AFRICAN DEVELOPMENT FUND

AFRICAN DEVELOPMENT FUND MULTINATIONAL PROJECT : PAN AFRICAN UNIVERSITY PROJECT PROJECT APPRAISAL REPORT Appraisal Team Sector Director: Mrs. A. SOUCAT, OSHD Regional Directors: MM. G. NEGATU (EARC), J. LITSE (ORWA), Mrs. M. KANGA (ORCE) Sector Manager: Team Leader: Mr. B. SAVADOGO, OSHD.2 Mr. C. M. GUEDEGBE, OSHD.2 OSHD DEPARTMENT July 2013

TABLE OF CONTENTS I STRATEGIC THRUST & RATIONALE... 1 1.1 PROJECT LINKAGES WITH RELEVANT STRATEGY AND OBJECTIVES... 1 1.2 RATIONALE FOR BANK S INVOLVEMENT... 2 1.3 DONOR COORDINATION... 4 II PROJECT DESCRIPTION... 4 2.1 PROJECT COMPONENTS... 4 2.2 TECHNICAL SOLUTION RETAINED AND OTHER ALTERNATIVES EXPLORED... 6 2.3 PROJECT TYPE... 7 2.4 PROJECT COST AND FINANCING ARRANGEMENTS... 7 2.5 PROJECT S TARGET AREA AND POPULATION... 9 2.6 PARTICIPATORY PROCESS FOR PROJECT IDENTIFICATION, DESIGN AND IMPLEMENTATION... 10 2.7 BANK GROUP EXPERIENCE, LESSONS REFLECTED IN PROJECT... 10 2.8 KEY PERFORMANCE INDICATORS... 11 III PROJECT FEASIBILITY... 11 3.1 ECONOMIC AND FINANCIAL PERFORMANCE... 11 3.2 ENVIRONMENTAL AND SOCIAL IMPACTS... 12 IV IMPLEMENTATION... 14 4.1 IMPLEMENTATION ARRANGEMENTS... 14 4.2 MONITORING... 16 4.3 GOVERNANCE... 17 4.4 SUSTAINABILITY... 17 4.5 RISK MANAGEMENT... 19 4.6 KNOWLEDGE BUILDING... 19 V FINANCING INSTRUMENTS AND CONDITIONS... 20 5.1 FINANCING INSTRUMENT AND CONDITIONS... 20 5.2 CONDITIONS ASSOCIATED WITH BANK S INTERVENTION... 20 5.3 COMPLIANCE WITH BANK POLICIES... 20 VI RECOMMENDATION... 20 APPENDICES APPENDIX I : DETAILED TEST FOR REGIONAL PUBLIC GOOD ELIGIBILITY APPENDIX II (A) : IMPLEMENTATION STRUCTURE FOR THE PROJECT APPENDIX II (B): EXPENDITURE CATEGORIES BY BENEFICIARY INSTITUTION APPENDIX III: COMPARATIVE SOCIO-ECONOMIC INDICATORS OF HOST COUNTRIES APPENDIX IV: MAP OF THE REGION INDICATING PROJECT SITES APPENDIX V : PROCUREMENT ARRANGEMENTS

TABLES Page 1.1 Contribution of development partners to initial phase 4 2.1 List of programs by PAU thematic institute 5 2.2 Project components 5 2.3 Alternatives considered and reasons for rejection 7 2.4.1 (a) to 2.4.5: Project costs 8-9 4.1 Financial management risk assessment 16 4.2 Procurement risk assessment 16 4.3 Monitoring schedule 17 4.4 Risks and mitigation 19 FIGURES 1. Percentage of students enrolled in S&T fields (2010) 2 2. Employment of active population 25-34 with higher education level 2 3. Relation between GER and Gender Parity in Tertiary Education 12 4. Projected evolution of recurrent costs and revenue 18 Currency Equivalents As of April 2013 1 Unit of Account (UA) = 1.5 US$ 1 UA = 235.1 NGN 1 UA = 130.6 KES 1 UA = 767.3 XAF Fiscal Year [Fiscal year 1 July 30 June] Weights and Measures 1 metric ton = 2204 pounds (lbs.) 1 kilogram (kg) = 2.200 lbs. 1 meter (m) = 3.28 feet (ft) 1 millimeter (mm) = 0.03937 inch ( ) 1 kilometer (km) = 0.62 mile 1 hectare (ha) = 2.471 acres i

Acronyms and Abbreviations AAU AERC AU AUC AUST AVU COMEDAF CSP ECOWAS EU GER HEST ICT JICA KES LTP MIS MTS NEPAD NGN OECD PAU PAUGHSS PAULESI PAUSTI PBA PIDA REC RISP RPG SIDA SSA STEM STI UNECA WAEMU WDR XAF Association of African Universities African Economic Research Council African Union African Union Commission African University of Science and Technology African Virtual University Conference of Ministers of Education of the AU Country Strategy Paper Economic Community of West African States European Union Gross Enrolment Rate Higher Education, Science and Technology Information and Communication Technologies Japan International Development Agency Kenyan Shilling Lead Thematic Partner Management Information System Medium Term Strategy New Partnership for Africa s Development Nigerian Naira Organization of Economic Cooperation and Development Pan African University PAU Institute of Governance, Humanities and Social Sciences PAU Institute of Life & Earth Sciences PAU Institute of Science, Technology and Innovation Performance-Based Allocation Programme for Infrastructure Development in Africa Regional Economic Community Regional Integration Strategy Paper Regional Public Good Swedish International Development Agency Sub Saharan Africa Science, Technology, Engineering and Mathematics Science, Technology and Innovation United Nations Economic Commission for Africa West African Economic and Monetary Union World Development Report (World Bank) CFA franc (Central Africa) ii

Client Information Grant Information GRANTEE: EXECUTING AGENCY: African Union Commission (AUC) Directorate of Human Resources, Sciences and Technology (HRST), African Union Commission (AUC); PAU Institute of Basic Sciences, Technology and Innovation (PAUSTI) at Jomo Kenyatta University of Agriculture and Technology (JKUAT); PAU Institute of Life and Earth Sciences (PAULESI) at the University of Ibadan (UI); PAU Institute of Governance, Humanities and Social Sciences (PAUGHSS) at The University of Yaoundé II (UYII) Financing Plan (2013-2018) Source Amount (UA million) Instrument ADF 30.00 Grant Governments 17.93 AUC 44.26 Other partners (LTPs) 10.64 Total cost 102.83 ADB s key financing information Grant currency FIRR, NPV (base case) EIRR (base case) Unit of Account NA NA Timeframe - Main Milestones (expected) Concept Note approval March 2012 Project Reappraisal March 2013 Project approval July 2013 Effectiveness December 2013 Completion December 31, 2018 Last Disbursement June 30, 2019 iii

Project Summary 1. Project overview. By supporting the Pan African University (PAU), the project will advance Africa s goal of enhancing its competitiveness and growth through the creation of high quality higher education and research capabilities. The PAU is a regional university offering only postgraduate (Master and doctoral) programmes. It aims at establishing an academic network of already existing post-graduate and research institutions. It will serve the entire continent in five development areas 1 identified by the Heads of States and the Conference of African Ministers of Education (COMEDAF). The total cost of the 5- year PAU support project is estimated at UA 102.83 million of which the ADF will contribute UA 30.00 million as a grant. The balance of UA 72.83 million will be mobilized by the African Union Commission (AUC), the countries hosting the PAU institutes and the Lead Thematic Partners (LTPs). 2. The implementation structure of the PAU is based on the selection of existing universities, on a competitive basis, to host the regional PAU Institutes and Centers. The first three PAU lead thematic institutes (out of five) are established and are hosted by Jomo Kenyatta University of Agriculture and Technology (JKUAT) in Kenya (for Sciences, Engineering, and Technology), the University of Yaoundé II in Cameroon (for Governance, Humanities and Social Sciences), and the University of Ibadan in Nigeria (for Life and Earth Sciences). They will serve all African countries. Algeria has been recently chosen for North Africa while selection for the host country for Southern Africa is in progress. Details of the structure of the PAU are provided in the approved Statute (Technical Annex C.5). 3. Needs Assessment. The project will help provide Africa with the skills needed to add value to its natural resources and enhance its competitiveness and sustainable growth. Through the post graduate programs in Science, Technology, Engineering and Mathematics (STEM), and governance offered in its thematic networks of institutions, the PAU will help constitute critical masses of talents in priority areas for Africa, while enhancing regional cooperation and integration in training and research in higher education as well as ensuring gender diversity for social inclusion. 4. Bank s Added Value. The Bank is playing a major role in the establishment of the PAU. First, it has provided technical assistance and advice to the AUC and the host universities for the PAU overall needs assessment concerning all components and activities. Second, through the project it is providing financial resources for key cost areas, thus playing a catalytic role in inducing the other partners to commit themselves to the total budget. 5. Knowledge Management.This project also offers a model for establishing a university system at the continental level and the Bank will learn from this experience. It is in line with the Regional Integration and Skills and Technology core operational priorities of the Bank s 2013-2022 Strategy and the Human Capital Strategy under preparation. The design of this university system (involving universities outside the continent, African countries, the private sector, the AU and bilateral and multilateral donors) is unique. The knowledge gained in implementing the PAU will be used to design the Bank s support to other centers of excellence, future scientific networks or future universities. This knowledge will be available through documents and web sites as well as exchange of experience between the project staff and experts in the AU countries. 1 The thematic areas constituting the PAU Programs and the geographical distribution are the following: (i) Basic sciences, Technology and Innovation, in East Africa, (ii) Earth and Life Sciences (including health and agriculture), in West Africa, (iii) Governance, Humanities and Social Sciences, in Central Africa, (iv) Water and Energy Sciences (including climate change), in North Africa and (v) Space Sciences in Southern Africa. iv

