ASIAN DEVELOPMENT BANK RRP: PAK 38178

REPORT AND RECOMMENDATION

OF THE

PRESIDENT

TO THE

BOARD OF DIRECTORS

ON A

PROPOSED LOAN

TO THE

ISLAMIC REPUBLIC OF PAKISTAN

FOR THE

RESTRUCTURING OF THE TECHNICAL EDUCATION

AND VOCATIONAL TRAINING SYSTEM PROJECT

(NORTH-WEST FRONTIER PROVINCE)

November 2004

CURRENCY EQUIVALENTS (as of 18 November 2004)

Currency Unit – Pakistan rupee (Pre/PRs)

Pre1.00 = $0.0168 $1.00 = PRs59.6659

ABBREVIATIONS ADB – Asian Development Bank B. Tech. – bachelor’s degree in technology CMC – center management committee CBT – competency-based training DAE – diploma of associate engineer DMC – district management committee DOI – Department of Industries DTE&MT – Directorate of Technical Education and Manpower Training IMC – institute management committee LMIS – labor market information system MDP – management development program MIS – management information system NGO – nongovernment organization NWFP – North-West Frontier Province PBMS – performance-based management system PBTE – Provincial Board of Technical Education PCR – project completion report P&D – planning and development PGNWFP – provincial government of North-West Frontier Province PIU – project implementation unit PMU – project management unit PPMES – project performance monitoring and evaluation system PRSP – Poverty Reduction Strategy Paper R&D – research and development SME – small or medium-sized enterprise TEP – Technical Education Project TEVT – technical education and vocational training TTB – Trade Testing Board TVTC – technical and vocational training center

NOTES

(i) The fiscal year (FY) of the Government ends on 30 June. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2004 ends on 30 June 2004.

(ii) In this report, "$" refers to US dollars.

This report was prepared by a team comprising B. Panth, team leader; N. Huda; M. Sultana; H. Ikemoto; L. Arthur; A. Qadir; T. Gallego-Lizon; and T. Moenjak

CONTENTS Page

LOAN AND PROJECT SUMMARY ii MAP vii I. THE PROPOSAL 1 II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES 1

A. Performance Indicators and Analysis 1 B. Analysis of Key Problems and Opportunities 2

III. THE PROPOSED PROJECT 4 A. Objective 4 B. Components and Outputs 5 C. Special Features 10 D. Cost Estimates 11 E. Financing Plan 11 F. Implementation Arrangements 12

IV. PROJECT BENEFITS, IMPACTS, AND RISKS 14 A. Project Benefits 14 B. Project Risks 15

V. ASSURANCES 16 A. Specific Assurances 16 B. Conditions of Loan Effectiveness 17

VI. RECOMMENDATION 18 APPENDIXES 1. Project Framework 19 2. Problem Tree Analysis 22 3. Sector Review 23 4. Lessons Learned 26 5. External Assistance to the Education Sector 28 6. Policy Framework 30 7. Detailed Cost Estimates and Financing Arrangements 32 8. Implementation Arrangements 33 9. Implementation Schedule 35 10. Indicative Contract Packages 36 11. Indicative Terms of Reference for Consulting Services 37 12. Project Performance Monitoring and Evaluation System 41 13. Project Risks and Proposed Mitigation Measures 43 14. Economic, Poverty Impact, and Financial Analysis 45 15. Summary Poverty Reduction and Social Strategy Form 52 SUPPLEMENTARY APPENDIX: Gender Strategy

LOAN AND PROJECT SUMMARY

Borrower Islamic Republic of Pakistan Classification Targeting Classification: Targeted intervention Sector: Education

Subsector: Technical education, vocational training and skills development Thematic: Inclusive social development, gender and development

Environment Assessment

Category C

Project Description The Restructuring of the Technical Education and Vocational

Training System Project (Project) will help the Department of Industries (DOI) in the North-West Frontier Province (NWFP) reform its technical education and vocational training (TEVT) system, covering postsecondary technician education at the polytechnic level, middle-level technical and vocational training for students with grade-8 pass, and livelihood training for out-of-school youths and women. The Project has three components: (i) institutional development; (ii) improvement of quality and relevance improvement; and (iii) access and equity enhancement. The Project’s main focus is to improve the capacity of TEVT institutions to meet labor market needs by emphasizing public-private partnership, on-the-job training, and job counseling for TEVT graduates; and performance-based management and management development programs to deliver TEVT efficiently. TEVT programs will be improved through competency-based training (CBT), teacher training, provision of learning resources, and quality control. The Project will support the rural poor and women through new programs and facilities, rural livelihood training, and entrepreneurship training and access to microcredit for self-employment.

Rationale NWFP has low literacy (40.0%—60.0% for males and 21.0% for

females) and high poverty (39.8% compared to 32.1% for Pakistan). NWFP is thus developing skilled workers and creating jobs, especially in small and medium-sized enterprises that use indigenous natural resources. NWFP has high unemployment, yet job vacancies often are unfilled due to lack of trained personnel. Abroad, demand is growing for skilled workers, especially in the Middle East and Malaysia. The TEVT system’s internal and external efficiency urgently needs to improve. Through consolidation and strengthening of TEVT programs, and investments to make the TEVT system more responsive and competitive, TEVT trainees’ job or self-employment prospects will improve.

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Objectives The Project aims to help the Government reduce poverty by enhancing competitiveness of TEVT and the employability of graduates in line with market needs. The Project’s specific objectives are to (i) restructure and strengthen institutional capacity, efficiency, and autonomy of TEVT institutions; (ii) improve quality and relevance of TEVT programs; and (iii) enhance access to quality TEVT, particularly among the rural poor and women. The Project will help DOI’s Directorate of Technical Education and Manpower Training (DTE&MT) restructure and strengthen its institutional capacity to provide quality TEVT. The Project will help TEVT institutions improve their planning and management by giving them autonomy to provide quality and relevant TEVT. Training teachers, providing learning resources, introducing CBT, and improving quality control will strengthen TEVT programs. Supporting new facilities and new TEVT programs, and providing livelihood training will increase access of the rural poor and women to TEVT.

Cost Estimates The estimated project cost is $15.7 million equivalent, of which

$3.7 million (24%) is the foreign exchange cost and $12.0 million equivalent (76%) the local currency cost.

Financing Plan ($ million equivalent)

Source Foreign Exchange

Local Currency

Total

Percent

Government 0.0 4.7 4.7 30 ADB 3.7 7.3 11.0 70

Total 3.7 12.0 15.7 100 ADB = Asian Development Bank. Loan Amount and Terms A loan of $11 million equivalent from the Asian Development Fund

of the Asian Development Bank (ADB) will be provided. The loan will have a term of 32 years, including a grace period of 8 years, an interest charge of 1.0% per year during the grace period and 1.5% per year thereafter, and such other terms and conditions set forth in the draft loan and project agreements.

Period of Utilization Until 30 April 2011 Estimated Project Completion Date

31 October 2010

Implementation Arrangements

The Implementing Agency will be DTE&MT. A project management unit will be responsible for day-to-day project planning, management, and implementation.

Executing Agency Department of Industries

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Procurement Procurement of ADB-financed goods, related services, and civil works will be carried out according to ADB’s Guidelines for Procurement. Each supply contract for equipment and materials estimated to cost the equivalent of more than $500,000 will be awarded on the basis of international competitive bidding. Each civil works contract estimated at less than $1 million will be awarded on the basis of local competitive bidding. Each supply contract for equipment or materials estimated to cost the equivalent of $500,000 or less will be awarded on the basis of international shopping. Equipment and textbooks estimated, in aggregate, at less than $100,000 equivalent may be directly procured.

Consulting Services A total of 77 person-months of consulting services (15

international, and 62 domestic) will be used following ADB’s Guidelines on the Use of Consultants and other arrangements satisfactory to ADB for the engagement of domestic consultants. The consultants will be selected and engaged individually or as a firm. A higher education institution and/or management institute will be selected and engaged for the management development program, performance-based management, and development of competency-based training system development. The quality- and cost-based selection method will be applied to select and engage consulting firms.

Project Benefits and Beneficiaries

The direct beneficiaries of the Project will include about 11,000 students in 38 technical and vocational training centers (TVTCs) and 25 commercial colleges during the project period. About half the beneficiaries will be students enrolled after these institutions expand their capacity. The beneficiaries also include 20,000 out-of-school youths and adults, who will undergo short-term livelihood training; 1,500 employed workers, who will upgrade their skills; 50 staff members, who will improve their teaching, education planning, curriculum design, and industrial skills; and 300 academic staff members, who will upgrade their educational level in national training programs. Qualitative improvements in the curriculum, teaching and learning methods, and learning resources will benefit a large number of students enrolled in TVTCs at project completion. About 25% of direct beneficiaries are estimated to be women, 75% from rural areas, and about 40% from poor families.

The Project will expand and improve the quality of rural TEVT to provide livelihood programs for out-of-school youths and adults who want to acquire job skills and to start their own business. Nongovernment organizations will plan and implement the livelihood programs. Identification of training needs and trades for self-employment will meet local as well as outside market needs. TEVT graduates will be helped to access microcredit to start small businesses and generate income and jobs. All these measures will reduce poverty, especially in rural areas.

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Risks and Assumptions The Project faces four possible risks: financial, institutional, policy, and economic. First, the Government’s effort to expand TEVT without consolidating and ensuring effective services at existing training institutes could erode the financial and technical base to sustain these institutions’ operations. The Project will strengthen the capacity and autonomy of TEVT institutions and seeks the Government’s assurances for adequate recurrent budgets and autonomy of TEVT institutions to manage their financial resources. Second, TEVT institutions lack the autonomy and leadership to meet labor market needs. While most TEVT institutions have institute management committees (IMCs) or center management committees (CMCs), few of these committees are active, due to weak governance structure, weak role of principals, and lack of time among committee members. The Project includes a management development program and performance-based management system (PBMS) to strengthen the capacity of principals, teachers, and staff of TEVT institutions. Third, while the federal policy is to improve the TEVT quality, management, and financing, the policy cannot be realized without linking TEVT institutions’ performance with improvement plans, targets, and policy stipulations. The Project aims to increase TEVT institutions’ efficiency and effectiveness through innovative measures such as a quality assurance and accreditation system, PBMS, examinations, and reform; and seeks Government assurances to align key provincial TEVT policies with federal policies.

Fourth, the economy is not growing fast enough to absorb more graduates from TEVT institutions. To remedy this, the Project supports much greater involvement of the private sector through IMCs, CMCs, production units, guidance counseling, and more organized labor market information.

I. THE PROPOSAL

1. I submit for your approval the following report and recommendation on a proposed loan to the Islamic Republic of Pakistan for the Restructuring of Technical Education and Vocational Training System Project (North-West Frontier Province).

II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES

A. Performance Indicators and Analysis 2. In the 1980s Pakistan enjoyed strong economic growth averaging 6.5%. However, it slowed down to 4.6% in the 1990s. Key social indicators, particularly for education, also stagnated, unlike in other countries at similar levels of development. The economy, however, started recovering from FY2003, when growth rate was 5.1%. Growth further strengthened in FY2004, with the growth rate estimated at 6.4%. To achieve the targets of the Poverty Reduction Strategy Paper (PRSP), annual economic growth rate should be sustained at above 6%, particularly since the population growth rate has remained high. 3. The provincial government of the North-West Frontier Province (PGNWFP) faces dual problems of high illiteracy and high incidence of poverty. The average literacy rate of the population 10 years and above is 38.0% (57.0% for males and 20.0% for females), and the net primary school enrollment rate in 2001 was about 51% (61% for males and 41% for females). The difference in literacy rates is marked between genders, and between urban (58%) and rural (37%) areas, although most people (75%) live in rural areas. Gross enrollment for boys was high at 110%, compared to only 63% for girls. About 58% of the students entering grade 1 reach grade 10 after repeating several grades, indicating that many children leave school without skills and knowledge. 4. The poverty headcount for the North-West Frontier Province (NWFP) is about 39.8%, compared to 32.1% for Pakistan. Urban and rural poverty are higher in NWFP than the entire country, leading to large variations in educational attainment among different economic groups. For instance, net enrollment in primary education was only 37% for the lowest economic quintile, compared to 59% for the highest. Poverty increased rapidly during the 1990s because economic growth slowed down and per capita income increased only negligibly. Poverty also increased because of (i) limited job growth and absorption capacity in the formal sector; (ii) high labor costs in the formal sector that lead to overexpansion of a low-productivity informal sector, thus lowering informal sector wages; (iii) limited opportunities for unskilled youth to obtain on-the-job training and skills; and (iv) low quality of social services, particularly in education and health. 5. Pakistan’s labor force grows at over 2% per annum, while employment grows much more slowly. The official unemployment rate is 5.4–5.9%, while the underemployment rate, those working less than 35 hours a week, is about 12.0%. The situation is much worse in NWFP, with a 13% (17% for females) unemployment rate and a 41% labor force participation rate (17% for females). Most workers are self-employed or unpaid family workers, while wage earners account for less than one third of the labor force. Of urban unemployed youths 10–24 years old, most are either illiterate or with qualifications below grade-10 pass. The Government is thus developing skilled workers and creating jobs, especially in small and medium-sized enterprises (SMEs) that use indigenous natural resources. Abroad, demand is growing for skilled workers, especially in the Middle East and Malaysia. The Project will reduce poverty by providing access to quality technical education and vocational training (TEVT) programs,

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especially in rural areas and for women, and help TEVT graduates access credit for employment or self-employment in SMEs. 6. The TEVT subsector comprises 12 polytechnics (1 for women), with about 5,500 students (205 women) and about 450 teachers, and 38 technical and vocational training centers (TVTCs, 11 for women), with about 3,200 students and about 390 teachers. Local jobs are limited although NWFP has been able to take advantage of the market abroad. Given the low participation rate in general education, low completion rates at the primary and secondary levels, and a large TEVT subsector dominated by the public sector, PGNWFP will have to adopt a two-pronged strategy: (i) improve general school education as a priority, with focus on girls and rural children; and (ii) provide selective support to training programs given that many youths lack the skills to seek jobs. As general education improves, support for TEVT will shift to practical aspects of training, since core life skills are expected to come from general education. However, until then, TEVT will have to focus on formal and nonformal programs to complement, and not substitute for, general education. This approach benefits the poor, who need a second chance at developing life skills. TEVT must be viewed holistically to fill in gaps in the context of overall educational needs. 7. The strategy of the Asian Development Bank (ADB) for development assistance to Pakistan, as articulated in the Country Strategy and Program 2002–2006,1 focuses on poverty reduction through sustainable pro-poor growth, inclusive social development, and good governance. ADB’s strategy also highlights the need for comprehensive human development strategies, devolution of services for human development, and education reforms for quality. In particular, ADB supports the Government’s Education Sector Reforms Action Plan, linked with devolution to promote public-private partnerships. ADB also emphasizes the need to move away from Government and umbrella projects to focused, provincial ones. ADB’s strategy is in line with the Government’s National Education Policy, Education Sector Reforms Action Plan, and PRSP—all of which stress the role of technical education in producing skilled workers and technicians. The Ten-Year Perspective Development Plan of 2001–2011 points out that options are still limited for technical, commercial, and vocational education, and sets as a priority the introduction of technical education at the secondary and postsecondary levels. B. Analysis of Key Problems and Opportunities 8. Despite progress made, TEVT still faces several challenges and constraints. Appendix 1 provides the project framework, Appendix 2 the problem tree, and Appendix 3 a brief sector analysis. Some key issues and opportunities are discussed in the following sections.

9. Weak Institutional Capacity. The Directorate of Technical Education and Manpower Training (DTE&MT) is responsible for planning, coordination, and supervision, as well as research and development (R&D) for technical education at all levels. Since DTE&MT was created only in January 2002 by combining the former Directorate of Technical Education under the Department of Education with the Directorate of Manpower Training under the Department of Industries (DOI), it is still realigning its mission and strengthening TEVT operations in the province. DTE&MT’s institutional capacity needs to be strengthened, particularly to improve the quality of TEVT programs, R&D policy reform, quality assurance, and linkage between industries and TEVT institutions. Capacity building for DTE&MT is crucial to enable its staff to carry out its new mandate and combined functions. Research capacity needs to be improved to meet labor market needs and to develop skills and attitudes necessary to get jobs or self- 1 ADB. 2003. Pakistan: Country Strategy and Program Update (2004–2006). Manila.

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employment. Organizational support is necessary to enable DOI to evolve an institution similar to the TEVT authority in Punjab. 10. Low Internal and External Efficiency. Internal efficiency of polytechnic programs remains a concern, although it has improved over the years. The high dropout rate wastes resources and must be lowered. Less than 50% of students pass external examinations. 11. External efficiency, as measured by the number of graduates who get jobs, also needs to be improved. The labor market survey conducted under an advisory technical assistance2 showed that graduates of diploma of associate engineer (DAE) programs had spent 1–2 years looking for a job before they found one. These graduates required additional training of 3–6 months after recruitment. Finding work takes such a long time partly because the private sector has few jobs, and partly because the required training and skills are mismatched (para. 12) with the quality and relevance of technical education (para. 14). Entrepreneurship training could be introduced to prepare students for self-employment. Job placement services should be provided for graduating students. Polytechnics and TVTCs can also offer short-term modular training programs for people who want to acquire skills and start their own business. Given that the Government encourages semiskilled and skilled workers to find work abroad, especially in the Middle East, Malaysia, and other countries, TEVT must play an important role.

