Document of The World Bank

FOR OFFICIAL USE ONLY

Report No. 47453-NG

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED IDA CREDIT

IN THE AMOUNT OF SDR 63.6 MILLION (US$95 MILLION EQUIVALENT)

TO THE

FEDERAL REPUBLIC OF NIGERIA

FOR A

LAGOS EKO SECONDARY EDUCATION PROJECT

May 18, 2009

Human Development 3 Country Department AFCW2 Africa Region

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective March 31, 2009)

Currency Unit = Naira N148 = US$1

US$1.495 = SDR 1

FISCAL YEAR January 1 – December 31

ABBREVIATIONS AND ACRONYMS

ASC Annual School Census

BES BPP

Basic Education Service Bureau of Public Procurement

CMD CPS CUBE CWIQ

Centre for Management Development Country Partnership Strategy Capacity Development for Universal Basic Education Core Welfare Indices Questionnaire

DFID DPAC DPL

UK Department for International Development District Project Advisory Committee Development Policy Lending

EA ECCD EFA EKO EMIS ESMF, ESMP EPDF ESP ESSPIN ETF

Environmental Assessment Early Child Care and Development Education for All Yoruba word meaning “education” Education Management Information System Environmental & Social Management Framework, ESM Plan Education Program Development Fund Education Sector Plan Education Sector Support Program in Nigeria Education Trust Fund

FCSC FCT FPM FTI

Federal Consultative Steering Committee Federal Capital Territory Financial Procedures Manual Fast-Track Initiative

GDP GER

Gross Domestic Product Gross Enrollment Ratio

HIV/AIDS Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome

IBRD ICT ICR IDA IFR

International Bank for Reconstruction & Development (The World Bank) Information and Communication Technology Implementation Completion Report International Development Association (The World Bank) Interim Financial Report

JSS JSSCE

Junior Secondary School (grades 7-10) JSS Certificate Examination

LASEEDS Lagos State Economic & Empowerment Development Strategy

iii

LASEPA LASGEMS LASTVEB LASU LEAP LCA LGA LGEA LMDGP LSG

Lagos State Environmental Protection Agency Lagos State Government Education Management System Lagos State Vocational Education Board Lagos State University Lagos Economic Advancement Program Local Council Area Local Government Area Local Government Education Area Lagos Metropolitan Development and Governance Project Lagos State Government

M&E MDGs MOE MOU MTEF MTESS

Monitoring & Evaluation Millennium Development Goals Ministry of Education Memorandum of Understanding Medium-Term Expenditure Framework Medium-Term Education Sector Strategy

N NECO NEEDS NERDC NESSC NLSS

Naira National Examinations Council National Economic Empowerment & Development Strategy Nigerian Educational Research & Development Council National Education Sector Steering Committee National Living Standards Survey

OP/BP Operational Policies/Bank Procedures (World Bank)

PEMFAR PEP2 PFMU PHRD PAC PIC PIM PO PPF PSU PTA, PTO

Public Expenditure Management and Financial Accountability Review Second Primary Education Project Project Financial Management Unit Population & Human Resource Development (Japanese grant) Project Advisory Committee Project Implementation Committee Project Implementation Manual Procurement Officer Project Preparation Facility Project Support Unit Parent-Teacher Association, Parent-Teacher Organization

SBMC SDG, SDGM SEEDS SEMIS SESP SMOE SOE SPAC SSS STEP-B SUBEB SY

School-Based Management Committee School Development Grant, SDG Manual State Economic Empowerment & Development Strategy School-level EMIS State Education Sector Project State Ministry of Education Statement of Expenditure State Project Advisory Committee Senior Secondary School (grades 10-12) Science & Technology Education in Post-Basic Education Project State Universal Basic Education Board School Year

TA TEPO TG/PS TPA TRC

Technical Assistance Teachers Establishment & Pensions Office Tutor-General/Permanent Secretary Ten Points Agenda Technical Review Committee

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TVET Technical-Vocational Education & Training

UBE, UBEC UNESCO UNICEF UNILAG

Universal Basic Education, UBE Commission United Nations Educational, Scientific & Cultural Organization United Nations Children's Fund University of Lagos

WAEC WASSCE

West Africa Examinations Council West Africa Senior Secondary Certificate Examination (the WAEC exam)

ZOPA Zonal Project Administrator

Vice President : Obiageli Katryn Ezekwesili Country Director : Onno Ruhl

Sector Director : Yaw Ansu Sector Manager : Lynne D. Sherburne-Benz

Task Team Leader : Marito H. Garcia

v

Federal Republic of Nigeria

Lagos Eko Secondary Education Project

TABLE OF CONTENTS

Page

I. STRATEGIC CONTEXT AND RATIONALE ............................................................................... 1 A. Country and sector issues.................................................................................................... 1

B. Rationale for Bank involvement ......................................................................................... 6

C. Higher level objectives to which the project contributes .................................................... 7

II. PROJECT DESCRIPTION .............................................................................................................. 7 A. Lending instrument ............................................................................................................. 7

B. Project development objective and key indicators .............................................................. 8

C. Project components ............................................................................................................. 8

D. Lessons learned and reflected in the project design .......................................................... 12

E. Alternatives considered and reasons for rejection ............................................................ 12

III. IMPLEMENTATION ................................................................................................................. 13 A. Partnership arrangements (if applicable) .......................................................................... 13

B. Institutional and implementation arrangements ................................................................ 14

C. Monitoring and evaluation of outcomes/results ................................................................ 16

D. Sustainability..................................................................................................................... 17

E. Critical risks and possible controversial aspects ............................................................... 18

F. Loan/credit conditions and covenants ............................................................................... 19

IV. APPRAISAL SUMMARY .......................................................................................................... 19 A. Economic and financial analyses ...................................................................................... 19

B. Technical ........................................................................................................................... 20

C. Fiduciary ........................................................................................................................... 21

D. Social................................................................................................................................. 24

E. Environment ...................................................................................................................... 25

F. Safeguard policies ............................................................................................................. 26