OUTPUTS OUTCOMES IMPACT Multinational: Support to Pan African University Project (Result-based Logical Framework) Project goal: Establish a world class regional university system to serve the entire continent in key development areas RESULTS CHAIN Africa s competitiveness and growth are improved through high quality higher education and research capabilities Result 1: Efficient regional higher education governance system (PAU) Result 2: Improved quality of Higher Education at regional level creating increased links with the labor market Result 3: Improved equitable access to quality higher education in S&T fields Result 4: PAU institutions have diversified sources of revenues Result 5: PAU Institutions achieve world class status (teaching & research) PERFORMANCE INDICATORS Indicators Baseline Target 1) African Universities International Ranking and Research Productivity 2) Unemployment rate of PAU students 6 months after graduation 3) Number of patents by PAU Institutes 1.1 Proportion of regional thematic hubs and centers fully integrated in the PAU governance structure 1.2. A single accreditation system in place for PAU programs 2.1. PAU Programs and curricula certified by a quality assurance systems 3.1 Evolution of student enrollment 3.2 Regional distribution of PAU students (gender disaggregated) 3.3. % of female students in PAU institutes 4.1. Number of PhD financed by private sector 4.2. Number of consultancies for private sector 5.1. Average scientific productivity of PAU Teachers and students 5.2. International Ranking of PAU Institutes and satellite centers (Number in top 1000) 1) Three African universities are in Top 500 (Shanghai 2010 rating) 2) 25% in SSA for higher education graduates in 2011 3) None in 2011 0% in 2011 Non existent in 2011 Nonexistent in 2011 None in 2011 NA in 2011 None in 2011 0 in 2011 0 in 2011 0.47 paper per researcher per year None in 2011 1) 2 PAU institutes in the top 500 in 2020 2) Less than 5% in 2018 3) At least one by year from 2016 100% by 2016 1 by 2016 Quality assurance system functioning in PAU by 2014 1064 students enrolled in MSc programs & 486 in PhD programs by 2018 A minimum of 80% of enrolled in a regional PAU institute students come from countries other than hosts in 2016 40% by 2087 50 by 2018 4 per thematic area by year in 2018 1.5 paper/researcher/year (STI) At least 10 PAU institutes and satellite centers by 2018 Means of verification - Baseline report; -AUC; RECs - UNESCO, AAU, AUC, RECs, WB,, Labor Market Surveys -AUC reports -PAU Rectorate reports -Reports from PAU institutes -Project progress report AUC reports Reports from PAU institutes Project Progress report RISKS, ASSUMPTIONS AND MITIGATING MEASURES Risk: (Low). Lack of support from the higher education community, including resistance to change by academics. Mitigation: Further stakeholder consultations, transparency in selection of institutions participating in thematic networks; strategy to inform on PAU goals and the aims. Risk: (Medium). Lead donors fail to honor the expected technical and financial support. Mitigation: Lead Thematic Partners are committed and have signed MOUs with the AUC. They have beene involved in all stages of the PAU design process.. Risk (Low). Host countries & universities fail to meet expected financial commitment. Mitigation. Financial responsibility is understood by host countries who are making adequate budget allocations Output 1.1: Thematic hubs operational Output 2.1: staff and student exchange operational Output 2.2: diverse high level skills available Output 2.3: Curricula developed for each of the 3 thematic areas Output 2.4: Qualified staff available Output 3.1: Increased enrolment to postgraduate S&T programs Output 3.2. Increased participation of female students in PAU S&T fields Output 3.3: Student financial support scheme established 1. Number of Lead thematic hubs operational as executing organs 2. Number of centers by thematic networks Proportion of PAU institutions with operational exchange programmes 1. Number of students graduating annually by fields 2. Proportion of women among graduates 1. Number of curricula developed and implemented 2. % of curricula developed with private businesses Proportion of required staff in place for each area Evolution of student enrolment in PAUSTI, & PAULESI 1. % of female students in PAU S&T institutes 2. % of ADF financed scholarships allocated to PAU female students 3. Study on the gender situation in higher education in Africa completed Proportion of new students by gender awarded a scholarship each year None in 2011 3 in 2013 None in 2011 At least 5 by network in 2018 0 in 2011 100% in 2018 0 in 2011-11 in 2012 0% in 2012-794 Masters degrees and 231 PhD degrees awarded by 2018 - At least 40% by 2018 17 by 2015 10% in 2018 0 in 2011 100% by 2014 0 in 2011 (2012 figures pending) None in 2011 None in 2011 None in 2011 None in 2011 100 annually by each PAU institute from 2014 Minimum 40% in 2018 Minimum 50% from 2014 Report completed with recommendations in 2014 100% by 2013 (male and female) during first five years AUC reports PAU Rectorate and institutes reports Project progress reports Risk. (Low). The students are overwhelmingly males and it proves very difficult to recruit females. Mitigation: Information campaigns to attract female candidates; specific scholarship quotas allocated to female candidates Risk: (Low). Difficulties in attracting high profile teachers for the PAU programs Mitigation: Recruitment process based on best practices with attractive salary and incentive package. Risk (Low). Brain Drain (PAU students join European or American universities after Master) for further studies and research. Mitigation. Students commit to work for a number of years or reimburse scholarships and other expenses. Establish conditions to help PAU graduates initiate start-ups. Strategic links with industry and other employers, e.g. through open days and career days v

ACTIVITIES BY COMPONENTS Output 4.1: Enhanced private sector involvement Output 5.1: Research and innovation enhanced 1. Proportion of PAU institutes with Incubators operational and functioning with private support 2. Number of training sessions organized under contract 3. Number of projects/activities sponsored by the industry 1. Number of Patents for each Thematic Hub 2.Number of referee journal by thematic hub 2. Number of articles in refereed journals None in 2011 None in 2011 None in 2011 None in 2011 None in 2011 None in 2011 3 by 2018 5 per year per thematic institute from 2016 2 per year from 2015 At least 10 per hub from 2016 At least one in 2018 At least 2 per researcher from 2016 Components Component 1. Support to Science and technology programs (PAUSTI & PAULESI) The East and West African Hubs, in Nairobi and Ibadan, will be supported through strategic and business plans; Curriculum development; Additional infrastructures (equipment); Students and Teachers exchange programs; Student scholarship program ; Partnerships with research institutions and industry; IT networking. Component 2. Support to Governance and regional integration program (PAUGHSS) The Central African hub, in Yaoundé, will be supported through Teacher and researchers exchange program; Student exchange program; Distance learning; IT networking as well as Strategic and business plans; Curriculum development. Component 3. Support to PAU Administration and Project Management Finalization of PAU Administrative structure; Sensitization on governance structure ; Staff recruitment and training ; IT based administrative and financial procedures, including MIS; Equipment ; Technical assistance ; Operating costs ; PAU IT Network; Impact evaluation; baseline and thematic studies; innovative financing of higher education and research including academic chairs Resources by component (UA million) Total ADF Component 1 : 78.65 19.23 Component 2 : 14.67 4.00 Component 3 : 9.51 6.77 Total 102.83 30.00 Sources (UA million): ADF: 30.00; AUC: 44.26; Governments: 17.93; Other partners: 10.64 vi

PROJECT TIME FRAME The project will start in the beginning of 2014 and is expected to be completed at the end of 2018. The summary project time frame is provided in the figure below. vii

REPORT AND RECOMMENDATION OF MANAGEMENT TO THE BOARD OF DIRECTORS ON A PROPOSED GRANT TO SUPPORT THE PAN AFRICAN UNIVERSITY PROJECT Management submits the following Report and Recommendation on a proposed grant for UA 30.00 million on Multinational Regional Public Good (RPG) to finance the Support to the Pan African University (PAU) Project, in accordance to the Strategic and Operational Framework for Regional Operations, March 2008 and Regional Integration Strategy 2009-2012. I STRATEGIC THRUST & RATIONALE 1.1 Project linkages with relevant strategy and objectives 1.1.1 The project falls within the overall vision of the African Union and has been endorsed by African governments at the highest level. The PAU has strong political endorsement from Heads of States, the Conference of the Education Ministers of the AU (COMEDAF) and the Governments of Kenya, Cameroon and Nigeria. It is in line with the AU s Plan of Action for the Second Decade of Education (2006-2015), its 2009-2012 Strategic Plan, its the draft 2014-2017 Strategic Plan as well as the Consolidated AU s and New Partnership for African Development (NEPAD) s Action Plan for Science and Technology. Furthermore, the Nairobi Declaration (April 2012) at the First African Science, Technology and Innovation (STI) Forum endorsed the PAU and called on African countries, the donor community and specifically the Bank, to support this initiative. Box 1 below briefly presents the AU s regional priorities in higher education. Box 1: AU s Higher Education priorities Higher Education falls under Pillar 2 Development, Integration & Cooperation of the AU s Strategic Plan 2009-2012 and is in line with the draft Strategic Plan 2014-2017 This pillar aims to enhance Research & Development institutions, and coordinate technological development and dissemination. The Education plan of action for the Decade (2006-2015) recognizes the role of knowledge and innovation in the world economy, and the role of higher education as a core resource base for the attainment of the Millennium Development Goals and highlights the need to fully exploit the potential of higher education to provide African-led solutions to African problems in the spirit of Africa s collective vision. Within this context the priorities defined for Higher Education for the Second Decade of Education in Africa are the following: (i) Promotion of research and original knowledge production in Higher Education; (ii) Promotion, development and assurance of quality in African Higher Education in all its dimensions, including the development and ratification of Regional and Continental Qualification Frameworks (such as the Arusha Convention) to facilitate mobility of students and staff; (iii). Increased involvement of universities in the continent s development efforts, including the development of the lower levels of education; and (iv). Ensuring appropriate levels of funding for Higher Education. Source: AU: Strategic Plan 2008-2012; Education plan of action for the decade (2006-2015) 1.1.2 The project is also in line with the Bank s priorities. Skills and Technology and Regional Integration are 2 or the -5 core operational priorities of the Bank s 2013-2022 Strategy focusing on Africa s economic transformation. Furthermore, Higher Education Science and Technology Strategy (2008) and the the Human Capital Strategy under preparation highlight the need to strengthen higher education, technology and vocational training to assist the countries develop adequate skills to enhance competitiveness and youth employment. The PAU has the potential to contribute to addressing these priorities. 1.1.3 The project responds to the orientations of the forthcoming Human Capital Strategy. The three building blocks of the HCD strategy are: i) improving competitiveness and employment opportunities, ii) value for money and accountability in service delivery and risk protection, and iii) inclusion and social cohesion. The PAU aims at upgrading selected existing higher education institutions in Africa, creating a network of researchers among universities towards a highly skilled workforce and increased access to higher education for the poorest students. Within this context, new approaches will guide the Bank s investments 1