12. Weak Linkage with Labor Market Needs. Although demand for some traditional trades and technologies (electrical, electronics, and mechanical) and for new trades and technologies (computer, information, and telecommunications) is expected to remain high, as skills and demand are mismatched. A labor market survey confirmed that (i) not enough graduates are being produced in some of the traditional courses, and training opportunities in new technologies are limited; and (ii) even if the courses are available, labor market information is lacking, practical training components limited and inappropriate, and linkages with industries lacking. 13. The lack of sharing of information and resources between industry and TEVT institutions creates a gap between users and producers of skilled workers, lowering the quality of TEVT programs and graduates. Students fail to acquire employable skills. To forge a closer link between industries and TEVT institutions, institute management committees (IMCs) have been established at polytechnics, and center management committees (CMCs) at TVTCs. However, the committees have not proved effective in drawing assistance and cooperation from industries. The committees must be strengthened, leadership enhanced, and the resource base improved. The committees, which include large representation of industries, need to focus on providing on-the-job training for students, industrial training for TEVT teachers, and job placement services for TEVT graduates. 14. Poor Quality of Examinations. The Provincial Board of Technical Education (PBTE) gives examinations to students in polytechnic institutes, government colleges of technology, and commercial colleges; and the Trade Testing Board (TTB) to students in the 38 TVTCs. The two boards do not coordinate much. The examinations, given annually, are rigid in scope, content, coverage, types of questions, theory-to-practice ratio, and marking procedures. The passing rate ranges from 18% for the diploma in business administration to 49% for the DAE. In 2002, TVTC passing rates ranged from 74% for machinists to 100% for plumbers and welders. The lowest passing rate that year was 39% for draftsman. The examination process should be

2 ADB. 2002. Technical Assistance to Pakistan for Restructuring of Technical Education and Vocational Education

System. Manila.

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decentralized and responsibilities delegated to the training institutions. A system of examinations given at the end of each semester is being explored. Examination system improvements are expected to enable TEVT institutions to raise the performance of students and prepare them for employment, thereby reducing wastage.

15. Limited Access to and Options for Technical Education and Vocational Training. Although a reasonable network of training facilities is available in various parts of the province, access to quality TEVT programs remains limited, especially for the rural population. Small training centers generally have poor facilities and training programs, and many are far from community centers. Traveling to and from rural training centers is difficult, especially for girls. PGNWFP needs assistance to upgrade the facilities and improve access to quality TEVT programs in rural areas. 16. Role of the Public Sector. The TEVT system is highly supply driven and needs to develop mechanisms to respond to market needs. TEVT programs can be improved, and the role of PGNWFP limited to policy, planning, and monitoring and evaluation, as envisaged by the Government, with implementation responsibilities gradually devolved to TEVT institutions supported by district management committees (DMCs).

17. Lessons Learned. Appendix 4 lists lessons learned and how they have been incorporated into the project design. The Technical Education Project (TEP) and an impact study, both supported by ADB, show that TEVT institutions should be expanded cautiously, and consolidated and strengthened.3 TEVT institutions should have resources for operations and maintenance and fill up all teaching vacancies. High turnover of project directors has also harmed project implementation. Due to lack of information on labor market needs and absence of R&D, TEVT institutions have been irrelevant and unresponsive to emerging needs. 18. Punjab’s experience in institutional consolidation (406 institutions in seven departments placed under one umbrella department) and efforts to move away from Government provision of TEVT to standard setting, facilitation, regulation, and coordination; Sindh’s experience in devolution to the districts; and NWFP’s efforts to consolidate institutions show the implications for TEVT institutions. While it is committed to consolidate TEVT programs, PGNWFP should also institutionalize strategic planning, policy reform, quality assurance, and curriculum development, and support gradual autonomy and strong leadership at polytechnics and training centers. 19. External Assistance. While in the past German Agency for Technical Cooperation (GTZ) supported technical and vocational training in the province, external support for TEVT is generally limited. External assistance to the education sector in Pakistan is described in Appendix 5.

III. THE PROPOSED PROJECT

A. Objective 20. The goal of the Project is to contribute to the Government’s overall strategic aim of poverty reduction by improving the competitiveness of TEVT system and enhancing the 3 ADB. 1995. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the

Islamic Republic of Pakistan for the Technical Teacher’s Training and Polytechnic Institutes Project. Manila; ADB. 1999. Impact Evaluation Study of the Technical and Vocational Education Projects in Malaysia, Pakistan, Papua New Guinea, and Sri Lanka. Manila.

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employment prospects of TEVT graduates in line with emerging market needs. The Project’s specific objectives are to (i) restructure and strengthen institutional capacity, efficiency, and autonomy of TEVT institutions; (ii) improve the quality and relevance of TEVT programs; and (iii) increase access to better-quality TEVT programs, particularly among rural poor and women. B. Components and Outputs 21. The Project has three components: (i) development of institutions, (ii) improvement of TEVT quality and relevance, and (iii) enhancement of access and equity. 1. Institutional Development 22. This component will help TEVT institutions restructure themselves and to strengthen their institutional capacity, efficiency, and operational autonomy to plan, manage, and develop programs. The Project’s policy implications are presented under assurances (para. 82) and in Appendix 6. This component has three subcomponents: (i) restructuring and strengthening capacity of DTE&MT, (ii) strengthening capacity and efficiency of TEVT institutions, and (iii) implementing performance-based management system (PBMS) in TEVT institutions.

a. Restructuring, and Strengthening Capacity of, the Directorate of Technical Education and Manpower Training

23. DTE&MT is responsible for ensuring effective planning, management, monitoring, and supervision of TEVT institutions. DTE&MT’s capacity and resources need to be strengthened, especially in R&D, program evaluation, institutional monitoring and supervision, and public-private partnership. The Project will (i) strengthen the R&D cell and incorporate it under DTE&MT, (ii) implement and institutionalize quality assurance and accreditation system, (iii) and institutionalize DMC for TEVT. 24. Strengthening the Research and Development Cell. The R&D cell was established under the TEP4 and attached to its project implementation unit . The cell’s mandate is to make TEVT graduates employable. The Project will strengthen the R&D cell by providing training for core staff; supplying office equipment and funds for labor market surveys; and developing a full-fledged computerized management information system (MIS), labor market information system (LMIS), and performance monitoring and evaluation system (PPMIS). The R&D cell will be incorporated under DTE&MT during project implementation. Through a competitive process the R&D cell will identify research and academic institutions to conduct research. 25. Institutionalizing Quality Assurance and Accreditation System. To strengthen DTE&MT’s registration system and improve the quality of TEVT programs in public and private TEVT institutions, the Project will help DTE&MT (i) establish a quality assurance and accreditation system; (ii) strengthen and institutionalize the registration, monitoring, and assessment of TEVT institutions throughout the province; (iii) develop accreditation standards; a quality assurance system; and mechanisms, including criteria, guidelines, manuals, and instruments, to assess and improve the quality of TEVT programs; and (iv) provide equipment, training, and seed money to implement the system in public and private TEVT institutions. The Project will support training for staff of polytechnics and TVTCs to establish an internal quality

4 ADB. 1995. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the

Islamic Republic of Pakistan for the Technical Education Project. Manila.

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assurance unit. The Project will also fund DTE&MT to strengthen quality assurance and accreditation, testing and certification, policymaking, and monitoring and evaluation. 26. Establishing a District Management Committee. The Project will help establish and institutionalize a DMC for each project district. The Project will provide modest funds to support the DMC’s activities at the beginning. The DMC, comprising representatives of industries, education institutions, and the community will promote collaboration between local industries, the community, and institutions to mobilize resources and support from the private sector for TEVT institutions. The DMC will coordinate with IMCs and CMCs to help link the polytechnics and training centers with industries at the district level.

b. Strengthening Capacity of Technical Education and Vocational Training Institutions

27. TEVT institutions have limited capacity and autonomy to plan, develop, and manage their programs and operations, especially course offerings and curriculum development, recruitment and hiring of teachers, staff development programs, financial control and accountability, and examinations. The Project will support an institution-based management system to enhance the capacity, autonomy, effectiveness, and efficiency of TEVT institutions to plan and manage their own affairs. In particular, the Project will (i) strengthen the capacity and resources of IMCs and CMCs, (ii) implement management development programs (MDPs) for principals and key staff members, and (iii) implement a PBMS in TEVT institutions. 28. Strengthening Committee Capacity and Resources. The Project will support IMC and CMC operations in all TEVT institutions. The composition, structure, roles, responsibilities, and mechanisms to make the committees more effective will be reviewed and strengthened. Modest seed money will be provided based on the committees’ proposals. Committee members’ capacity will be strengthened. A consultant will help prepare procedural manuals and handbooks for reference of the committees and TEVT institutions. 29. Implementing the Management Development Program. Qualified management institutions, including universities and higher-education institutions, will be invited to propose ways to implement the MDP. It will strengthen the capability of principals, teachers, and key TEVT officials to assume more responsibilities and autonomy in planning, management, and effective resource mobilization and use. The MDP will include market and competitiveness analysis for demand-based training, financial planning and management, performance improvement, institutional development, proposal preparation and project implementation, and training program evaluation. The Project will provide support to TEVT institutions based on their institutional development plans. 30. Implementing Performance-Based Management System. To promote accountable and efficient TEVT management, the Project will implement PBMS in all project institutions. TEVT institutions will be required to prepare a 5-year institutional development plan as a basis for budgetary allocations. Indicators such as enrollments, number of poor students in the programs, dropout and pass rates, and employment of graduates, to be developed as part of the Project Performance Monitoring and Evaluation System (PPMES), will be used to assess project institutions’ efficiency and effectiveness. The Project will provide funds to develop guidelines, criteria, and operation manuals to implement the system. The Project will also provide a block fund as an incentive to project institutions producing the best results. Such institutions may subsequently develop into centers of excellence. Gradually, TEVT institutions will develop the capacity to manage their own operations autonomously. PGNWFP will issue

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directives to institutionalize the PBMS, which will be tied to budgetary allocations after project completion. The services of a management institution or firm as part of the MDP, and a consultant will be provided to develop and implement the PBMS. 2. Improvement in Quality and Relevance of Technical Education and

Vocational Training 31. This component will help improve the quality and relevance of TEVT programs in 12 existing polytechnics and 40 TVTCs (38 existing and 2 new) by (i) introducing competency-based training (CBT) system development and examination reform, (ii) supporting facility upgrading and learning resource development, and (iii) improving relevance of TEVT programs through innovative schemes.

a. Competency-Based Training System Development and Examination Reform

32. Competency-Based Training System Development. The Project will help develop a framework and mechanisms for introducing the CBT system in TEVT institutions to support the acquisition of skills, knowledge, and work attitudes required by industries. Teachers will be trained to prepare lessons, instructional materials, and learning modules in the CBT format, to help students practice and acquire the needed skills. Each project institution will nominate courses in technologies and trades to be converted into the CBT format for project funding. Each technology and trade will convert at least one course into the CBT format. Project funds will be made available through the project institutions for teachers who submit proposals to develop lessons and instructional materials and learning modules and packages in the CBT format. An institution will be selected to train teachers, coordinate development, implementation, and monitor the CBT system. Social marketing programs will be funded to raise awareness of principals, teachers, students, and the public of the CBT system. The Project will help introduce the CBT system gradually in TEVT institutions through incentives and active participation of teachers and institutions. 33. Examination Reform. PBTE conducts annual examinations for DAE students at polytechnics and commercial colleges, and TTB does the same at TVTCs. Examination practices are inflexible and do not encourage students to acquire the skills required by industries. The Project will develop an operational framework and manual to increase TEVT institutions’ autonomy and responsibility to conduct CBT-format skill tests. Teachers will train to prepare reliable and valid skill tests and practical examinations. The Project will also help PBTE and TTB, based on their proposals, improve the quality of examinations, training of examiners and paper setters, examination item bank, and examination management system; and provide office equipment and materials to computerize the TTB examination system.

b. Quality Improvement through Facilities Upgrading and Learning Resource Development

34. Construction of New Facilities for Five Technical and Vocational Training Centers for Girls. Of the 38 TVTCs, 11 are for girls; of these, 8 are in old rented facilities, mostly far from community centers. The Project will help construct new facilities for five TVTCs in major town centers and will provide equipment, instructional materials, staff training, and furniture. These TVTCs will serve the rural population.

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35. Upgrading of Equipment in 26 Technical and Vocational Training Centers. The Project will provide new and additional training equipment and furniture in the remaining 6 TVTCs for girls and in 20 for boys. Three TVTCs for girls and three for boys will be designated as “model training centers” in locations with potential for development. The centers will offer high-quality training not only in modern trades but also in traditional arts and crafts using natural resources such as marble, wood, and other materials. Programs that increase the value of agricultural products, such as food preservation and food technology, will be introduced. The centers will also help promote cultural heritage, increase the value of natural resources, and generate income for communities. 36. Upgrading of Three Polytechnics to Centers of Excellence. To meet industries’ needs and prepare highly qualified technicians for industries, three polytechnics will be upgraded to centers of excellence in specialized areas. The schools will be provided with equipment, laboratories, and workshops for one new program in either telecommunications or mechatronics (computerized system of production) as well as additional equipment to upgrade one program that is in demand by industries. These centers of excellence will be required to prepare an institutional development plan on use of the new technology and upgrading of the program, costs involved, staff development, recruitment and hiring of additional staff, curriculum development, and equipment lists, among others, for approval by DTE&MT before project funds can be released to the institutions. 37. Introduction of Mining Technology Program. Mineral resources abound in NWFP. To support PGNWFP’s plan to expand the mining industry, an instructional program in mining technology will be offered at one polytechnic near mining sources. The Project will provide modest civil works, laboratories, workshops, equipment, teaching staff, and staff training. 38. Upgrading of Computer Laboratories in 22 Commercial Colleges and 2 Training Centers. Commercial colleges and training centers, which offer a diploma and bachelor’s degree in commerce, are popular among graduates aspiring for service sector jobs. Since most colleges have too many students, many offer evening shifts. All the students must take computer courses. However, as computer facilities are inadequate, training quality is poor. The Project will improve the quality of computer training at 22 commercial colleges and 2 training centers by providing computers, software, and other training equipment. 39. Development of Learning Resource Centers. To support the CBT system and to allow teachers and students to pursue self-learning, a learning resource center-cum-library will be established at all polytechnics and TVTCs. The Project will provide computers, software, multimedia packages, books, and journals. Where library space is inadequate, the Project will provide modest support for extra space with furniture.

c. Improving Relevance of Technical Education and Vocational Trainings through Innovative Schemes

40. This subcomponent will introduce innovative schemes to make TEVT graduates employable. The Project will introduce an entrepreneurship training program in TEVTs in partnership with the private sector and nongovernment organizations (NGOs). A consultant will help develop curriculum, textbooks, manuals, and instructional materials in CBT format for all TEVT institutions. The entrepreneurship training modules will be mandatory for all TEVT students. Teachers will train to conduct the program using the materials prepared under the Project. To help TEVT graduates start their own business, the Project will involve the same

9

consultant along with experienced private sector institute and/or NGOs to facilitate access to credit by graduates. 41. The Project will support on-the-job training to enable students to acquire relevant skills, knowledge, work discipline, and industrial and work experience. The scheme will also foster cooperation between TEVT institutions and the private sector. The IMCs and CMCs will help establish linkages and operational mechanisms with local industries to support this scheme. The Project will engage an entrepreneurship and microcredit specialist to help develop operational guidelines, mechanisms, and procedures to ensure effective implementation of the scheme. 42. The Project will support the recently reestablished employment exchange program at DTE&MT with a network of nine employment exchange centers based at the training centers. The Project will provide equipment, support for staff at DTE&MT and employment exchange offices, and staff development programs. The Project will provide furniture, equipment, and career guidance materials at career guidance and job placement centers at all TEVT institutions. A staff member will be trained as a career guidance and job placement officer, either full or part time. With the support of the CMC/IMC, the center will liaise regularly with industries to obtain information about job openings and provide career guidance and counseling services to TEVT students. The center will maintain a database on local industries, job openings, job placements, and employment records of TEVT graduates, and maintain and update it regularly. A career guidance and job placement specialist will help do this. 43. The Project will help establish a production-cum-service center in partnership with the private sector in selected TEVT institutions. The center will accept work orders for production and provide services to internal and external clients. The management of the unit will be contracted out to qualified private institutions or NGOs that are willing to engage teachers from TEVT institutions and train the students on a profit-sharing basis. The students will be given allowances for their work at the center. TEVT institutions will be allowed to retain a share of the income. The Project will provide facilities, equipment, furniture, staff development, and seed money for the center and support its initial operations. It is expected to become self-sufficient and will be managed independently as a business unit.

