only

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attributable to attending technical colleges or universities. The estimated wages were computed based on the IHS3, and the wage levels were projected to account for inflation for future years.

Inflation rate. The assumed inflation rate is 11.8 percent (a rate at the end of FY2013). This is used as Discount rate for cost-benefit analysis.

Annual increase of salary. The Project assumes that salary of graduates increase by 1.5 percent annually.

Employment of graduates. 85 percent of completers of technical colleges and universities programs are employed after graduation.

Retirement age. The Project assumes that retirement age is 60. No unemployment period between graduation and retirement.

34. Net Present Values (NPV) of Benefits, Costs and Internal Rate of Return. Based on the discount rate of 11.8 percent for the benefits and costs stream mentioned above, the net present value is MK190.6 billion. The Internal Rate of Return (IRR) associated with this NPV is 29.9 percent.

35. Sensitivity Analysis. Table 6 shows the IRRs based on different scenarios. For instance, if employment ratio of graduate drops to 70 percent from 85 percent of base scenario), IRR decreases to 26.9 percent from 29.9 percent (base scenario). If employment ratio of graduates drops to 70 percent from 85 percent and graduates are only 80 percent of targeted number of the project, IRR decreases to 24.0 percent. These results suggest that the SDP is expected to yield significant economic returns and thus to be a very sound investment. There are conservative lower bound estimates, given that they do not account for other potential benefits including the social benefits of education. The total economic and social impact on the project is likely to substantially exceed the economic benefits, which are nonetheless very considerable.

Table 6. Results of the Sensitivity Analysis

Scenario Change NPV

(MK, million) IRR

Base Graduate employment is 85%, and number of graduates is 100% of target 190,571.0 29.9%

Decrease of graduate employment Graduate employment from 85% to 70% 151,879.9 26.9%

Decrease of graduates from technical colleges/universities Number of graduates only 80% of targets 146,721.0 26.5%

Decrease of graduate employment and graduates from technical colleges/universities

Graduate employment from 85% to 70%, and number of graduates only 80% of targets

115,768.1 24.0%

36. Benefits from Technical Assistance. Out of US$50.9 million, the SDP will allocate US$ 4.9 million to technical assistance (Component2) to strengthen capacities of the MoEST, NCHE and participating institutions for program implementation, planning and policy development. It would be difficult to quantify their benefits in monetary value. The Project will bring to Malawi not only the IDA funding but also the World Bank’s global knowledge (best practice,

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international experts and lessons learned from other projects) and expertise. All of these will help the GoM and participating institutions prepare and implement the project better.

E. Financial Analysis of the Project

37. This section provides the financial analysis of the project. Firstly, the project reviews the possible impact on government finances and on financial modality. After this, fiscal results of fiscal analyses based on several scenarios are presented.

38. Impact on Government Finances. The proposed project is not expected to have any immediately significant impact on Government finances, although there may be incremental recurrent costs for salaries for additional staff, such as staff recruited on NCHE. During the project implementation period, it is expected that the increase in recurrent costs attributable to the operationalization of the NCHE and the establishment of national higher education loan board will be marginal. Incremental recurrent costs will be primarily borne by the Government through additional staff needed to strengthen tertiary education.

39. Impact on Financial Modality. The project will follow a pragmatic and results-based approach to enhancing the ability of unskilled youth and adults to gain relevant skills and improving the availability of skilled labor at all levels (university, technician, and artisan for both the formal and informal sectors) in priority sectors as articulated in the National Education Sector Plan (NESP) and Malawi Development and Growth Strategy (MDGS) II and the Economic Recovery Program (ERP). To ensure a results focus to these interventions, the SDP uses performance-based funding; a funding modality which reduces the direct role of government while introducing transparent and objective ways to disburse funds.

40. Fiscal Analysis. This analysis examines the current and projected budget for the education sector. The results under three cases are presented here: (i) a base case scenario; (ii) a high case scenario; and (iii) a low case scenario. Table 7 to 9 present the stream of expenditures for the education budget for the period 2014 - 2018 and the contribution of the SDP under different case scenarios.