in higher education focusing on (i) skills development to support job creation and private and public sector investments in infrastructure and other economic sectors; (ii) better matching the supply and demand for skilled workers to address youth unemployment in Africa; (iii) strengthening of Science and Technology including scientific research and innovation work being carried out by regional African Networks of Excellence; and (iv) promoting cooperation and regional integration through regional centers of excellence and regional networks of knowledge. 1.1.4 The training and research areas selected for the PAU are Basic Sciences, Engineering, Earth and Life Sciences, Environment, Energy, and Governance, which are priority areas for individual countries and the regions. The CSPs for the 3 host countries (Cameroon 2010-2014; Kenya 2008-2012 extended to 2013; Nigeria 2013-2017) cover areas such as Infrastructure, Agriculture and rural development, Human Development, Governance and Private sector development, which are all relevant to the thematic priorities of the PAU. Furthermore, the Regional Integration Strategy Papers (RISPs) for Central Africa, West Africa and East Africa stress the need for capacity building to support the implementation of the regional integration agenda focusing on development of infrastructure and trade facilitation. 1.2 Rationale for Bank s involvement 1.2.1 African countries have the lowest ratio of scientists and engineers in R&D and the PAU holds the promise to create a cadre of scientists and engineers and build knowledge societies in Africa. While Africa accounts for 13.4% of world population, its production of knowledge is only 1.1% of world scientific knowledge 2. Out of 4 million scientific papers, the share of African scientists is only 1.8%. Only three African universities have ranked among the Top 500 universities in the world. On average, countries in Africa have 35 scientists and engineers per million inhabitants compared to 168 for Brazil, 2457 for Europe and 4103 for the United States. Tertiary students from Sub-Saharan Africa are still among the world s most mobile. In 2010, they were 260 000 studying abroad, representing 4.9% of all students in Africa 3. This situation is mainly due to the lack of high profile institutions in the fields of science, technology, engineering and mathematics (STEM) and to the low proportion of students in scientific fields as compared to other parts of the world (Figure 1). By offering training at post-graduate level (Masters and PhD), the PAU aims to create centers of excellence in STEM and boost the innovative capacity of Africans to adapt to the changing needs of the global economy. Furthermore, supporting and facilitating intra-african mobility of highly skilled persons through the PAU will be a key element in strengthening regional integration and addressing the brain drain challenge. 2 NEPAD (2010), African Innovation Outlook 3 UNESCO-UIS, (2012), Opportunities Lost: Impact of grade repetition and early school leaving; UNESCO- BREDA, (2009), Access to Higher Education in Africa 2

1.2.2 Although African countries invest an increasing proportion of GDP per capita in higher education, unemployment of graduates indicate inefficiencies. It is estimated that the unit cost of public higher education in Africa (in GDP per capita unit) is 2.06 as compared to 0.67 for OECD countries 4. For individual countries, this unit cost varies from 0.18 (Mauritius) to 6.43 (Ethiopia). Furthermore as indicated in Figure 2, a large proportion of the active population aged 25-34 with higher education level of training are unemployed (25%) or employed in the informal sector (20%). Investing in skills development in science and technology fields will address these inefficiencies by improving the relevance of the training and the job market needs. 1.2.3 The PAU is a Regional Public Good (RPG) and is in line with the Bank s regional integration strategy (2009-2012). This strategy recommended the mainstreaming of regional public goods in Bank s operations. The project also conforms to the Regional Integration Strategy Papers (RISPs) for Central, East and West Africa for 2011-2015 which all highlight the need for human capacity building as a major pillar. More specifically, the PAU will accelerate the regional approach through the promotion of regional integration and cooperation in Africa and the increasing mobility of skilled labor. The PAU will service all African countries through a network of thematic centers of excellence with the extensive use of open and distance training using broadband connectivity. The PAU statute provides that the working languages of the PAU are French, English and Arabic (Article 21). In this regard no qualified student will be excluded either on the basis of language or country of origin. The PAU Institutes are required to provide language training (French or English) to students from other linguistic areas to assist them to fully participate and resources are allocated in the scholarship package to cover these expenses. The scholarship scheme will offer the same opportunities to all qualified candidates. In addition, the proposed project satisfies the conditions defined in the Bank s Strategic and Operational Framework for regional operations (2008) as well as all seven criteria for a Regional Public Good (RPG). The detailed test for RPG eligibility is attached (Appendix 1). In line with its RPG approach, the Bank s intervention will play a key catalytic role for the PAU. 1.2.4 There is complementarity between the Bank s support to the PAU and other similar programs financed by the Bank. Such projects have supported regional higher education programs including the WAEMU countries (Project in support of Higher Education and Research); ECOWAS (through Support to AUST Abuja and the Water & Environment institute (2Ie) in Ouagadougou); the African Virtual University (AVU) (Phases 1 and 2), and the African Economic Research Consortium (AERC) etc. Some of the institutions supported through regional operations as well as those supported through national operations (the Kigali Institute of Science and Technology and Carnegie Mellon University in Rwanda), could later qualify as affiliate PAU thematic centers for excellence. Most other Bank financed projects or programs support undergraduate and graduate levels which prepare students to qualify for admission into post graduate training in the specific fields of the PAU. There is a similarity between the objectives pursued by the PAU and those of the AERC s Collaborative Masters and PhD programs in Economics, i.e. (a) individual capacity building; (b) institutional capacity building; (c) enhancement of the relevance of curricula, theory, teaching and research on "African problems in search of African solutions ; and (d) efficient management of the programme. However, the delivery context of the PAU is a formal university organized around 5 specific programme 4 Source : Education Sector Analysis Unit (UNESCO-BREDA) and calculations based on data from OECD and WDI 2011 3

areas, with its own network of lead thematic Institutes and thematic centers of excellence. 1.2.5 The Project will complement and support the African Union s Programme for Infrastructure Development in Africa, 2012-2040 (PIDA). The PIDA which was developed with the Bank s assistance focuses on Energy, Transport, Water, and Information and Communication Technologies (ICT) which are all PAU programme areas. The production of high level skills and knowledge by the PAU will contribute to the implementation and sustainability of the PIDA. 1.3 Donor coordination 1.3.1 The PAU concept is built on partnerships involving the AUC, Regional Economic Communities (RECs), development partners, host countries and universities. Several donors are involved as Lead Thematic Partners (LTP) of the PAU s thematic institutes. Each LTP is expected to support coordination of PAU partners by providing substantial technical assistance as well as mobilize resources for the particular thematic network it is involved in. In this context SIDA (Sweden) is already working with the AUC as the LTP for the PAU thematic Institute for Governance, Humanities and Social Sciences at the University of Yaounde II. As LTP, JICA (Japan) is already supportingthe PAU Institute for Science for Sciences, Technology, and Innovation at the Jomo Kenyatta University of Agriculture and Technology in Nairobi (JKUAT). India has agreed to be the LTP for the West African thematic Institute on Earth and Life Sciences at the University of Ibadan (Nigeria). SIDA and GIZ (Germany) have established units for coordinating support for the PAU in their countries. 1.3.2 The AUC has already received financial assistance from several development partners to support the operationalization of the PAU. This support aims to prepare the way for their more substantial support. In this regard, SIDA is envisaging providing USD 5.00 million a year to the PAUGHSS for five years. During the project design process, the Bank has coordinated closely with prospective LTPs, namely SIDA and JICA and has had joint missions with these institutions during this process. Table 1.1 below presents support provided by some development partners in the preparation phase. GIZ (Germany) is designing its specific support to the PAU Institute in Algeria. Table 1.1: Contribution of development partners to initial phase Partners Amount (in UA equivalent) Period EU 887,000 2010-2012 GIZ 2,459,000 2011-2014 SIDA 452,000 2011-2012 II PROJECT DESCRIPTION 2.1 Project components 2.1.1 Project design (components). The project will support the establishment of the PAU management structure as well as the three PAU regional institutes established in Cameroon, Kenya and Nigeria. The three thematic programme areas covered by the institutes are as follows: 4

PAUSTI (Nairobi) Basic Sciences, Technology and Innovation 1. Mathematics, with 3 options: Applied, Computing, Financial Table 2.1: List of programs by PAU thematic institute PAUGHSS (Yaoundé) Governance, Humanities and Social Sciences PAULESI (Ibadan) Life and Earth Sciences 1. Governance & regional 1. Geosciences with Mineral petroleum integration (integrated Geology and Mineral exploration program) Geology options 2. Molecular Biology and Biotechnology 2. Interpretation & Translation 2. Environmental Management 3. Electrical and Electronics Engineering 3. Plant Breeding 4. Civil Engineering and Construction 4. Health Sciences with Reproductive Health Sciences and Reproductive Biology options 2.1.2 Table 2.2 below presents a brief description of the project components. Component No. and name 1. Support to Science and Technology programs. 2. Support to Governance and Regional Integration Programs 3. Support to PAU Management and Project Implementation Cost in million UA, (ADF in brackets) Table 2.2: Project components Component description 78.65 (19.23) This component will support two thematic areas (subcomponents) of the PAU. These include: (i) Basic sciences, Technology and Innovation, the East African Hub (PAU-STI) hosted by the Jomo Kenyatta University in Nairobi; and Earth and Life Sciences including health and agriculture, the West African Hub (PAULESI) hosted by the University of Ibadan in Nigeria. Activities will include: preparation of the strategic and business plan; curriculum development; provision of additional equipment and books; students and teachers exchange program; student scholarships; building partnerships with research institutions and industry; IT networking; building capacity in procurement and management of programs; promoting e-health and m-health; supporting linkages with private sector; e-learning content development 14.67 (4.00) This component will support the Central African thematic hub (PAUGHSS) hosted by the University of Yaoundé II, in Cameroon. Activities will include: preparation of the strategic and business plan; curriculum development; provision of additional equipment and books; students and teachers exchange program; student scholarships; building partnerships with research institutions and industry; IT networking; building capacity in procurement and management of programs; supporting linkages with private sector; e-learning content development 9.50 (6.77) Activities will include: Operationalization of PAU Administrative structure; sensitization on the structure; staff recruitment and training ; IT based administrative and financial procedures, including MIS; technical assistance ; establishment of the PAU IT platform; impact evaluation; baseline and thematic studies; linkage with private sector. 2.1.3 Component 1. As indicated in table 2.1 above, this component supports the PAU institutes established in West and East Africa. Activities will include: curriculum and course development, lab and workshop equipment, broadband ICT platform (networking equipment; connectivity; training technical staff for maintenance), library equipment and material, teacher and researcher exchange programs, linkages with the industry including the creation of conditions for incubation and emergence of start-ups leading to more small and medium enterprises (SMEs) and new jobs. The private sector and the industry will be involved in design and delivery of programs and curricula including providing of instructors and receiving student interns, which will enhance relevance of the skills produced by the PAU. Networking of the PAU institutions as well as distance learning will be enhanced through the establishment of the PAU IT platform. Under this component the project will support, initial networking activities as well as content development for the e-learning within the context of the PAU IT Platform. 5