3. Access and Equity Enhancement 44. This component will increase access to TEVT by the rural poor and women, especially those who cannot obtain skill training in TEVT programs. This component covers three key areas: (i) introduction of equivalency and certification system, (ii) implementation of nonformal livelihood skills improvement programs at TVTCs, and (iii) establishment of two VTCs for girls in Chittral and Karak.

a. Introduction of Equivalency and Certification System 45. To help workers who want to obtain technical qualifications through external examinations, the Project will establish an equivalency and certification system for a nonformal system with mechanisms for skill assessment based on CBT standards. The system will give qualifying credits and issue trade certificates to students, trainees, and workers who pass the external examinations and assessments. The equivalency system will allow those who have studied before to continue their studies, and skilled workers to obtain formal qualifications abroad. DTE&MT will be responsible for developing, implementing, and institutionalizing the equivalency and certification system for all TVTCs. Selected training centers will be designated as skill assessment centers. The Project will provide them with consultancy services,

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infrastructure, equipment, and materials. Social marketing activities will increase awareness and acceptance of the equivalency and certification system among the students and the public.

b. Implementation of Nonformal Livelihood Skill Improvement Programs

46. Nonformal training programs of DTE&MT to improve livelihoods and provide employable skills to about 20,000 out-of-school youths and adults (at least 50% women) will be provided largely through competitively selected NGOs. Polytechnics and TVTCs can also compete for the funds and may choose to partner with NGOs. Subjects and topics will be based on the communities’ needs and on jobs in the areas. Course duration will be flexible but normally shorter than the standard training programs. Course fees will be minimal to ensure some cost recovery and enable the poor to acquire skills. To be eligible for funds, TEVT institutions and NGOs will conduct a situation analysis with stakeholders and potential trainees to plan livelihood training programs on farm and nonfarm activities for the poor. After the analysis, the TEVT institutions and NGOs will submit a proposal to conduct nonformal livelihood training programs to the project management unit for approval and funding. Livelihood training programs will be introduced to remote communities and the rural poor. Funding will be based on the duration of the course, number of trainees, and other criteria. TEVT institutions offering nonformal training programs will be allowed to retain and use the money from the Project, and the fees to supplement their regular budgets. The programs could eventually be made a regular feature of TEVT institutions as outreach and community services and to promote jobs for the poor.

c. Establishment of Two Technical and Vocational Training Centers for Girls

47. The Project will support the construction of two TVTCs for girls in Chittral and Karak, which do not have training facilities. The tourism and food industries, especially, in these remote districts could hire many skilled workers. The centers will be provided with basic infrastructure, equipment, furniture, a learning resource center, and instructional materials similar to those to be provided to other TVTCs. C. Special Features 48. The Project will help NWFP strengthen TEVT institutions and to meet the needs of the market and of women and rural poor. Existing investments will be maximized by filling all teacher vacancies, providing in-service training to teachers, improving quality and relevance of programs, and allocating adequate budget for basic operations and maintenance and functioning of TEVT institutions before embarking on any large-scale expansion. 49. The Project will improve TEVT institutions’ efficiency by giving them autonomy and improving their management and instructional leadership, promoting partnership with the private sector to run evening classes and production units, and supporting performance-based management. This approach is necessary to move away from a supply- to a demand-driven TEVT system. 50. The Project will support TEVT programs for females and the poor in rural areas. It will also explore the possibility of introducing double shifts in selected TEVT institutions to run programs for males and females. The Project will support selected hostel facilities for rural women; livelihood programs (fisheries, livestock, agriculture, food preservation, crafts, etc., and

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access to microcredit) for rural poor and women; and engagement of NGOs to provide services to them. D. Cost Estimates 51. The total cost of the Project is estimated at $15.7 million equivalent, of which an estimated $3.7 million or 24% is the foreign exchange cost. The local currency cost is estimated at $12 million, equivalent to 76% of the total cost. Cost estimates by component are shown in Table 1, with details in Appendix 7.

Table 1. Cost Estimates by Component ($ million)

Project Component Foreign

Exchange Local

Currency Total Cost

Percent of Base Cost

A. Base Cost 1. Institutional Development 0.2 3.1 3.3 242. Improvement in Quality and Relevance 2.5 3.6 6.1 453. Access and Equity Enhancement 0.1 2.2 2.4 185. Project Management 0.1 0.5 0.6 44. Taxes and Duties 0.0 1.1 1.1 8

Total Base Cost 2.9 10.5 13.5 B. Contingencies

1. Physical Contingency 0.1 0.2 0.3 2. Price Contingency 0.3 1.2 1.5

Subtotal 0.4 1.4 1.8 C. Interest Charge 0.4 0.0 0.4

Total Project Cost 3.7 12.0 15.7 Percentage of Foreign Exchange and Local Currency 24 76 100

Source: Asian Development Bank estimates. E. Financing Plan

52. The Government has requested a loan of $11.0 million equivalent from ADB’s Special Funds resources to help finance 70% of the total project cost. The loan will have a 32-year term, including a grace period of 8 years with an interest charge of 1.0% per annum during the grace period and 1.5% per annum thereafter, and such other terms and conditions as are substantially in accordance with those set forth in the draft loan and project agreements. The Borrower will be the Islamic Republic of Pakistan. The Government will on-lend the loan to PGNWFP on the same terms and conditions. ADB will finance 100% of the foreign exchange cost, totaling 24% of total project cost, and 61% of the local currency cost or $7.3 million equivalent. PGNWFP will provide the remaining $4.7 million equivalent as counterpart financing, accounting for 30% of the total project cost, which includes financing 24% of civil works costs, land, incremental staff salary and recurrent cost, counterpart staff for programs receiving project support, and taxes and duties. The financing plan is in Table 2.

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Table 2. Financing Plan ($ million)

Source Foreign

Currency Local

Currency Total Percent

Government 0.0 4.7 4.7 30 Asian Development Bank 3.7 7.3 11.0 70

Total 3.7 12.0 15.7 100 Source: ADB estimates. F. Implementation Arrangements

1. Implementation Arrangements 53. The DOI will be the Project Executing Agency. A steering committee, headed by the additional chief secretary of the Planning and Development Department, has been established, and include representatives from DOI, DOF, Chamber of Commerce, DTE&MT, and local government. The steering committee will meet at least once every quarter to review project implementation. It will be responsible for coordinating policy reforms, addressing bottlenecks, and providing overall guidance. 54. The DTE&MT will be the Implementing Agency as it was for the TEP. A project management unit (PMU) will be set up at or near DTE&MT, with a project director appointed competitively and supported by a deputy project director, accounts/disbursement officer, procurement officer, monitoring and evaluation officer, and other staff as appropriate whose qualifications, experience and expertise are acceptable to ADB. The project director will be responsible for the overall implementation of the Project in close collaboration with the recipient TEVT institutions. The PMU will organize quarterly implementation review meetings and submit a quarterly progress report to the steering committee and ADB. Implementation arrangements are described in Appendix 8. 55. Each district affected by the Project will establish a DMC and will assign a district project coordinator to supervise and implement district-level activities. Each coordinator will seek inputs from either consultants or experts from PGNWFP. The PMU will provide technical support to coordinators.

2. Implementation Period 56. The Project will be implemented over 6 years, starting in April 2005, and will be completed by 31 October 2010. A tentative implementation schedule is in Appendix 9.

3. Procurement 57. Procurement of ADB-financed goods, related services, and civil works will be carried out according to ADB’s Guidelines for Procurement. Each supply contract for equipment and materials estimated to cost the equivalent of more than $500,000 will be awarded on the basis of international competitive bidding. Each civil works contract estimated at less than $1 million will be awarded on the basis of local competitive bidding. Each supply contract for equipment or materials estimated to cost the equivalent of $500,000 or less will be awarded on the basis of international shopping. Equipment and textbooks estimated, in aggregate, at less than $100,000 equivalent may be directly procured. The indicative contract packages are in Appendix 10.

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4. Consulting Services 58. A total of 77 person-months of consulting services (15 international and 62 domestic) will be used following ADB’s Guidelines on the Use of Consultants and other arrangements satisfactory to ADB for the engagement of domestic consultants. The consultants will be selected and engaged individually or as a firm. A higher education institution and/or management institute will be selected and engaged for the management development program, performance-based management, and development of competency-based training system development. The quality- and cost-based selection method will be applied to select and engage consulting firms. Appendix 11 provides indicative terms of reference and consultancy requirements.

5. Disbursement Arrangements 59. DOI will, immediately after the loan effectiveness, establish an imprest account at a branch of the National Bank of Pakistan, Peshawar for the PMU to expedite disbursement of the loan proceeds, in accordance with ADB’s Loan Disbursement Handbook and detailed arrangements between the Government and ADB. The initial amount to be deposited in the imprest account will not exceed $300,000. ADB’s statement of expenditure procedures will be followed to liquidate the imprest account and reimburse individual payments of $50,000 and below. 60. To expedite preparatory activities, DOI must take advance action, particularly to select and engage a higher education institution and/or a management institute, select and recruit consultants, and prepare bid documents. Retroactive financing of up to $200,000 has been approved in principle for preparatory activities between loan negotiations and loan effectiveness. All advance action will be in accordance with ADB’s Guidelines on the Use of Consultants and Guidelines for Procurement. PGNWFP was advised that the approval of advance action and retroactive financing (in principle) does not commit ADB to finance the Project.

6. Accounting, Auditing, and Reporting 61. The PMU will prepare quarterly reports on project implementation in line with ADB’s project performance report, and submit them to ADB within 30 days of the end of each quarter. Within 3 months of physical completion, the PMU will submit a project completion report to ADB. DTE&MT will (i) maintain separate records and accounts for all expenditures financed out of the proceeds of the loan; (ii) ensure that accounts and financial statements are audited annually, in accordance with sound accounting principles by auditors acceptable to ADB; and (iii) furnish to ADB, not later than 9 months after the close of each fiscal year, certified copies of audited accounts and financial statements, and the auditor’s report. The report will include an audit with separate opinion on the use of imprest account with the statement of expenditure procedure.

7. Project Performance Monitoring and Evaluation System 62. The Project focuses on strengthening MIS, LMIS, and PPMES, as well as undertaking research on areas such as tracer studies of graduates and labor market surveys. During the first year, the Project will help DTE&MT establish a comprehensive project performance monitoring and evaluation system by developing baseline information on all TEVT institutions, and developing MIS and LMIS linked to a set of key monitoring indicators indicated in the project framework. The PPMES will help monitor progress made on key indicators, and also help all

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TEVT institutions monitor their performance against the indicators in their institutional development plan. The indicators will cover internal and external efficiency as well as quality and institutional indicators such as number of teacher positions filled, quality of teachers, availability of instructional materials, institutional capacity, etc. The PPMES will allow comparison between the status at the time of project start-up and outputs at midterm and end of the Project. TEVT annual planning and budgeting will be linked to information available from the PPMES. The PPMES will establish mechanisms to introduce mandatory reporting and sharing of information with the public. To ensure effective and transparent utilization of resources, PGNWFP will require the TEVT institutions to provide financial information to DMCs each year. Appendix 12 provides a list of key indicators and strategy for the PPMES.

8. Project Review 63. PGNWFP and ADB will jointly conduct two semiannual reviews (at least one full review). PGNWFP and ADB will jointly establish the issues to be addressed during each mission, and reports required. PGNWFP and ADB will carry out a midterm review of project implementation arrangements, focusing on a few key issues, during the third year of implementation. ADB and PGNWFP will consider changes based on the findings of the review.

IV. PROJECT BENEFITS, IMPACTS, AND RISKS

A. Project Benefits 64. The Project focuses on consolidating and strengthening existing TEVT programs, and improving TEVT institutions’ capacity to become more competitive, provide high-quality and relevant skills to TEVT students in selected technologies, and give women and the rural poor access to training. The Project will make TEVT more responsive to labor market needs and help graduates find jobs quickly at home or abroad or acquire microcredit to start own ventures. The Project’s staff development activities will improve TEVT teachers’ practical and subject skills. Enterprises and other employers will benefit from the availability of trained and skilled workers, which will improve production quality, increase productivity, and make management more efficient. All these inputs will improve the TEVT system’s external efficiency by creating jobs and increasing earnings. The Project will benefit the economy, particularly NWFP, by contributing to long-term sustainable industrial, commercial, and agricultural growth. 65. In over 6 years the Project will directly benefit about 11,000 students (about 3,000 graduates) in 12 polytechnics, about 20,000 students in 38 training centers (about the same number of graduates), and about 20,000 out-of-school adults and women who will receive nonformal livelihood training. Other direct beneficiaries include about 450 teachers in polytechnics, about 390 in training centers, and about 550 IMC and CMC members. Of the total direct beneficiaries, 75% are expected to come from rural areas, about 25% will be females, and about 40% will be from economically poor families. Poor communities will benefit mostly from the livelihood programs, but also from DAE and trade programs since most poor students cannot afford general education. 66. The DAE and trade programs will benefit SMEs in by introducing improved learning methods, resource materials, and modern equipment. The focus on practical application and linkages with the industry for students and teachers will allow polytechnics and training centers to learn from industry, while giving industry skilled graduates. TEVT graduates could also work abroad, as many Pakistanis do, and remit the earnings. Livelihood training will give rural out-of-school youths and adults job and self-employment skills. With NGO support, programs that are

15

in demand can be provided with great flexibility. TEVT graduates will be helped to access microcredit to start small ventures. All these measures will reduce poverty, especially in rural areas. The Project also gives women access to quality TEVT by strengthening polytechnic institutes and training centers, supporting the establishment of two new training centers, and constructing facilities for five training centers for women. B. Project Risks 67. The Project faces four possible risks: financial, institutional, policy, and economic. Appendix 13 identifies potential risks and proposed mitigation measures. First, PGNWFP’s effort to expand TEVT without consolidating and ensuring effective services at the existing training institutes could erode the financial base needed to run them. The Project helps strengthen the capacity and increase the autonomy of TEVT institutions and seeks PGNWFP’s assurances for adequate recurrent budgets and notification or directive to enable TEVT institutions to manage their financial resources. The economic, poverty impact, and financial analysis is in Appendix 14. 68. Second, TEVT institutions lack the autonomy and leadership to allow them to meet labor market needs. While most TEVT institutions have IMCs or CMCs, few of these committees are effective due to weak governance structure and role of the principals. The Project includes a management development program and PBMS to strengthen the capacity of principals, teachers, and staff of TEVT institutions. The Project also supports capacity-building programs for IMCs and CMCs, and provides modest financial assistance to make them more effective in supporting TEVT institutions. 69. Third, the quality, management, and financing of TEVT programs can be improved only by improving plans, targets, and policy stipulations. The Project aims to implement innovative measures such as a quality assurance and accreditation system, PBMS, and examination reform, among others, to enable TEVT institutions to improve quality, relevance, efficiency, and effectiveness of their programs and operations. The Project also seeks PGNWFP’s assurances to align key TEVT policies at the provincial level. 70. Fourth, the economy is not growing fast enough to absorb more graduates from TEVT institutions. Unless the private sector is engaged more actively, TEVT graduates will continue to have difficulty finding jobs. The Project supports much greater involvement of the private sector through IMCs and CMCs, production units, guidance counseling, more organized labor market information, and credit facilitation for self-employment.

1. Environment

71. The Project’s environmental categorization is "C" as the initial screening has not identified any adverse environmental impacts.

2. Social Analysis

72. The Project aims to increase equity and effectiveness of TEVT programs by supporting two training centers and providing new facilities for five centers mainly for rural girls. The focus on improving quality and organization of all TEVT institutions will benefit largely rural poor students. The summary poverty reduction and social strategy form is in Appendix 15.

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V. ASSURANCES

A. Specific Assurances

73. Assurances. PGNWFP has given the following assurances, in addition to the standard ones, which have been incorporated in the legal documents. 74. To implement new initiatives and programs to improve the quality, relevance, and efficiency of the TEVT programs and institutions in accordance with the national policies on the TEVT subsector, PGNWFP commits to issue within 12 months of loan effectiveness, the following binding directive(s):

(i) TEVT institutions in NWFP will (a) adopt the CBT system developed under the

Project for selective subjects and courses in all trades and technologies; (b) require teachers of these subjects and courses to conduct practical examinations following CBT principles and format; (c) develop and implement on-the-job training programs as an integral part of the curriculum for all technologies and trades; (d) encourage teachers to obtain industrial experience with pay as part of the ongoing in-service training programs; and (e) gradually assume more autonomy in the management and utilization of resources, including retention of revenues to support their activities according to the PBMS to be introduced under the Project.

(ii) DTE&MT in collaboration with the PBTE will (a) develop, implement, and

institutionalize the equivalency and certification system in NWFP to provide more opportunities and greater access to TEVT for the out-of-school youths and adults; and (b) develop, implement, and institutionalize an accreditation and quality assurance system to improve the quality of TEVT institutions in NWFP.

75. To ensure continuity, efficiency, and smooth implementation of the Project, PGNWFP agrees that the project director will be appointed for at least a term of 3 years. In case of an absolute necessity to replace the project director, inter alia, due to unsatisfactory performance, PGNWFP will appoint a new one, on a competitive basis, whose qualifications, experience and expertise are acceptable to ADB. 76. To ensure effective and timely implementation of the Project, PGNWFP commits that upon completion of the TEP, essential experienced staff of the TEP will be transferred to the PMU. 77. PGNWFP will sanction recruitment of necessary teaching and non-teaching staff for (i) any new training centers before procurement of equipment for and construction of such training centers; and (ii) any new programs contemplated under the Project before commencement of these programs. PGNWFP will start recruitment of such staff immediately after the (a) establishment of new training centers; and (b) commencement of new programs. 78. PGNWFP agrees that the existing R&D cell will become part of the PMU. PGNWFP further agrees that immediately after the loan effectiveness (a) the R&D cell will be integrated under DTE&MT, and (b) PGNWFP will be fully responsible for its expenses. 79. Unless otherwise agreed, PGNWFP will ensure that within 9 months of loan effectiveness each TEVT institution will develop and submit for review and approval of DTE&MT

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a 5-year institutional development plan that clearly identifies objectives, targets, staffing requirements, capacity-building needs, and budgetary requirements to qualify for civil works, equipment, and other support from the Project. 80. PGNWFP will allocate and make available, in a timely manner, requisite counterpart funds from its budget for each fiscal year for the smooth implementation of the Project. 81. PGNWFP will ensure that within 11 months of loan effectiveness, to enhance competitiveness of the polytechnics and training centers, DTE&MT will prepare for PGNWFP’s approval a 5-year plan encompassing (i) TEVT rationalization, (ii) teacher career development, and (iii) gradual autonomy to TEVT institutions. PGNWFP commits that the implementation of such a plan will begin within a month after its approval. 82. PGNWFP commits to maintain the additional recurrent costs of approximately $370,000 equivalent required annually after the project completion on 31 October 2010 to sustain the project investments. 83. PGNWFP will ensure that basic MIS and LMIS, including all baseline information, will be set up by the PMU within 12 months of loan effectiveness, with plans for further development during the project period. 84. PGNWFP will ensure women's participation in project implementation in accordance with the gender strategy set out in Appendix 15. Based on the gender strategy, a gender action plan to improve gender imbalances in the TEVT subsector will be prepared by the PMU and approved and implemented by DTE&MT within 12 months of loan effectiveness. PGNWFP will attempt to ensure that at least 50% of the livelihood training programs will include women. 85. PGNWFP confirms that all required land for the Project is PGNWFP’s land, free from any encumbrances, structures, human settlements, or cultivation. PGNWFP further confirms that the Project will not entail any land acquisition or resettlement and that no persons will be adversely affected in terms of ADB’s Policy on Involuntary Resettlement and ADB’s Policy on Indigenous People. 86. PGNWFP will ensure that adequate environmental protection and safety measures will be included in the design of the project facilities, and that the project facilities will be constructed, operated, and maintained in accordance with ADB’s Environmental Policy. PGNWFP will ensure implementation of the mitigation and monitoring measures as set out in the Initial Environmental Examination carried out for the Project. 87. PGNWFP will support and encourage public-private partnerships in the sharing and utilization of resources of TEVT institutions, such as management of production-cum-service centers; delivery of nonformal livelihood training programs, operation of second shift in TEVT institutions; and establishment of DMCs and provision of seed money to DMCs, IMCs, and CMCs. B. Conditions of Loan Effectiveness 88. The project director for the PMU, whose qualifications, experience, and expertise are acceptable to ADB, will be selected and appointed on a competitive basis. 89. The PMU will be fully staffed and become functional.

