AFRICAN DEVELOPMENT FUND ERITREA SUPPORT TO SKILLS DEVELOPMENT FOR EMPLOYABILITY AND ENTREPRENEURSHIP

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized AFRICAN DEVELOPMENT FUND ERITREA SUPPORT TO SKILLS DEVELOPMENT FOR EMPLOYABILITY AND ENTREPRENEURSHIP OSHD DEPARTMENT February 2015

2 TABLE OF CONTENTS CURRENCY EQUIVALENTS, WEIGHTS AND MEASURES, ACRONYMS AND ABBREVIATIONS, LOAN INFORMATION, PROJECT SUMMARY, RESULT-BASED LOGICAL FRAMEWORK, PROJECT TIME FRAME... i-vii I STRATEGIC THRUST & RATIONALE Project linkages with country strategy and objectives Rationale for Bank s involvement Donors coordination... 4 II PROJECT DESCRIPTION Project components Technical solution retained and other alternatives explored Project type Project cost and financing arrangements Project s target area and population Participatory process for project identification, design and implementation Bank Group experience, lessons reflected in project design Key performance indicators III PROJECT FEASIBILITY Economic and financial performance Environmental and Social impacts IV IMPLEMENTATION Implementation arrangements Monitoring Governance Sustainability Risk management Knowledge building V LEGAL INSTRUMENTS AND AUTHORITY Legal instrument Conditions associated with Bank s intervention Compliance with Bank Policies VI RECOMMENDATION Appendix I. Country s comparative socio-economic indicators Appendix II. Bank s ongoing operationsand performance indicators Appendix III. Matrix of Development Partners' Coordination Appendix IV. Map of the project area Appendix V. Formal letter of request for the Education project List of Tables Table 1: Contributions of DPs to Education Sector 5 Table 2: Project Components 6 Table 3: Project alternatives considered and reasons for rejection 8 Table 4.1 Project cost estimates by component [amounts in million USD and UA] 8 Table 4.2: Sources of financing [amounts in million UA] 9 Table 4.3: ADB Grant and Loan disaggregated expenditures [amounts in million UA] 9 Table 4.4: Project cost by category of expenditure [amounts in million USD and UA] 9 Table 4.5: Expenditure schedule by component [amounts in million UA] 9 Table 4.6: Project cost by source and category of expenditure [amounts in million UA] 9 Table 5: Lessons learnt and their application in the new project design 11 Table 6: Procurement arrangements 16 Table 7: Risk and Mitigation Measures 19

3 Currency Equivalents As of November UA = ERN UA = USD USD = ERN Fiscal Year 1 st January 31 st December Weights and Measures 1 metric ton = 2204 pounds (lbs.) 1 kilogram (kg) = lbs. 1 meter (m) = 3.28 feet (ft.) 1 millimeter (mm) = inch ( ) 1 kilometer (km) = 0.62 mile 1 hectare (ha) = acres i

4 Acronyms and Abbreviations ADF = African Development Fund BPPR = Bi-annual Project Progress Report DPs = Development Partners DAE = Department of Adult Education DAF = Department of Administration and Finance EIT = Eritrea Institute of Technology ESDP = Education Sector Development Plan ESDP = Education Sector Development Program ESMP = Environmental and Social Management Plan EU = European Union FE = Foreign Exchange GEDCC = General Engineering Development and Consulting Company GoSE = Government of the State of Eritrea GDP = Gross Domestic Project HEIs = Higher Education Institutions HEST = Higher Education Science and Technology I-CSP = Interim Country Strategy Paper ICT = Information and Communication Technology IDA = International Development Association IPRSP = Interim Poverty Reduction Strategy Paper LC = Local Cost MDGs = Millennium Development Goals MoE = Ministry of Education MOU = Memorandum of Understanding MTS = Medium Term Strategy NDP = National Development Plan OAG = Office of the Auditor General PBA = Performance Based Allocation PTC = Project Technical Committee PMU = Project Management Unit PPP = Public-Private Partnership QFR = Quarterly Financial Report SHED = Support to Higher Education Development project SSDEE = Support to Skills Development for Employability and Entrepreneurship STVET = Support to Technical Vocational Education and Training TVET = Technical Vocational Education and Training UNIDO = United Nation Industrial Development Organization UNDP = United Nation Development Program VfM = Value for Money ii

5 Loan and Grant Information Client s information BORROWER/BENEFICIARY: EXECUTING AGENCY: State of Eritrea Ministry of Education Financing plan Source Amount (UA) Instrument ADF 7.58 Loan ADF 5.92 Grant Government 1.50 Counterpart funding TOTAL COST ADB s key financing information Loan & Grant currency UA Maturity 40 Years Grace period 10 Years Repayment 10 years at 2% per year followed by 20 years at 4% per year Service charge 0.75% Commitment fee 0.5% Interest rate 0.0 Timeframe - Main Milestones (expected) Identification Mission July, 2013 Government Request for Bank Support April, 2014 Preparation Mission June, 2014 Concept Note Approval September, 2014 Appraisal Mission October, 2014 Project approval February, 2015 Effectiveness March, 2015 Completion December 2019 Closing Date June, 2020 iii

6 Project Overview 1. The proposed Eritrea Support to Skills Development for Employability and Entrepreneurship (SSDEE) is designed to assist the Government of the State of Eritrea (GoSE) s commitment to improve equitable access, quality and relevance of Technical Vocational Education and Training (TVET) in the country. The outcome of the project is to increase the supply of qualified male and female technicians needed by the Eritrean economy. The key outputs of the project are to train 1,400 graduates in two new formal TVET schools established under the project, and 5,000 students in non-formal TVET program by Additionally, 180 teachers and 60 managers/staff will be trained on relevant areas. Mentoring and training on gender policy will be given to 200 women in science technology. A gender perspective in the search of parity will be applied in the design and implementation of all lines of work. The project will be implemented over a five year period and funded by an ADF loan of UA 7.58 and grant of UA 5.92 for a total of UA 13.5 million, with a Government contribution of UA 1.5 million. The project is making use of the small allocation rule allowing countries with an indicative 3-year PBA allocation, which is less than UA 20 million to access the entire allocation at any time during the cycle. Needs Assessment 2. The Government of the State of Eritrea (GoSE) identifies human capital development as one of the strategic priorities of the National Development Plan (NDP). The vision of GoSE is to create the conditions for the emergence of a modern, technologically advanced, and internationally competitive labor force necessary for the country s economy. However severe shortage of skilled labor is one of the major constraints for Eritrea to achieve its vision. The proposed project will assist in addressing this constraint and support the country to increase the quantity and improve the quality of its human capital critical for inclusive growth and poverty reduction. This would mean adding about 1,400 well skilled and 5,000 medium skilled workers by Bank s Added Value 3. The Bank has significant experience in implementing education projects in Eritrea. The Bank in the past has also supported other technical skills development related projects in the country. The value addition is embedded in the Bank s provision of the project resources to support the GoSE to address the severe shortage of appropriate skills through the development of formal and non-formal technical vocational education, entrepreneurship development, and capacity building with a gender perspective. It is evident that resource constraints have limited skills development and gender equality in Eritrea and are hindering the capacity of technical vocational education and training to respond to the needs of the economy. Moreover, most of the sectors representing about 80% of the manufacturing currently operate at 26% capacity. At the moment the Government spends only 8-10% 1 of its national budget in education, which is far below other African countries which spend 14-20% of the national budgets on education. Expenditure on TVET is less than 1% of the education budget and consequently about 58% of large manufacturing firms declared lack of skilled labor as the main constraint, according to a UNIDO/UNDP supported survey. Relevant gender gaps have been identified in access to decision making, waged employment and resources. The Bank will support the government s efforts to reduce these gender gaps. Knowledge Management 4. The project will contribute to improving the body of knowledge in the area of skills development with a gender perspective for the Government and the Bank. The aim of the project is to nurture the acquisition, development and application of high quality technical know-how of skilled workers in a manner that is consistent with established training goals and national priorities as a basis for economic growth and improved access to employment and wellbeing for Eritrean women and men. 1 Eritrea Education Sector Strategic Plan , page 4. iv