2.1.4 Component 2. This component will support the Central African thematic hub (PAUGHSS) hosted by the University of Yaoundé II, in Cameroon. Activities include: the preparation of the strategic and business plan; curriculum development; provision of additional equipment and books; students and teachers exchange program; student scholarships; building partnerships with research institutions and industry; IT networking; building capacity in procurement and management of programs; supporting linkages with private sector; e-learning content development. 2.1.5 Component 3: PAU Management and Project Implementation. This component will support the implementation of the overall PAU management structure and the execution of the specific ADF-financed project. The PAU was established by Decision AU Dec.290 (XV) of the Ordinary Assembly of the AU in July 2010. The Statute establishing the PAU, was officially adopted by the AU General Assembly on 28 th January 2013 in Addis Ababa [Decision ASS/AU/Dec.451 (XX)] and is effective. The PAU management structure consists of a University Council, a Rectorate coordinating the thematic hubs and a Senate (as described in the PAU Statutes (Technical Annex C.5). The University was officially launched by the AU in December 2011. The Thematic Institutes in each host university are under the administrative and academic responsibility of the PAU and its organs. The Acting Rector and the Directors of 3 thematic institutes have been appointed. 2.1.6 The implementation of the ADF-funded project will be the responsibility of the AU s Department of Human Resources, Sciences and Technology in coordination with thematic institutes and their host universities. The PAU is an AU s entity under the overall administrative oversight of the Department of Human Resources, Science and Technology (HRST) headed by the Commissioner for HRST. The HRST Department has technical and professional staff including a Director, and 3 division chiefs and their staff and is currently coordinating the operationalization of the PAU. The MOU signed between the AUC and each host university specifies the services to be provided by host universities within the context of the PAU thematic institutes, in coordination witth the PAU Rectorate. The project will, through technical assistance, support the HRST Department and the thematic institutes and their host universities in the implementation of project activities. The implementation structure for the project is presented in appendix II (A). 2.1.7 The project will strengthen the PAU management structure through several activities. These activities include: the sensitization of the partner institutions, staff training; establishing IT based administrative and financial procedures, including Management Information System (MIS) and studies to define several reform strategies including those related to qualification framework, innovative financing, the application of IT for content and service delivery. Furthermore, business plans will be prepared/updated and impact evaluation activities will be conducted. Under this component the PAU IT Platform as well as networking activities will be designed. 2.2 Technical solution retained and other alternatives explored 2.2.1 The technical solution retained consists of implementing the PAU as a network of existing higher education institutions which are excellent in teaching and research in the target thematic areas. The solution aims at building a new model of higher education in Africa with an expected substantial impact on the host universities. This technical solution seems one of the most appropriate considering the constraints and challenges faced by higher education systems in Africa. 6

2.2.2 The alternatives considered in designing the project and reasons for rejection are provided in table 2.3. Alternative name Establishment of a Pan African University as a new institution Establishment of foreign Universities in Africa in the chosen thematic areas Table 2.3: Project alternatives considered and reasons for rejection Brief description Reasons for rejection This alternative consists in building a new university in each of the regional hubs with its own infrastructure, staff and facilities. Such universities will be free to set their own programs and curricula. The alternative solution is to have foreign universities establish and operate a branch campus in an African country. Costs for the establishment of the universities will be high for the host countries. The PAU will become operational after several years with its own infrastructure, staff and facilities. The regional cooperation and integration objective will be missed. This solution does not contribute to improvement of quality, relevance, competitiveness of African universities and their progress towards world class institutions. Neither does it promote regional mobility of students, teachers and researchers. This option also excludes regionally sponsored scholarships which constitute a major opportunity for qualified students from disadvantaged groups. 2.3 Project type 2.3.1 The project is a standalone regional investment operation presented as a Regional Public Good. The programs to be delivered by the PAU will be available for all African countries that will benefit from post graduate training and research in key areas. As such it is a public good for the region, satisfying the conditions defined in the Bank s Strategic and Operational Framework for regional operations. 2.3.2 The detailed test for Regional Public Good eligibility (Appendix I) indicates that the proposed operation satisfies all seven criteria: (i) it has non rival character; (ii) it does not exclude any AU member country and provides a unique opportunity for high level training and research for all qualified persons; in this regard, a scholarship scheme will be established so that no qualified candidate be excluded for lack of financial resources; (iii) it has public interest and is owned by the AU to serve the entire continent; (iv) it has regional dimension; (v) it is strategically aligned to the Bank s strategic focus; (v) the Bank is playing a key catalytic and upstream role by contributing this initial investment; and (vii) the project has incremental benefit since it aims to establish an advanced training, education, research and innovation capacity in Africa to promote effective governance and stimulate economic growth. Furthermore, language training (French or English) will be offered to students from a different linguistic background than the institution where they are admitted, to provide them with the language proficiency level required for training and research 2.4 Project cost and financing arrangements 2.4.1 The total cost of operating the PAU five years (2014-2018) is estimated at USD 154.24 million (UA 102.83 million). Of this amount consisting of 63% foreign exchange, USD 45.00 million (UA 30.00 million) is the proposed ADF grant to the AUC, USD 109.24 million (UA 72.83 million) will be contributed by the AUC, host countries and LTPs. The ADF grant will support all components exclusive of construction works which is the responsibility of host countries. 2.4.2 Details of cost are presented in the tables below. Tables 2.4.1, 2.4.2 and 2.4.3 present estimated project costs by components, financing sources and categories of expenditure. Table 2.4.4 shows the expenditure schedule by component and table 2.4.5 the 7

expenditure categories by financing sources. Costs have been estimated on the basis of data obtained from the needs assessment and estimates by the host universities. Incorporated in the cost estimates are 12% of physical and price contingencies on local and foreign currency. Based on current estimates, contributions from other sources represent 44.26% by the AUC, 17.43% by host countries and 10.30% by other partners. Scholarships (which include tuition) represent 50% of total cost and the AUC has confirmed by writing to the Bank its commitment to mobilize necessary resources to finance 85% of scholarships needed for all students admitted to the PAU during the first five years. It is estimated that at the end of this investment and initial operation period, the PAU will become sustainable on tuition paid by students, subsidies and services provided. The sustainability is further examined in section 4.4 below and in technical annex B.8. Table 2.4.1 (a): Project cost estimates by component (in UA million) (USD Million) (UA Million) % Foreign Components Local Foreign Total Local Foreign Total Exchange 1. Science & Technology programs (PAUSTI ET PAULESI) 34,54 69,48 104,02 23,03 46,32 69,34 67 2. Governance and regional integration programs (PAUHGSS) 7,49 12,07 19,56 5,00 8,04 13,04 62 3. PAU Management and project implementation 8,20 5,08 13,27 5,47 3,38 8,85 38 Base cost 50,23 86,62 136,85 33,49 57,74 91,23 63 Physical Contingencies 3,41 6,62 10,03 2,28 4,41 6,69 66 Price Contingencies 2,75 4,61 7,36 1,83 3,07 4,91 63 Total Cost 56,40 97,84 154,24 37,60 65,23 102,83 63 Table 2.4.1 (b): Project cost estimates by component (in UA million) - ADF financing Components Total costs % of component 1. Science & Technology Programs (PAUSTI & PAULESI) 19,23 24,4 2. Governance & Regional Integration programs (PAUGHSS) 4,00 27,3 3. PAU Management and Project Implementation 6,77 71,2 Total cost 30,00 29,2 Table 2.4.2: Sources of financing (in UA million) ADF AUC Governments Other donors Total Amount % Amount % Amount % Amount % Amount % Foreign 18,24 28,1 28,30 43,6 11,38 17,52 7,01 10,8 64,93 63,1 Local 11,77 31,0 15,96 42,1 6,55 17,28 3,63 9,6 37,90 36,9 Total 30,00 29,2 44,26 43,0 17,93 17,43 10,64 10,3 102,83 100,0 Table 2.4.3 (a): Project cost by category of expenditure (in million) Category of expenditures USD UA % For Exch Foreign Local Foreign Exch Total Local Exch Total A. Works 1,88 3,48 5,36 1,25 2,32 3,57 65 B. Goods 5,04 20,16 25,20 3,36 13,44 16,80 80 C. Services 6,75 15,75 22,49 4,50 10,50 15,00 70 D. Operating 12,87 3,22 16,09 8,58 2,15 10,73 20 E. Miscellaneous Scholarships, Research grants) 23,70 44,01 67,70 15,80 29,34 45,13 65 Base cost 50,23 86,62 136,85 33,49 57,74 91,23 63 Physical Contingencies 3,41 6,62 10,03 2,28 4,41 6,69 66 Price Contingencies 2,75 4,61 7,36 1,83 3,07 4,91 63 Total cost 56,40 97,84 154,24 37,60 65,23 102,83 63 8