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90. The PMU will prepare and submit for ADB’s review and approval the shortlist of candidates, terms of reference, and invitation letters for the management development contract. 91. Planning Commission Performa-1 will be approved by the competent authorities.

VI. RECOMMENDATION

92. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Asian Development Bank (ADB) and recommend that the Board approve the loan in various currencies equivalent to Special Drawing Rights 7,339,000 to the Islamic Republic of Pakistan for the Restructuring of the Technical Education and Vocational Training System Project (North-West Frontier Province) from ADB’s Special Funds resources with an interest charge at the rate of 1% per annum during the grace period and 1.5% per annum thereafter; a term of 32 years, including a grace period of 8 years; and such other terms and conditions as are substantially in accordance with those set forth in the draft Loan and Project Agreements presented to the Board.

Tadao Chino President

18 November 2004

Appendix 1 19

PROJECT FRAMEWORK

Design Summary Performance Indicators/Targets Monitoring Mechanisms Assumptions and Risks Goal Help the Government reduce poverty by making technical education and vocational training (TEVT) competitive, and TEVT graduates employable, in line with emerging market needs

For project institutions • Examination passing rate improved by 25% • Employment rate of TEVT graduates improved by 25% • Average earnings of TEVT graduates improved by 20% • About 5% TEVT graduates able to access credit for self- employment

• National statistics • Examination results • Performance monitoring and evaluation system (PMIS) • Labor market information • Tracer studies • Project completion report (PCR) • Self-employment records

Objective and Purpose Improve the quality and relevance of TEVT programs by making them accessible, especially to females and the rural poor; increasing graduates’ employability; and making key TEVT institutions efficient

Institutional efficiency (2005–2010) • Dropout rates in TEVT institutions reduced by 25% • Policies reformed to increase autonomy and improve management • Research and development (R&D) cell integrated with directorate of technical education and manpower training (DTE&MT) and strengthened, with labor market information system (LMIS) and management information system (MIS) to improve information on and analyses of key TEVT issues • Over 25% of TEVT institutions enabled to establish linkages with industry

Quality and Relevance • Examination passing rate improved by 25% • Facilities and instructional materials upgraded selectively • New technologies and trades introduced to meet emerging market needs • Qualifications, experience, and skills of 25-50% TEVT teachers improved • Education standards and evaluation system improved through competency-based training (CBT) and quality assurance

Access and Equity • Access to TEVT among poor and female students increased (mechanisms and targets to be developed) • Equivalency and certification system introduced

• Baseline data disaggregated by gender and compared with status at the end of the Project (2010) • Quarterly progress reports • Review missions • Midterm review • PMIS • Educational management information system (EMIS) • Tracer studies • PCR

• The provincial government is committed to TEVT reform and provides adequate mandate, resources, and appropriate authorities to key institutions to carry out their functions.

• Institutional efficiency is closely linked to gradual efforts to change the culture of stakeholders toward internal and external efficiency.

• Credit institutions are willing to lend to TEVT graduates, who are able and willing to seek loans to start their own ventures.

• TEVT programs are closely linked with market needs and quality inputs.

• Industries are willing to develop partnerships with TEVT institutions.

• Modest economic growth is sustained during the project period.

Continued on next page

Appendix 1 20

PROJECT FRAMEWORK—Continued

Design Summary Performance Indicators/Targets Monitoring Mechanisms Assumptions and Risks • Livelihood training provided to

about 20,000 youths and adults • Entrepreneurship training, on-the-job, and counseling services introduced in all TEVT institutes

Project Outputs 1. Institutional efficiency of TEVT institutions improved

a. TEVT organization strengthened

b. TEVT planning and

financial management strengthened

c. Management program

for TEVT strengthened and made more relevant

2. Improved quality and relevance of TEVT programs

a. Teacher competence improved

b. Facilities upgraded in

selected polytechnics, TVTCs

c. Job opportunities

improved 3. Equitable access increased

a. Polytechnics’ Intake capacity expanded

• DTE&MT strengthened with training of staff, equipment, and appropriate facilities • Provincial board of technical education strengthened through computerization of the examination system, improvement of question setting and evaluation, and training of examiners • R&D strengthened and absorbed under DTE&MT • TEVT management and planning enhanced through MIS, LMIS, PMIS, and refined terms of reference of key institutions and management committees • TEVT financing improved through competitive funding and resource mobilization • Management training modules reviewed and strengthened through targeted inputs and partnership with relevant institutions and experts • National Institute for Science and Technology Education (NISTE) engaged to support CBT and teacher training to meet emerging needs • Qualifications of about 300 TEVT teachers upgraded, including through exposure to industry • Quality of physical facilities, equipment, and instructional materials upgraded to meet emerging needs • Students made more employable through improved counseling, on-the-job training, and job placement services • Access to credit enhanced through entrepreneurship training and credit facilitation support

• Two new training centers set up in Chitral and Karak, and facilities constructed for five existing training centers

• Baseline data disaggregated by gender and compared with status at the end of the Project (2010) • Quarterly progress reports

• Semiannual reports from project institutions • Review missions • Midterm review • PMIS • MIS • Tracer studies • PCR

• Provincial government of North-West Frontier Province (PGNWFP) is committed to provide greater autonomy to TEVT institutions. • PGNWFP is committed to align its policies in line with national policies on TEVT reform. • PGNWFP is committed to increase allocations to TEVT and supports rationalization and resource mobilization.

• TEVT institutions get support from PGNWFP to recruit and retain qualified teachers for all vacancies. • TEVT institutions are committed to apply CBT and reform the curriculum and teacher training accordingly with support from PGNWFP. • PGNWFP is able to provide support and the framework to allow NGOs and the private sector to participate actively in TEVT.

• Local industries are convinced and willing to participate more actively in TEVT-industry linkages.

Continued on next page

Appendix 1 21

PROJECT FRAMEWORK—Continued

Design Summary Performance Indicators/Targets Monitoring Mechanisms Assumptions and Risks b. Access to technical

training centers, vocational training centers, and nonformal livelihood

• Three new technologies added in existing polytechnics to benefit 600 students (girls and boys), and the bachelor’s degree in technology created to benefit 200 students • About 20,000 people trained in livelihood activities

• Target groups are aware of and able to take advantage of training opportunities offered under the Project.

Project Activities/ Inputs 1. Improve institutional efficiency Provision of the following: • Targeted training for staff, and civil works, equipment, and educational materials to establish the Directorate of Technical Education (DTE) • Technical assistance and training to improve TEVT examinations, and R&D • Management training for policymakers, planners, administrators, and principals of TEVT institutions on TEVT policy, financing, resource mobilization, equity, monitoring, and quality control

2. Improve quality and relevance Provision of the following: • Training for about 300 teachers • Upgraded facilities to meet curriculum needs • Relevant and adequate instructional materials • Entrepreneurship training for polytechnic students and other eligible trainees • Technical assistance and training to improve counseling services, on-the-job training, and industrial linkage

3. Enhance equitable access Provision of the following: • Civil works, equipment, and furniture for new and existing TEVT institutions to expand coverage • Targeted intake and support for TEVT institutions

• PMU staff and consultants recruited on time and able to achieve the targets • DTE&MT established and fully operational, with appropriate training to key staff and equipment and facilities

• Number of teachers trained, facilities constructed or upgraded, and learning resources provided • Institutional development plans drawn up by TEVT institutions during the first and last years

• Framework for nongovernment organization (NGO) and private sector involvement available during the first year • New and improved facilities, equipment, and furniture available from the Project, and number of students enrolled in various programs

• Baseline data disaggregated by gender and compared with status at the end of the Project (2010) • Quarterly progress reports

• Semiannual reports from project institutions • Review missions • Midterm review • PMIS • EMIS • Tracer studies • PCR

• Adequate Government contributions are available on time to expedite implementation.

• Government of Balochistan, participating districts, and TEVT institutions are committed to autonomy and performance management.

• Parents, students, and communities are made aware of training opportunities and are keen to enroll their children in the programs.

PROBLEM ANALYSIS OF THE TECHNICAL EDUCATION AND VOCATIONAL TRAINING SYSTEM

22 Appendix 2

Government Actions

Project Actions

Lack of MIS and LMISand weak monitoring

Theory-orientedcurriculum

Poor methods ofassessment

Low participation of females in TEVT and labor market

Poor facilities, inadequate materials,

teacher vacancies

Lack of incentives and framework for NGO

and the private sector

Conduct market re-search, employmentsruveys, tracer studies to determine needs of industries

Improve quality through filling teacher vacancies, in-service training, enhanced capacity of principals and staff

Provide greater access to females and the poor

Encourage the private sector and NGOs to participate in operations and management of TEVT programs

Commitment to provide more resources for O&M for TEVT

Issuing notifica-tions to support policy reform

Program for public-private partnership

Support PBMS, quality assurance, and accreditation

Introduce CBT and examination reform

Upgrade existing facilities with staff development, equip-ment, and materials

Establish 3 new and construct 5 new training facilities

Support innovative measures to enhance effective-ness of TEVT

Support LMIS, MIS, and monitoring

Weak linkage with labor market

Low internal and external efficiency

Poor quality of TEVT

Weak management and leadership of TEVT programs

Unequal access to and option for TEVT

Limited resources for O&M

Limited NGO/ private sector

Supply-driven TEVT with many structural and operational problems

CBT = competency-based training, LMIS = labor market information system, MIS = management information system, NGO = nongovernment organization, O&M = operations and maintenance, PBMS = performance-based management system, TEVT = technical education and vocational training system. Source: Appraisal Mission and consultants’ report.

Appendix 3 23

SECTOR REVIEW

A. General Education 1. General education in Pakistan is divided into elementary, secondary, higher-secondary, and higher education. Elementary education is subdivided into primary (grades 1–5) and middle levels (grades 6–8). The secondary level comprises grades 6–10, and the higher-secondary level, grades 11–12. A bachelor’s degree in general science or humanities takes another 2 years after higher-secondary school, for a total of 14 years, while engineering and medicine programs are longer. 2. The Ministry of Education is responsible for policy, planning, and overall educational standards at the federal level. The ministry also has control over the curriculum for grades 1–12. The departments of education are responsible at the provincial level. Recently, this responsibility has been devolved to the district level, where the executive district officer for education supervises and promotes education. B. Technical Education and Vocational Training 3. Technical Education and Vocational Training (TEVT) has three subcomponents: school level prevocational, post grade 8 level TEVT, and higher-level engineering and technology education. The introduction and integration of prevocational and vocational courses into general school education dates back to the early 1950s, and many experiments have been done at this level. However, these efforts haven’t made a significant dent in general school education, which since colonial rule has been geared to produce clerks and other office workers rather than technicians, engineers, and scientists. The education policy of 1972–1980 suggested a major shift from general education and emphasized relating education to the world of work. This resulted in the introduction of agro-technical studies (wood work, metal work, and electricity) in urban, agriculture in rural, and home economics in girls’ middle schools in grades 6–8. In grades 9–10 the introduction of vocational courses such as agriculture, commerce, home economics, and industrial arts was encouraged. More recently, this approach is reaffirmed under the National Education Policy and Education Sector Reform Program. 4. The rapid growth of the TEVT subsector is due to the Government’s desire to increase access of rural youths and women to TEVT to improve their job skills and means of livelihood. The lack of places in the universities also led to further expansion of the subsector, as it became an alternative channel for the youth and school leavers. This increased demand for TEVT. All through the years, the Government was mainly responsible for providing TEVT to youths, with little private sector participation. Only during the last few years has the private sector been encouraged to provide TEVT, through, for example, incentives under the Education Sector Reform Program. 5. Vocational Training. Vocational training caters to unemployed, unskilled youths and those who either drop out of school or fail to qualify for admission to the polytechnic institutes and colleges. Vocational training expanded in 1980–1990, when several training centers were established and number of old ones upgraded. The Ministry of Youth Affairs also established 20 youth vocational centers. The National Training Ordinance in 1980 expanded vocational training and established the National Training Board and provincial training boards to improve vocational training, start training women in nontraditional trades, and closely involve employers in planning and administering vocational training.

Appendix 3 24

6. The duration of and entry qualifications for different vocational training programs vary widely. Training programs range from a few weeks to 2 years, and entry qualifications vary from middle- to secondary-school pass. With 80% practice and 20% theory, vocational courses are more practical than technical education. Graduates are expected to perform semiskilled and skilled jobs in various sectors or to be self-employed. 7. North-West Frontier Province (NWFP) has 38 technical and vocational training centers: 12 vocational training centers for boys, 15 government technical and vocational centers, and 11 government vocational training centers for women. These centers offer training in 17 trades. Except for a few well-established training centers such as the government technical and vocational center in Peshawar, with about 850 trainees in 11 trades in day and evening shifts, most are small and offer traditional trades, ranging from 6 months to 1 year. Thirteen of these training centers (eight for girls and five for boys) are in rented houses or old facilities and have limited training capacity and equipment. While facilities are limited, instructional materials are even scarcer. A training cost analysis in 2001–2002 showed that each girl trainee was provided a total of PRs41 for instructional materials, compared to Rs158 for boys. In 2002, 3,752 students enrolled in the centers—506 for diplomas and 3,246 for certificates. The centers had 389 teaching staff members. 8. Technical Education. Technical education refers to postsecondary training of middle-level supervisory technicians carried out in polytechnic institutes. These technicians serve as a link between engineers and technologists on the top and skilled and semiskilled workers below them. The rapid growth of the TEVT subsector was the result of the Government’s desire to increase access of rural youth and women to TEVT to improve their job skills and means of livelihood. The lack of places in universities also led to expansion of the subsector, as it became an alternative channel for the youth and school leavers. This resulted in increasing demand for TEVT. 9. A three-year course leading to a diploma of associate engineer (DAE) is the main polytechnic program. The curriculum comprises 60% practice and 40% theory. The polytechnic institutes offer a wide range of training in traditional as well as new and emerging technologies. The bigger institutes offer up to eight technologies. NWFP has 12 polytechnics, with about 4,500 students and 450 teachers. For a province with over 20 million people, this is inadequate, and much fewer women enroll than in Punjab and Sindh. 10. DAE holders’ persistent demand for extension of facilities to higher education resulted in the introduction in the late 1970s of the bachelor’s degree in technology (B. Tech.) throughout the country. The B. Tech (pass course) is two years—one year on the job and one year teaching; and the B. Tech. (honors) is two years—one year on the job and one year schooling. For offering a B. Tech program, a number of polytechnic institutes were upgraded to colleges of technology. The program is offered only by colleges of technology through affiliation with a recognized university in the province. This initiative is considered important as it (i) allows DAE graduates to train further; and (ii) upgrades DAE teachers’ qualifications, as about 50% have only DAEs. C. Governance, Structure, and Management of Technical Education and Vocational

Training 11. In NWFP the Government has initiated major structural changes in TEVT system. First, the directorates of technical education and of manpower training were merged into the Directorate of Technical Education and Manpower Training (DTE&MT) at the beginning of 2002 under the Department of Industries (DOI). Then in September the TEVT Authority was

Appendix 3 25

established as an autonomous body with powers to take over all polytechnics, commerce colleges, technical and vocational training centers, and similar institutes. 12. Restructuring can be complicated, needing political will. Massive support will be needed for the new system to fulfill its mandate and aspirations. E. Demand and Supply of Skilled Workers and Technicians 13. Traditionally most TEVT institutions, particularly the polytechnics, were established to train the workforce for Government departments and public sector organizations. Until recently end users have not been involved in the operation, management, and program delivery, and course have not been aligned to industries’ needs. TEVT institutions have thus become marginalized, with employers showing little interest in cooperating with the institutions due to lack of interaction between them and industries. 14. A labor market survey conducted in 2003 under an Asian Development Bank advisory technical assistance found that, first, graduates identified lack of industrial training skills and inadequate practical content as a key weakness of TEVT programs, followed by shortage of equipment, insufficient consumables and learning materials, and poorly prepared teachers. Most enterprises rated practical skills, troubleshooting, report writing and communication skills, and safety consciousness as poor. Finally, graduates who were hired had to be trained for 3 more months by their employers. 15. Second, future demand for skilled workers and technicians is high in electrical, mechanical, electronics, computer and information, telecommunication courses, and moderate in civil works and construction, auto and diesel, refrigeration and air-conditioning, plastic, rubber, and petroleum trades and technologies. 16. Third, TEVT skills are mismatched with those required by the industry due to dated curriculum; lack of trained teachers; shortage of funds; an inflexible training system; and lack of training in practical aspects, troubleshooting, report writing, and communication. E. Key Issues and Challenges 17. Several areas need improvement. First, TEVT programs should be consolidated to ensure that they are organized and managed effectively to meet the needs of the local and foreign labor markets. Second, as the private sector’s involvement in TEVT is limited, the provincial government of North-West Frontier Province (PGNWFP) needs to improve TEVT, particularly for women and the rural poor, through policy reforms, regulation, targeted investments, monitoring and evaluation, and a greater role for nongovernment organizations and the private sector. Third, PGNWFP needs to link TEVT with industry, make TEVT programs practical, provide labor market information and counseling to TEVT students and graduates, employ performance-based management to target funds, and be flexible about changing teaching and learning. Finally, TEVT institutions should have autonomy, which will promote effective leadership and performance-based management and allow TEVT providers to become more responsive and competitive.