G. Policy Exceptions and Readiness...................................................................................... 26

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Annex 1: Country and Sector Background ................................................................................................. 27

Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ....................................... 49

Annex 3: Results Framework and Monitoring ............................................................................................ 50

Annex 4: Detailed Project Description ....................................................................................................... 56

Annex 5: Project Costs ................................................................................................................................ 74

Annex 6: Implementation Arrangements .................................................................................................... 75

Annex 7: Financial Management and Disbursement Arrangements ........................................................... 82

Annex 8: Procurement Arrangements ......................................................................................................... 97

Annex 9: Economic and Financial Analysis ............................................................................................. 104

Annex 10: Safeguard Policy Issues ........................................................................................................... 112

Annex 11: Project Preparation and Supervision ....................................................................................... 114

Annex 12: Documents in the Project File ................................................................................................. 115

Annex 13: Statement of Loans and Credits .............................................................................................. 116

Annex 14: Country at a Glance ................................................................................................................. 118

Annex 15: DFID ESSPIN ........................................................................................................................ 120

MAP IBRD No. 36893 ............................................................................................................................. 121

NIGERIA LAGOS EKO SECONDARY EDUCATION PROJECT

PROJECT APPRAISAL DOCUMENT AFRICA AFTH3

Date: May 18, 2009 Team Leader: Marito H. Garcia Country Director: Onno Ruhl Sector Manager: Lynne D. Sherburne-Benz Sector Director: Yaw Ansu

Sectors: Secondary education (90%); General education sector (10%) Themes: Education for the knowledge economy (67%); Improving labor markets (33%)

Project ID: P106280 Environmental screening category: “B” Partial Assessment

Lending Instrument: Specific Investment Loan

Project Financing Data [ ] Loan [X] Credit [ ] Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (US$ millions): 95.00 Proposed terms: 40 years maturity, with a 10-year grace period.

Financing Plan (US$m) Source Local Foreign Total

BORROWER/RECIPIENT 0.00 0.00 0.00 International Development Association (IDA)

95.00 0.00 95.00

Total: 95.00 0.00 95.00 Borrower: Federal Ministry of Finance Finance Building Central Business Area Abuja Nigeria Responsible Agency: Office of the Commissioner of Education Lagos State Ministry of Education The Secretariat Alausa, Ikeja Nigeria Tel: 234-805-495-0021 ronkeazeez@aol.co.uk Federal Ministry of Education c/o STEP-B Project Plot 245, Samuel Adesujo Adeulegun St.

Central Business District Abuja Nigeria Tel: 234-803-385-4351 stepbfme@yahoo.com

Estimated disbursements (Bank FY/US$m)FY 2010 2011 2012 2013 Annual 12.00 25.00 28.00 30.00 Cumulative 12.00 37.00 65.00 95.00 Project implementation period: Start June 16, 2009 End: December 31, 2013 Expected effectiveness date: September 15, 2009 Expected closing date: December 31, 2013

Does the project depart from the CAS in content or other significant respects? [ ]Yes [X] No Does the project require any exceptions from Bank policies? Have these been approved by Bank management?

[ ]Yes [X] No [ ]Yes [X] No

Is approval for any policy exception sought from the Board? [ ]Yes [X] No Does the project include any critical risks rated “substantial” or “high”? [X]Yes [ ] No Does the project meet the Regional criteria for readiness for implementation? [X]Yes [ ] No

Project development objective: The development objective of the project is to improve the quality of public junior and senior secondary education in Lagos State. The project will support over half a million public school students in 637 secondary schools, over 7,000 teachers and school administrators and will strengthen the capacity of education district, state and federal institutions. Project description: The project would support the government’s priority of human capital development by directly supporting public junior and senior secondary schools through school grants, performance-based incentives, teacher training and standardized testing of its students. Component 1: Promoting Secondary School Effectiveness through School Development Grants: School grants will be provided annually to all public secondary schools, (amount based on school enrollment), to support activities that impact student learning outcomes. The five technical colleges also will apply for public-private partnership grants to strengthen the linkages between the colleges and industry with the aim of making them more relevant to the labor market in Lagos. Quality improvements are further encouraged through the availability of additional performance awards to those top 40 percent of schools demonstrating learning gains. Component 2: Enhancing Quality Assurance for Junior and Senior Secondary Schools: The second component of the project establishes a standardized system for measuring student’s learning achievements in core subjects (English, math and science) which will be used to track project results and provide important feedback for teachers, principals, parents and students. Since teachers play a critical role in improving the quality of learning, the project also will support enhanced professional development for public secondary school teachers, particularly in the core subject areas and current pedagogy. Component 3: Project Coordination and Management: This component will provide resources to Lagos State for effective project coordination, implementation, monitoring and evaluation, capacity building and the implementation of an information and communications strategy. Component 4: Strengthening the Federal Post-Basic Education Strategy: The last component is a small allocation to the Federal Ministry of Education to strengthen policy

dialogue, build capacity, provide technical assistance for developing the national post-basic education strategy, and support policy dialogue on the strategy with States. Which safeguard policies are triggered, if any? Environmental Assessment (OP/BP 4.01). Significant, non-standard conditions, if any, for: Board presentation: None. Loan/credit effectiveness:

(i) Subsidiary Financing Agreement has been signed between the Federal Ministry of Finance and Lagos State; and

(ii) Ratification and Legal Opinion. Covenants applicable to project implementation:

(i) Carry-out the project in accordance with the Financing Agreement and PIM and shall not amend, suspend, abrogate, repeal or waive any provision of the PIM without prior approval of the Bank.

(ii) Maintain PFMU with sufficient staff and resources acceptable to the Bank. (iii) Ensure monitoring of agreed project performance indicators and progress

benchmarks. (iv) During the implementation of the project, provide the Bank for its review, a quarterly

report on the progress achieved in the carrying out of the Project no later than 45 days after the end of the period covered by such report, as set forth in the PIM.

(v) Jointly undertake with the Bank a review of the project activities based on the report referred to in subparagraph (iv) above.