Table 2.4.3(b): Project cost by category of expenditure (in UA million) - ADF financing Categories of expenditures Total costs % of category Foreign Exch Local Currency Works - - Goods 6,44 34,1 5,15 1,29 Services 9,72 61,4 6,81 2,92 Operating 5,36 46,1 1,07 4,29 Miscellaneous (Scholarships, Research grants) 8,48 16,2 5,51 2,97 Total cost 30,00 29,2 18,54 11,46 2.4.4 Table 2.7 shows the expenditure schedule by component and Table 2.8 the components by financing sources. Table 2.4.4: Expenditure schedule by component (in UA million) Components 2014 2015 2016 2017 2018 Total 1. Science &Technology Programs (PAUSTI & PAULESI) 10,58 16,64 18,18 16,65 16,60 78,64 2. Governance & Regional Integration programs (PAUGHSS) 2,13 3,01 2,91 3,27 3,35 14,67 3. PAU Management and Project Implementation 2,37 2,15 1,49 1,72 1,78 9,51 Total project cost 15,09 21,80 22,58 21,63 21,73 102,83 Table 2.4.5: Categories of expenditures by financing sources (in UA million) Expenditure ADF AUC GOC GOK GON Other partners (LTP) TOTAL Category Amt % Amt % Amt % Amt % Amt % Amt % Amt % A. Works - - - - 0,32 8,0 0,67 16,6 3,05 75,5 - - 4,04 3,9 B. Goods 6,44 34,1 0,09 0,5 0,68 3,6 3,85 20,4 2,51 13,3 5,29 28,1 18,87 18,3 C. Services 9,72 61,4 - - 0,67 4,2 1,31 8,3 1,51 9,6 2,63 16,6 15,84 15,4 D. Operating 5,36 46,1 1,07 9,2 1,00 8,6 1,25 10,8 1,10 9,4 1,84 15,8 11,62 11,3 Miscellaneous Scholarships, Research grants) 8,48 16,2 43,10 82,2 - - - - - - 0,87 1,7 52,45 51,0 TOTAL 30,00 29,2 44,26 43,0 2,67 2,6 7,08 6,9 8,17 7,9 10,64 10,3 102,83 100,0 GOC: Government of Cameroon; GOK: Government of Kenya; GON: Government of Nigeria 2.5 Project s target area and population The PAU is intended to serve all African countries, a population of 1.1 billion. All African graduate students may benefit from PAU. This project aims at fostering the mobility of African researchers. All higher education teachers and researchers may also benefit from PAU through the exchange programmes, interactions with academic and scientists from institutions in Africa and abroad. A scholarship program will be established to provide financial support to all students admitted to the PAU during the first five years. Through sensitization and communication on the PAU, the AUC and the Rectorate will endeavor to attract female student candidates, the objective being to reach at least 40% participation after 5 years of operation. The research grants provided through the projects will offer African researchers resources to improve their research productivity and publications. Projections of enrollment and graduation indicate that during the first five years, the PAU will admit in the 3 institutes 1064 students in Masters programmes and 486 in PhD programmes and award, considering a wastage of 10%, 794 Master degrees, (with one cohort in second year Master programmes) and 231 PhD degrees (with two cohorts in second and third years of doctoral programmes), including 40% females. Details of the projections are provided in Technical annex B3. All national communities will benefit from the PAU through the highly specialized graduates who will contribute to addressing development issues. 9

2.6 Participatory process for project identification, design and implementation 2.6.1 The project was designed through a participatory process involving major stakeholders. Consultative meetings were held with the AUC, development partners, RECs, host countries authorities. Meetings were organized with academic and administrative authorities of host universities and their entities involved in programs to be delivered by PAU Institutes. The ADB team met with all the above mentioned stakeholders during the preparation in October 2011, and the appraisal and reappraisal respectively in March 2012 and March 2013. The following development partners were met in Addis Ababa: Germany, Italy, Luxembourg, Turkey, India, European Union, JICA and SIDA. 2.6.2 The ADB Team worked closely with the development partners identified as Lead Thematic Partners (LTP). The PAU project document provides that each thematic network of PAU Institutes and Centers shall have a team of dedicated partners to be coordinated by a Lead Thematic Partner (LTP), committed to nurturing and providing substantiated technical support and mobilizing resources for the particular thematic network. In this regard, the AUC approached several potential donors. Japan, Sweden and India have agreed to be the LTP, respectively for the PAUSTI network (Nairobi), the PAUGHSS (Yaoundé) and the PAULESI (Ibadan). JICA joined the ADB team in Nairobi for the preparation and appraisal missions in Kenya and SIDA for the preparation mission in Cameroon. The PAU was presented by the AUC at the STI Forum in Nairobi in April 2012 and was endorsed by international institutions, the Ministers of Education and Finance and private sector (Nairobi Declaration). 2.7 Bank Group experience, lessons reflected in project 2.7.1 The Bank has several regional experiences in higher education from which lessons have been drawn for this Pan African University (PAU) support project. Previous operations include (i) the completed African Virtual University Project which has supported countries in West, Central, Eastern and Southern Africa and the recently approved Phase 2 support; (ii) the Higher Education Support Project in the West African Economic and Monetary Union (WAEMU) covering eight countries in West Africa; and (iii) the Support to a Network of Institutions of Higher Education Project covering Economic Community of West African States (ECOWAS) countries. The AVU Phase 1 has established the largest network of Open Distance and e-learning institutions in over 30 Sub Saharan African countries. The project completion report indicated a successful project which has even won the 2011 Education-Portal.com s prize. Phase 2, approved in 2011, is in progress. The ECOWAS and WAEMU projects are ongoing. They have experienced implementation delays mainly due to delayed start up in general, and also to initial weakness of the central coordination unit in the case of the WAEMU Project. Other relevant African regional institutions are Institut Africain d Informatique (IAI) in Libreville, Ecole Inter-Etat de Sciences et Medecine Veterinaire (EISMV) in Dakar, established as joint ventures by several African countries, which suffered serious difficulties due to lack of continuous support from these countries. 2.7.2 There is potential for synergy and complementarity between this project and the regional projects previously financed by the Bank. The Bank has supported the African Economic Research Consortium (AERC) which delivers postgraduate training through the Collaborative Masters and PhD programs in Economics. Meetings with the AERC and AVU Management involved discussions on their experience in working with networks of universities for postgraduate programs and managing scholarships. There is similarity in recognizing the need to build on networks and existing institutions. In April 2012 the AUC 10

signed an MOU with the AVU, paving the way for cooperation in the area of elearning. Furthermore, graduates from WAEMU universities and the ECOWAS institutions supported through the projects mentioned above are potential candidates for relevant PAU post graduate programs. 2.7.3 Lessons learnt from these experiences have been considered in designing this project. Lessons have highlighted the need to directly involve the institutions as main executing organs in order to increase ownership, to avoid delays and minimize transaction cost of central management by the regional economic communities (RECs) and to enhance sustainability. All these lessons are considered in the design of the project through a multipartner arrangement for financing the project; a harmonized regional curriculum development approach; a clear identification of project risks; and the development/update of business plans for all the PAU institutes at the start of the project, in order to ensure sustainability and effectiveness as well as sector policy harmonization at a regional level. 2.8 Key performance indicators Several indicators are proposed to monitor overall performance and are indicated in the log frame. These include impact, outcome and output level indicators. Impact indicators: (i) International Ranking of African Universities; (ii) Number of patents by PAU institutes by year; (iii) Employment of Graduate Students. Outcome indicators: (i) Student enrolment; (ii) Regional distribution of Students (iii) Proportion of female students; (iv) Accreditation system in place for the PAU programs: (v) Average Scientific Productivity of PAU Teachers etc.; Output indicators: (i) Number of Centers by thematic networks; (ii) percentage of curricula developed with private sector; (iii) number of patents for each thematic hub: and (iv) number of training sessions for private sector organized under contract. III PROJECT FEASIBILITY 3.1 Economic and financial performance 3.1.1 The Project has substantial development impact since it will contribute to building high level human capital essential for Africa s competitiveness and transformation. Hence, for the case of this project, development perspective analysis has been applied instead of the traditional quantitative methods (Net Present Value, Economic Internal Rate of Return). This is due to the difficulty to estimate the benefits since all students trained (graduates) will have homogenous training unit costs for each training institution, but will eventually join different labor markets. The social and economic benefits are presented in paragraphs 3.2.5 to 3.27. The assessment of rates of return to Education in the international context and in Africa indicates higher returns for higher education. A study in Cameroon 5 showed that an extra year of schooling (mainly at university level) increased earnings by 0.5 overall (0.53 for males and 0.56 for females) 3.1.2 Private Sector involvement. The private sector is considered as a key partner for the sustainability of the PAU. It has been involved in the development of the University, through the project. The private sector was a critical stakeholder for the PAU during the elaboration of PAU during the programmes in order to ensure the employability of the future graduates. 5 Aloysius. A. Amin & Wilfried J. Awung, Economic analysis of private returns to investment in Education in Cameroon (2005) 11

3.1.3 The private sector will continue to have an essential role to play in the successful running of the PAU. In fact, some of the teaching courses and lectures will be given by private sector specialists. Furthermore, the private sector will have representatives in the Project Steering Committee and the monitoring and evaluation of the project. The private sector is also fully involved in the design and implementation of the internship program and is expected to offer job offers for future graduates. In addition, in order to further strengthen and to build a capacity for the involvement of the private sector, coordinators from the private sector will be recruited at each PAU Institute and at the Rectorate level. The three host Universities have been traditionally engaged with the private sector and the PAU offers them an opportunity for strengthening existing partnerships. The project will also support the university update business plans and programs for collaborating with the private sector. The PAU project includes an indicator on the involvement of the private sector and how PAU is responding to its demand. The PAU will provide professional services for the Private Sector, such has: training, resolving practical problems (PhD thesis subjects), innovation workshops and seminar consultations. 3.2 Environmental and Social Impacts 3.2.1 Environment.The project, classified as category III, will adhere to the respective countries environmental and waste management guidelines and procedures. Activities under the project will include equipping existing laboratories and workshops with state of the art equipment. The host universities have been established for years and have been training at the level of Masters and PhD in science and technology areas in their labs and workshops, with waste management policies. Outdated equipment will be replaced with more efficient equipment and refurbishment of facilities will include the removal of asbestos parts, which will have a positive impact on the environment. Disposal of outdated equipment will be done in accordance with the respective National Environment Management Plans if applicable. Infrastructure development under the project consisting mainly of minor rehabilitation works will have limited scale. An institutional assessment of the three hosting campuses of the PAU institutes was carried out and is presented in Technical Annex C3. 3.2.2 Climate Change. The PAU will have a positive impact on climate change and environment in two ways. Firstly, the specific Program dedicated to environmental Management will graduate 12 environmental specialists each year (starting from year 2) at the Masters level and 7 at the PhD (starting from year 3). These highly qualified staff will improve marginally environmental management in Africa. Some PhD thesis topics as well as post-doctoral research will be directly linked to climate change. Secondly, through this training and research the PAU will contribute to building Africa s capacity to absorb, manage and adapt new technologies able to help African countries face the challenges of climate change. Gender 3.2.3 The World Development Report 2012 (World Bank) «Gender Equality and Development» indicates that globally girls and boys participate equally in primary and secondary education, while in tertiary, a clear bias is emerging that favors women. Enrolments increase faster for women than for men at that level. However, women dominate health and education studies (84%) and men dominate engineering and sciences (82%). 12