Appendix 4 26

LESSONS LEARNED

Lessons Learned Incorporations of the Lessons in Project Design Project Design and Processing 1. Stakeholders’ participation in the design and implementation of past technical education and vocational training (TEVT) projects was inadequate. 2. Umbrella projects coordinated by the federal Government did not solve project management and implementation problems at the provincial level. 3. Project cost estimates were not accurately calculated during the Appraisal Mission. 4. Omissions or discrepancies in the planning commission form 1 were not resolved on time, especially during the Appraisal Mission. 5. The Government could not provide recurrent budgets to cover operations, management, and maintenance of new institutions and facilities. 6. Data on demand and supply of labor markets in various industries were neither available nor considered in TEVT curriculum design. 7. Project design should include industrial experience in the polytechnic curriculum as well as in the preservice and in-service training of technical teachers. 8. Further assistance from ADB should focus on micro-level and institutional issues to solve various project implementation deficiencies and give TEVT institutions autonomy. Project Implementation 9. Project implementation was delayed by weak coordination between the federal and provincial governments and bureaucratic practices. 10. Frequent turnover of the project implementation unit (PIU) project director and manager delayed and impaired project implementation.

1. The project design incorporates the views, needs, and feedback from government agencies, private sector representatives, NGOs, teachers, students, and communities through extensive consultations during project formulation. 2. The Project is province based and will be implemented by the province to ensure full commitment and expeditious project implementation. 3. Cost estimates were prepared in collaboration with the provincial government and with assistance of financial analysts to ensure that data are accurate and complete. 4. The draft form was prepared, discussed, and revised with inputs from government agencies during project preparations and will be reviewed during appraisal. 5. The provincial government was requested to earmark adequate recurrent budgets to support project activities and to give highest priority to provide adequate recurrent budgets to project institutions and facilities. 6. A labor market survey was conducted during technical assistance implementation, and findings on demand-supply of skilled workers and technicians incorporated into the project design. 7. The project design includes on-the-job training as an integral part of TEVT. Technical teachers will receive in-service training in industry to upgrade their skills and knowledge. 8. The project design incorporates components to enhance capacity and autonomy of TEVT institutions to become more independent in managing their programs and operations. 9. The provincial government will take full responsibility for project implementation activities. 10. A professional project director will be appointed from the market. The Government agrees that the project director will not be replaced for at least 3 years. If the project director needs to be replaced, the Government will seek ADB’s concurrence.

Continued on next page

Appendix 4 27

LESSONS LEARNED—Continued Lessons Learned Incorporations of the Lessons in Project Design 10. Inadequate training in project management, procurement, project accounting, and auditing of staff of executing agencies and PIU delayed and impaired project implementation. 11. Inadequate supervision by ADB’s review missions delayed project implementation. 12. Delayed recruitment of teachers for new technologies and subjects due to restrictive government regulations and lack of recurrent budget to hire contractual teachers impaired the new programs. Project Sustainability and Impact 13. Lack of private sector cooperation and support in operating and managing TEVT institutions results in their poor quality and graduates’ skill mismatch. 14. Planning, management, monitoring, and supervision of the TEVT system was ineffective due to lack of baseline data, benchmarks, management information system, benefit monitoring and evaluation system, and internal project statistics. 15. Lack of a social marketing campaign resulted in poor response and participation by target groups and beneficiaries.

11. To the extent possible, experienced PIU staff from the Technical Education Project will be retained, and training in project management, procurement, accounting, and other topics provided. 12. ADB’s supervision of project activities will be strengthened by improving monitoring and providing more time and staff, increasing field visits, and involving the Pakistan Resident Mission in project supervision and loan administration. 13. The Government is committed to remove restrictions on recruitment of teachers from other provinces and to provide recurrent budgets for hiring technical teachers for new programs on a contractual basis. 14. Private sector participation and cooperation in TEVT planning and operation will be improved by establishing district management committees and strengthening institute management and center management committees. 15. A baseline database will be established in the first year. A MIS, labor market information system (LMIS), and performance monitoring and evaluation system (PPMES) will be strengthened and institutionalized under the strengthened R&D cell. 16. A social marketing campaign will be funded to raise awareness of intended beneficiaries and the communities, especially women and the poor.

28 Appendix 6

EXTERNAL ASSISTANCE TO THE EDUCATION SECTOR ($ million)

No. Project Approval Date/Duration Amount

A. Loans Asian Development Bank 0419-PAK(SF) Technical Teachers’ Training & Polytechnic Institutes 29 Oct. 1979 21.00 0448-PAK (SF) Textbook Printinga 1 Dec. 1979 10.00 0759-PAK (SF) Science Education for Secondary Schools 28 Nov. 1985 28.80 0977-PAK (SF) Primary Education (girls) Sector 26 Oct. 1989 64.20 1210-PAK(SF) Teacher Training 15 Dec. 1992 52.10 1278-PAK(SF) Middle School 2 Dec. 1993 78.01 1301-PAK(SF) Social Action Program (sector) 23 Jun. 1994 100.00 1373-PAK(SF) Technical Education 19 Sep. 1995 60.00 1454-PAK(SF) Second Girls Primary School (sector) 15 Aug. 1996 45.00 1493-PAK(SF) Social Action Program II (sector) 28 Nov. 1996 200.00 1534-PAK(SF) Second Science Education 11 Sep. 1997 40.00 1916-PAK(SF) Decentralized Elementary Education (Sindh) Sep. 2002 75.00 Sindh Devolved Social Services Program Sindh Devolved Social Services Technical Assistance

Subtotal (A) 774.11b B. Project Preparatory Technical Assistance 339-PAK Agro-Technical Education 28 Feb. 1980 0.147 604-PAK Science Education Project for Secondary Schools 6 Jun. 1984 0.150 806-PAK Second Polytechnics Institute 16 Oct. 1986 0.150 907-PAK Primary Education (Girls) 13 Oct. 1987 0.150 907-PAK Primary Education (Girls) Supplementary 23 Aug. 1990 0.025 1386-PAK Teacher Training 11 Oct. 1990 0.260 1687-PAK Lower Secondary Education 3 Apr. 1992 0.300 2142-PAK Second Primary Education for Girls 19 Aug. 1994 0.250 2149-PAK Technical Education 14 Sep. 1994 0.100 2358-PAK Secondary Science Education 6 Jul. 1995 0.450 2475-PAK Second Social Action Program 15 Dec. 1996 0.110 2547-PAK Nonformal Education for Rural Women 23 Mar. 1998 0.600 3144-PAK Primary School Quality Improvement 23 Dec. 1998 0.500 4149-PAK Skills Development Reform 17 Jul. 2003 0.150 Subtotal (B) 3.342 C. Advisory Technical Assistance 999-PAK Technical & Vocational Education Development. Study 1 Jul. 1988 0.495 1297-PAK Master Plan for the Development of School Education 10 May 1990 0.100 560- PAK Education Program for Technical Education and Voc. Trng. 26 Dec. 1990 0.160 4048- PAK Restructuring of Technical Education 18 Dec. 2002 0.150 and Vocational Training System Subtotal (C) 0.905

Continued on next page

Appendix 5 29

EXTERNAL ASSISTANCE TO THE EDUCATION SECTOR—Continued Source/Project Approval Date/Duration AmountD. Selected Projects Funded by other Development Agencies Canadian International Development Agency Strengthening Rural Primary Education in Pakistan (grant) Sep 2000 0.38 Department for International Development Community Support Schools, Sindh 1999 Adopt a School, Sindh 1997 Management Training for District Personnel 1996 Scholarships for Working Children, Sindh 1997–2000 Development and Improvement of Textbooks, Balochistan and Sindh 1997–2000 Ammal Project 1995–2000 German Development Cooperation NWFP Education Sector Development Program (loan) Jun 2002 3.74 Japan Bank for International Cooperation Balochistan Middle Level Education Project (loan) 11 Nov. 1997 32.60 Norwegian Embassy for Development Cooperation Free Distribution of Textbooks, Sindh, and NWFP 1997–2000 NWFP Basic Education Improvement (grant) 2003 10.00 NORAD, World Bank School Nutrition Program, Sindh UNICEF Formal Primary Education System Program 1992–1996 Nonformal Primary Education 1992–1996 Parent-Teacher School Management Committees, Balochistan 1995–1998 UNICEF, DFID Parent Teacher Association, Sindh 1994 USAID, UNICEF, World Bank, ADB, CIDA, Royal Netherlands Embassy, and Government of Balochistan Community Support Schools 1996–1999 World Bank Punjab Education Sector Adjustment Credit 2004 100.00 World Bank, NORAD Sindh Primary Education Development Program 1991–1998 World Bank, ADB, Netherlands, EU, DFID Social Action Program I 1991–1996 Social Action Program II 1997–2002 World Food Program (Food Aid) School Nutrition Program 1994–2001 Assistance to Girls’ Primary Education Jan 2002 14.20 CIDA = Canadian International Development Agency, DFiD = Department for International Development (United Kingdom), EU = European Union, NORAD = Norwegian Agency for International Cooperation, NWFP = North West Frontier Province, UNICEF = United Nations International Children’s Fund, USAID = United States Agency for International Development, Voc. Trng. = vocational training. a Canceled at the request of the Government. b Excluding $10 million that was canceled. Sources: Appraisal Mission and consultants’ report.

30 Appendix 6

POLICY FRAMEWORK A. National Education Policy 1. The National Education Policy (1998–2010) stipulates 19 provisions for technical education and vocational training (TEVT). These can be grouped into seven policy areas: (i) improving planning, management, coordination, and institutional development; (ii) encouraging need- and performance-based funding, cost recovery for self-reliance, and private sector participation in TEVT provision; (iii) strengthening evaluation, examinations, and accreditation of TEVT programs and institutions; (iv) improving the skills and qualifications of teachers through in-service training and provision of liberal in-service training facilities; (v) regular revision and upgrading of curricula; introduction of emerging technologies, including computer education as a compulsory component of technical education; introduction of a modular approach to continuing TEVT education; and development of teaching-learning resource materials by TEVT teachers; (vi) increasing equity and access to TEVT by establishing new institutions, conducting distance and continuing education, broadening the base for TEVT by introducing a new technical stream of matriculation (technical) and extending opportunities for further education for TEVT graduates; and (vii) improving TEVT quality by refurbishing and modernizing laboratories, workshops, and training equipment. B. Policy Reform Proposed Under the Project 2. These stipulations directly affect TEVT development under the Project. In particular, the Project will improve the quality of TEVT and expand it modestly in strategic areas to (i) train workers to meet industry’s emerging needs, (ii) make TEVT graduates more employable, (iii) design TEVT programs to train workers for self-employment and for industry, (iv) teach students relevant technical skills and instill in them a work ethic, (v) establish an evaluation system that emphasizes practical skills and project orientation, (vi) promote institution-industry linkages, and (vii) impart employable skills through nonformal livelihood training programs. 3. Other policy implications from the Project have been incorporated into the framework. For example, resource implications must be incorporated to achieve these policies. The target for higher budgetary allocation by mid-term as a percentage of allocations to TEVT will be carefully studied and reflected as appropriate.

Appendix 6 31

POLICY REFORM UNDER THE PROJECT

Government’s Policies on TEVT Subsector

Policy Reform Proposed in Project Design

Actions to be Taken by Government

1. Regular revision of the curriculum, introduction of a modular approach, and development of teaching-learning resource materials by TEVT teachers.

Introduction of CBT to improve the quality and relevance of TEVT instructional programs.

Approval by the provincial government to implement CBT in TEVT institutions and to mandate TEVT teachers to conduct practical examinations following the CBT principles and format.

2. Introduction and implementation of need- and performance-based funding, and cost recovery for self-reliance, and improved capacity to plan and develop TEVT institutions.

Introduction of IDP, PBMS, and MDP to promote accountability and autonomy of TEVT institutions to improve financial and administrative affairs.

Develop and implement a system and mechanisms to adopt IDP and PBMS in TEVT institutions. Approve the introduction and institutionalization of IDP and PBMS.

3. Public-private sector participation in providing and strengthening TEVT to make training meet job market requirements, improve teachers’ skills and qualifications, and increase nonformal access to TEVT.

Establishment of DMCs, allowing institutions to run programs in partnership with the private sector and NGOs, and to train students on the job to increase public-private sector cooperation and make TEVT relevant. Implementation of industrial training programs in collaboration with the private sector to upgrade teachers’ technical skills. Introduction of nonformal livelihood programs for out-of-school youths and adults.

Develop and approve a framework for public-private and/or NGO partnership to strengthen the roles and responsibilities of DMC, IMCs, CMCs; require TEVT institutions to provide on-the-job training as part of the curriculum; require TEVT teachers to undergo industrial training; and allow TEVT institutions to run nonformal livelihood training programs. Allow provision of seed money to support the committees’ work.

4. Increase of access to TEVT through distance education and nonformal modes.

Introduction of an equivalency and certification scheme in the TEVT system.

Approval to introduce an equivalency and certification scheme for TEVT in the province.

5. Strengthening of evaluation, examinations, and accreditation of TEVT programs and institutions.

Giving of more weight to practical examinations and skill tests, and implementation of a quality assurance and accreditation system for TEVT.

Approval to introduce a quality assurance and accreditation system for TEVT and to ensure compliance by public and private TEVT institutions. PBTE to prepare an action plan to reform examinations for endorsement by DOE.

CBT = competency-based training, CMC = center management committee, DMC = district management committee, DOE = Department of Education, IDP = institutional development planning, IMC = institute management committee, NGO = nongovernment organization, PBMS = performance-based management system, PBTE = provincial board of technical education, TEVT = technical education and vocational training. Sources: Asian Development Bank Mission and consultants.

DETAILED COST ESTIMATES AND FINANCING ARRANGEMENTS

($) 32 Appendix 7

ItemForeign Local Total Foreign Local Total Local Total

Exchange Currency Cost Exchange Currency Cost Currency Cost

A. Civil Works 0 1,192,000 1,192,000 0 856,000 856,000 335,000 335,000B. Equipment and Furniture

Equipment and Furniture 2,037,000 610,000 2,647,000 2,037,000 226,000 2,264,000 383,000 383,000Computer, Printer, and Software 461,000 137,000 598,000 461,000 51,000 512,000 86,000 86,000Vehicles 87,000 33,000 120,000 87,000 0 87,000 33,000 33,000Furniture 0 238,000 238,000 0 231,000 231,000 8,000 8,000

Subtotal 2,585,000 1,018,000 3,603,000 2,585,000 508,000 3,093,000 510,000 510,000

C. Learning Materials and Resources 0 456,000 456,000 0 389,000 389,000 67,000 67,000D. Staff Development

In-Country Training 0 1,214,000 1,214,000 0 1,036,000 1,036,000 178,000 178,000Overseas/Regional Training 90,000 0 90,000 90,000 0 90,000 0 0

Subtotal 90,000 1,214,000 1,304,000 90,000 1,036,000 1,126,000 178,000 178,000

E. Research, Development, and Studies 0 124,000 124,000 0 106,000 106,000 18,000 18,000F. Innovative and Incentive Grant Fund 0 1,815,000 1,815,000 0 1,546,000 1,546,000 269,000 269,000G. Consulting Services

International Consultants 270,000 0 270,000 270,000 0 270,000 0 0Local Consultants 0 303,000 303,000 0 248,000 248,000 55,000 55,000

Subtotal 270,000 303,000 573,000 270,000 248,000 518,000 55,000 55,000

H. Counterpart Staff and Land 0 2,256,000 2,256,000 0 0 0 2,256,000 2,256,000I. Administration, and Operation 0 2,165,000 2,165,000 0 1,608,000 1,608,000 557,000 557,000

and MaintenanceSubtotal (A-I) 2,945,000 10,543,000 13,488,000 2,945,000 6,297,000 9,242,000 4,246,000 4,246,000

J. Contingencies 364,000 1,431,000 1,795,000 364,000 963,000 1,327,000 468,000 468,000K. Interest Charges 431,000 0 431,000 431000 0 431,000 0 0

Total 3,740,000 11,974,000 15,714,000 3,740,000 7,260,000 11,000,000 4,714,000 4,714,000Percentage 24 76 100 24 46 70 30 30

Total Cost Asian Development Bank Financing Government Financing

Notes: Physical contingency is estimated at 2.6% for civil works, equipment, furniture, vehicles and materials, training, consulting services, studies, and operation and maintenance. Price contingency is estimated at an annual factor of 3.2% of foreign and local project costs in dollar terms. Totals may not add up due to rounding.