(vi) Financial covenants are the standard ones as stated in the Financing Agreement Schedule 2, Section II (B) on Financial Management, Financial Reports and Audits and Section 4.09 of the General Conditions.

I. STRATEGIC CONTEXT AND RATIONALE

A. Country and sector issues

1. The Lagos Eko Secondary Education Project (“Eko” is the Yoruba word for education) will support the main objectives of the Nigeria Country Partnership Strategy (CPS) and the implementation of the education sector plan for Lagos State. Lagos was selected on the basis of (a) its demonstrated commitment and ownership to the development of the education sector; (b) poor quality of public education, especially in urban slum areas; (c) its significant role in Nigeria’s economic growth; and (d) the quality of its Education Sector Plan (ESP).

2. Country context and macro-economic situation. Nigeria is the largest country in Sub-Saharan Africa in terms of population (estimated around 140 million) and has a decentralized government structure. There are 36 States and the Federal Capital Territory (FCT) and 774 local government areas (LGAs). Despite being the 6th largest exporter of oil, Nigeria is one of the poorest countries in the world with per capita income of US$920, and with a very high level of inequality--approximately 54 percent of the population is estimated to be poor.1 Nigeria’s oil revenues grew from an annual average of about US$15 billion between 2000 and 2003 to about US$36 billion annually between 2005 and 2008. On the macroeconomic front, real GDP growth was 6.3 percent in 2007, and is projected to increase further in 2008 but at a lower rate due to the global economic slowdown and falling oil prices. Inflation rates of 40 percent per year in the 1990s declined to a range of 14 to 18 percent during 2001-2005 and to single digits in 2007; and in spite of recent increases in food and energy prices, inflation was under 15 percent in 2008.

3. Lagos State macro-economic situation. Lagos is a predominantly urban state, with an estimated population of 9 million.2 It is a mega-city of dominant economic importance not only for Nigeria but in West Africa. It is the premier manufacturing and port city in the region with the largest concentration of multinationals and financial institutions in the country. Lagos is the second largest contributor to the GDP of Nigeria. The state accounts for about 80 percent manufacturing value-added in Nigeria and over 65 percent of its commercial and industrial activities. Lagos has over 2000 industries and over 250 financial and allied institutions with the most active stock exchange in the country. Despite its dominant economic status in Nigeria’s non-oil economy, Lagos is a poor city with poor social indicators. Although its annual budget dramatically improved in the last three years, it remains small relative to the resources necessary for adequate service delivery and infrastructure. According to the National Living Standards Survey (NLSS), 67 percent of the population of Lagos lives on less than one dollar a day and, as such, are considered to be poor. The poverty ranking of the state is 23rd out of the 36 states in the Federation. Lagos has one of the highest incidences of poverty and inequality in the country. Overall, Lagos ranks 11th in terms of poverty incidence and 1st in terms of inequality. Almost 70 percent of the Lagos population lives in slums in extremely poor environmental conditions.

1 World Bank (2007) Nigeria: Poverty Assessment. 2 The 2006 Nigerian census puts the population of Lagos at 9 million, but the authorities of Lagos have disputed this

figure. According to the Lagos Central Bureau of Statistics, the population is closer to 17.5 million (2008) with annual population growth of roughly 4 % over the last 10 years. World Urbanization Prospects (2003) estimated the population as 11 million.

2

Table 1: Poverty Data in Selected Nigerian States

State Total Population* Poverty

Headcount (%)

Population living in Poverty

Poverty Gap Gini Index (%)

Enugu 3,257,298 36.8 1,198,686 12.0 44 Jigawa 4,348,649 90.9 3,952,922 47.3 44 Lagos* 9,013,534 67.0 6,039,068 35.6 64 Kaduna 6,066,562 40.9 2,481,224 12.7 42 Kano 9,383,682 49.7 4,663,689 18.0 43 Sources: Provisional Results of the 2006 Nigeria Census by State & Nigeria Poverty Assessment (2007, draft). * Population data from the 2006 Census are contested. Many argue that the population of Lagos is likely to be closer

to 17 million. This would give the population living in poverty in Lagos as 11.39 million. 4. Nigeria’s education sector. Nigeria’s education system comprises 9 years of basic education (6 years of primary and 3 years of junior secondary), 3 years of senior secondary, and 4 years of tertiary education. The provision of education is a concurrent responsibility of the federal, state and local governments, with a fast growing private education sector also active at all levels of the education system, especially at the primary level. The Federal Government plays a dominant role in the provision of post secondary education, while state and local governments have principal responsibility for the provision of secondary and primary education. The Federal Government also provides additional direct funding for education at the state and local government levels through the Universal Basic Education Commission (UBEC) for the implementation of the Universal Basic Education program (UBE), the Education Trust Fund (ETF), which is mainly for physical infrastructure, and the virtual poverty fund from the debt relief initiative, for the achievement of the Millennium Development Goals (MDGs).

5. Lagos’ education sector.3 Lagos State offers tuition-free education for basic and secondary education. As of 2008, 11,387 schools (public and private) enrolled an estimated 2.3 million students. Of these schools, 1,030 are public primary, 319 public junior secondary and 318 public senior secondary schools with enrollment of about 1 million students. The Ministry of Education reports 7,511 private primary schools, 1,172 private junior secondary and 1,037 private senior secondary schools, although officials agree that these figures are substantially underestimated since the number of private schools is difficult to capture, given that many are unregistered. For tertiary education, the state also has 5 public technical colleges, 5 universities (2 public and 3 private), 2 polytechnics, 1 monotechnic and 4 Colleges of Education. The high demand for education, combined with the ever-growing population has spawned a dramatic growth of private schools over the last two decades, especially at the primary level. As a result, the majority of lower income groups in Lagos enroll their children in public schools, particularly at the secondary level, whereas the majority of the middle and high income groups send their children to private schools. For example, most civil servants in Lagos send their children to private schools. Only 57 percent in the poorest quintile attend secondary school, compared to 94 percent in the highest income quintile (CWIQ, 2005). Out of school youth (roughly estimated between 1 and 2 million4) remains a considerable challenge in Lagos where the opportunity costs of attending secondary school are high and the availability of quality public secondary education is constrained by the enrolment ”bulge” from the high completion rates in primary education and

3 It is difficult to estimate the number of private schools since many are neither registered nor have applied for

registration. New schools are being established at a far greater number than can be accurately monitored. 4 The EFA Action Plan from 2004 estimated 2.5 million out of school children, although the most recent EMIS data

suggests 1.3 million not enrolled in school between 6-14 years of age. The lack of data on private schools and unavailable population figures makes it difficult to estimate.