So although girls participate equally (or more) at all education levels, the educational patterns they chose are remarkably different and stable across countries at very different incomes. While part of the problem lies in the educational system, these patterns are reinforced by gender norms in households. The report points out that equal gender participation in different fields of studies requires simultaneous changes among households, markets, and institutions. In Sub Saharan Africa (SSA), GER girl/boy parity index in tertiary education is only 0.625 against 1.077 for the entire world. This average figure hides disparities. While the parity index is only 0.182 in Democratic Republic of Congo and 0.333 in Chad, Eritrea and Mali, it reaches 1.440 in Algeria and 1.556 in Tunisia. Data from UNESCO (Figure 3) indicate a wider spread in the relationship between GER and GER Gender Parity in Tertiary Education in Africa as compared to the World s average. The current proportion of female in S&T graduates is between 5% and 18% in Africa. It is expected that women will represent at least 40% of total PAU enrolments. 3.2.4 The PAU will strive towards increased women participation in advanced postgraduate training and research particularly in STEM. The project will address the smaller representation of females as compared to males, through wide information on its programs and by encouraging qualified women to apply for admission. The actions proposed in this project focus more on admission and retention, since the PAU target population consists of students holding Bachelor or Master degrees who will pursue academic training and research at post-graduate level (Master and PhD). The proportion of women is expected to rise to 40% by 2015 through marketing of the PAU, sensitization and the scholarship program. In this regard, a minimum of 50% of the scholarships financed by the Bank (i.e. UA 4.3 million) will be for the admitted female students. Furthermore, considering the lack of comprehensive data on the gender situation in higher education in Africa, the project will conduct a study to assess this situation thoroughly and propose an agenda for action in line with the WDR 2012. A consultant gender specialist will be recruited to assist the AUC organize and monitor the gender component of the project. Technical Annex B9.3 further discusses the gender equality at higher education level and the actions proposed in the project. Social and Economic impact 3.2.5 The project will help provide Africa with the skills needed to add value to its natural resources and enhance its competitiveness and growth while supporting youth employment. It will establish world-class graduate and post-graduate programs in engineering, science, technology, innovation and governance. These high level skills are needed to add value to its natural resources through value chain activities and processing and enhance its competitiveness and growth. It will result in the constitution of critical masses of talents in priority areas for Africa, while reducing the brain drain, enhancing mobility within the continent and regional integration as well as ensuring gender diversity for social inclusion. The PAU will further contribute to building an absorptive capacity for Africa in new technologies. All countries will benefit through enhanced mobility of students, lecturers and researchers. As mentioned in paragraph 1.2.2, a large proportion of the active population aged 25-34 with higher education level of training are unemployed or employed in the informal sector. By focusing on skills which are identified as essential for Africa, and strengthening linkages with the private sector to create conditions for sponsoring R&D and establishing start-ups, the PAU contributes to addressing the critical issue of unemployment of graduate youth. The PAU s thematic areas are viewed as the growth areas with high demand for skills and will therefore be the destinations of choice for the graduates. 3.2.6 It will foster cooperation and regional integration in higher education and contribute to the emergence of the African Higher Education Space. The PAU which the project supports furthers the vision of the African Union of an integrated, prosperous and 13

peaceful Africa, especially by the creation of regional Centers of Excellence. The thematic areas to be strengthened correspond to the areas identified as key for Africa s development. The project will establish conditions for partnerships between the AU, RECs, national governments, African and foreign universities, bilateral and multilateral donors, national and international private sector. The PAU will through this project be able to serve as a developmental university for the entire continent. To facilitate free movement of academics and student, the PAU Statutes provide that All full time professors, lecturers and administrative staff and of PAU shall be granted with AU travelling privileges according to AU procedures. Students of the PAU shall travel using their own national passports and access shall be facilitated by the host countries (Article 11, paragraphs 5-6). For the first batch of students, the call for application has already been issued and all channels possible (website, RECs, country ministries and institutions of higher learning) are used to make the information available to all eligible African candidates. Institutes in Cameroon and Kenya have admitted first batch of students in early 2013. 3.2.7 The project further contributes to the advancement of the Paris, Accra and Busan Declarations on Aid Effectiveness by promoting cooperation and regional integration through regional ownership of an institution of higher learning. The Bank is partnering with the AUC, national governments and several development partners to establish this regional institution of higher learning and research owned by an African organization. The project is founded on the AU development strategy and will contribute to the harmonization of national policies and strategies, hence preparing the way for the creation of the African Higher Education Space in light of the European one triggered by the Bologna process. 3.2.8 Involuntary resettlement. The activities to be implemented under the proposed project do not involve any type of resettlement. The PAU institutes are established on existing university campuses. IV IMPLEMENTATION 4.1 Implementation arrangements Executing Agency and Project Implementation Unit 4.1.1 The overall implementation and coordination of the Project will be under the AU s Human Resources, Science and Technology (HRST) Department. The ADF-funded project seeks to build within the AU and the PAU system capacity to manage and implement project activities. As mentioned earlier, the Pan African University is an AU s institution under the Commissioner for (HRST) who heads the HRST Department. The HRST Department has technical and managerial staff including one Director and three division chiefs. The thematic institute will be in charge of implementing their activities with the assistance of the respective host university. The MOU signed between the AUC and each of the host universities specifies the services to be provided by host universities within the context of the PAU thematic institutes. Other development partners assisting the PAU are operating within these arrangements and working with the HRST Department and the directors of the thematic institutes. Within the context of the project, the responsibilities of the Department of HRST will include: organization of Regional Steering Committee meetings, communication with the Bank on major project issues, preparation and transmission of periodic technical and financial implementation reports, managing the scholarship programme, procurement and monitoring of consultant services for activities concerning the overall PAU System, such as curriculum development and thematic studies. 14

4.1.2 Under the technical supervision of the HRST Department, the thematic institutes will be responsible for executing their specific project activities with the assistance of the host university. These include: procurement of equipment, organization of student exchange and faculty exchange, research grants, recruitment of specific consultant services, preparation of work programme and annual budget, preparation of periodic technical and financial implementation reports. These directorates of the PAU institutes consist of the following professional staff: Director, Deputy Director, Program Officer, Senior Finance Officer, an Accountant, and a Private Sector Coordinator. Fiduciary and procurement capacity assessments have indicated the need to strengthen these functions by recruiting a Procurement specialist for each of them which will be devoted to PAU activities with the assistance of the appropriate office of the host university. The project has allocated resources to provide technical assistance to the thematic institutes to carry out these activities. The implementation structure for the project is presented in appendix II (A). 4.1.3 Role and responsibilities of the host countries and of the Lead Thematic Partners are formalized in MOUs. These MOUs include (i) an MOU between the AUC and each of the 3 host governments (Cameroon, Kenya and Nigeria) and (ii) an MOU between the AUC and each LTP (Sweden, Japan and India). Each LTP is expected to support coordination of PAU partners, provide substantiated technical assistance and mobilize resources for the particular thematic network it is assisting. The Statute establishing the PAU was adopted by the Summit of the Heads of State and Government of the AU on 28 th January 2013 in Addis Ababa [Decision ASS/AU/Dec.451 (XX)] and is effective. The 3 host country agreements and 3 LTP MOUs have been signed. 4.1.4 A Regional Project Steering Committee has been established for regional oversight of the project. It is chaired by the AU Commissioner for Human Resources, Science and Technology and consists of the PAU Acting Rector, representatives of the AU Department of Human Resources, Science and Technology, of the RECs, of the COMEDAF Bureau, the Coordinator of the ADB-ECA-UA Joint Secretariat, the host universities, the thematic hubs directors, representatives of civil society, private sector and women association. The Steering Committee will provide guidance for the overall implementation of the project and review progress bi-annually. It will also approve the annual project work plan and budget prepared by the AUC/HRST, the PAU Rectorate and the PAU institutes. The Regional Steering Committee was inaugurated in Addis Ababa on 12 October 2012. The ADB field offices (EARC, ETFO, NGFO, CMFO) will play a key role in technical and financial monitoring of implementation and provide assistance if necessary. 4.1.5 Disbursement arrangements. All Bank s disbursement methods will be available for the Project. The AU will open a Special Account in foreign currency to receive funds from the Bank to cover Project eligible expenditures. An initial deposit for an amount corresponding to six months of Project activities, as justified by a work program approved by the Bank, will be made in the Special Account. Subsequent replenishments of the Special Account will be subject to the AU having provided sufficient justifications for the use of at least 50% of the most recent advance and 100% of the other older advances, and upon production of an agreed work program for the next six months. Direct payments to contractors and suppliers will be effected, during the course of project implementation, as per the Bank s rules of procedure. The three PAU institutes (PAUSTI, PAULESI and PAUGHSS) will receive funds from the Special Account to be opened at the AU. Disbursement to the three PAU institutes will be done based on approved work program; and the institutes will provide regular utilization reports to the AU. The Bank s Disbursement Letter will be issued stipulating key disbursement procedures and practices. The Bank will have the right, as 15