Source: Asian Development Bank estimates.

Appendix 8 33

IMPLEMENTATION ARRANGEMENTS 1. Executing Agency. The Department of Industries (DOI) will be the Executing Agency. 2. Steering Committee. The DOI will be the Project Executing Agency. A steering committee, headed by the additional chief secretary of the Planning and Development Department, has been established, and will include representatives from DOI, DOF, Chamber of Commerce, DTE&MT, and local government. The steering committee will meet at least once every quarter to review project implementation. It will be responsible for coordinating policy reforms, addressing bottlenecks, and providing overall guidance. 3. Implementing Agency. The Directorate of Technical Education and Manpower Training (DTE&MT) responsible for TEVT programs will be the Implementing Agency. DTE&MT was also the Implementing Agency for the recently closed Technical Education Project (TEP), and has the mechanisms for financial management and reporting. 4. Project Management Unit. A project management unit (PMU) will be established. It will be headed by a project director appointed competitively. Guided by DTE&MT, the project director will be responsible for overall project implementation in close collaboration with the recipient institutions. The PMU will also comprise a deputy project director, procurement officer, accounts and disbursement officer, monitoring and evaluation officer, and staff in other areas as necessary. To ensure continuity of project activities, PIU staff under the TEP will be retained in the PMU as appropriate. 5. To ensure continuity and efficiency in project implementation, the competitively appointed project director will sign an agreement with the provincial government of North-West Frontier Province (PGNWFP) committing to stay with the Project for at least 3 years. If the project director’s performance is unsatisfactory, DOI will seek the concurrence of the Asian Development Bank (ADB) to replace the him or her through a competitive procedure. A. Funding Mechanisms and Conditions 6. Funding mechanisms and release of project resources to finance certain types of project programs and activities are contingent upon satisfactory completion of conditions and requirements. The following guidelines will apply:

(i) Project institutions must prepare a 5-year development plan for consideration by PGNWFP and ADB. The plan will include, at least, the following: (a) philosophy of the institution; (b) vision and mission; (c) development objectives for the next 5 years for programs and services to offer to the clients; (d) target and indicators for enrollment, pass and dropout rates, employment of graduates, and number of teaching and nonteaching staff members; (e) financial development plan, including revenue generation, investments, and savings; (f) staff development plan; (g) maintenance programs for buildings and equipment; (h) social marketing of the institution, programs, and its students and graduates; (i) development and maintenance of a management information system; (j) physical infrastructure development plan (i.e., new buildings, expansion of existing facilities, rehabilitation of laboratories, workshops); (k) equipment repair, maintenance, and replacement plan; (l) number of teaching staff and the qualifications required for existing or new programs; (m) job placement plan and

34 Appendix 8

activities for graduates; (n) forecast of annual budgets and expenditures for the next 5 years; and (o) implementation schedules.

(ii) After the plan has been reviewed and endorsed, with any revisions, by PMU and

DTE&MT, it will be submitted to ADB for concurrence.

(iii) After ADB concurs, the institution will start implementing the plan in phases. For each phase, the money will be released through PGNWFP and the PMU.

(iv) Funds for construction will generally not be released until the Government

approves creation, financing, and appointment of staff; acquisition of land rights; completion of blueprints for buildings; and installation of electricity, water, and other utilities, etc.

(v) The progress of programs and activities under the institutional development plan

will be closely monitored and reviewed by DTE&MT with the assistance of PMU every six months, coinciding with semiannual reviews. If progress is unsatisfactory, funds will be suspended until the situation is improved and implementation expedited.

(vi) Each recipient institution will prepare an annual report describing the progress of

implementation activities as well as outputs, benefits, impacts, assistance needed, and problems that need to be resolved in the following year, for submission to DTE&MT and ADB.

(vii) This process will continue until the last year of the institutional development plan.

In the last year, each recipient institution will start preparing another 5-year development plan. It will be the basis for budget allocation to the institution in conjunction with the performance-based management system under the Project.

(viii) TEVT institutions will receive support under a management development contract

to prepare an institutional development plan and to strengthen institutional management through management development programs.

(ix) For nonformal livelihood training programs, the nongovernment organizations

(NGOs) and private ones will be encouraged and/or required to implement training programs based on the results of the needs analysis, and jobs in the targeted communities. NGOs with 5 years of relevant experience in Balochistan and with provincial government of Balochistan will be selected based on their proposals.

Appendix 10 35 IMPLEMENTATION SCHEDULE

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

i. Establish Directorate of Technical

ii. Strengthen R&D Cell

iii. Institutionalize Quality Assurance andAccreditation System

i. Establish DAC and Strengthen IMCsand CMCs

i. CBT System Development

ii. Examination Reform

i. Upgrade Equipment in 31 TTCs/VTCs

ii. Upgrade 3 Polytechnics to Centers ofExcellence

iii. Introduce Mining Technology

iv. Upgrade Computer Technology

v. Develop Learning Resource Center

i. Entrepreneurship Training

ii. On-the-Job Training

iii. Career Guidance and Job Placement

iv. Production-cum-Service Center

i. 2 New Polytechnics

ii. 3 Technical/Vocational Training Centers

a. Restructure and Strengthen Capacity

Skills Improvement Programs

Management System in TEVT Insitutions

for Girls

Schemes

a. Introduce Equivalency and Certification

c. Establish 2 New Training Centers

Certification System

2. Improve Quality and Relevance of

c. Improve Relevance through Innovative

Development

Year III Year IVYear I

b. Implementing Performance-Based

Component/Activities

TEVT and Examinations

Upgrading and Learning Resource

c. Strengthening Capacity of TEVT Institutions

b. Implementing Nonformal Livelihood

a. CBT System Development

b. Quality Improvement through Facilities

Year VI

1. Institutional Development

of DTE&MT

3. Access and Equity Enhancement

Year VYear II

CBT = competency-based training, CMC = center management committee, DMC = district management committee, IMC = institute management committee, MDP = Management Development Program, R&D = research and development, TEVT = technical education and vocational training, TTC = technical training center, VTC = vocational training center. Source: Appraisal Mission.

36 Appendix 10

INDICATIVE CONTRACT PACKAGES Item Number of

Packages Amount

($) Mode

A. Civil Works Polytechnics

Upgrade 3 Polytechnics to Model Centers TVTCs

New TVTC in Chittral New TVTC in Karak Construction of 5 TVTCs

Other Construction/Refurbishment Learning Resource Centers Production Units (52)

B. Equipment and Furniture

Polytechnics Training Equipment TVTCs Training Equipment

Computer Equipment Office Equipment Furniture

C. Instructional Materials (reference books,

training materials, demonstration kits, practice sets, etc.)

3

1 1 5

1 1

1 1

2 1 2

Multiple

150,000

175,000 175,000 450,000

40,000 140,000

610,000 286,000

950,000 73,500 260,000

460,000

LCB

LCB LCB LCB

LCB LCB

ICB ICB/IS

ICB/IS/LCB

IS/LCB LCB/DP

LCB/DP

DP = direct purchase, ICB = international competitive bidding, IS = international shopping, LCB = local competitive bidding, TVTC = technical and vocational training center. Source: Appraisal Mission.

Appendix 11 37

INDICATIVE TERMS OF REFERENCE FOR CONSULTING SERVICES

Table A11: Summary of Expertise and Person Months

Person-Months Role International Domestic

Team Leader/ CBT Curriculum Development Specialist 12 TEVT Systems Planning and Development Specialist 12

(deputy team leader) TEVT Equivalency and Certification Specialist 3 Quality Assurance and Accreditation Specialist 3 5 Labor Market Analysis and LMIS/MIS Specialist 6 Student Counseling, Guidance, and Job Placement Specialist 6 Performance-Based Management System Specialist 8 TEVT Examination Reforms Specialist 4 Entrepreneurship Training and Microcredit Specialist 6 Mining Technology Specialist 3 Food Preservation Technology Specialist 3 Gender Specialist 6

Total 15 62 CBT = competency-based training, LMIS = labor market information system, MIS = management information system, TEVT = technical education and vocational training. Sources: Appraisal Mission. A. International Consultants 1. Technical Education and Vocational Training Competency-Based Curriculum Development Specialist (team leader, 12 person-months). The consultant will help the Directorate of Technical Education and Manpower Training (DTE&MT) (i) ensure that activities are implemented smoothly and on time; (ii) ensure that other consultants complete their work on time; (iii) develop detailed project implementation guidelines in collaboration with the project director; (iv) prepare an inception report, progress reports, and a midterm review report; and (v) plan and implement competency-based training . 2. Quality Assurance and Accreditation Specialist (3 person-months). The consultant will help the team leader and DTE&MT (i) develop a quality assurance and accreditation system for public and private technical education and vocational training (TEVT) institutions; (ii) develop and implement a quality assurance system that will enable them to continuously upgrade their training programs to meet quality assurance criteria and to obtain program and institutional accreditation; (iii) prepare operating procedures, guidelines, criteria, instruments, and manuals to implement the quality assurance and accreditation system, which will also provide a basis for issuing a notification or directive for policy reform; and (iv) train quality assessors, staff of TEVT agencies and institutions, and other TEVT specialists to implement and manage the registration, quality assurance, and accreditation system during and after the Project. B. Domestic Consultants 3. Technical Education and Vocational Training Systems Planning and Development Specialist (deputy team leader, 12 person-months). The consultant will help the team leader and DTE&MT coordinate the consultancy services. The consultant will (i) coordinate the restructuring and strengthening of the research and development (R&D) cell and the establishment and institutionalization of the management information system, project performance monitoring and evaluation system, and labor market information system (LMIS) as

38 Appendix 11

part of the R&D cell’s operations; (ii) prepare and implement staff development programs; (iii) implement operational plans, strategies, guidelines, and mechanisms to strengthen and expand public-private partnership and TEVT-industry linkage programs; and (iv) help design and conduct capacity-building programs. 4. Quality Assurance and Accreditation Specialist (5 person-months). The consultant will help the international consultant (i) survey the registration, accreditation, and quality assurance and/or quality control of public and private TEVT programs; (ii) develop a quality assurance and accreditation system; (iii) assist TEVT institutions to implement a quality assurance and accreditation system that will enable them to continuously upgrade their training programs; (iv) prepare operating procedures, guidelines, criteria, instruments, manuals, and a monitoring plan to implement the quality assurance and accreditation system, and provide a basis for notifications and/or directives; and (v) train quality assessors, staff of TEVT agencies and institutions, and other TEVT specialists to implement quality assurance system. 5. Technical Education and Vocational Training Equivalency and Certification Specialist (3 person-months). The consultant will help the international consultant (i) design and conduct a survey and analysis of the examination and certification system and practices at all TEVT levels; (ii) prepare notifications or directives for the provincial government of North-West Frontier Province to support policy reform; (iii) develop operational guidelines, criteria, and procedures to implement and manage the equivalency and certification system; (iv) develop standard guidelines, criteria, and mechanisms for the transfer of credits and/or certification obtained under the equivalency and certification system; (v) assist the Board of Intermediate and Secondary Education (BISE), trade testing board (TTB), and project management unit (PMU) in conducting social marketing campaigns to introduce the equivalency and certification system; and (vi) assist BISE, TTB, and TEVT institutions in implementing the equivalency and certification system. 6. Labor Market Analysis and Labor Market Information Specialist (4 person-months). The consultant will (i) review the labor market information system (LMIS); (ii) develop and implement the full LMIS for TEVT in the province; (iii) design and develop an electronic networking system for the LMIS to link different institutions; (iv) help the R&D cell conduct a comprehensive labor market survey across the province; and (v) train staff of the R&D cell, DTE&MT, and TEVT institutions to design and conduct labor market surveys. 7. Student Counseling, Guidance, and Job Placement Specialist (6 person-months). The consultant will (i) survey TEVT students and industry to know what graduates need to plan careers and look for jobs, and what types of information are available and required; (ii) design a comprehensive career guidance, counseling, and job placement service program for TEVT institutions; (iii) identify requirements to establish a career guidance and job placement center for all TEVT institutions; (iv) help DTE&MT and heads of TEVT institutions establish a career guidance and job placement center at TEVT institutions; (v) design, organize, and conduct training programs for career guidance and job placement officers; and (vi) implement social marketing programs to promote the career guidance and job placement centers. 8. Performance-Based Management Specialist (8 person-months). The consultant will (i) help TEVT institutions identify indicators, mechanisms, and criteria to assess themselves, and report under the performance-based management system (PBMS; (ii) help TEVT institutions prepare institutional development plans by incorporating performance indicators and mechanisms for monitoring activity implementation; (iii) develop manuals and guidelines for monitoring of and follow-up on the success and impact of the PBMS at TEVT institutions,

Appendix 11 39

including mechanisms to share mandatory information with the steering committee and district management committees (DMCs) to ensure transparency; (iv) train principals and staff of TEVT institutions to implement and assess the achievements of the performance-based management system; and (v) help the DMC and TEVT oversight institutions systematically assess the success and impact of the performance-based management system, identify weaknesses and areas that need improvement, and seek information on the format. 9. Technical Education and Vocational Training Examination Reform Specialist (4 person-months). The consultant will help the BISE incorporate CBT into the existing examination and technical education systems so that they adhere to the curriculum and reinforce each other. 10. Entrepreneurship Training and Microcredit Specialist (6 person-months). The consultant will (i) survey microcredit facilities and loan programs for small and medium-sized enterprises; (ii) develop guidelines, procedures, criteria, mechanisms, and documents to enable TEVT students and graduates to use existing microcredit facilities; (iii) negotiate terms, conditions, and mechanisms with financial institutions to make microcredit facilities available for TEVT students and graduates, and arrange for the implementation of the microcredit scheme between financial and TEVT institutions; (iv) design, organize, and conduct training programs for heads of TEVT institutions, teachers, and students on how to use microcredit to promote self-employment among TEVT graduates; (v) develop curriculum content, course materials, manuals, and instructional materials for entrepreneurship training; and (vi) support any other activity to facilitate TEVT graduates’ access to credit. 11. Mining Technology Specialist (6 person-months). The consultant will (i) survey the mining industry and recommend the structure, scope, and content of a program to train workers for the industry; (ii) develop the curriculum, instructional materials, manuals, and other related documents in CBT format for TEVT programs; (iii) identify equipment, materials, and other teaching-learning aids to be acquired for the program, and list equipment and their specifications; and (iv) design, organize, and conduct training programs for heads of TEVT institutions, and teachers on how to conduct training. 12. Food Preservation Technology Specialist (6 person-months). The consultant will (i) survey the food industry and recommend the structure, scope, and content of the program to train workers to preserve food; (ii) develop the curriculum, instructional materials, manuals, and other related documents in CBT format for TEVT programs; (iii) identify equipment, materials, and other teaching-learning aids to be acquired for the program, and list equipment and their specifications; and (iv) design, organize, and conduct training program for heads of TEVT institutions, and teachers on how to conduct training. 13. Gender Specialist (6 person-months). The consultant will (i) develop and implement procedures and guidelines to enhance participation of females in TEVT programs; (ii) help social marketing campaigns encourage females to enroll in TEVT; (iii) advise and assist NGOs engaged in livelihood training programs to ensure that about 50% of the trainees are female; (iv) organize workshops to train TEVT staff to develop gender strategies to ensure greater participation of females; and (v) advise the CBT specialist on mainstreaming gender concerns in CBT materials. 14. All the consultants will perform any other duties and tasks requested by the team leader and project director.

40 Appendix 11

15. Higher Education Institution and/or Management Institute. The main objective of the management development program (MDP) is to strengthen the capacity of principals, teachers, and staff of TEVT institutions to plan, manage, and evaluate their own operations and performance more effectively and professionally within the context of the 5-year institutional development plan, internal quality assurance, and performance-based management to be introduced under the Project. To achieve this objective a systematic and comprehensive MDP will be implemented under the guidance and support of a premier management institution selected through competitive bidding to provide capacity building and MDPs in the following areas, but not limited to them: (i) labor market survey and analysis; (ii) institutional development plans; (iii) leadership and management of TEVT institutions; (iv) financial planning, management, and monitoring; (iv) internal quality assurance of TEVT programs; (v) development and management of management information system and project performance monitoring and evaluation system; (vi) tracer studies and market analysis; (vi) TEVT programs evaluation and improvement; (vii) social marketing and public relations programs; (viii) institution-industry linkage; (ix) management and operations of institute management committees and center management committees; and (x) staff development plan and programs to improve the competencies, performance, and efficiencies of teachers and staff of the institutions. 16. The DOE PMU and DOLM PMU, in collaboration with the project institutions, will prepare an MDP document including a program outline, invitation letter, scope of work, terms of reference, and evaluation criteria for selecting qualified management institutions from within and outside the province, and submit their technical and financial proposals for implementing the MDP at the project institutions. The selection will be based on the criteria for the technical and financial proposals following ADB’s Guidelines on the Use of Consultants. The criteria for selecting an institute will include (i) knowledge of and expertise in planning and managing TEVT system and institutions in the province; (ii) similar experience of conducting and/or implementing MDPs for educational institutions or Government organizations; (iii) expertise and availability of personnel and resources in the areas to be implemented at TEVT institutions; (iv) implementation plan including suitable and logical timing for implementation of the MDP activities; and (v) expertise, qualifications, and experience of personnel to be assigned to implement the MDP.