3

fast increasing population. However, it should be noted that the Lagos household survey showed that the State has a high adult literacy level (93 percent).

6. Lagos’s education sector faces several critical challenges, including: (i) low access to junior secondary and senior secondary education for the poor; (ii) poor quality of education at all levels, leading to weak skills development and limited employability; (iii) inadequate funding and lack of accountability/quality mechanisms; (iv) limited capacity for policy making, management, and monitoring and evaluation; (v) weak alignment of curriculum to labor market needs; and (vi) large private provision of primary and some secondary schools not systematically monitored or supervised by the State. The Lagos Eko project will focus on addressing only several of these issues.

a) Access to education at junior and secondary education, is low for the poor. Lagos enjoys a strong culture of school attendance (nearly all children attend primary school, either public or private) and no gender disparities seem to exist in this age group. School enrollment is nearly 100 percent for 6-14 year old children (fig. 1), but declines to 65 percent by senior secondary and is estimated at around 40 percent for the lowest income quintiles. Although progression of students from primary to junior secondary school is automatic, completion rates in secondary schools are considerably lower, reflecting the inadequacies of the learning environment (poor infrastructure, overcrowding, limited learning materials, etc.), availability of schools (both public and private), and indirect costs of education. Until this year, core textbooks and other essential learning materials had been in chronically short supply in most public secondary schools. Transportation issues (traffic congestion, distance to nearest school, urban expansion) further exacerbate children’s access to education. The low quality of education combined with high opportunity costs at the secondary level contributes to the decline in enrollment in secondary schools. Furthermore, the low employment rate of secondary school graduates acts as an additional deterrence.

Sources: ASC, CWIQ 2006.

0

20

40

60

80

100

120

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30Age

Attendance rate (%)

Male Female

Figure 1: Age Specific Attendance Rates by Age 3-30 years old, Lagos State, 2006

4

Table 2: Primary and Junior Secondary Gross Enrollment Rates by Household Consumption Quintile, Jigawa and Lagos, 2006

State & Gender Primary by Income Quintile Junior Secondary by Income Quintile

1st 2 3 4 5th 1st 2 3 4 5th Jigawa State Female 29 39 52 86 84 23 27 47 62 125 Male 23 25 42 65 71 6 9 8 40 47

Lagos State Female 13 104 130 109 104 45 71 85 104 117 Male 10 67 100 101 113 57 82 78 94 89

Source: CWIQ 2006; where 1= lowest income quintile and 5 = highest income quintile.

b) Quality and relevance of basic and secondary education is inadequate for skills development. The quality of primary and secondary education has markedly deteriorated over the last decade. The Ed tap Survey conducted by the Federal Ministry of Education in 2007 reveals that as many as 60 percent of graduates are unemployable primarily because they do not have sufficient skills to adapt to the needs of the ever changing and dynamic business environment. The quality and relevance of education must be improved to provide basic life skills, knowledge and key competencies for all students, and more broadly to contribute to non-oil labor market growth. Although data is scarce on learning outcomes, available examination results show poor results. For example, excluding a few high performing schools, only eight percent of candidates obtained five credit passes in the 2007 WASSCE examination. The main contributing factors to low learning outcomes are the poor conditions of the learning environment to support teaching and learning (e.g., inadequate physical infrastructure, poor conditions of facilities, including water and sanitation, inadequate distribution of core textbooks and instructional aids); and inadequate opportunities for teachers to develop and maintain skills.

c) There is inadequate funding, the quality of education expenditures is low; and there is a lack of accountability mechanisms. Education financing in Nigeria is the responsibility of all tiers of the government. Data on education expenditures is inadequate to examine the source and use of education spending for education. However, available data suggest that education funding in Lagos state has been declining in real terms. The share of the state education sector in total state recurrent expenditure was 25 percent in 2005, although the data are insufficient to determine LGA expenditures. The share of primary education has remained fairly constant at 35 percent since 2001, which is relatively low compared with other states. The share of secondary education has also remained relatively stable at 50-55 percent. The share of higher education increased from 10 percent in 2001 to 14 percent in 2005. Despite high shares of public spending on primary and secondary education, with the bulk of resources going to teacher salaries, the quality of learning conditions is very poor. Lagos follows the traditional incremental budgeting model, with the result that budgeted expenditure and actual expenditure deviated significantly with less than one third of the approved budget being spent (especially for capital expenditures). Available evidence suggests inefficiencies in the delivery of education services, such as teacher deployment, where the most deprived areas lack qualified teachers. A Medium-Term Education Sector Strategy (MTESS) has already been prepared (2008) to cost education initiatives and expenditure plans over the next three years.

5

d) Weak skills development not responsive to labor market needs. Most secondary schools are teaching with very little practical or technical content. Low test scores across the State reflect the poor level of knowledge attainment including even basic literacy and numeracy skills which are critical to support the demand for the Lagos labor market (both formal and informal). Unqualified teachers in the core subjects of English, Math and Sciences are contributing to the problem. And the lack of emphasis on more progressive pedagogy is stunting student’s abilities to adapt to the changing workforce needs. The poor reputation of technical education and training has further eroded the quality of the technical programs as students and parents see these colleges as “schools of last resort.”5 The lack of prestige for these programs, combined with the unqualified teachers, outdated curriculum, and inadequate public funding are hampering the government’s goal of increasing TVET participation to 20 percent as compared to the current 2 percent enrollment. Only 30 percent of all courses in technical colleges are accredited and women are grossly underrepresented (20 percent). To ensure more relevant teaching and courses of study, the government plans to encourage the TVET colleges to establish partnerships with the private sector.