7 OUTPUTS OUTCOMES IMPACT Result-based Logical Framework Country and project name: Eritrea Support to Skills Development for Employability and Entrepreneurship. Purpose of the project: The purpose of the project is to assist in improving the employability of the labor force. The specific objective of the project is to contribute to increased access, improved quality and equity of technical vocational education and training. RESULTS CHAIN PERFORMANCE INDICATORS Indicator Baseline Target SOURCE RISKS/MITIGATION MEASURES Impact Increased availability of employable skilled workers in public and private sectors % of students completing secondary education in skills training 15-20% in % in 2020 National Statistics Risk: Uncertainty that skilled workers get jobs or be self-employed Mitigation: Eritrea is still a young country and needs skilled force for its economy Outcome 1 Improved access and quality to formal TVET Outcome 2 Improved equity and increased access of formal and non-formal TVET 1.1 Percentage increase in TVET enrolment 1.2 Percentage of students enrolled in formal TVET completing training 1.3 Percentage of female students with entrepreneurship skills 2.1 Percentage of students in formal TVET that are female 2.2 Number of literate out of school children receiving vocational education 2.3 Percentage of students enrolled in nonformal TVET completing training % in 2014 (i.e. 1,631 of 26,500 students) 1.2 None in None in % in in None in % in 2020 (i.e. 3,031 of 31,000 students) % (40% F) in % in % by ,000 by % (40% F) in 2020 TVET statistical data TVET statistical data DAE records Risk: Inadequate supply of staffing of the TVET schools established. Mitigation: GoSE committed to providing the required budget for staffing Risk: Lack of sufficient female students in TVET. Mitigation: Mentoring in TVET for girls. Component 1 Sub-component Increased TVET schools capacity Increased students population in the 2 new TVET schools Sub-component Students enrolled in the non-formal TVET programs Number of TVET schools established Number of students enrolled in None in Number of students enrolled None in by ,400 (50% Female) by ,000 (50% Female) by 2020 TVET data DAE Risk: Inadequate maintenance and effective use of equipment provided. Mitigation: Suppliers will be required to install equipment and train staff in the use of maintenance of equipment Risk: Delays in project start-up Mitigation: Complete designs of facilities, tender documents, and work v

8 ACTIVITIES BY COMPONENT Component Upgraded TVET teachers/staff/managers qualification 2.2 TVET curricula and occupational standards are pertinent 2.3 Enhanced gender mainstreaming No. of TVET teachers trained No. of TVET staff trained Curricula revised Number of trades Number of women mentored and trained in science and technology subjects Number of women trained on gender policy None in None in Old curricula in use in in None in None in (40%F) by (40%F) by Revised Curricula in use by trades in in 2015 DAE data plan to be ready by project effectiveness Risk: Sustainability and retention of the people who will be trained Mitigation: Eritrean youth in training institutions are systematically placed under national service. They have the opportunity of learning/practicing in institutions. Component Audit reports submitted 3.2 Quarterly progress reports submitted 3.3 Project Completion Report submitted 3.1 No. of audit report submitted 3.2 No. of progress reports submitted 3.3No. of PCR submitted 3.1 None in None in None in by by by 2020 DAF and ADB records Components Component 1. Increasing access and improving equity to TVET Sub-Component 1.1: Increasing access to formal TVET The sub-component will support the TVET sub-sector through the provision of infrastructure and equipment Sub-Component 1.2: Increasing access to non-formal TVET The sub-component will provide skills training for literate adults, school drop-outs, and out of school children Component 2.Capacity building, curriculum development, and quality assurance for TVET The component will assist in the upgrading the qualifications of under qualified TVET teachers, training of TVET staff and school managers, review of the competencybased curriculum, and the development of occupational standards for more trades. Component 3. Project Management The component will provide operating costs for administration, coordination, supervision of project activities, and audits. Resources by component (UA million) Total ADF Component 1 : Component 2 : Component 3 : Total Sources (UA million): ADF: 13.50; Government: 1.50 vi

9 Project Time Frame vii

10 RECOMMENDATION OF THE MANAGEMENT TO THE BOARD OF DIRECTORS ON A PROPOSES LOAN AND GRANT TO ERITREA FOR THE SUPPORT TO SKILLS DEVELOPMENT FOR EMPLOYABILITY AND ENTREPRENEURSHIP PROJECT Management submits the following Report and Recommendation on a proposed UA 13.5 million representing project loan of UA 7.58 and grant of UA 5.92 to finance the Support to Skills Development for Employability and Entrepreneurship project in Eritrea. I STRATEGIC THRUST & RATIONALE 1.1. Project linkages with country strategy and objectives The proposed Eritrea Support to Skills Development for Employability and Entrepreneurship Project is designed within the context of the national human resource development priorities to support the development of skills in the country. It will focus on the technical/vocational training, with the overall aim of contributing to efforts to build the country s required technical skills among the youth and adult for effective engagement in entrepreneurship and opportunities for employability in the private sector. The proposed project is aligned with the priorities of Eritrea s development agenda, which puts emphasis on the development of the country s human capital critical for inclusive growth and poverty reduction. Furthermore, the planned intervention is in line with the country s educational policy as articulated in Eritrea s 2009 Revised National Education Policy, which in addition to the development of basic education, puts emphasis on the expansion of tertiary education and preparation of skilled work force as a critical part of the country s human resources development strategy The five-year National Development Plan (NDP) under finalization and the Education Sector Development Plan (ESDP) identify shortage of skilled labor as one of the major constraints to Eritrea s economic growth and development. The NDP for articulated around three strategic priority areas: i) human capital development; (ii) food security; and (iii) infrastructure development; focuses on the vision to create the necessary conditions for the emergence of a modern, technologically advanced, and internationally competitive economy. To promote human capital development, the GoSE has also prepared the ESDP for The latter highlights the GoSE s commitment to the development of the sector and the critical role education and skills development are expected to play in promoting inclusive socioeconomic development in Eritrea. It aims to expand TVET promote education and skilled development for the labour market; and advance gender parity The NDP is focused on the vision of creating the conditions for emergence of a modern, technologically advanced, and internationally competitive economy. It maintains that investing in skills and human resources development is essential to improve the capacity to generate additional livelihood opportunities while addressing the youth unemployment challenge. Similarly, the Interim-Country Strategy Paper (I-CSP) for has a single pillar that focuses on the enhancement of skills development and technology, in support of inclusiveness and transition to green growth. In line with the focus of the NDP and that of the I- CSP, the project aims to address the insufficient human capital in public and private sectors, which is constraining the country s economic and social transformation. 1

11 1.1.4 The GoSE seeks to promote self-employment and reduce unemployment rates. In the past 20 years, of the 204,971 registered job seekers, 70% were young men and women. Over the same period, about 111,938 job vacancies were advertised, which met only 55% of demand from the registered job seekers. Since job seekers were not able to meet the competency requirements of the job vacancies, only 76% of the available job vacancies were filled, of which only 14% were filled with job seekers below 40 years of age The GoSE promotes gender equality. Gender gaps are present at all levels of education, from primary to tertiary level. As a consequence women are disadvantaged in the labor market, and have less opportunity to participate in decision making processes. According to the Eritrea Demographic and Health Survey (NSEO, 2002) 47% of the households in Eritrea are headed by women, both from a rights perspective and from a smart economics one, it is essential to advance women effective participation and gender equality addressing the specific barriers women are facing at present. (See existing data on gender in 3.2.3) The proposed project is in line with the Bank s assistance strategy for Eritrea. Consistent with the NDP which has human capital development as one of its three priorities, and the Education Sector Development Plan (ESDP) for articulated around the expansion of technical and vocational education and training; the promotion of education and skilled work force for the labour market, and the achievement of gender parity, the Bank Group s Interim Country Strategy Paper (I-CSP) for seeks to assist the country address human resource challenges through activities that will contribute to the country s efforts to build the optimal level of human capital stock required to achieve sustainable growth 3. The only pillar of the I-CSP focuses on the enhancement of skills development and technology in support of inclusiveness and transition to green growth. The planned intervention for the development of TVET is therefore in support of the priority of the I-CSP and is in line with Bank s own priorities as stated in its strategy, identifying technical vocational education for skills development and improvement of the quality of education as priority operational areas for Bank support. It will also present a continuation of the Bank s support in the education sector, thus aligning the project s aims with the objectives of the Bank s human capital strategy for Africa ( ). In addition, it will reinforce the achievements of the completed program and ongoing projects by assisting in the improvement of access and equity of TVET; and the building of capacity for teachers needed for the improvement of formal and non-formal TVET. Linked to the labor market, the project promotes Public-Private Partnership (PPP) through active collaboration with private enterprises including their participation in the training and apprenticeship of beneficiary students Rationale for Bank s involvement The Bank is a major development partner in the education sector in Eritrea. As a trusted partner, the Bank has assisted in the development of the sector through three investment programs and projects. The program is completed, and the ongoing SHEDP and STVET projects 2 Summary Strategic Development Plan, Ministry of Labor and Human Welfare, March The I-CSP states, Despite significant progress made, the still weak human capital development and its linkage to the needs of the labor market is a key impediment to employment creation and inclusiveness of growth and poverty reduction. Investing in skills development is an effective way to implement the Government s inclusive development policies as well as poverty reduction. 2