Appendix 12 41

PROJECT PERFORMANCE MONITORING AND EVALUATION SYSTEM 1. The Research and Development (R&D) Cell, to be strengthened and integrated into the Directorate of Technical Education and Manpower Training (DTE&MT), with support from the Monitoring and Evaluation Division, will develop and implement the project performance monitoring and evaluation system (PPMES) for all polytechnics and technical and vocational training centers. This arrangement will institutionalize the collection, processing, and reporting and dissemination of the information. The R&D cell will establish a process of data collection from the polytechnics and training centers annually and through regular surveys. The PPMES will provide benchmarks and guidelines for monitoring and evaluating the progress, outputs, and impact of project activities based on a set of comprehensive indicators linked to the management information system (MIS) and labor market information system (LMIS) to be developed by the R&D cell with inputs from a local expert (Appendix 11). 2. The PPMES will focus on all aspects of development, including inputs, processes, outputs, and outcomes and impact. A set of core indicators will be identified (para. 5), with further disaggregation for monitoring at different levels. The performance-based management system to be introduced in all polytechnics and training centers under the Project will be based on and guided by the PPMES. Information and data are scattered and unorganized. Basic MIS, LMIS, and baseline information will be established during the first year of the Project, and progress evaluated at midterm and at the end, and annually. 3. The PPMES will build capacity at each polytechnic and training center for the first level of detailed monitoring and reporting. Another level of capacity will be developed and strengthened at the DTE&MT level, with a consolidated PPMES database complemented by research studies. A local expert will provide inputs in this process. 4. As part of the regular review of the implementation progress the steering committee will review two sets of information: establishment and institutionalization of the educational management information system, LMIS, and baseline information; and implementation of overall project activities. The project management unit will reflect both aspects in its quarterly reports, which the review missions will use. Reporting and monitoring will require sharing mandatory information with the steering committee and district management committees to ensure transparency. 5. The PPMES will include basic MIS information disaggregated by gender and covering statistics on students; teachers; facilities (buildings, equipment, furniture); and financing. While each polytechnic and training center will maintain a database with its own information, DTE&MT will maintain a consolidated database on all polytechnics and training centers. The PPMES will focus on the following key indicators, with baseline established during the first year, which will be modified and disaggregated as appropriate:

(i) Equitable Access and Enhanced Employability.

(a) About 5% of technical education and vocational training (TEVT) graduates are able to access credit for self-employment.

(b) The employment rate of TEVT graduates is improved by 25%. (c) Average time to get a job is reduced by 25%. (d) Average earnings of TEVT graduates are improved by 20%. (e) Poor and female students have access to TEVT, including developing

mechanisms and targets.

42 Appendix 12

(ii) Quality and Relevance

(a) Examination passing rate is improved by 25%. (b) Qualifications, experience, and skills of 25–50% TEVT teachers are

improved. (c) Education standards and the evaluation system are improved through

competency-based training. (d) Facilities and instructional materials are upgraded. (e) New technologies and trades are introduced to meet emerging market

needs. (iii) Institutional Efficiency

(a) Dropout rates are reduced by 25%. (b) Policy reforms allow greater autonomy and improved management. (c) The R&D cell is integrated with DTE&MT and strengthened, with LMIS and

MIS to improve information on and analyses of key TEVT issues. (d) Over 25% of TEVT institutions are able to establish linkages with the

industry. 6. This progress will be achieved during the Project (2005–2010), and progress achieved over the baseline will be established during the first year. 7. MIS will focus on the following information:

(i) Students: number of applications, admission, enrollment, dropout rates, examination performance, employment rates by program and gender.

(ii) Teachers: expertise, experience, qualification, training. (iii) Management and administration staff: expertise, experience, qualification, and

training. (iv) Financing: capital cost and recurrent cost by standard budget items, including

unit costs. (v) Facilities: number of classrooms, workshops, equipment, furniture and their

condition. 8. LMIS will focus on the following information to complement MIS and avoid duplication:

(i) Demand and supply of labor (local and foreign markets, self-employment). (ii) Skills required (based on labor market surveys, and interaction with industry,

private sector, Overseas Pakistan Association). (iii) Labor market trends and labor force statistics by key sector. (iv) Information on job openings and types of jobs. (v) Information on apprenticeship, internship, and voluntary work. (vi) Job opportunities.

Appendix 13 43

PROJECT RISKS AND PROPOSED MITIGATION MEASURES

Project Risks Mitigation Measures 1. The Government’s recurrent budget is inadequate to operate and maintain existing and new TEVT institutions. 2. TEVT institutions will not be able to recruit teachers for new programs because of restrictive Government regulations and inadequate budget. 3. TEVT administrators and staff need support to implement a performance-based management system and other programs such as a CBT system. 4. The Government has been unwilling or unready to grant more autonomy to TEVT institutions to manage their own programs and operations. 5. Various government agencies involved in project implementation may not fully cooperate with each other in implementing new programs at existing TEVT institutions. 6. The provincial government has weak capacity to manage institutions and programs introduced under the Project. 7. TEVT graduates, especially those of new programs, will not be able to find employment.

1. First, the provincial government has committed to provide additional recurrent budget. Second, TEVT institutions will be allowed to retain their revenues to finance their activities. TEVTs will also partner with the private sector and NGOs. Other possibilities will be explored to mobilize resources. 2. The Government has agreed to relax its regulations to allow TEVT institutions to recruit qualified teachers from other provinces. The institutions will also be allowed to use their resources to hire contractual teachers. 3. Capacity-building programs such as a management development program will be provided through a management institute or university. The National Institute of Science and Technical Education will be engaged to provide technical assistance to TEVT institutions for CBT and teacher training. 4. Under the devolution scheme the Government has agreed in principle to allow TEVT institutions more autonomy to manage themselves. The Project design includes significant support to TEVT institutions. 5. The P&D Department will coordinate project implementation and ensure full cooperation from the agencies, whose representatives will sit on the project steering committee. 6. DTE&MT will be strengthened and provided with staff members and resources to enable them to better supervise and support TEVT institutions. 7. New programs are more market driven. Closer industry-institution linkage will enable TEVT institutions to better prepare students for employment. Career guidance and job placement services will help graduates find jobs.

Continued on next page

44 Appendix 13

PROJECT RISKS AND PROPOSED MITIGATION MEASURES—Continued

Project Risks Mitigation Measures 8. Project implementation may be affected by frequent turnover of PIU staff, especially the project director or project director. 9. Innovative schemes such as systems for equivalency and certification, quality assurance and accreditation, CBT, and performance-based management system may not be well understood or accepted by concerned parties and organizations. 10. NGOs and the private sector may not be interested in participating in various project activities. Or the Government may not be interested in engaging NGOs and the private sector.

8. The Government has agreed to retain a project director for at least 3 years. A project director appointed from the market will ensure continuity of project implementation. 9. Social marketing campaigns will be launched early to raise awareness and understanding of the schemes. Capacity-building programs will be provided for TEVT institutions. Principals, teachers, and staff of TEVT institutions will help change how the new schemes are implemented. 10. The Project will encourage NGOs and the private sector to participate in the programs and activities. Consultations with NGOs and the private sector during project formulation confirm their interest in cooperating and supporting project activities. A social marketing campaign will be launched to involve NGOs and the private sector in these programs.

CBT = competency-based training, DTE&MT = directorate of technical education and manpower training, NGO = nongovernment organization, P&D = planning and development, PMU = project management unit, TEVT = technical education and vocational training. Sources: Asian Development Bank Appraisal Mission and consultant report.

Appendix 14 45

ECONOMIC, POVERTY IMPACT AND FINANCIAL ANALYSIS

A. Economic Analysis 1. Economic Rationale. Pakistan has 562 public technical education and vocational training (TEVT) institutions, unevenly distributed across the provinces. About 85% are in Punjab and Sindh, and the rest in North-West Frontier Province (NWFP) and Balochistan. One TEVT institution is built for every 311,000 people in Punjab, 142,000 in Sindh, 266,000 in NWFP, and 535,000 in Balochistan (Table A15.1). When private TEVT institutions are included, Balochistan lags even further behind.

Table A14.1: Distribution of Population and TEVT Institutions in Pakistan

Item Pakistan Punjab Sindh NWFP Balochistan Population (‘000) (A) 136,372 78,387 32,104 18,925 6,956 TEVT Institutions (B) 562 252 226 71 13

Polytechnics 77 25 37 12 2 TVTCs 253 109 95 38 11 Other 232 118 94 21 Population–TEVT Institution Ratio (A/B) 242,000 311,000 142,000 266,000 535,000

TEVT = technical education and vocational training, TVTC = technical and vocational training. Source: ADB. 2003. Technical Assistance to the Islamic Repubic of Pakistan for Skills Development Reform

Project, Manila. 2. TEVT problems in NWFP are not only distribution and number of institutions but also their inefficiency and inability to meet labor market demands. NWFP has about 700 enterprises, specializing in mineral resources processing; food processing and woodwork; and chemical, electrical, and mechanical engineering. The market survey indicates that enterprises will need more graduates from polytechnics, technical training centers and technical and vocational training centers (TVTCs), and short-term training. The labor force required for the local enterprises has been supplied by 12 polytechnics and 38 public TVTCs and 95 private TEVT institutions. However, TEVT does not fully cover the areas and level of skills in demand. As facilities and equipment are outdated, TEVT institutions are unable to provide students and trainees with updated training. As a result, the completion rate is less than 50%, and the transition rate from graduation to employment, 30%. 3. Insufficient physical capacity of TEVT institutions, high internal inefficiency as a result of low-quality TEVT, and high external inefficiency due to skill mismatch warrant investment in TEVT. While private TEVT institutions outnumber public ones, more students and trainees were enrolled in the public ones in 2001 (Table A14.2). On average, one public TEVT institution enrolls more students and trainees than a private one, making the public sector more efficient. As private polytechnics are limited, the provincial government of NWFP (PGNWFP) should invest in public polytechnics. However, with greater autonomy and in partnership with the private sector, public TEVT institutions could become much more efficient.

46 Appendix 14

Table A14.2: Technical Education and Vocational Training Institutions

in North-West Frontier Province in 2001

Item Institutions (A) Enrollment (B) Ratio (B/A) Public Sector Polytechnic Institutes 12 5,414 451

TTC/TVTCs 38 3,752 99 Other 21 4,957 236

Subtotal (A) 71 14,123 199 Private Sector

Polytechnic Institutes 27 5,730 212 TTC/VTCs 41 1,490 36 Other 27 3,750 139

Subtotal (B) 95 10,970 115 Total (A+B) 166 25,093 151

TTC = technical training center, TVTC = technical and vocational training. Source: ADB. 2003. Technical Assistance to the Islamic Repubic of Pakistan for Skills Development Reform

Project, Manila. 4. Consideration of Design Alternatives. The Project faced two options: (i) support large-scale expansion, given the Government’s ambitious plan of providing TEVT to the districts and tahsils; or (ii) focus on ensuring effective functioning of existing facilities before embarking on large-scale expansion. While large-scale expansion would be in line with the Government’s perspective plan of 2001–2011 and education sector reform (2001-2005), and would be supported by the PGNWFP, such an approach would be difficult to sustain due to limited budgets available for essential recurrent expenditures and lack of effective TEVT institutional models. The Project has, therefore, taken the middle path of cautious expansion while consolidating existing TEVT institutions, as NWFP offers significantly less access to TEVT than Punjab and Sindh, particularly to women and the rural poor. The balance between cautious expansion and consolidation allows PGNWFP to improve the quality and efficiency of existing TEVT institutions, with limited expansion in the most viable towns and districts, focusing on women and the rural poor. 5. An investment loan is proposed since PGNWFP is not yet ready to embark on a more complex design. Given the experience of the Asian Development Bank (ADB) under the two previous projects for TEVT, persistent problems must be solved. First, a project approach allows a simple design emphasizing policy reform. Second, Pakistan is trying to bring TEVT institutions under one organization. Punjab is leading in this effort by bringing all TEVT activities under the TEVT authority (TEVTA), and other provinces are watching this development closely. While PGNWFP has already brought TEVT under the Directorate of Technical Education and Manpower Training (DTE&MT) of the Department of Industries (DOI), it needs to consolidate TEVT programs and improve institutional efficiency before implementing a TEVTA-type arrangement. Third, the devolution policy is changing many government services but not yet TEVT provision. Therefore, PGNWFP should be encouraged to allow TEVT institutions to become autonomous, competitive, and responsive to labor market needs. Finally, some fundamental elements for making TEVT institutions more effective, such as public-private partnership, counseling services, and exposure of teachers to industries, can be achieved under a simple investment loan. 6. The Project’s first component will make TEVT institutions responsive to labor market needs through autonomy, performance-based management, and management development programs. The second component will improve TEVT quality through teacher training and competency-based training (CBT), which are supported by the National Institute for Science and Technical Education. CBT will allow aligning training with the needs of the private sector and

Appendix 14 47

industries. The Project provides materials to support this approach. The third component will establish equivalency and certification, benefiting many trained and experienced people who want further training or better-paying jobs. This component also provides opportunities to out-of-school youths and adults to seek livelihood training. With limited support to new institutions, access to polytechnics and TVTCs can be increased. 7. Economic Internal Rate of Return. To assess the investment’s economic viability and efficiency, the economic internal rate of return (EIRR) over 25 years was estimated. Three major economic project benefits are (i) increased access to TEVT institutions, (ii) improved internal efficiency, and (iii) improved external efficiency. Their impacts are presented in monetary value by using estimated future salary increments5 of TEVT students and trainees as a result of completing an additional year of TEVT under the Project. 8. Increased access is represented by growth in enrollment due to new TEVT institutions, technologies, and training programs and courses. The Project will allow 200 more enrollees a year in polytechnics, 600 in TVTCs and colleges, and 10,000 in short-term training courses and programs. Polytechnic and TVTC students will learn the skills and acquire the work ethic that will increase their annual earning by $83 throughout their working life. Trainees in short courses will add $9 a year to their salary throughout their working life. 9. Improvement in internal efficiency is measured by the difference in polytechnics’ completion rates under with- and without-project scenarios, assuming that newly designed courses and better institutional management will improve delivery of education and training, and, hence, the completion rate. During the Project, the completion rate in polytechnics is estimated to improve by approximately 20%, gradually from 46% to 55%. 10. Improved external efficiency is measured by the difference in employment rate of those who complete TEVT under with- and without-project scenarios, assuming that new educational content, new institutional management systems, and counseling give students more job opportunities. Immediately after graduation 70% of students cannot find jobs and have to wait about 1.5 years to be employed. During the Project, the graduates’ employment rate is estimated to rise gradually from 30% to 60%, allowing 30% of graduates a year to generate income, which will benefit the economy by $1,407 (polytechnic graduates) and $1,227 (TVTC graduates) per year. 11. The Project, however, has investment, recurrent, and private and opportunity costs. It is estimated at $39.7 million. Recurrent cost will gradually increase from $52,000 to $367,600 during the Project, covering the salary of additional administrative and teaching staff, and operation and maintenance expenses of new organizations and institutions. The recurrent cost will remain at $367,600 after the Project, and $55,900 more will be incurred every 5 years after the Project to cover major maintenance of project buildings. Private cost includes students’ and trainees’ out-of-pocket expenses to continue TEVT and is estimated at $33 per year.6 Opportunity cost is equivalent to the income that a student or trainee otherwise would receive if he or she did not undergo TEVT, estimated at $1,145 for polytechnic and TVTC students. Private and opportunity costs of a short-term training program trainee are assumed at zero, since locally provided training does not incur considerable private cost, and most trainees are likely to be unemployed.

5 Earning level was estimated by using earning functions developed by Zafar Mueen Nasir and Hina Nazli in

Pakistan Institute of Development Economics. 2000. Education and Earnings in Pakistan, Research Report No. 177. Islamabad. The function indicates that a secondary-school pupil will receive an average increment of $83 per year throughout his or her working life by studying 1 more year from 18 to 20 years old.

6 Qureshi, Sarfraz K. and G. M. Arif. 2001. Profile of Poverty In Pakistan 1998-99. Islamabad. Pakistan Institute of Development Economics.

48 Appendix 14

Table A14.3: Assumptions for Economic Internal Rate of Return Estimates

Item Economic Benefit of Increased Access

Impact of Enrollment in TEVT Institutions on Annual Salary Polytechnics and TVTCs +$82.5 Short-Term Training Programs +$9.2

Economic Benefit of Improved Internal Efficiency Impact of 1-year Completion of Polytechnic Course on Annual Salary +$83.0 Degree of Improvement in Completion Rate in Polytechnics 20%

Economic Benefit of Improved External Efficiency Degree of Improvement in Employment Rate of TEVT graduates 100% Earnings Forgone due to Unemployment of a TEVT Graduate

Polytechnics $2,111 TVTCs $1,841

Economic Cost of Proposed Project Recurrent Cost after the Project Period

Annual Recurrent Cost $367,600 Major Maintenance of the Buildings $55,900

Private Cost (Per Year per Student/Trainee) $33 Opportunity Cost of a Polytechnic Student and a TVTC Trainee $1,145

TEVT = technical education and vocational training, TVTC = technical and vocational training center. Source: Asian Development Bank Appraisal Mission.

12. The Project will yield an estimated net present value of $16.4 million, assuming a discount rate of 12.0% and an EIRR of 17.2%. The summary result is in Table A14.4. The actual economic rate of return is likely to be somewhat higher, reflecting positive externalities and long-term intergenerational social benefits that come with improved TEVT, such as positive parental attitudes to children’s education and a good work ethic, to which it is difficult to assign monetary values. No allowance is made for the fact that TEVT improvements will raise the self-esteem of students and trainees and expose them to different technologies and skills, which will improve performance and productivity.