Table 3: Total Number of Academic Schools in Lagos State (2007/08) Number of Schools Enrolment

Public Primary 1,030 454,808

JSS 319 318,664 SS 318 265,233

Total 1,667 1,038,705 Private

Primary 7,511 907,767 JSS 1,172 182,218 SS 1,037 168,841

Total 9,720 1,258,826 Total Public and Private

Primary 8,541 1,362,575 JSS 1,491 500,882 SS 1,355 434,074

Total 11,387 2,297,531 Source: SUBEB and Ministry of Education, 2007/2008 EMIS (includes 5 public technical SS colleges).

e) Role of the private education sector. An interesting phenomenon of the education sector in Lagos is the exceptionally large private sector provision of primary and secondary schools, nearly 60 percent of all primary and secondary enrolment. In 2007/08, Lagos had 1,667 public primary and secondary schools, but 9,720 private primary and secondary schools (Lagos State Government Education Management Systems-LASGEMS), typically small to medium size schools located within the neighborhood. The bulk of private schools service primary students. Private education providers have filled a gap in Lagos and demonstrate the large demand for quality education. The failure of the public school system is one reason parents opt for private education. The strikes and teacher walkouts are still remembered by many parents today. The inability of the government to keep pace with the ever expanding population has also created an attractive business opportunity for school proprietors. Private schools are the only option in some of the newly settled outer areas of Lagos where no public schools exist yet. Another advantage the private providers offer is extra child care for

5 The five technical colleges in the state have a total student enrolment of 5,374. The National Policy on Education

envisages 20% of all students leaving JSS would enter technical colleges. The current ESP therefore plans to increase the number of technical schools to 25 over the next 10 years.

6

working mothers. Private providers can often offer a more conducive learning environment with small classes, better infrastructure, motivated and accountable teachers and learning materials. Unregistered private schools, however, may not always provide a quality education. The unregulated expansion and establishment of private schools is a major issue for the MoE, but the private school department within the Ministry is not equipped to deal with the volume of schools nor does it have the capacity to properly monitor the sector. While the IDA credit focuses on public secondary education, private education policy and regulation will be supported by other development partners.

7. Government strategy. At the federal level, the Federal Government launched the UBE Program (1999) making it compulsory for every child to receive nine years tuition free education, and the UBE bill was passed in May 2004. In 2003, the Government prepared the NEEDS, a major multi-sectoral reform program that sees educational reforms as a vital transformational tool and instrument for socioeconomic empowerment. In June 2005, a National Committee was inaugurated to monitor and allocate additional funds from the debt relief funds for the achievements of the MDGs. The Federal Government launched a major education reform program in 2006, which stressed the importance of institutional reforms to improve the efficiency and effectiveness of service delivery at all levels of education.

8. At the state level, the Lagos State Economic and Empowerment Development Strategy (LASEEDs) was developed in 2007, recognizing that enhancing the Lagos State citizens’ access to education can help reduce extreme poverty and provide empowerment. The Education Sector Plan was subsequently presented in October 2008 and aims to provide accessible, equitable, quantitative and qualitative education for all, fostering self-reliance and socioeconomic development in Lagos. The ESP broadly lays out guidelines for strengthening and expanding educational opportunities at all levels from ECCD to tertiary. The Bank and DFID are working with the State to finalize the ESP and support key areas. More recently, the Ten Points Agenda, also referred to as the Lagos Economic Advancement Program (LEAP) sets out the main strategies for achieving efficient and adequate social services and infrastructure to stimulate and create gainful employment through such educational policies as the construction of millennium schools, curriculum review, rehabilitation of all schools and libraries, provision of school furniture and equipment, self-sustaining tertiary education and teachers welfare enhancement.

B. Rationale for Bank involvement

9. The country partnership strategy aims to achieve the following results: (i) improved governance; (ii) maintaining non-oil growth; and (iii) promoting human development. The proposed project would support results packages (ii), and (iii) through improvements in the quality of secondary education, which will contribute to improved productivity, skills development and ultimately non-oil growth. The rationale for bank support for Lagos education is summarized below:

a) Strong political ownership and commitment to the education sector. Lagos has embarked on substantive economic and governance reforms since 1999. A new Government was elected in April 2007 on a platform that put education reforms at the top of the agenda. A set of PHRD supported studies have helped to inform the design of the project components. Textbooks in core subjects (English, Math, Integrated Science, Biology, Computer Science, Agric Science, Yoruba) have been purchased (N 2.9 billion) and were recently distributed to all public school children. Funding will be set aside in subsequent years for replacement stock. Approximately N 37 million has been spent on teachers’ guides in these core subjects. Over N 12 billion has been spent since June 2007 on new construction, rehabilitation and

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school furniture. Additional support for infrastructure upgrading is being provided through the Lagos Metropolitan Development Governance Project (LMDGP).

b) Poverty targeting in Lagos. Lagos has poor education indicators, especially affecting poor households. Despite the relatively good gross enrollment indicators and low gender disparities in primary education, there remain a very high absolute number of poor households and children not receiving quality education services and/or not completing the general education cycle. Most poor children do not have access to quality basic and secondary education (GER 40 percent), resulting in high drop out and low completion rates and poor education outcomes. By targeting public secondary education, the project will focus on students from poor families.

c) Role of Lagos in Nigeria’s economic growth. Supporting the quality of secondary education will directly contribute to the skills/growth agenda that is vital for Lagos, given its national strategic importance as the major commercial/financial and logistical hub for Nigeria and the West Africa region. The Lagos education system provides opportunities for children from other parts of Nigeria as evidenced by the high percentage (almost 90 percent) of students that are from other States and/or Zones of origin taking the JSS examination.

d) Strong historical Bank support to the state. The Bank has a strong historical program of support to the Lagos government’s development program.6 The Bank’s engagement would enhance policy guidance to the SMOE and provide linkages between the Bank and other projects that are supporting Lagos state. Collaboration between the LMDGP and Lagos Eko is providing synergies for school construction under the former project and delivery of services under the latter. The previous UBE project established a precedent for project support directly to schools (through self-help grants) by working through departments within both the SMOE and SUBEB. In addition, the state has a well-established PFMU to handle bank-financed financial management activities.