41. Base Case Scenario. The base case scenario assumes that the current political and economic situation continues without major changes in Malawi (Table 7). GDP growth rate is assumed to be increasing gradually and be relatively stable from 6.1 percent in 2014 to 6.5 percent in 2018 (Malawi authority, IMF and WB estimation). Total government budget as a percentage of absolute GDP is projected to be 33 percent constantly. The proportion of the education sector budget to the total government budget is projected to remain 19 percent which is a rate in 2013 (PER). It is assumed that recurrent and capital education budget remain constant at 85 percent and 15 percent respectively. The results of the base case show that total education budget could increase in real terms over the project period from MK97.1 billion to MK125.4 billion.

42. High Case Scenario. In the case of high-growth, it is assumed that the GDP growth rate is back to pre-2010 level (GDP growth rate at 2009 is 9.0 percent). Total government budget as a percentage of absolute GDP is projected to remain 33 percent. Total government budget to education is projected to remain at 19.0 percent. Again, we continue to assume that recurrent and capital expenditures remain constant at 85 percent and 15 percent respectively. The results of this scenario indicate that the total education budget could increase in real terms over the project period from MK99.8 billion to MK140.8 billion (Table 8).

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43. Low Case Scenario. In the low case scenario shown in Table 9, it is assumed that Malawi will face again underperformance in the production of tobacco, cotton and maize that happened in 2012 when GDP increased only at 1.9 percent. At that time, the decline in maize was largely attributed to poor and erratic rains in the southern part of the country. Total government budget as a percentage of absolute GDP is projected to remain 33.0 percent. The percentage of the education sector budget to the total government budget is projected to remain at 19.0 percent. The SDP continues to assume that recurrent and capital expenditures remain constant at 85 percent and 15 percent respectively. Under the low case scenario, total education budget could decrease in real terms over the project period from MK93.3 billion to MK100.6 billion (Table 9).

Table 7. Fiscal Analysis (base scenario)

Table 8. Fiscal Analysis (high scenario)

2014 2015 2016 2017 2018 Real GDP Growth Rate (%) 9.0 9.0 9.0 9.0 9.0 GDP (MK million) (base year 2013) 1591.3 1734.5 1890.6 2060.7 2246.2 Proportion of Government Budget to GDP (base year 2013, WDI) 33 33 33 33 33 Total Government Budget (MK billion) 525.1 572.4 623.9 680.0 741.2 Total Government Budget to Education (%) (19% in 2013, PER) 19.0 19.0 19.0 19.0 19.0 Education Budget (billion) 99.8 108.8 118.5 129.2 140.8 Recurrent Expenditure (85% in 2013) 84.8 92.4 100.8 109.8 119.7 Capital Expenditure (15% in 2013) 15.0 16.3 17.8 19.4 21.1 Skills Development Project (SDP) (MK, billion Econ Analysis, MK400/US$)

4.0 6.0 6.0 2.0 2.0

Share of SDP in the recurrent education budget (%) 4.5 6.1 5.6 1.8 1.6 Share of SDP in the total education budget (%) 3.9 5.2 4.8 1.5 1.4 Share of higher education budget toward total education budget (base year 2011, 25.8%, AAA)

25.8 25.8 25.8 25.8 25.8

Higher education budget (billion) 25.7 28.1 30.6 33.3 36.3 Share of SDP in the total higher education budget (%) 15.5 21.4 19.6 6.0 5.5

2014 2015 2016 2017 2018 Real GDP Growth Rate (%) 6.1 6.5 6.7 6.7 6.5 GDP (MK million) (base year 2013) 1548.9 1655.8 1773.4 1892.2 2000.2 Proportion of Government Budget to GDP (base year 2013, WDI) 33 33 33 33 33 Total Government Budget (MK billion) 511.1 546.4 585.2 624.4 660.1 Total Government Budget to Education (%) (19% in 2013, PER) 19.0 19.0 19.0 19.0 19.0 Education Budget (billion) 97.1 103.8 111.2 118.6 125.4 Recurrent Expenditure (85% in 2013) 82.6 88.2 94.5 100.8 106.6 Capital Expenditure (15% in 2013) 14.6 15.6 16.7 17.8 18.8 Skills Devt Project (SDP) (MK, billion Econ Analysis, MK400/US$)