12 are being implemented with a combined overall rating of The GoSE is keen on continuing with its cooperation with the Bank to increase access, enhance quality of TVET sub-sector and promote human resource development. Despite these interventions the challenge in the sector remains sizeable. The planned intervention is a response to a specific request from the GoSE to the Bank (Annex V) for support to address the enhancement of formal TVET and to offer basic skills training programs to the youth and adults, with emphasis on gender which are also priority areas for the Bank Shortage of skills and high unemployment are among the main bottlenecks for inclusive growth in Eritrea. According to the MoE s Sub-Sector Review Report on Technical Vocational Education and Training, over 80% of Eritrean students do not acquire specific job related skills after high TVET ENROLLMENT 3000 school, thereby increasing youth unemployment. Lack of 2500 requisite skills is also a major disadvantage for the manufacturing firms and companies as the majority are operating at only 26% capacity. Additionally, access to TVET at the secondary level is very limited, exacerbating the shortage of middle level skills in the country. In 2014, only 2.1% of total secondary school enrolment was in TVET, with Fig. 1: TVET enrollment (source: Basic Education Statistics 2974 graduating of which only 25% were females. And as shown in Figure 1 provided by TVET Department, TVET secondary enrolments have not only been low but almost stagnant for the past five years. The intervention will therefore seek to assist in expanding access to formal TVET at the secondary level and develop skills closely linked to essential services so as to promote employability, entrepreneurship, and greater economic inclusion in both urban and rural communities The majority of over-age and out of school children in Eritrea also do not receive skills that can assist them with improving their livelihoods. According to DAE Department, about 163,000 children are considered over age and cannot enrol in the formal schools. Some of these children are given educational opportunity through a special program known as Complementary Elementary Education (CEE) which is a part of the adult education programs. Since 2007, the CEE has addressed the learning needs of 25,000 over-aged children, helping them become literate. However these children do not receive skills that will assist them increase their opportunities for employment or self- employment. The project will aim in assisting public and private efforts to address the lack of skills training of this category of children The project will address employability and entrepreneurship in several ways. It will provide: (i) basic professional life skills training programs in key economic growth sectors, (ii) on-the-job training for unskilled youth through apprenticeships with master craftsmen and microenterprises, (iii) entrepreneurship training and business development support through incubators during training Improved quality of learning outcomes in needed skills, resulting from the increased capacity of trainers, will mean better prepared students entering labor market. Better preparation in skills would enable the students to take better advantage of the education provided by the technical colleges and other tertiary institutions. This project also provides an opportunity for the Bank to continuously engage GoSE in improving the business environment to allow the skilled youth get absorbed into the current labor force market. The role of the private sector will 3

13 be crowded in to create space for the Government to concentrate on strengthening policy and regulatory framework for attaining a private sector driven economy backed by technology Addressing gender inequalities and youth unemployment will contribute to building resilience in the country. This project has been designed to assist the country achieve inclusive growth and building resilience and capacity to deal with fundamental challenges to development. Skills development in Eritrea is critical in improving the employability of the labour force, especially the youth and women. Investing in the requisite skills and technology will help building resilience as it will create more opportunities and enhance women and youth involvement in alternative income generating activities. This will benefit a large portion of the population, notably disadvantaged groups, such as adults, over-age and out of school children Donors coordination Besides the Bank, the UN agencies and EU are the main multilateral development partners (DPs) operating in Eritrea. The Government of Japan (JICA), China, European Union and FAO provide technical assistance. Resources have also been provided from the Global Partnership for Education (GPE). The Eritrean Development Partners Forum (EDPF), comprising of DPs with a presence in Asmara meets quarterly to share information on developmental issues. The forum is supported by technical working groups; but it is important to note that the coordination has been weak. However, with the on-going formalisation of the Education Sector Working Group (ESWG), the situation is improving and this provides an opportunity to strengthen the coordination and selectivity. A strategic partnership co-operation framework between the GoSE and the UN, covering was concluded in January In addition to food aid and emergency reconstruction, the UN system focuses its assistance on the social and agricultural sectors. However, it is critical to note that most of these interventions are not in the development of technical skills that are urgently required to support the country s development agenda. In order to ensure that there are no duplication of efforts and its own intervention compliments, the Bank consulted widely with the existing development partners. Eritrea is also a member of IGAD, a regional trade bloc in eastern Africa. Coordination will be reinforced under this project through semi-annual meetings to exchange on achievements, challenges and solutions used by other donors. At the moment, the Bank is currently considered by the GoSE and DPs as a broker, convenor and most trusted partner in Eritrea and this opportunity will be used to engage the Government to improve on the policy frameworks and engagement Direct Development Partners support for education is very limited. Support by DPs for the education sector is mainly provided through investment projects (Table 1). Funding is largely concentrated in primary and secondary education, and to some extent in higher education. The Bank s on-going portfolio comprises two projects (SHED 4 and STVET 5 ), both in the education sub-sector with a net cumulative commitment of UA million. The execution of both operations is satisfactory, with an implementation progress (IP) rating of 2.77 for SHEP and 3.00 for STVET. Globally, the portfolio performance is satisfactory with an overall rating of 2.75 for SHEP and 3.00 for STVET. The average disbursement rate stands at 73.6%. There is no project at risk and no ageing project and the average age of the portfolio is 3.1 years. In addition, 4 The SHED project covers eight higher education institutes (HEI), namely: Eritrea Institute of Technology; Hamelmalo Agricultural College; Asmara College of Health Sciences; Orotta School of Medicine and Dental Medicine; College of Marine Science & Technology; Halhale College of Business and Economics; College of Arts & Social Science. 5 The STVET project supports Sawa Center for Vocational Training, Asmara, Mai Habar, and Winna Technical Schools, and other technical schools that received equipment. 4

14 GPE is funding the Global Partnership for Education (GPE) program for USD million and UNICEF is acting as a coordinating and supervising entity. Details of DP area and level of support for the education sector are given in Technical Annex A2.13. Government Commitment to TVET is on the rise , , , , , , , , Table 1 : Contributions of DPs to Education Sector Agency Project Period Amount (million) ADF Support to Technical Vocational Education and Training UA: ADF Support to Higher Education Development UA: ADF Skills development for employability and entrepreneurship UA: 13.5 ADF Expansion of the colleges of Engineering and Agriculture and Technical UA: assistance UNICEF Basic education: access, quality and capacity building US$: 7.25 GPE GPE-Enhancing Equitable Access to Quality Basic Education for Social US$: 25.3 Justice Islamic Development Elementary education US$: 0.2 Bank China Expansion of College of Arts & Social Sciences US$: Development Partners assistance for Education lies among the strategies developed by the Government to finance TVET. The figures collected from the TVET Department indicate that over the past five years, the total Government expenditure for TVET cumulated to 128,819,634 Eritrean Nakfa (ERN), about 8.6 million dollars. The ERN 21,907,388 amount spent in 2010 soared to ERN 34,697,530 in As shown in Figure 2 across, the trend line indicates that there is commitment from the Government to continue to fund TVET schools. II PROJECT DESCRIPTION 2.1. Project components The development objective of the project is to enhance human resources development with a gender perspective through skilled labor force in order to support inclusive economic growth. The specific objective of the project is to contribute to increased access, improved quality and equity of technical vocational education and training. To achieve this objective, the project will have the following components: 5