C. Higher level objectives to which the project contributes

10. The project is consistent with the objectives and approach of the CPS that supports Nigeria’s National Economic Empowerment and Development Strategy (NEEDS). The State Economic Empowerment and Development Strategy (SEEDS) places a high priority on developing human capital for economic growth, particularly in the non-oil sector. The focus of the Lagos Eko project is to assist the State to improve the performance of secondary school students, thereby contributing to the objectives of supporting non-oil economic growth and human capital development. The project will also strengthen accountability through standardized assessments to measure learning outcomes.

II. PROJECT DESCRIPTION

A. Lending instrument 11. The Lagos Eko project will be implemented as a four-year Specific Investment Loan (SIL) of US$95 million (of which US$5 million will support Federal Ministry of Education secondary education strategy and oversight activities). The proposed approach will allow Lagos

6 The Lagos Partnership Strategy (2009) is under preparation to support an integrated vision of donor coordination in

support of the Lagos development strategy. Current World Bank assisted projects include FADAMA, Health Sector Development, Lagos Urban Transport, Urban Water Sector Reform II, and LMDGP.

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and the Bank to (a) target investments in specific priority areas, based on the Lagos ESP; (b) support innovative mechanisms to strengthen the Government’s capacity for the delivery of public secondary education services; and (c) provide a platform for other donors (i.e., DFID, EFA-FTI, etc.) to support the education sector in Lagos.

B. Project development objective and key indicators 12. The development objective of the Lagos Eko project is to: improve the quality of public junior and senior secondary education in Lagos State. The significant level of private schooling, access to federal UBEC funds, and high enrollment rate in primary school guided the decision to concentrate on addressing quality issues at the secondary level. The project will support 583,900 public school students in 637 schools. Current achievement/test scores indicate students are not performing as mandated by the curriculum. More worrying is the lack of employment options for many graduates given their limited and/or mismatched skills. Using school grants and student assessments, the project will support the promotion of school learning in Lagos. Support to five technical and vocational colleges will further enhance linkages to the labor market. Although secondary education is the focus of the interventions, some of the institutional reforms (i.e., assessments, teacher training) and support to the Federal MoE will impact the education system more broadly. And, DFID, through ESSPIN will provide complementary technical assistance for the education sector, with a focus on basic education.

13. Project performance will be monitored through a set of key performance indicators (see Annex 3). The PDO outcome indicators specifically measure the increase in the percentage of public junior secondary students obtaining results “at and above credit” in the junior secondary certificate examination in English, mathematics, and integrated science; and the increase in the percentage of public senior secondary students obtaining “pass grade” results in the West African senior secondary certificate examination in English, mathematics, and biology.

C. Project components 14. The proposed Lagos Eko project will address the government’s priority of human capital development by directly supporting public junior and senior secondary schools through school grants, performance-based incentives, teacher training and standardized testing of its students. 15. Component 1: Promoting Secondary School Effectiveness through School Development Grants (Estimated base cost: US$62.6 million). The objective of the school development grants is to raise education outcomes in junior and senior secondary education by providing public secondary schools in Lagos access to yearly discretionary resources with an explicit focus on improving the quality of education services as priority needs are defined at the school level. School progress will be rewarded through additional performance grants for the top 40 percent of schools based on criteria for measuring quality improvements (i.e., test scores, teacher attendance). Grants based on private-sector partnerships also will be provided for the five technical colleges. 16. Subcomponent 1.1: Secondary School Development Grants (US$45.6 million): The grants will be provided annually to all public secondary schools, to augment schools’ non-salary expenditures to improve learning performance. The initial grant is expected to be between N 2 and 3.5 million (approximately US$13,000-23,000) depending on the size of the school. Approximately 632 schools and 5 technical colleges would receive the grant based on an approved school improvement plan which would include activities that impact student learning

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outcomes. Training will be provided to school leaders, district officers, and School-Based Management Committees (SBMCs) in school improvement planning and grant operations. Project Implementation Committees (PICs) would be formed to prepare the school improvement plans. Proposals would be reviewed and approved at the District level and endorsed at the State level according the School Development Grants Manual (SDGM). The execution of the grants will be facilitated and monitored by Zonal Project Administrators (ZOPAs) to ensure standards of reporting and accountability are upheld. In Lagos, junior secondary schools already have experience in grant operations through the provision of minimal monthly resources for operational expenditures from the SMoE and the provision of self-help funds from UBEC. However, most schools do not receive sufficient funding to support their needs. It is expected that by the fourth year of project implementation, assessment scores in core subjects of the secondary schools will increase from project baseline.

a) In order to encourage interventions that will show results in improving learning, infrastructure expenditures will be capped at (30 percent) of grant resources. Investments in school infrastructure improvements are being planned for under State budget allocations with support from UBEC and ETF, and from the Bank supported LMDGP (US$25 million for school construction/rehabilitation). Examples of activities that could be supported are: (a) instructional materials and other learning inputs; (b) training opportunities for teachers; (c) teacher development and support programs; (d) lab equipment; (e) academic competitions and prizes; (f) allowances for volunteer teachers; (g) remedial courses; (h) library books; (i) reading enrichment; (j) strategies for skill development programs/ICT to improve secondary teaching and learning; and (k) innovative activities (e.g., preparation of school-level educational management information systems). The SDGM will provide guidance on eligible expenditures and implementation of this component.

b) About 9,400 principals, vice principals, inspectors, ZOPAs and other officials at the district and LGA, including the SBMCs, will be trained on the establishment and monitoring of school improvement plans, grant implementation, effective schooling, preparation of annual student performance improvement plans, financial management and grant performance monitoring and reporting.