reflected in the General Conditions, to suspend disbursement of the Funds if reporting requirements are not complied with. 4.1.6 Financial Management and audits. Financial management will be handled by the executing agencies. The financial management capacity assessment of the AUC and the 3 host institutions was conducted. The fiduciary risk assessment of the AUC was based on a recent assessment done by the World Bank in March 2012 which rated the risk as moderate. In the case of the AUC, the ADF supervision plan will follow the FM Action plan and the Implementation Strategy proposed in this report. However, for disbursement of ADF resources, the AUC will open a separate SA account. Details of the findings and measures recommended to address specific issues for each case are specified in Technical Annex B.5. Table 4.1 summarizes the FM risk assessment. The ADB regional fiduciary teams posted in field offices will provide regular supervision. The consolidated audit report for the Project, complete with a management letter, will be submitted to the Bank no later than six months after the end of the year. This is applicable for each year of activity. Table 4.1: Financial Management risk assessment Executing agency Level of fiduciary risk AUC/HRST Moderate PAUSTI/JKUAT Moderate PAULESI/UI Moderate PAUGHSS/UY2 Substantial 4.1.7 Procurement arrangements. All procurement of Works and Goods and acquisition of consulting services financed by the Bank will be in accordance with the Bank s rules (ie Rules and Procedures for Procurement of Goods and Works (May 2008), or as appropriate, Rules and Procedures for the Use of Consultants (May 2008), using the relevant Bank standard Bidding Documents. The Executing Agencies will be responsible for the procurement of goods and consulting services in accordance with the Bank rules and procedures. The procurement arrangements table is attached (Appendix V). Details are provided in Technical Annex B.6. The procurement management capacity assessment of the AUC and the 3 host institutions was conducted. Details of the findings and measures recommended to address specific issues for each case are specified in Technical Annex B.6. The table below summarizes the procurement risk assessment. The ADB regional procurement teams posted in field offices will provide regular supervision. Table 4.2: Procurement Risk Assessment Executing agencies Level of Procurement Risk AUC/HRST Moderate PAUSTI/JKUAT Moderate PAULESI/UI Moderate PAUGHSS/UY2 Substantial 4.2 Monitoring 4.2.1 Monitoring and evaluation will be a major function of the AUC s Department of HRST which will be the overall project coordinating agency. Where appropriate, the project will make use of existing AU s M & E systems and procedures. A performance based M&E system will be established based on the log frame indicators including provision for impact evaluation. The system will be integrated into the overall PAU management system as defined in the Statute. Resources will be provided to assess the needs for the system, conduct collection of baseline data and update mechanism. The system will provide information for 16

the quarterly progress reports. A mid-term evaluation will be conducted after 2 years of implementation to review progress and take corrective measures if necessary. 4.2.2 Impact Evaluation: The project will fund an impact evaluation that will provide evidence as to the type of interventions that are successful (or not) in improving the performance of higher education institutions. The impact of inputs and processes such as the use of IT, the scholarship scheme, and the involvement of the private sector will be assessed. The PAU Management structure (Rectorate and Institutes) will be strengthened to enable them to conduct impact evaluation as a function. Table 4.3 presents the main monitoring milestones for the implementation of the projects. Table 4.3: Monitoring schedule Timeframe Milestone Monitoring process / feedback loop November 2013 Grant agreement effective December 2013 Project launched with 3 PAU institutes staffed with the minimum professional staff required Launching mission is organized with adequate skills mix February 2014 Meeting of Regional Steering Committee September 2014 PAU Permanent Rector recruited October 2014 Admission of PhD students in the 3 institutes Report PAU Management and HRST/AUC Number of scholarships offered December 2014 March 2015 Baseline studies (for impact evaluation completed) All planned new equipment purchased under project 17 Report produced with indicators to be monitored June 2016 Mid- term evaluation Mission conducted and report produced with recommendations September 2016 First MS graduates Graduation ceremony held September 2017 First PhD graduates December 2018 Project completed June 2019 PCR mission, including impact evaluation PCR produced and processed 4.3 Governance There are no critical foreseen risks related to Governance. The PAU which will be run like a formal university benefits in its early stages from the experience of well-established universities hosting its institutes. The design of the project reflects the need to assist the AUC set up a solid Administrative structure for the PAU in accordance with the statutes. Development partners such as GIZ and SIDA are assisting the AUC in this regard. The Bank s contribution will also support aspects related to Administration and Management aspects. The involvement of the LTPs in the development and operation of individual PAU institutes through their own higher education institutions will offer the PAU the opportunity to build on the experience of these foreign institutions. 4.4 Sustainability 4.4.1 The sustainability of the PAU lies in its ownership by the AU and host African countries. The host countries and the universities fully agree that they are hosting regional institutions. In this context, three PAU thematic hubs have all benefited from substantial support from host countries/universities in terms of office space on campus and appointment of Acting Director and his staff and facilities in the concerned Departments and Faculties. Host countries also agree that they are responsible for new constructions and are prepared to use their own resources (Nigeria and Cameroon which have dedicated budget lines for the campus expansion works) or request resources from bilateral or multilateral sources. Kenya,

Cameroon and Nigeria have already allocated respectively USD 500,000 (UA 335,000), XAF 140,000,000 (USD 183,000) and NGN 250.00 million (USD 1.06 million) and the AUC has allocated USD 14.3 million for its 2013 budget. 4.4.2 The PAU addresses priorities of the AU s Development Strategy for which there is a strong commitment from the AU and Members states. The endorsement by the Ministers and the Scientific Community (Declaration at the Nairobi STI Forum, April 2012) and the specific Decision of the AU Assembly on the PAU in July 2012 are further evidence of this support. Furthermore, the PAU Statute (Article 16) provides for the establishment of an Endowment Fund for the university which will be an effective instrument for resource mobilization. This has been approved by the July 2012 Summit of the AU. The Endowment Fund, to be managed in conformity with the general financial principles applicable to AU institutions, will be created based on voluntary contributions from Governments of Member States of the AU, RECs, Development Partners and relevant Donors, and Public and private sources. 4.4.3 Preliminary assessments indicate the viability of the PAU thematic institutes and there is potential for co-financing. The PAU business model shows that most of the needed resources for the five year period are provided by the AU (43%) which has sent a written commitment to the Bank in this regard, the ADF (29.2%) with contribution from the 3 host countries (17,4%) and the LTPs (10,3%). The potential for co-financing from the LTPs is substantial (e.g. SIDA alone has pledged USD 5.00 million a year for 5 years). As discussed above (paragraph 1.3.1) several development partners have already allocated resources and are working with the AU to prepare their more substantial support. Resources will also be channeled to the PAU through the Endowment Fund, as provided for in the PAU Statute. In order to ensure long term sustainability of the PAU, the project has allocated resources and technical assistance to support the PAU to develop and update business plans and programs to strengthen linkages with the private sector. All the 3 host universities have been traditionally engaged with the private sector and the PAU offers them an opportunity for strengthening existing partnerships. The participation of qualified private universities to the thematic networks will be envisaged. Capacity building in planning, management and monitoring at central PAU level and at the level of the institutes will be funded through training and technical assistance. It is estimated that at the end of this investment and initial operation period, the PAU will become sustainable through tuition fees, private sector sponsorships and provision of professional services by the PAU institutes. 4.4.4 The recurrent costs are covered by the revenue generated by the PAU institutes. The host universities were selected on the basis of their history in delivering post-graduate programs and the existing potential. Figure 4 and the table in Technical Annex B8.3 present the evolution of total recurrent costs and revenues for 10 years. The analysis demonstrates that (i) the recurrent costs are covered by tuition paid by students from the second year on, indicating that the business model of the PAU is consistent and can generate future revenue in order to invest in other programs or economic activities (research and development projects, incubators, international cooperation, social activities); (ii) after a first period (five years) where the PAU is subsidized by ADB and other strategic donors there's a window for its sustainability (for example in Year 6, in order to cover the recurrent costs only 60% of tuition is needed), and (iii) recurrent costs per student for these high level programs are reasonable. 18

Furthermore, the average recurrent student cost is decreasing and is reduced to USD 4,400 within five years starting from USD 11,662. The decreasing marginal cost implies that the PAU is sustainable. 4.5 Risk management The main risks presented in the following table have been articulated in the resultsbased logical framework Table 4.4: Risks and mitigation Potential Risks Level Mitigation Measures Difficulties in attracting high profile teachers to PAU programs Lack of support from the existing higher education community, including resistance to change by academics (rivalry, lack of recognition of the thematic hubs). Host countries & universities fail to honor the expected financial commitment. Lead donors fail to honor the expected technical and financial support The students are overwhelmingly males and it proves very difficult to recruit females Brain Drain Students leave PAU institutes and are enrolled by best American or European universities after Masters degree. Low Recruitment will be based on best practices and top 50 universities standards, with attractive salary and incentive package. Low Further stakeholders consultations, transparency in selection of institutions participating in thematic networks; strategy to inform on PAU goals and the aims. Low Medium Low Low Partial financial responsibility is understood as part of the host country agreement. Some countries have already allocated start up resources. During Appraisal mission the ADB Team noted the strong commitment of government and universities. Lead thematic Partners (LTP) are committed and have signed MOUs with the AUC. Some of the LTPs have already allocated funds to the start-up activities of the PAU. (SIDA, GIZ) Information campaign to attract female candidates; and specific scholarship quotas allocated to female candidates. A commitment to work for at least 5 years in African countries or to reimburse the scholarships and other expenses. Establish conditions in partnership with private sector to help PAU graduates to initiate start-ups. Strategic links with industry and other employers, e.g. through open days and career days. 4.6 Knowledge building 4.6.1 The design of the PAU Center of Excellence has had a significant contribution to the generation of knowledge for higher education and skills development for Africa and the Bank. The process for design of this project involving overall needs assessment will provide a good experience for the AU to implement advanced training and research programs in other areas. This project also offers a model for establishing an institution of higher learning by building on partnership involving African institutions, African countries, and institutions of higher learning from the North and South and bilateral and multilateral donors. 4.6.2 The Bank will use the knowledge generated to study, design and implement other centers of excellence in the region. This knowledge will be available through documents and web sites as well as exchange of experience between the project staff and experts in Partner States. 19