Appendix 14 49

Table A14.4: Economic Internal Rate of Return Estimation ($’000)

Economic Cost Economic Benefit

Year

During Project Period

After Project Period

Benefi-ciaries

Cost Total Access

Internal Efficiency

External Efficiency

Benefit Total

Net Benefit

NPV (12%)

1 1,202 0 0 1,202 89 0 0 89 (1,113) (994) 2 4,630 0 0 4,630 177 6 558 741 (3,888) (3,100) 3 4,527 0 0 4,527 266 18 1,261 1,545 (2,982) (2,123) 4 1,768 0 218 1,986 403 41 2,396 2,840 854 542 5 1,294 0 286 1,580 554 74 3,662 4,290 2,710 1,538 6 1,211 0 301 1,512 709 108 3,670 4,487 2,975 1,507 7 0 368 301 669 863 143 3,670 4,677 4,008 1,813 8 0 368 301 669 1,018 177 3,670 4,866 4,197 1,695 9 0 368 301 669 1,173 212 3,670 5,055 4,386 1,582

10 0 368 301 669 1,328 246 3,670 5,244 4,576 1,473 11 0 425 301 726 1,482 281 3,670 5,434 4,707 1,353 12 0 368 301 669 1,637 315 3,670 5,623 4,954 1,272 13 0 368 301 669 1,792 350 3,670 5,812 5,143 1,179 14 0 368 301 669 1,946 384 3,670 6,001 5,332 1,091 15 0 368 301 669 2,101 419 3,670 6,190 5,522 1,009 16 0 425 301 726 2,256 454 3,670 6,380 5,653 922 17 0 368 301 669 2,410 488 3,670 6,569 5,900 859 18 0 368 301 669 2,565 523 3,670 6,758 6,089 792 19 0 368 301 669 2,720 557 3,670 6,947 6,279 729 20 0 368 301 669 2,875 592 3,670 7,137 6,468 670 21 0 425 301 726 3,029 626 3,670 7,326 6,599 611 22 0 368 301 669 3,184 661 3,670 7,515 6,846 566 23 0 368 301 669 3,339 695 3,670 7,704 7,035 519 24 0 368 301 669 3,493 730 3,670 7,893 7,225 476 25 0 368 301 669 3,648 764 3,670 8,083 7,414 436

NPV= 16,418 EIRR= 0.172

NPV = net present value. Source: Asian Development Bank estimates. 13. Sensitivity Analysis. A sensitivity analysis has been undertaken on the basis of alternative assumptions regarding the extent to which the Project will improve access, and internal and external efficiency. The project targets are that 10,800 additional students enroll7 per year, 55% more complete their courses, and 60% fewer are jobless. Alternative assumptions were tested by employing extreme values: the “low” case representing improvement 50% lower than the target, and the “high” case 50% higher. In the low case, the targets are reduced to 5,400 students for additional enrollment, 51% completion rate, and 45% employment rate. For the high case, the targets are increased to 16,200, 60%, and 75%, respectively (Table A14.5).

7 Comprising 200 enrollees to polytechnics, 600 to TVTCs and colleges, and 10,000 to short-term training courses

and programs per year.

50 Appendix 14

Table A14.5: Sensitivity Analysis (percent)

Low Case Normal Case High Case Increase in Access 14.1 17.2 20.1 Degree of Change (18%) 0% +17% Internal Efficiency 13.3 17.2 21.2 Degree of change (23%) 0% +23% External Efficiency 8.5 17.2 25.8 Degree of change (51%) 0% +50% Source: Asian Development Bank estimates.

14. The results indicate that the Project will substantially benefit the economy when improvement exceeds targets. An excessive increase in access, however, may replicate the current situation, where enrollment exceeds capacity, resulting in overcrowded classes and low-quality education and training. The Project is highly sensitive to external efficiency. A small decline in improvement in access could render the Project economically nonviable. The Project must achieve at least the 70% target in external efficiency. The minimum targets required for economic viability are likely to be achieved through provision of sufficient updated training equipment and learning materials, and extensive job counseling and placement in each project district.

A. Poverty Impact Analysis 15. The Project will reduce poverty by giving young people opportunities to earn through training, guidance, and job placement programs. The direct project beneficiaries are students and trainees in polytechnics, TVTCs, and training programs. The poverty line in Pakistan is based on a norm of 2,350 calories per adult daily equivalent and minimum nonfood requirements, and approximates $160 per year8. Those who complete 1-year training in TVTCs will likely earn about $166 more than those without training. Those who complete the 3-year polytechnic course will likely earn about $500 more than those who do not. Thus, the annual salary increments due to completion of polytechnic and TVTC training, coupled with employment, will increase earning levels well above the poverty line. 16. In the absence of statistics, the proportion of poor students and trainees is assumed to be the same as that of the poor in the province. Student selection procedures in polytechnics and the geographical distribution of TVTCs are also assumed to reflect the rural and urban distribution of the provincial population: 17% of students and trainees were estimated to be from the urban region, and 83% from the rural region in 1999, and poverty incidence was estimated at 31% and 44%, respectively, in 2001. About 42% of students and trainees were from poor families in 1999–2001 (Table A14.6), so at least 42% of polytechnic and TVTC students are from poor families.

Table A14.6: Population and Poverty in NWFP (percent)

Regions Provincial Urban Rural Total

Population (A) 16.9 83.1 100 Poverty Incidence in Region (B) 31.2 44.3 Poverty Incidence in Province (AxB) 5.3 36.8 42.1 Sources: Ministry of Finance, Government of Pakistan. 2003. Poverty Reduction Strategy Paper. Islamabad. Social Policy and Development Center. 2003. Social Development in Pakistan, Annual Review

2001. Oxford University Press.

8 Government of Pakistan, Ministry of Finance, Government of Pakistan. 2003. Accelerating Economic

Growth and Reducing Poverty: The Road Ahead, Poverty Reduction Strategy Paper. Islamabad.

Appendix 14 51

17. The poverty incidence for students and trainees in polytechnics and TVTCs could, however, be underestimated. TEVT students are more likely to be poorer than general-education students.

B. Financial Analysis 18. The TEVT sector is financed by DTE&MT. It was established in 2003, so only 2 years of records are available. The total recurrent budget for TEVT in FY2004 is PRs366 million, of which 70% is recurrent budget. The sector budget level has been generally stagnant, slightly reduced in size and proportion to PGNWFP expenditure for the last 2 financial years.

Table A14.7: Education, Manpower and Labor Management Budget FY2001–2004

(PRs in million)

Item FY1999 FY2000 FY2001 FY2002 FY2003 FY2004 Provincial Government of NWFP

Development Budget 4,927 3,995 9,237 7,986 8,909 9,305 Recurrent Budget 33,001 35,493 39,132 45,040b 48,564b 47,115b

Total 37,928 39,488 48,369 53,026 57,473 56,420 (Annual Growth) 4% 22% 10% 8% (1%)

Directorate of Technical Education and Manpower

Development Budget 195 113 Recurrent Budget 269 253

Total 464 366 (proportion to government expenditure) 0.7% 0.5%

FY = fiscal year, NWFP = North-West Frontier Province. Note: Due to limited availability of records, the recurrent budget figures are from the original budget, and the

development budget was from http://www.nwfpfinance.com/ and financial records of DTEM. All figures from FY1999 to FY2002 are from the budget analysis of the Ministry of Education.

Sources: Planning and Development Wing, Ministry of Education, Government of Pakistan. Department of Finance, Provincial Government of North West Frontier Provinces. Directorate of Technical Education and Manpower Training, Provincial Government of North-West Frontier Province. 19. The Project’s affordability and sustainability are analyzed. Due to limited official provincial budget forecasts and plans and lack of budgetary records, the financial analysis had to compare the total provincial budget growth rates and the required budget growth rate for TEVT. The Project is estimated to incur additional recurrent expenditure at approximately PRs21 million after the Project. DTE&MT’s recurrent budget needs to be increased annually by 1% (8% in 6 years) during the Project. Comparing provincial budgets, which have increased from 4% to 22%, the DTE&MT budget will most likely increase by 1% annually provided DOI and DTE&MT consolidate and prioritize TEVT investments. Although the provincial budget in FY2004 declines slightly, PGNWFP favors allocating budget for increased recurrent expenditure during and after the Project.

Appendix 15 52

SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY

A. Linkages to the County Poverty Analysis Sector identified as a national

priority in country poverty analysis

Yes

No

Country identified as a national priority in country poverty partnership agreement

Yes

No

Contribution of the subsector to reduce poverty in Pakistan: Given the strong linkage between poverty and low level of human development as measured by the human development index, the Government of Pakistan sets as a major objective to “accelerate GDP growth, reduce unemployment, and alleviate property” in its Ten-Year Perspective Development Plan (the Plan). The Government’s Poverty Reduction Strategy Paper (PRSP) of December 2003 recognizes education as a key pillar for sustainable economic growth. Education is seen as key to improve the quality of life and to provide students with employable skills. In particular, the Government recognizes basic education and skills development as key to reduce poverty. The Plan and PRSP identify priority areas for the education sector: (i) improvement of the literacy rate, (ii) education for all, (iii) improvement in secondary-level enrollment, (iv) production of higher-education graduates responsive to the country’s socioeconomic and technical needs, and (v) improvement of education quality. Technical education and vocational training (TEVT) is prominent in the Plan and PRSP as a strategy to produce skilled workers who will make the country competitive. The National Education Policy sets targets to expand TEVT facilities and allow more people to enroll in quality TEVT. In addition to establishing more technical institutes across the country, especially in North-West Frontier Province (NWFP), where TEVT facilities and opportunities are still limited, the Government plans to introduce job-oriented education and training in secondary schools throughout the country. To expand the skilled workforce, the Government has introduced a technical stream in 1,100 high schools to increase the number of students who choose to study technical, commercial, and vocational subjects, from 35% to 50% by 2011. Facilities at high schools, technical and vocational training centers (TVTCs), commercial colleges, and polytechnics are being used to conduct evening programs for out-of-school youths and dropouts. These activities directly help the Government reduce poverty by expanding access to TEVT. The Project’s goal is to help reduce poverty in NWFP by providing quality and relevant skill development programs and increasing access to TEVT. The Project’s specific objectives are to (i) restructure and strengthen institutional capacity and autonomy of TEVT institutions; (ii) improve the quality and relevance of TEVT programs; and (iii) enhance access and equity to TEVT, especially for women and the rural poor. The Project will create jobs in small and medium-sized enterprises by giving graduates access to microcredit. Two new vocational training centers for girls will be established in poor areas. Five of the eight existing centers for girls will receive new facilities in seven rural districts. Facilities, equipment, and training programs of all 13 existing centers will also be upgraded. About 160 trainees a year will benefit from these centers’ programs. Overall, 500–2,000 trainees will directly benefit from TEVT programs offered by centers covered by the Project. As about 500 polytechnic graduates are expected to access microcredit to start their own business, and thus support their families and create jobs, the Project’s economic impact and benefits will be substantial.

B. Poverty Analysis Targeted Classification: Targeted Intervention In the past decade poverty has increased sharply due to slow economic growth, declining development spending, and low agricultural outputs because of a severe drought. The proportion of the poor (those who consume 2,350 calories per adult equivalent per day, or an equivalent amount of PRs. 670 per capita per month in 1999 value) increased from 26.6% in FY1993 to 32.2% in FY1999, and deteriorated to 38.2% in FY2003. Rural poverty is normally higher than urban poverty. Over three fourths of the poor live in rural areas. Although poverty increased in all four provinces, it varied in different parts of the country. In 1998/99 urban Sindh had the least poverty (16%) while rural NWFP had the highest (42%). The poor are mainly illiterate, have big families and nonworking heads of household, and lack physical assets such as land or livestock. Poverty is highest among households whose heads are day laborers in agriculture, construction,

Appendix 15 53

trade, and transport. Poverty is also high among the self-employed, including urban street vendors and sharecroppers. Besides the economic slowdown and negligible increase in per capita income, the causes of poverty also include (i) limited job growth and absorptive capacity of the formal sector; (ii) few opportunities for unskilled youth to obtain on-the-job training and skills; and (iii) low quality of social services, particularly education and health services. The proportion of literate heads of poor households is almost half that for nonpoor households. Access to urban jobs reduces poverty by 45%, while education and physical assets reduce it by 12% and 9%. Social Development in Pakistan towards Poverty Reduction Investing in education and training to prepare students, including those who have not undergone formal education, for employment will directly reduce poverty, especially in villages and districts that lack education facilities. Educational opportunities are limited, especially in rural areas. The Mahbub-ul-Haq Center for Human Development has developed a broad index of poverty that takes into account deprivation in education and health, in addition to income. Poverty of education opportunities consistently ranked the highest: 77% in 1970 and 58% in 1995. Pakistan has approximately 41 million adult illiterates, and their ranks increase every year. Less than 50% of rural girls 10–14 years old are in school, and over 30% of all children are unlikely to attend school. The Project will rural TEVT to reach about 20,000 out-of school youths and adults who want to acquire job skills or start their own business. Nongovernment organizations (NGOs) will plan and implement the livelihood programs. Training needs and trades will be identified that will meet local and foreign needs. The Project’s linkages with an Asian Development Bank-supported credit project will give TEVT graduates access to microcredit for small business and self-employment.

B. Participation Process Is there a stakeholder analysis? Yes No Is there a participation strategy? Yes No Stakeholder Analysis: The Project was formulated after extensive consultations with all stakeholders, including the Government, provincial government of NWFP, and key government agencies responsible for TEVT planning and management. In NWFP consultations and discussions were carried out with key officials of Planning and Development Department, Department of Industries, Directorate of Technical Education and Manpower Training (DTE&MT), and the chair of the Board of Technical Education. Consultations were also carried out with administrators, teachers, students, community leaders, development partners, and the president of SME Bank, among others, and with NGOs and representatives of public and private TEVT institutions. NGO involvement in a situation analysis of vocational training needs and trades with potential trainees and local stakeholders will facilitate a participatory process for designing and implanting TEVT and livelihood programs. Participation of various stakeholders, including the private sector, will enable the provinces and TEVT institutions to implement these activities effectively.

D. Gender and Development Gender discrimination is a key factor associated with poverty. More women than men are poor. Women also have less land and productive assets, and suffer more unemployment, discrimination in the labor market, and limited access to economic options and the political process. Discrimination against women exists in almost all spheres of life, but is most profound in education and worse in NWFP than in the rest of the country. The national female literacy rate is only 29% compared to 55% for men. TEVT facilities and opportunities for women are equally limited. Of the 77 polytechnic institutes in the country only 10 are for women. The number of vocational training centers for girls is almost equal to that for boys, but the number of trades or technologies offered to girls is limited, and enrollments are also lower in the training centers for girls. Apart from cultural factors, socioeconomic factors are to blame: in some rural training centers for girls, lack of public transportation is a big obstacle and can prevent girls from enrolling.

54 Appendix 15

In NWFP, of the 12 polytechnic institutes, including 1 Government College of Technology, only 1 is for women. Of the 38 TVTCs only 11 are for females. Of the 11 vocational training centers for girls, 8 are in ill-equipped rented facilities, some outside the main community centers. Lack of transportation and accommodation also discourages girls who want to study at the centers. NWFP intends to remedy these problems under the Project and to improve technical and vocational training centers. In particular, the Project will upgrade facilities and equipment, train teachers, provide instructional materials, and establish career guidance and counseling centers. Gender Plan Several project measures are being proposed to give girls, especially in rural areas, access to TEVT. Training facilities and equipment at vocational training centers for girls will be upgraded. Initially, the centers now housed in rented facilities will be provided with their own facilities and equipment, and instructional materials upgraded. New programs will also give girls better career choices. The Project will establish two new vocational centers, among other measures, to expand girls’ opportunities to take up TEVT, especially in rural areas. The following is a summary of interventions: (i) Two new vocational training centers for girls will be established at Chitral and Karak. Computer and information technology, telecommunication technology, and biotechnology will be introduced to the girls to expose them to emerging technologies and enhance their job prospects. (ii) Girls and boys undergoing TEVT will gain experience through on-the-job training and train to use microcredit and become self-employed. A career guidance and job placement center in each training center will help girls prepare for and look for jobs after graduation. (iii) Nonformal livelihood skill improvement programs will target 20,000 rural trainees, at least half of whom will be girls or women. NGOs will identify training needs for new skills and upgrading of traditional skills. (iv) To enable poor students, especially females, from rural and remote areas, to attend TEVT, training will be conducted in the communities. If this is not possible, students will be housed in hostels or other accommodation in areas with facilities.

(v) The project management unit (PMU) and partner NGOs will involve female representatives of union and district councils in situation analysis and in planning and implementation of TEVT and livelihood programs. The PMU will include women staff in its management. (vi) A national consultant will be included in the consultant package. The gender and development consultant will work with the project implementation unit and partner NGOs to develop a gender action plan. (vii) A project performance monitoring and evaluation system will be developed and institutionalized to assess project impacts on job creation and graduates’ incomes, and other related indicators by gender and socioeconomic group. Has an output been prepared? Yes No

Appendix 15

55

E. Potential Issues

Significant/ Not Significant/

Uncertain/ None

Strategy to Address Issues Output Prepared

Resettlement Significant

Not Significant

None

Facilities in the same compound will be improved. New facilities will be built on Government land, requiring no resettlement.

Full Short None

Affordability Significant

Not Significant

None

Since the fee structure will not be changed under the Project, it will not impact on affordability. Significant

Not Significant

None Labor Significant

Not Significant

None

For any infrastructure construction work the Project will ensure that fair wages will be paid and basic facilities provided. No child labor will be used.

Significant

Not Significant

None

Indigenous People Significant

Not Significant

None

The Project will conduct social marketing campaigns to raise public awareness of its activities. Significant

Not Significant

None Other Risks/Vulnerabilities

Significant

Not Significant

None

Access to TEVT facilities may not be equitable in certain remote areas because of poor infrastructure and lack of transportation. TEVT institutions will be encouraged to offer NGOs facilities as part of the nonformal outreach programs to conduct training in remote areas.

Significant

Not Significant

None