15 Table 2: Project components Component 1 Increasing access and improving equity in enrolment in TVET (UA m) Component description Sub-component 1.1 Increasing access to formal TVET Will support the TVET subsector as detailed below: a) Constructing and equipping 1 technical school in Mendefera, constructing and equipping 1 agricultural technical school in Gash Barka, providing equipment for technical workshops, laboratories, farm demonstration units, ICT labs. b) Increase of enrolment to at least 1,400 students in the two new technical schools in five years, 50% being females. c) Provision of fire protection, adequate water and sanitation, waste handling d) Design and construction of the technical schools ensuring the adequate gender activities mainstreaming and consideration for Special Needs groups, to access technical and employability skills in the new technical schools. 2 Capacity building, curriculum development and quality assurance of TVET (UA 1.75 m) 3 Project Management (UA 0.72 m) Sub-component 1.2 Increasing access to non-formal TVET Will provide skills training for literate adults, school drop-outs, and out of school children through : a) Training 5,000 adults, of which 50% are females b) Equipping training centers to ensure high quality skills training c) Consultation workshops at Zoba level for awareness raising for adult learners. d) Training in six Zobas, e) Content and material development for the post adult education skills training. f) Monitoring, supervising and evaluation of training programme. Component will support the following activities: a) Upgrading qualification for 180 TVET teachers, of which at least 30% are females b) Training of 60 TVET staff and school managers, of which 30% being females c) Mentoring and training 125 women in science and technology d) Training 75 women on gender policy e) Developing competency-based curricula for 3or more trades f) Developing quality assurance manual for TVET training g) Assessment of internal efficiency of the TVET training schools Component will support the following activities: Providing resources for operating costs and procurement of goods and services needed for implementing the overall project, technical assistance for capacity building, financial management, training and use of ICT, audit as well as monitoring and evaluation; and provision of monitoring of project implementation in the field and at office level. Component 1: Improving access and increasing equity in enrolment in TVET This component has two sub-components. A summary description of the sub-components is as follow: Sub-component 1.1 Increasing access to formal TVET This sub-component will support the TVET sub-sector through the provision of infrastructure and equipment. It aims at reducing the large percentage of students completing secondary education who are unable to proceed to post-secondary education, and at the same time without employable skills. This will be achieved through the establishment of two new TVET schools (one for technical studies in Mendefera the country s most populated area but with no institution providing TVET - and the other for agricultural studies in Gash Barka the country s main bread providing region, but with no institution providing agriculture related TVET). During the project period, about 1,400 students will receive training in both schools. These will be national schools, and students from all regions of the country will benefit from the education provided. About 50% of the enrolment will be girls. 6

16 2.1.4 A wide range of skills training will be offered in the industrial and agricultural areas. Since independence in 1991, a total of boys (73.46%) and 4671 girls (26.54%) have graduated in technical fields (figure 3 across). The skills taught in the new Technical school funded by the project will include: (i) auto mechanics, (ii) building construction, (iii) machine shops, (iv) electronics, (v) electricity, and (vi) computer maintenance and networks. The skills offered in the new Agricultural school will be: (i) plant science, (ii) animal science, (iii) agro mechanics, and (iv) soil and water conservation. Sub-component 1.2 Increasing access to non-formal TVET This sub-component will provide skills training for literate adults and out of school children. It will assist the Government s efforts to provide skills training to adults who graduated from literacy programs and who lack vocational skills for self or wage employment, as well as youth who are formal school drop outs and who need vocational skills for employment; and over-age out of school children who completed complementary elementary education and could not continue their education and need skills for employment. The training will be provided at all six Zobas (administrative regions) of the country at both public and private institutions. It is expected that about 5,000 adults and youth (50% of female) will benefit from the skills training. Component 2: Capacity building, curriculum development, and quality assurance of TVET The component will assist in the upgrading the qualifications of under qualified TVET teachers, training of TVET staff and school managers, review of the competencybased curriculum, and the development of occupational standards for more trades. It will also support capacity building and curriculum development for TVET. To achieve this, the component will provide resources for upgrading the qualifications of under qualified TVET teachers; training of TVET staff and school managers; mentoring and training women on science, technology, and gender policy to enable them to reach management positions; review of the competency-based curriculum; and development of occupational standards for more trades. Component 3: Project Management This component will support the implementation of project activities. The component will provide resources for the cost of coordination and supervision of project activities. It will also augment, through the provision of technical 4000 assistance, the capacity of MoE to effectively procure goods and services, supervise construction works and implement activities. The operational costs in carrying out the administration, co-ordination and procurement activities necessary for the successful completion of the project will be met by the project for the five years of implementation Technical solution retained and other alternatives explored The technical solution retained for the design of this project addresses the challenges that are faced by the country in the development of skilled human capital. It was established that construction of new TVET institutions in areas and disciplines which are well targeted will lead to higher and better distribution of enrolment in TVET in the country. Table 2.1 below shows the other alternatives that were not accepted and the reasons for their rejection Total 7

17 2.3. Project type Table 3: Project alternatives considered and reasons for rejection Alternative Brief description Reason for rejection Balanced distribution of TVET schools Selective expansion of TVET The option involved establishing schools in less populated areas. The option involved a selective construction and equipping of only government owned technical institutions and ignores the private providers who produce 50% of TVET graduates in the country The project is an investment operation which will assist in the development of the country s skilled workforce needed for the Eritrean economy and improved wellbeing of their people. The Government policy allows for the provision of resources through investment projects Project cost and financing arrangements The total project cost is estimated at UA million. The cost estimates are based on November 2014 prices. All items have been priced in Eritrean Nakfa (ERN) and converted into UA at the exchange rate applicable for the month of November The ADF instruments are a grant and a loan. The alternative does not significantly increase enrolment in the TVET. Furthermore there is need for decentralization of the TVET facilities to areas with high population concentration and where agriculture is flourishing. The alternative did not embrace government s need to sustain the gains in TVET delivery since independence The project will be jointly financed by the ADF Grant at UA 5.92 million (39%), ADF Loan at UA 7.58 million (51%), and the Government at UA 1.5 million (10%) as shown in Table 4.2. The cost estimates include 5% for physical contingencies and 8% price escalation during the project implementation period. The ADF contribution will cover 100% of the foreign exchange costs. The Government will finance 100% of the local costs. The Fund will contribute to financing the cost of works, goods, services and training. Table 4.1: Project cost estimates by component [amounts in millions UA] COMPONENT UA Million F.E. L.C. Total Costs I. Increasing access and improving equity of TVET % 96% II. Capacity Building and Curriculum Development for TVET % 67% III. Project Management % 47% Total Base Cost % 90% Physical Contingency % 90% Sub-Total % 90% Price Contingency % 90% TOTAL COST % 90.0% Table 4.2: Sources of financing [amounts in million UA] SOURCE F.E. L.C. Total % Total ADF Grant % ADF Loan % Government of Eritrea (GoSE) % Total % 8

18 Table 4.3: ADB Grant and Loan disaggregated expenditure [amounts in millions UA Item Category ADF Grant (in Millions UA ADF Loan in Millions UA Total in Millions UA 1 Goods Works Services Operating Costs Total Costs Table 4.4: Project cost by category of expenditure [amounts in millions UA CATEGORY F.E. L.C. Total % Total % F.E. A. Goods % % B. Works % % C. Services % 68.63% D. Operating Costs % 34.96% Base Cost % 89.99% Physical Contingency % 89.99% Sub-Total % 89.99% Price Contingency % 89.99% TOTAL COSTS % 89.99% Table 4.5: Expenditure schedule by component [amounts in million UA] COMPONENT Year 1 Year 2 Year 3 Year 4 Year 5 TOTAL I. Increasing access and improving the equity of TVET II. Capacity Building and Curriculum Development for TVET III. Project Management TOTAL % 15.00% 30.00% 35.00% 10.00% % Table 4.6: Project cost by source and category of expenditure [amounts in million UA CATEGORY ADF LOAN AND GRANT GoSE ADF & GoSE F.E. L.C. Total % of LC % of Total % of Category % F.E. of Total Total cost Cost A. Goods % 20.34% % % B Works % 51.43% % % C. Services % % 24.81% 68.63% D. Operating Costs % % 3.42% 34.96% TOTAL % % 100.0% 90.0% 2.5. Project s target area and population The project will benefit various constituents in Eritrea. These include the students from rural and urban areas who will attend the two newly established TVET schools by the project at two rural regions: (i) a technical school in Mendefera the country s most populated area but with no institution providing TVET and an agricultural school in Gash Barka the country s main bread providing region, but with no institution providing agriculture related TVET. The training of staff from education institutions and MoE will upgrade their skills and enhance their understanding of gender equality. Institutions, such as schools, organizations, agencies such as government ministries, and enterprises, both public and private, at which the graduates will be serving, will also be major beneficiaries. 9