V FINANCING INSTRUMENTS AND CONDITIONS 5.1 Financing instrument and conditions The financing instrument proposed is a grant of UA 30.00 million to the AU. 5.2 Conditions associated with Bank s intervention Conditions precedent to Entry into force of the Grant Agreement: The grant agreement shall enter into force on the date of signature by the Recipient and by the Fund. Condition precedent to First Disbursement: The obligations of the Fund to make the first disbursement of the Grant shall be conditional upon the entry into force of this Protocol of Agreement and the fulfillment by the Recipient, in form and substance satisfactory to the Fund, of the following condition: (i) Provide evidence of the opening of one (1) special account in a Bank acceptable to the Fund to receive the proceeds of the Grant (paragraph 4.1.5). 5.3 Compliance with Bank Policies This project complies with all applicable Bank policies, including (i) The Ten Year Strategy 2013-2022; (ii) Education Sector Policy; (iii) Higher Education, Science and Technology Strategy (2008); (iv) Strategy for Regional Integration 2009-2012; and (v) Strategic Framework for regional operations (2008), and the draft Human Capital Development Strategy. VI RECOMMENDATION Management recommends that the Board of Directors approve the proposed grant of UA 30.00 million to the Support to the Pan African University Project for the purposes and subject to the conditions stipulated in this report. 20

Appendix I. Detailed Test for Regional Public Good Eligibility MULTINATIONAL: THE SUPPORT TO THE PAN AFRICAN UNIVERSITY PROJECT CHECK-LIST OF CRITERIA FOR FINANCING RPGs The AFDB has been asked to play a deeper role in financing regional operations (ROs). Regional integration (RI) has emerged as one of the key pillars of the Bank s strategic orientations. In this connection, the Bank has also been increasingly called upon to support regional public goods (RPGs). The Board and ADF-11 Deputies have discussed the regional operations and RPG issues extensively and requested management to elaborate a coherent framework for ROs and provide specific classification and selection criteria for RPGs. Please rate eligible RPGs according to this set of criteria developed by the Task team. Project Name: Department: Task Manager: Countries involved Regions involved: Support to the Pan African University Project OSHD C.M. GUEDEGBE Kenya, Cameroon, Nigeria All Africa For each criterion below, please provide bullet-points to evaluate the project. CRITERION Stage I: Non-rivalry: Public goods are those whose benefits can be enjoyed by one party without (or hardly) reducing the availability of these benefits to others. The project will demonstrate that the object of assistance within the project is something whose benefits will be consumed by more than one party and that a provider cannot keep non-contributors from consuming the benefit of that good. Some examples can be terms of trade, crossboundary diseases (animal and human), shared water resources, cross-border roads. Non-excludability: It is difficult or prohibitively expensive to exclude others (countries/ communities/ regions) from enjoying/ consuming the generated benefits. The project will demonstrate that there is no way that non-participating countries/ communities can be stopped from enjoying the generated benefits because of the nature of the object of the project s assistance. Of Public Interest: The good is of broad public interest and benefit. Typically, a public/ governmental entity in each participating country is typically responsible for the regulatory/policy context for the good to be produced and takes part in its production. The project will demonstrate that there is either an intergovernmental coordinating body in place or an existing REC to regulate and oversee the function and coordination of the object of support in a proposed project. As such, the project will demonstrate to what extent the inter-governmental body and/or REC has taken steps to ensure the maintenance of the object of support and to what level of success. SHORT EVALUATION (BULLET-POINTS) The support to the Pan African University (PAU) Project is in line with the African Union s priorities in higher education. It provides a conceptual framework to build excellence in African higher education and research. The configuration includes main thematic institutes (hubs) leading thematic networks of 10 centres of excellence each selected from all over Africa. Thus access to quality higher education & research (Master and PhD level )will be possible to all qualified Africans. The project increases the Scientific Knowledge creation and generation in Africa. This Knowledge benefits all Africa without any rivalry. Each region will host a central hub for one network of centres of excellence in a given area. It will thus reach all the geographic regions and all the areas of studies African Governments found relevant for the development of the continent. The regional thematic hubs are located in each of the African region to serve the entire continent. Each of them will lead a network of institutions belonging to all regions of Africa. The PAU increases the availability of top-level degrees in Africa for all African countries. At the same time knowledge creation (African students resolving African problems in African context) will benefit the entire continent through itsdissemination. All African Governments have endorsed the PAU as a project of public interest. The AU Commission has officially requested the Bank to assist. Higher Education and Public Research and Development are of broad Public Interest. A Rectorate under the supervision of African Union will coordinate the project.. The PAU is of broad public interest and benefits all AU countries. The public good dimension of the PAU stems from the Summit of Head of States and the Conference of Education Ministers (COMEDAF), as well as African Ministers at the First Africa Science and Technology Forum in Nairobi in April 2012 (Nairobi Declaration). - 1 -

CRITERION Stage II Multi-country involvement: The public good involves two or more countries and can only be effectively produced if every country involved participates and supports its production. The project will demonstrate that there are at least two countries involved with regards to the object of support (5%) and that the object of support in the Bank s investment is something that is either of a global and/or regional development importance and this should be demonstrated through a regionally/globally validated document (for example the Convergence Plan of COMEFAC outlining the work in the Congo Basin, a UN document agreeing on steps to reduce climate change, SADC gender action plan, the ECOWAS memorandum on Food Crisis, etc.) confirming this importance (10%). Strategic Alignment: The RPG is strongly aligned with the Bank s strategic orientations and also to continental and regional objectives (i.e RPGs identified as priority operations under NEPAD or REC regional integration plans). Harmonization and partnership will be encouraged by giving preference to co-financing arrangements that promote donor coordination and leverage the Bank s own resources by mobilizing additional funds, including from sister institutions or the private sector. The project will demonstrate that the RPG is closely aligned with the continental and regional development agenda as well as the Bank Group s own strategy, especially with regard to selectivity and sector focus, and harmonization and partnership. Catalytic and Upstream Role: Bank financing targets the initial stages of the processes for generating the public good and the Bank s support should aim at correcting disincentives that prevent the RPG from emerging or progressing toward the stage of production, such as lack of coordination, aversion to risk, free-rider problem. The project will demonstrate that the Bank is supporting an initial investment to an object and that by doing so opens the way for further investments by partners/ RMCs in the regional or national context for specific development impact (to be specifically demonstrated). Under this criterion, the project will also demonstrate that without the Bank s intervention, there is a risk of certain beneficiaries free-riding and not being held accountable. The project will demonstrate that the Bank s intervention will add value to strengthen coordination in the region generally and/or through the inter-governmental body or REC involved (if any). Higher Developmental Impact in Cooperating: The development impact to be achieved through countries cooperation is demonstrably superior to what each country could have achieved individually. The project will go on to demonstrate that the development impact (to be specified by the team e.g. poverty reduction, gender equity, human development, etc.) will be increased only if the object of support is addressed within a regional context with the participation of at least two countries (as opposed to national projects). SHORT EVALUATION (BULLET-POINTS) The Fourth Ordinary Session of the Conference of Ministers of Education of the African Union (COMEDAF IV) held in Mombasa in November 2009, endorsed the Pan African University as an Academic network of already existing postgraduate and research institutions. At the present stage, three countries (Kenya, Nigeria and Cameroon) are actively involved as lead thematic institutes The current development stage of the PAU indicates involvement of several countries. Algeria is going to host the fourth hub. At its final stage the project may benefit more than 50 universities from all African countries. The regional dimension. The AU as a continental organization and the RECs as well as individual countries support this initiative. Moreover, in agreement with the AUC, the host countries have been playing a key role to establish the PAU institutes in Cameroon, Kenya, and Nigeria by providing financial resources and logistics. The proposed project is in line with the Bank s 2013-2022 Strategy, Skills and Technology and Regional Integration are 2 or the 5 core operational priorities of the Strategy. Furthermore, Higher Education Science and Technology Strategy (2008) and the the Human Capital Development Strategy under preparation highlight the need to strengthen higher education, technology and vocational training to assist the countries develop adequate skills to enhance competitiveness and youth employment. The PAU has the potential to contribute to addressing these priorities The project also furthers the African Union s priorities as expressed in the Strategic Plan (2009-2012), and Education Plan for the Second Decade (2006-2015) At the request of the AUC, the Bank has prepared a comprehensive needs assessment for the establishment of the the PAU. The Bank is playing a key role as technical and financial partner in helping develop the concept of the PAU as well as its initial structures and in mobilizing resources. The Bank s involvement has been an incentive for other technical and financial partners (such as Japan, Sweden) who have joined the Bank during the preparation mission. The Bank s financial contribution will create adequate conditions for startup. While improving quality the project will promote regional integration of academic and research programmes and the mobility of students and staff. It is also expected to help curb and reverse the brain drain. Individual academic. The PAU will contribute to alleviating the constraints higher education is facing in the countries as regards the lack of high level skills, by capitalizing on the availability of shared resources The PAU will make it possible for less endowed countries to train their citizens in very specialized fields. - 2 -

Eligibility to cost-sharing exemption Grant resources outside the Performance-Based allocation (PBA) Allocation (i.e. exclusively from the RO envelope) will be considered for those projects which demonstrate superior developmental impact- with respect to economic and social advancement through amongst others, the following: employment generation, trade promotion, security improvement, gender equality and climate change and adaptation. The list of such projects will be determined by the ranking stemming from the rating assessed during the previous stage and endorsement by the Operations Committee. The Bank is supporting the AUC, a regional body establish a regional university which will serve the entire continent. The institutions hosting the first three regional thematic hubs (Jomo Kenyatta University in Kenya; University of Yaounde 2 in Cameroon and University of Ibadan in Nigeria) have been selected on a competitive basis. These universities as well as national authorities have already committed resources to support these hubs. Lead thematic partners (technical and financial external partners) have been identified and are preparing to provide support. - 3 -

Appendix II (A): Implementation structure for the Project Appendix II (B): Expenditure categories by Beneficiary Institution Expenditure categories A. WORKS PAUSTI (Nairobi) PAULESI (Ibadan) PAUGHSS (Yaoundé) PAU Administration & Project Management (Addis Ababa B. GOODS 3,89 1,95 0,30 0,30 6,44 C. SERVICES 2,75 2,76 1,71 2,50 9,72 D. OPERATING 0,43 0,43 0,52 3,98 5,36 E. MISCELLANEOUS 3,50 3,50 1,47 0,00 8,48 TOTAL 10,57 8,65 4,01 6,78 30,00 Total - 1 -