4.0 6.0 6.0 2.0 2.0

Share of SDP in the recurrent education budget (%) 4.6 6.4 6.0 1.9 1.8 Share of SDP in the total education budget (%) 4.0 5.5 5.1 1.7 1.6 Share of higher education budget toward total education budget (base year 2011, 25.8%, AAA)

25.8 25.8 25.8 25.8 25.8

Higher education budget (billion) 25.1 26.8 28.7 30.6 32.4 Share of SDP in the total higher education budget (%) 16.0 22.4 20.9 6.5 6.2

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Table 9. Fiscal Analysis (low scenario) 2014 2015 2016 2017 2018 Real GDP Growth Rate (%) 1.9 1.9 1.9 1.9 1.9 GDP (MK million) (base year 2013) 1487.6 1515.9 1544.7 1574.0 1603.9 Proportion of Government Budget to GDP (base year 2013, WDI) 33 33 33 33 33 Total Government Budget (MK billion) 490.9 500.2 509.7 519.4 529.3 Total Government Budget to Education (%) (19% in 2013, PER) 19.0 19.0 19.0 19.0 19.0 Education Budget (billion) 93.3 95.0 96.9 98.7 100.6 Recurrent Expenditure (85% in 2013) 79.3 80.8 82.3 83.9 85.5 Capital Expenditure (15% in 2013) 14.0 14.3 14.5 14.8 15.1 Skills Development Project (SDP) (MK, billion Econ Analysis, MK400/US$) 4.0 6.0 6.0 2.0 2.0 Share of SDP in the recurrent education budget (%) 4.8 6.9 6.8 2.3 2.3 Share of SDP in the total education budget (%) 4.1 5.9 5.8 2.0 1.9 Share of higher education budget toward total education budget (base year 2011, 25.8%, AAA) 25.8 25.8 25.8 25.8 25.8 Higher education budget (billion) 24.1 24.5 25.0 25.5 25.9 Share of SDP in the total higher education budget (%) 16.6 24.5 24.0 7.9 7.7

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Annex 7: Current Support to Skills Development

MALAWI: SKILLS DEVELOPMENT PROJECT SUPPORT PROVIDE

PROJECT INSTITUTION DETAIL ALLOCATION

African Development Bank

Support To Higher Education, Science And Technology (HEST) Project

Chancellor College Malawi Polytechnic, Nasawa, Soche , Lilongwe and Salima Technical College

Support for construction of ICT centers, laboratory and office space, and construct 1 business centre at each HE institution. At technical colleges HEST will support centers of specialization through general site works, equipment and human resources development.

US$2,502,455

World Bank and European Union

Mining Governance and Growth Support Project (Building Capacity for Tertiary Education in Mining)

Malawi Polytechnic Support for launch of degree-level and other tertiary level courses at University of Malawi: Malawi Polytechnic.

US$400,000

Agriculture Research and Development Fund

Reduction of poverty and vulnerability through research and outreach system in the agriculture sector of Malawi

Bunda College of Agriculture (now LUANAR)

Provision of research vehicles, computers, research equipment and computers.

NOK35 million

Norway Capacity Building for Managing Climate Change in Malawi

Bunda College of Agriculture (now LUANAR)

Provide scholarships for Msc, PhD, MBAs. Support the upgrading of financial systems across LUANAR. Support the implementation of eleven research programmes, and upgrade infrastructure including the library, laboratory.

NOK82,089,858

Irish AID with support from UNICEF

Capacity Building for Scaling-Up Nutrition

Train national and district personnel in the implementation of Scaling-Up Nutrition: 1000 Special Days and NECS Initiative.

€140,694.93

UNESCO Better Education for Africa’s Rise (BEAR) Project

Natural Resource College, Magomero Community Training College, Nasawa TC, Salima TC, Neno Youth Training Centres, trade testing centres

Improve training capacities in construction and agro- and food processing through integrated approaches including human resource development, equipment, curriculum development and others.

US$2,000,000

UNESCO CAPEFA MOL/DTVT and other implementing institutions

Develop policy, pedagogical and institutional capacities through funding of policy reviews, harmonization of curricula, development of entrepreneurial training manuals, study tours and other interventions targeting the entire TEVET sector.

US$1,300,000