19 2.5.2 A total of 6,840 persons will benefit initially from the project directly. The primary beneficiaries of the project will be students enrolled in the institutions supported by the project. The beneficiaries of the two schools will be about 1,400 students (50% female). These will be national schools, and students from all regions of the country will benefit from the education provided. Additionally, 5000 students will enrol in non-formal TVET programs. Other beneficiaries of the project will include about 240 TVET teachers/staff, comprising 180 TVET teachers (40% female) and 60 TVET managers (40% female) who will receive training that will upgrade their qualifications and enhance their capacities to fulfil their duties more effectively. Monitoring and training will be offered to 200 women in science technology, and on gender policy Participatory process for project identification, design and implementation The project has been prepared through an extensive participation of key stakeholders whose involvement will continue during implementation. The project team consulted widely during the identification, preparation, and appraisal missions 6. Discussions with private sector companies and enterprises focused on involving them in the training of project beneficiaries and internship programs. Views of representatives of the Ministry of Finance; Ministry of Education, civil society and private sector organizations, and external financing agents were sought. There was a wide support for the project at all levels. Discussions were carried out with TVET management and their staff on the two schools that the project will support. The project team worked with the TVET Department representing the MoE and the DAF through the (PMU) to fully develop the project. This participatory approach will be maintained during project implementation. In order to ensure an appropriate gender mainstreaming, gender experts and focal points will participate in the Project Technical Committee (PTC), and women and men should be preferably part of the decision making processes, with no least of 30% of either sex. The MoE beneficiary department will be represented in the PTC. The project management team will also receive technical support from the beneficiary MoE departments in the preparation of work programs, selection of candidates for training and monitoring the implementation of construction activities. In addition, aspects of the project, such as training of TVET teachers, managers, and supply of equipment, which support skills development for the emerging mining sector, will be implemented in collaboration with international mining companies and NGOs involved in the training of TVET teachers for trades related to the mining sector Bank Group experience, lessons reflected in project design The Bank has assisted GoSE in funding the Education Sector Development Program (ESDP), the Support to Higher Education Development (SHED) and the Support to Technical Vocational Education and Training (STVET) projects. With a view of improving access to quality basic education, ESDP has supported various activities for elementary, middle and special needs education. It has also contributed to the strengthening of the teaching force in order to meet the demand for teachers engendered by rising enrolments. The ongoing SHED and STVET have overall ratings of 2.75 and 3.00 respectively. These projects aim to contribute to 6 The missions visited and discussed with five private sector companies in metal and wood works, textile, automobile, and computer systems. Those were: Sembel Metal & Wood Works Co., Dolce Vita Textile Factory, Amberbeb Toyota Company, Dynamic Computer Center, and Delta Information Systems. The missions also had discussions with the National Union of Eritrean Women (NUEW), and development partners, namely UNICEF and UN offices in Eritrea. 10

20 building capacity for teaching, research and service at the country s higher education institutions, expand equitable access to TVET, improving its relevance, quality, and management at the coordination and school levels and are successfully being implemented. Despite these interventions, the challenge in the sector remains sizeable. The planned intervention is a response to a specific request from the GoSE to the Bank (Appendix V) for support to address the enhancement of formal TVET and to offer basic skills training programs to the youth and adults, which are also priority areas for the Bank. Furthermore, the Bank is supporting the Eritrea Drought Resilience Sustainable Livelihoods program The project benefited from lessons learned from the implementation of the Bank s completed education program and ongoing projects which are being implemented satisfactorily, as well as the experiences gained from interventions funded by other development partners. These lessons include: (i) full involvement of executing agency in the design of the project and implementation of project activities is critical to ensuring realization of project results; (ii) existence of stable and effective project management team is crucial to successful project implementation; (iii) training of project management staff in Bank procurement and financial management and procedures is critical in speeding up project implementation; (iv) monitoring and evaluation are critical to managing risks and enhancing achievement of results; (v) extensive supervision of the project activities by the Bank is crucial to successful project implementation; (vi) challenges in developing correct specifications of all equipment to be procured under the project negates the effective utilization of equipment by the beneficiary institutions; (vii) early involvement of all key stakeholders in the design of buildings and the preparation of detailed accurate tender documents, informed by accurate cost estimates and geo-technical and topographical investigations, are essential for timely implementation of construction activities and completing them within budget These lessons have been taken into account in the development of the project. Table 5 below summarizes lessons learnt and their application in the new project design. 1 Table 5: Lessons learnt and their application in the new project design: Lesson Full involvement of executing agency in the design of the project and implementation of project activities is critical to ensuring realization of project results 2 Existence of stable and effective project management team is crucial to successful project implementation Training of project management staff in Bank procurement and 3 financial management and procedures is critical in speeding up project implementation. Monitoring and evaluation are critical to managing risks and 4 enhancing achievement of results Extensive supervision of the project activities by the Bank is crucial 5 to successful project implementation 6 Challenges in developing correct specifications of all equipment to be procured under the project negates the effective utilization of equipment by the beneficiary Early involvement of all key stakeholders in the design of buildings and the preparation of detailed accurate tender documents, informed by accurate cost estimates and geo-technical and topographical 7 investigations, are essential for timely implementation of construction activities and completing them within budget Application in Project Design Collaborating with a national project team from the MoE in developing the project. Integrating the implementation of project activities into the operations of the MoE and using the existing Project Management Unit of DAF for the implementation of project. Providing training in Bank procurement and financial management and procedures on regular basis throughout project implementation period Providing resources to strengthen the capacity of the MoE in monitoring and evaluation. Planning for supervision of the project and follow up training by the Bank twice a year to provide adequate implementation support to the project management Strengthening the procurement capacity of the executing agency through the provision of training Involving a qualified multi-disciplinary team of professionals in the design of buildings, preparation of tender documents and oversight of construction activities 11

21 2.8. Key performance indicators The key performance indicators for monitoring progress in achieving the project objectives are described in the project logical framework. These include output indicators such as the number of institutions established, number of students enrolled in the institutions established, number of new trades, number of students enrolled, number of staff and managers trained, and number of curricula revised; and outcome indicators such as the level of increase of the number of students attending TVET, proportion of females at the institutions supported, the percentage of graduates getting jobs within twelve months of completing their training. These will be integrated into the monitoring and evaluation framework of the MoE and also feed into the education sector review process. III PROJECT FEASIBILITY 3.1. Economic and financial performance Skills development particularly for employability and entrepreneurship has become an increasing focus of discussion in broad based growth debate and analysis in Eritrea. The reason for this lies predominantly in the view that over 54% of the men 7, particularly the youth, are either un-employed or under-employed in the seasonal agricultural work/casual labourers and that there is a need to equip them with skills for both the formal and non-formal sectors, including the entrepreneurship skills to enable them to be able to create small businesses. Thus, improvement in the capacity of technical and commercial schools is critical to developing skills that are linked to the demands of the current labour market and improved prospects for youth employment and particularly in various industrial sub-sectors like agriculture, textiles, footwear etc The increased importance of skills development is therefore exerting pressure on the Government to strengthen the elementary and middle training schools in order to produce the labour force that is ready to get into the current labour market. The National Policy on Education 2009 emphasises that skilled manpower requirements of the entrepreneurs will be met through the provision of integrated skills and strengthening of various technical and commercials schools. The project will therefore support the building of the capacity of the technical and agricultural training schools to produce the required skilled workforce. The recent tracer study on TVET indicates that a ready market for skilled trained people already exists in Eritrea industrial sub-sectors especially in food processing, textiles, leather and footwear, metalworking. Consequently, with this kind of support, key sectors which represent about 80% of the manufacturing and currently operating at 26% capacity 8 will be rejuvenated to contribute to inclusive growth and reduction of poverty. This kind of contribution to direct employment will also stimulate additional jobs (indirect employment) in firms supporting and supplying industry. This will also induce an employment and jobs which emanates from industry sector employees spending on goods and services in the economy Low educational and skill levels hinder the country s efforts to achieve inclusive economic growth. Employers repeatedly cite lack of skilled labour as a problem to private sector growth. Between 80-85% of Eritrean students leave high school without specific job related skills, thereby increasing the number of unemployable people annually. It is estimated 7 Eritrea Population and Health Survey Report, Eritrea Enterprise Survey Report,