17. Subcomponent 1.2: Secondary School Performance Awards (US$10.3 million): The objective of this subcomponent is to sustain the gains made in learning outcomes by providing additional performance based resources to qualifying schools. These follow-on grants would reward the schools for progress in improving learning outcomes and would be used to fund activities eligible under subcomponent 1.1. The awards would be given to schools which have achieved improvements based on the school’s composite score in standardized tests in English, mathematics, and science as compared to previous year’s results; significant improvement in teacher attendance; and organization and demonstrated evidence of participation by a school-based management committee. Standardized learning assessments and achievement tests will be administered on a yearly basis and determined electronically at the Lagos State Board of Examinations. The expected outcome of this sub-component is that principals and teachers make concerted effort to maintain or raise the level of achievement of their students. It is expected that by the fourth year of the project, at least 40 percent of secondary schools maintain learning gains. The quality assurance/measurement tools will be supported and financed under Component 2. 18. Subcomponent 1.3: Public-Private Partnership Grants in Technical Education (US$6.6 million): The objective of this sub-component is to improve the quality of teaching, research and skills development at the technical colleges and make them more relevant to the

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demands of employment and entrepreneurship in Lagos. The five technical colleges (enrolling 5,374 students) would receive additional funding in order to strengthen the linkages between the colleges and industry. Funds of up to N 40 million (US$285,000) would be provided for twinning arrangements between the private sector and technical colleges to strengthen the linkages between skills training and labor market demand. Cooperation between technical colleges and private sector industry, professional associations, and/or private institutions is expected to lead to more relevant teaching, research and development activities. The first year of the project will be devoted to capacity building for the technical colleges to develop their PPP proposals. The expected outcomes of this subcomponent are that graduates of the technical colleges find gainful employment, pass the relevant academic or professional exams, and/or are admitted to post-secondary institutions. This subcomponent would support partnerships between the technical colleges and private sector, strengthen the school-industry advisory agency (LASTVEB), develop relevant training curricula and certification systems, and promote sharing of industry equipment and skilled personnel with schools. 19. Component 2: Enhancing Quality Assurance for Junior and Senior Secondary Schools (Estimated base cost: US$13.7 million). The objective of this component is to establish a standardized system for measuring student’s learning achievements in core subject areas and support teachers to develop the skills needed to better teach these areas. This component would support the improvement of the quality assurance systems in Lagos State to measure progress, identify deficits, provide feedback to service providers, and establish appropriate benchmarks/standards. This critical data will provide continuous assessment and impact evaluation of project and government interventions. Furthermore, it will measure the learning outcomes in schools to give the government a comprehensive picture of progress in the secondary education sector, at the same time providing a transparent yardstick to hold schools, teachers, and district officials accountable for delivering a quality education. 20. Sub-component 2.1: Standardized Testing for Secondary Schools (US$2.9 million): The objective of this sub-component is to establish a standardized system for measuring learning achievements, and to support the development of the performance grants scheme of the project. By forming a complete series of examinations that is consistent and comparable, improvements in student learning outcomes can be better understood and managed. Reliable information about student’s learning will help teachers, parents and principals to set achievable benchmarks for improving instruction and learning. Specifically, this subcomponent will support: (i) the establishment of an education baseline and revalidation of standardized tests; (ii) the standardization of unified examinations for secondary students, particularly for the core subject areas for junior secondary grades one and two and senior secondary grades one and two; and (iii) institutional strengthening of the Lagos State Examinations Board. Technical assistance will be provided for test development and evaluation design, data handling and analysis, field testing assessment instruments, training and orientation for test administrators and training for examinations bodies. The necessary equipment (e.g., optical marker recorder paper, machines and scanners) also will be financed under the project.

21. Sub-component 2.2: Strengthening Teachers’ Professional Development (US$10.8 million): The objective of this sub-component is to establish a mechanism for identifying training and capacity development needs of secondary schools, develop the interventions to address those needs, and link secondary schools with institutions providing those interventions. To help schools address the demand for high quality teaching in the core education areas, the project will support the development of teachers’ professional knowledge and skills by increasing the capacity of service providers to offer high quality courses in core competencies in

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English, Math and Science teaching. Activities that will be supported include: (i) assessing capacity development needs analysis of teachers and school leaders; (ii) capacity building for the Teachers Establishment and Pensions Office (TEPO); (iii) training courses (competitively contracted) developed and delivered at teacher development institutions in core subject areas and school management; (iv) support for teacher subject conversion in math, science and English; (v) strengthening subject associations and their outreach efforts into the schools; and (vi) the establishment and publication of a training information website and teacher training information bulletin. Current pedagogic methods (e.g., active learning) will be offered to help teachers improve the learning outcomes of their students. Approximately 5,385 JSS and SS math, English and science teachers and 1,700 principals and vice-principals will receive support under this subcomponent. The teacher formation institutions and in-service training agencies will offer training courses year round and during summer break. Teachers may participate in more specialized or customized training, to be funded under the school development grants. 22. Component 3: Project Coordination and Management (Estimated base cost: US$4.6 million). Effective implementation of the project will depend upon efficient coordination mechanisms, proper financial management and procurement practices, timely implementation, and effective monitoring and evaluation of project outcomes in Lagos. This component will provide the necessary resources for effective coordination and monitoring and evaluation, and the implementation of an information and communications strategy. To support the Lagos public secondary schools, management and oversight would be organized at the State level (SMOE in close coordination with the relevant parastatals) and Education District level (TG/PS, ZOPAs and LGEAs). The technical support for implementation includes a team of short and long-term consultants, specializing in project implementation (including project management, financial management, procurement and M&E), resident in the MOE, and providing regular support to Districts. The capacity building support for implementation would begin during project preparation and necessary training would be provided to project implementers. For the Monitoring and Evaluation, the SMOE will continue to update data to facilitate accurate reporting on the key progress indicators identified in the Results Framework as described in Annex 3. Most of the data for monitoring project outcomes will come from the Education Management Information System (EMIS), collection of school data by ZOPAs, regular project reports, and the Exams Board, supplemented by project studies and a baseline survey. 23. Component 4: Strengthening of the Federal Post-Basic Education Strategy (Estimated base cost: US$5 million): The objective of this component is to provide capacity building and technical assistance to the Federal Ministry of Education to enhance the development of the national post-basic education strategy and support policy dialogue on the strategy with States. Activities are expected to include technical assistance and studies to support key policy reforms (e.g., examination system, technical and vocational education), national dialogue on post-basic education and development of the National Secondary Education Sector Strategy, training and capacity building, international study tours /visits and exchange programs. Support will also be provided to help at least three States prepare their secondary education strategies. Pilots may be proposed to encourage innovative linkages for supporting state specific post-basic strategies. This component also would provide support for the federal coordination of State level education projects, including funds for the National Education Sector Steering Committee (NESSC).