22 that the project will reduce the number of Eritreans who fail to acquire specific skills by 14% and internal efficiency will improve through reduced resource wastage. Moreover, education is entirely financed by the Government and therefore this project will create fiscal space in the sector budget which accounts for only 3% of the country s GDP. Yet, the Bank is currently the only institution that is financing technical and vocational education and therefore the Government s effort will be devoted towards mobilising resources for the Basic education with a funding gap of US$25 million over the period With this project, the projected job growth over the implementation would be 27% for the manufacturing, 38.6% trade and 44% services.the Government already has established structures at zobas and sub-zobas as well as TVET trainers to take over once the financing ends in The project is also to be implemented as part of the education sector activities which will not attract any additional administrative costs. In this context, enhancing skills development is viewed by the GoSE as an overarching priority, particularly the technical vocational education and training (TVET) component Environmental and Social impacts Environment: The project is classified as category II according to the Bank s environmental guidelines and an Environmental and Social Management Plan (ESMP) has been prepared. The ESMP was approved by Safeguards on November 19, 2014 and published by CERD on the same day. The activities to be implemented under the project include new construction works (classrooms, workshops, libraries, dormitories, kitchens, administrative block and toilets) at two schools. The information provided in the ESMP includes mechanisms for identifying adverse environmental and social impacts associated with the implementation of activities supported by the project. It also contains measures that need to be taken into account to mitigate the adverse impacts and actions that can assist in improving the physical and social environment of the institutions. Technical Annex B8 gives a summary of the ESMP, outlining the project environmental issues and mitigation measures that will be put in place during project implementation Climate Change: Several measures are envisaged under the project to address the effects of climate change. The GoSE is aware of clean environment and the project will support the strengthening of environmental education at the two institutions supported by the project, and also at the forty centres supporting non formal skills development. Environmental education and alternative energy will be a major part of the curriculum of the TVET and Agriculture schools and students will receive instruction on the effects of climate change and their role in mitigating these effects. Training for the teaching staff supported by the project will also include environmental education. The agriculture curriculum will feature strongly on techniques for sustainable agriculture in harsh climatic conditions that prevail in the country Gender: In Eritrea, girls access to post primary education is considered as a very important challenge to gender equality in education. The ESDP considers gender and the promotion of women as a priority. This document advances that significant differences exist between boys and girls in school enrolment. The Gender Parity Index is 0.81, 0.80 and 0.74 at elementary, middle, and secondary levels respectively for the 2011/2012 school year. The gender gap widens with successive levels of the education system. Significant differences also exist in rates of youth literacy aged by gender. It has been estimated that 88.3% of Eritrean men are literate, compared with only 61.4% of the women (EPHS 2010). The participation of girls and women in technical-vocational education and training is also low. Only about 36.6% of the students enrolled in 13

23 intermediate technical and vocational schools in 2010/11 were female and 38.4% in the postsecondary level technical and vocational schools. These fields are perceived as male domains, yet they are areas where women could acquire important employable skills. This document of national policy recognized that there is considerable scope for on the job training, notably in agriculture and construction, but also in small scale enterprises engaged in such sectors as apparel, dressmaking and other sectors. In the design of the SSDEE project, emphasis is laid on ensuring that establishment of the two new schools target higher enrolment of girls, and the training centers for adults support higher enrolment of women. In construction of both new schools, the design will include separate dormitories and sanitation facilities to encourage girls participation in the program. The project will work against segregation of men and women in different trades, and promote a woman friendly environment with the increase of female teachers and women s participation in decision making of the project. The project will also promote women and gender expertise in the technical management and amongst the teaching teams. The project will genderize all its research and documents and provide disaggregated monitoring and evaluation data. (Technical Annex B8.14 describes the gender challenges and actions proposed) Social: The project will have a positive impact on the social development in Eritrea. Despite Eritrea s macroeconomic performance and sustained economic growth in recent years, there has been very little impact on the incomes and well-being of the poor and poverty rates remain high in most parts of the country. Unemployment is also a major concern with most of the unemployed being the youth and less skilled population. The government believes that these problems can be addressed in the context of a broad policy framework, which includes investments in human resources through education and skills training. By contributing to the government efforts to develop the country s human resource base, the project, through its support for increasing access and improving equity, building capacity, developing curriculum for TVET, will assist in the building of middle level skills in the country, which are needed for promoting sustained economic growth and social development. The project s other focus on skills for those who have undergone adult education will address a category of the population which is also in a critical poverty vulnerability position Involuntary resettlement: There will be no people who will be displaced by the project. The activities supported by the project will be taking place in lands already allocated by the GoSE for the purpose. IV IMPLEMENTATION 4.1. Implementation arrangements Institutional: The Ministry of Education (MoE) will be the Executing Agency (EA) of the project. The project will be coordinated by DAF through its PMU that will be the implementing agency. The PMU is fully integrated into the institutional structure of the MoE and functionally under the Department of Administration and Finance of the ministry. The unit has long experience in managing ADF education projects, has provided technical assistance to the NBHE through preparing bidding documents in the earlier stages of implementation of the ongoing Support to Higher Education Project (SHEP) and is currently managing the ongoing ADF Support to Technical and Vocational Education Training (STVET) project The Bank has assessed PMU s capacity and found it adequate for implementing the planned procurements for the new project. The PMU is currently staffed with a Project Manager, one Administrative Officer, an Internal Auditor, three Engineers, five Procurement 14

24 Officers, four Finance Officers and two M&E officers. The Bank has recently trained PMU staff members on procurement and financial management issues. This trend will continue to strengthened PMU s capacity to implement the new operation. Considering that the PMU will be implementing this new project (SSDEE) before the closing date for the ongoing TVET project, it will be necessary to provide dedicated teams for the two projects Procurement, Engineering, Accounting, Monitoring and Evaluation officers under the supervision of the unit heads. Considering that the main objective of the project is to offer skills development for employability and entrepreneurship, capacity building will be facilitated by the Human Resource Development unit of TVET. The M&E Officer should be given additional responsibility to highlight gender aspects in data collected, analysed, and reported. Policy and technical guidance in the areas of formal technical and vocational education and training will be provided by the Department of TVET and the beneficiary institutions whilst the Department of Adult Education will provide policy and technical guidance in the areas of non-formal technical and vocational education and training. A Project Technical Committee (PTC) will oversee the implementation of the project, providing strategic advice and direction. The PTC will be chaired by the Director General of TVET with members from the following stakeholders; Ministry of Finance; TVET; Adult Education; Administration and Finance of the MoE, and a representative of the National Union of Eritrean Women within the MoE. The PTC will endeavor to meet monthly so as to guide the project implementation effectively Special attention on the issues that affect project start-up and cause implementation delays have been addressed in the design and appraisal of this project. In particular, proposals have been made to ensure that the designs and tender documents are prepared early in the project by a consultant with compliment of professional team consisting of Architects, Structural Engineers, Electrical Engineers, Sanitary Engineers, and Mechanical Engineers. Considering that General Development, Engineering and Construction Company (GEDECC), the sole government consultant has experience in designing and supervising a Bank financed project, the DAF will sign an MOU with them under similar terms that they were engaged under SHEP. The Ministry of Public Works has a statutory function for approval of designs, certification of payments and quality assurance of works for all government projects including donor funded ones. The PMU will facilitate the timely delivery of the Ministry of Public Work s mandate under this project to assure minimum delay in project implementation and to provide additional oversight over the process Procurement: All procurement of goods, works and acquisition of consulting services financed by the Bank will be in accordance with the Bank s Rules and Procedures: Rules and Procedures for Procurement of Goods and Works, dated May 2008, revised July 2012; and Rules and Procedures for the Use of Consultants, dated May 2008, revised July 2012, using the relevant Bank Standard Bidding Documents, and the provisions stipulated in the Financing Agreement The procurement arrangements for the project are detailed in Technical Annex B5. There is no procurement law in the State of Eritrea. At the moment all government budgetary bodies do follow the rules and regulations of the MoF 1994 procurement document. The Ministry of Finance is in the process of reviewing the document which eventually to incorporate all types of procurement both domestic and external financed projects as well as government purchases. Also there has been no public procurement assessments conducted for the country by Development Partners such as the World Bank and AfDB. Therefore there is no Country Procurement Assessment Report (CPAR) or National Competitive Bidding (NCB) Assessment 15

25 Reports (NCB Report). Each contract to be financed by the loan/grant, the different procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior-review requirements, and time frame as agreed between the Borrower and the Bank will be provided in the Procurement Plan The procurement arrangements for the project are summarized in the following table: Table 6: Procurement arrangements 9 Item Project category UA 000,000 ICB NCB LCS OTHER NBF TOTAL 1.0 WORKS 1.1 Works for Mendefera Technical School Works for Gash Barka Agricultural School GOODS 2.1 Equipment Equipment for Mendefera Technical School Equipment for Gash Barka Agricultural School Equipment for Adult Education Department for Training and Monitoring Equipment for Adult Education various tools, equipment, different traditional materials for Training centers Equipment for PMU FURNITURE Furniture for Mendefera Technical School Furniture for Gash Barka Agricultural School Furniture for PMU SUPPLEMENTARY TRAINING MATERIAL Animals for Gash Barka Agricultural School Reference books for TVET Audiovisual training materials for TVET NON-CONSULTING SERVICES 3.1 Printing of developed for the 3 new vocational trades Printing of developed Teacher Guide SERVICES Services for TVET Design and supervision services - Mendefera Technical School Design and supervision services - Gash Barka Agricultural School Services for Adult Education Identification of Trainers and providing training to Trainers Content identification and familiarization to the content Conducting basic vocational skills training programs in all Zobas Program evaluation with other costs CAPACITY BUILDING TRAINING OF TVET STAFF Teachers in-service training Training of TVET Teachers in-country for diploma and degree courses Training of TVET Depart. Staff and School Managers in Service Training Training, Awareness on gender for Staff, students and adults Capacity building for TVET Staff in different areas CURRICULUM DEVELOPMENT FOR TVET Competency-based curriculum develop. for the 3 new vocational trades Training material development Textbook development for the 3 new vocational trades Teacher Guide development Consultant on use of ICT in teaching/learning in TVET Quality assurance of TVET Consultant/Develop Monitoring, Quality assurance & Assessment Manual Assess the internal efficiency of schools External Audit costs OPERATING COSTS For Adult Education 5.1 Consultation workshops for assessing/surveying status of the existing training institutions at National and Zoba levels 5.2 Awareness raising activities among learners and stakeholders Monitoring and supervising the program by MoE Hq and Zoba officers For TVET 5.4 Curriculum review workshop Textbook familiarization workshop Training Material Development Workshop Awareness Workshop TVET and the Environment Workshop to disseminate report on use of ICT in teaching/learning in TVET Salaries and other management costs by PMU Staff Consumables Communication Procurement Costs Foreign travel Monitoring and supervising Works and Progress by PMU TOTAL ICB : International Competitive Bidding ; NCB : National Competitive Bidding; LCS: Least Cost Selection; NBF: Non-Bank Funding 16

26 4.1.7 Disbursements: The Disbursement methods that can be used for the bank funded component of the program as described in the Disbursement Handbook are: (i) the Direct Payment (ii) Special Account and (iii) Reimbursement. Special accounts, one in US Dollar and one in local currency shall be opened by MoE at the Bank of Eritrea (BoE) before the first disbursement. Government counterpart contribution shall be paid based on a percentage on all works directly to consultants and The Bank s Disbursement Letter will be issued stipulating key disbursement procedures and practices Financial Reporting and Auditing: The annual project financial statements will be prepared in accordance with the IPSAS s cash basis annually by 30th June. As the Project is a nonrevenue earning, the annual financial statements should include: (i) Statement of Receipts showing separately Bank s funding, those of counter party and cash balances; (ii) Statement of Special Account; (iii) Statements of Expenditures (both for the current year and accumulated to-date); and (iv) Notes to the Financial Statements describing the applicable accounting principles in place and a detailed analysis of the main accounts. The PMU shall provide an update on financial performance of the project as part of the Quarterly Progress report (QPR) as required by the Bank not later than 45 days after the end of each Quarter. External Audit: This Project s audit will be conducted by the Office of the Auditor General, or his appointee in accordance with International Standards on Auditing using the Bank s terms of reference for external audit. The audit report, complete with a management letter and management responses, shall be submitted to the Bank by MoE no later than six months after the end of the fiscal year and no later than 30th June Financial Management System used by MoE The finance section of the PMU is made up of 4 staff who are qualified and experienced. They are supported by 6 finance officers based at the Zobas. The finance section at the PMU is headed by a Finance Manager who reports functionally to the General Manager of PMU.The Zoba finance officers report to the finance section of the PMU The PMU currently uses the ROSHI accounting system, to record its financial transactions. The system is able to capture expenditures and generate various reports required for financial management and has been considered adequate. The chart of accounts is flexible to create new projects accounts The PMU has an internal audit section comprising 1 Internal Audit Manager. The Internal Audit Manager reports functionally to the General Manager of PMU copied to the Director General of DAF. The SSDEE Project shall be included in the audit plan and audited once per year The project financial statements will be audited by the Office of the Auditor General (OAG) using the Bank s audit terms of reference. The audited project financial statements will be submitted to the Bank within six months after the close of the fiscal year. At the project midterm, a Value for Money (VfM) Audit will be carried out by the AG on terms of reference agreed with the Bank. Where the VfM is not undertaken by OAG, the OAG will appoint a suitable auditor acceptable to the Bank with the firm s audit fees being paid for from the project funds The FM assessment concluded that the overall residual risk is Moderate after taking into account mitigation measures. Based on the assessment and experience the risk level is such that the Project will be able to (1) use the funds for the intended purposes in an efficient and economical way, (2) ensure funds are properly managed and flow smoothly, adequately, regularly and predictably, (3) prepare accurate, reliable and timely periodic financial reports, (4) monitor the efficient implementation of the project and (5) safeguard the entities assets 17

27 4.2. Monitoring Monitoring and Evaluation (M&E) of project activities will be a responsibility of the implementing departments TVET, DAE, and DAF. The PMU s M&E section will coordinate all the M&E activities and progress reports will be submitted quarterly. To assess progress and provide implementation support; the Bank will conduct three supervision missions per year. A mid-term review will also be conducted after two years to evaluate progress. The Bank will be responsible for undertaking the review in collaboration with the PMU, DAF, TVET and DAE departments. A participatory approach will be encouraged in the review process. In the event of the need for modification of the project after the mid-term review, submissions will be made to ADF for consideration Governance Appropriate governance structures are in place for the execution of the project. The Bank s experience in implementing education projects in Eritrea has shown that the governance practices and control systems in place at the MoE are satisfactory. The MoE will be the executing agency (EA). The Department of Administration and Finance of the MoE, through its existing PMU will implement the project, with support from the beneficiary MoE departments. For efficiency and effectiveness, the PMU already in place, which has long experience in managing ADF education projects and is currently managing the ADF STVET project has the capacity to implement the project activities. A PTC will oversee the implementation of the project, providing strategic advice and direction. The operations of the project will be guided by all existing procedures manuals e.g. the finance and administration manual. The internal audit section shall assist in monitoring and evaluating the internal controls. External oversight shall be provided by the Office of the Auditor General. The Bank will provide some oversight, especially during supervision missions that shall take place three times a year. All the anticorruption measures that pertain to government will apply to this project The financial management system of the MoE is also adequate and capable of recording accurate and complete transactions and delivering financial reports. The MoE uses Eritrea s public financial management rules and procedures in its operations and also in the implementation of the existing projects. The project will be implemented under the same rules. The Internal Audit Section will assist in monitoring and evaluating the internal controls; external oversight will be provided by the Office of the Auditor General Sustainability The sustainability of project outcomes is primarily contingent on the level of ownership by the country. The proposed project was requested by the GoSE and will support a clearly identified national priority. The government of Eritrea considers education as being central to its economic development and therefore places the sector high in its development agenda. This strong commitment and sense of ownership on the part of the government, and the extensive participation of beneficiaries in the development of the project forms a strong foundation for the institutional sustainability of the project The implementation of the project activities will be integrated with the regular operations of the MoE and capacity for maintenance will be reinforced. The project will not be implemented by an independent project implementation unit, but implementation of project activities will be streamlined with the operations of the Ministry. This approach should improve the sustainability of the project outcomes as any capacity building resulting from the implementation of the project will stay with the Ministry. In addition, the project will provide resources for training in preventive maintenance and promotion of maintenance culture at education institutions as part of the ESMP. 18

28 4.4.3 Recurrent costs resulting from the project are manageable and do not constitute a major sustainability risk. Staffing of the two new schools to be established under the project, will largely be achieved through the efficient utilization of existing TVET teaching force. On the other hand, the project will provide resources for the training of the staff of these institutions, which will improve their capacity to deliver quality programs The involvement of the private sector in the development of TVET is critical to the sustainability of the project outcomes. Employers are included in the governing and policy making bodies of the TVET coordinating and regulating agencies. They will be involved in assessing training needs, determining training standards and related specifications leading to curriculum development; and validation of the assessment processes. Frequent policy dialogues will be held so as to sustain the Government s effort to promote entrepreneurship Risk management Three main risks were identified and appropriate mitigation measures proposed. Table 6 shows the main risks identified and the proposed mitigation measures Knowledge building Table 7: Risks and Mitigation Measures The project will contribute to improving the body of knowledge in the area of skills development for the GoSE and the Bank. The aim of the project is to nurture the acquisition, development and application of high quality technical know-how of TVET graduates in a manner that is consistent with established training goals and national values as a basis for economic growth. In this regard, skills in industrial related activities and agricultural will be developed. For empirical and evidence-based information on the same, analytical work will be undertaken as part of the project in the area of efficiency of TVET and labor market linkages so that most relevant skills are produced from the proposed institutions. Methods for advancing skills from one level to the other so that the country could have adequacy of these skills at all required levels will also be evolved. Furthermore the Technical and the Agricultural skills schools will be developed in areas where such facilities do not exist; hence the institutions will become centers for knowledge and skills development to the communities and nationally. V LEGAL INSTRUMENTS AND AUTHORITY 5.1. Legal instrument RISK RATING MITIGATION MEASURES Uncertainty that skilled workers get jobs or be Low Eritrea is still a young country and needs skilled force for its economy. self-employed Inadequate supply of staffing of the TVET Low GoSE is committed to providing the required budget for staffing schools established Lack of sufficient female students in TVET Moderate Mentoring in TVET for girls. Inadequate maintenance and effective use of equipment provided Low Suppliers will be required to install equipment and train relevant staff on use and maintenance of the equipment Delays in project start-up Moderate Complete design of facilities, tender documents, and work plan to be ready by project effectiveness Sustainability and retention of the people who will be trained Low Eritrean youth in training institutions are systematically placed under national service and have the opportunity of learning/practicing in institutions ADF Loan and an ADF Grant will be used to finance the project Conditions associated with Bank s intervention A. Conditions Precedent to Entry into Force of the Loan Agreement 19

29 5.2.1 The entry into force of the Loan shall be subject to the fulfillment by the Borrower of the provisions of Section of the General Conditions Applicable to Loan Agreements. B. Conditions Precedent to First Disbursement of the Loan Agreement The obligation of the Fund to make the first disbursement of the Loan to the Borrower shall be conditional upon the entry into force of the Loan Agreement and the fulfillment by the Borrower of the following conditions: i) The Borrower shall have provided evidence in form and substance satisfactory to the Fund of the opening of foreign and local currency special accounts (the Special Accounts ) for the deposit of proceeds of the loan, with the foreign currency or main special account opened at the Bank of Eritrea and the local currency or operating account held with a bank acceptable to the Fund. ii) The Borrower shall have provided evidence in form and substance of opening of a separate local currency account to receive the counterpart contribution to be provided by the Borrower. C. Entry into Force of the Grant Agreement The Protocol of Agreement shall enter into force on its signature. D. Conditions Precedent to First Disbursement of the Protocol of Agreement i) The Recipient shall have provided evidence in form and substance satisfactory to the Fund of the opening of foreign and local currency special accounts (the Special Accounts ) for the deposit of proceeds of the grant, with the foreign currency or main special account opened at the Bank of Eritrea and the local currency or operating account held with a bank acceptable to the Fund. ii) The Recipient shall have provided evidence of opening of a separate local currency account to receive the counterpart contribution to be provided by the Recipient. E. Other Conditions (i) Carry out an Environmental and Social Management Plan (ESMP) based on the categorization provided by its Regulatory Agency and put in place the appropriate mitigation measures and report on its implementation on a quarterly basis Compliance with Bank Policies This project complies with all applicable Bank policies. The proposed project is consistent with the Bank s strategy and its Human Capital Strategy. It is also in line with the Bank Group s Country Strategy Paper for Eritrea. VI RECOMMENDATION Management recommends that the Board of Directors approve the proposed ADF loan of UA 7.58 million and ADF grant of UA 5.92 million to the State of Eritrea for the purposes and subject to the conditions stipulated in this appraisal report. 20

30 Appendix I: Comparative Socio-Economic Indicators I

31 Project Name 1. Support to Higher Education ** Appendix II: Bank s On-going Operations and Performance Indicators. Window ADF Grant Approv. Date 28 April 2010 Project Data Performance Assessment Rating Risk Approved Disburs. Disburs Financial Fulfilment Procurement Activities Overall Age Amount Amount Rate performan IP DO conditions performance and works rating Years (UA m) (UA m) (%) ce Disburs. Deadline 31 Dec % PAR NON PP/ NON PPP Project Name 2. Vocational & Tech. Educ. Training*** Window ADF Grant Approv. Date 30 Nov 2011 Project Data Performance Assessment Rating Risk Approved Disburs. Disburs Complian Execution Outcomes System & Overall Age Amount Amount Rate ce with & IP DO & outputs procurement rating Years (UA m) (UA m) (%) Covenants financing Disburs. Deadline 31 Dec % NPPP PAR TOTAL % 3.1 Source: ADB Data Base ** Project rated in SAP: 0 = highly unsatisfactory 1 = Unsatisfactory 2= satisfactory 3 = highly satisfactory *** Project rated in IPR (Implementation Progress and Results Report): 1 = highly unsatisfactory 2 = Unsatisfactory 3= satisfactory 4 = highly satisfactory II

32 Appendix III Eritrea: Matrix of Development Partners Coordination Key Development Partners and Areas of Intervention Development Partner Operational Framework and Funding Areas of Focus African Development Bank Group US$19.7 million for the Interim Country Higher Education and TVET in the Education sector Strategy Paper Islamic Development Bank US$200,000 to cover the period Elementary education World Bank No WB Program in place since Not Applicable. EU Country Strategy Paper ( ). Euro 122 million for 6 years. Food security/rural development, livestock production, marketing and pricing, road infrastructure, regional connections and capacity building. IFAD Four Year Plan. Annual allocation estimated at Rural development, food security, crop and livestock production and irrigation. US$ million. UN System The Strategic Partnership Cooperation The strategic priority areas are: (1) Basic social sectors (education, health and social Framework (SPCF) About US$ 188 million is the indicative resource package. protection); (2) National capacity development; (3) Food security and sustainable livelihoods; (4) Environmental sustainability; (5) Gender equity and advancement of women. Norway Strategy Paper ( ). US$ 10.0 million Capacity building, health, and education and political dialogue annually IMF No Fund Program in place. Article IV Consultation Report. China, People s Republic Telecommunications Project US$ 20 million + Telecommunications, industry, education and agriculture for food security. Cement Factory US$ 40 million. GPE Enhancing Equitable Access to Quality Basic Education for Social Justice US$25.3 million Education sector Source: AfDB, UN and Government III

33 Appendix IV: Map of Eritrea This map is provided by the Government of State of Eritrea for economic purposes, 9 th April 2014 during the I-CSP preparation. IV

34 Appendix V: Formal letter of request for the Education project V

35 VI