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D. Lessons learned and reflected in the project design 24. Bank-financed education projects have a mixed track record in Nigeria. The Second Primary Education Project (PEP2) closed in December 2004. It was implemented at the federal level and provided funds for both federal and state level activities to increase access and quality. Although the centralized implementation was problematic, ultimately a demand driven, community focused infrastructure program was established and continues today. The UBE Project (closed in June 2006) supported the capacity of 16 participating States and the Federal government to manage and implement the program to achieve universal basic education. Unlike PEP2, it was implemented at the State level by providing an initial allocation of US$5 million to each state. The unsatisfactory performance of this project was related to (a) faulty project design (e.g., allocation of a fixed amount of project funds for each of the 16 participating states without having a clear project implementation plan); (b) weak implementation capacity at all levels; and (c) ineffective performance of technical assistance provided by the DFID-financed technical assistance project --Capacity Development for Universal Basic Education (CUBE)--, which was not adequately aligned, from the design stage, to the implementation of the UBE Project .7 The current State Education Sector Project8 in Kaduna, Kano and Kwara has only been under implementation for about one year, but already some lessons are being applied, such as the focus on school grants. The Lagos Eko project will build upon the lessons learned under previous Bank projects by:

a) Designing a project based on priorities of state’s education sector plan to avoid ad hoc implementation and have maximum impact on the achievement of state’s education goals. In addition, similar to SESP, the design of the Lagos Eko project will be focused on a limited number of complementary interventions that can be measured and evaluated;

b) Being ready to be implemented by having: (i) a well-prepared project implementation plan with the relevant procurement documents; (ii) a team of qualified project staff with experience and knowledge in Bank-financed project implementation, with limited turnover; (iii) a role and funding for the Federal Ministry of Education; and (iv) complementary technical assistance;

c) Strong State level political ownership and commitment to the objectives of the project; d) Sufficient credit amount to have a catalytic impact on the implementation of the ESP; e) Enhanced communication and engagement with Federal ministries to ensure that legal issues such as Subsidiary Financing Agreements, etc. are handled without delay; and

f) Establishing a rigorous monitoring and evaluation system to track results and make changes as and when needed.

E. Alternatives considered and reasons for rejection

25. Development Policy Lending (DPL) and a Sector-Wide Approach (SWAp). Sector adjustment lending was considered to support broader reforms such as improved staff deployment, financial management and accountability arrangements, and of exerting leverage on the State Government for policy reforms in the sector. However, it was agreed that it would be 7 The Project was rated unsatisfactory for most of the implementation period. At the request of the Government, a

portion of the undisbursed credit amount (SDR 27 million) was cancelled in March 2006, and the project was closed on June 30, 2006 because it would not be able to meet its development objectives.

8 The State Education Sector Project (SESP) and the Science and Technology Education in Post-Basic Education (STEBP) Project were approved by the Bank Board in FY07 and became effective in FY08.

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helpful to demonstrate results on the ground quickly to complement the ongoing package of investments being undertaken to improve the Lagos public education system. Furthermore, the planned technical assistance program supported by DFID (through ESSPIN) will support education policy reform, helping to pave the way for DPL assistance in the near future. The Bank is discussing a DPL framework with Lagos government for the next generation of projects. 26. Single State Project vs. Multiple State Project. The ongoing SESP provides support to three States, based on broad project development objectives with small adjustments tailored to the implementation of each States’ ESP. The specific characteristics of the Lagos education sector set it apart from other States given the large private sector, population size and flow, and labor market conditions. Therefore the focus of the project, on secondary education rather than basic education, would have been less relevant to most other states in Nigeria. Furthermore the quality of preparation is enhanced if resources and TA can be focused on one State at a time. Although some small efficiencies were gained by preparing the program for more than one state at a time, the workload and costs were equal to preparing three projects at one time. 27. Horizontal Adaptable Program Lending. The horizontal adaptable program approach was considered to provide support to additional States as they finalized their Education Sector Plans and applied for donor financing. It was agreed that given the differences among States and the inability to predict IDA allocations beyond two or three years, the horizontal APL would not be appropriate at this time. As alternative sources of funding such as EFA-FTI catalytic funds or Education Program Development Funds (EPDF) are introduced to support State ESPs, and DFID launches its ESSPIN operation, a more strategic framework for investing in the education sector may be necessary to address the growing number of states requesting assistance from IDA. 28. Scope of the Project. The decision to focus on secondary education rather than the entire sector reflects the government’s priority in addressing the “bulge” from the significant increases in primary and junior secondary enrollment while at the same time addressing the pressures from a dynamic labor market. The exceptionally large private sector provision, particularly at the primary level, relieves some of the congestion at public primary schools, but private secondary schools are less numerous and serve a much smaller population. Although some private providers have filled the gap in Lagos, the demand for secondary school combined with the increasing demand from the labor market for enhanced skills requires significant investments in the quality of secondary education. The project team considered how to provide some support for private schools, given the large number of children enrolled. The limited oversight, data, and/or regulation of the private school sector presented a challenge for engaging in reforms at this time. It was also agreed that the project should support the government’s priority of targeting needier students and schools as evidenced by the low transition rates from primary to junior secondary and especially from junior secondary to senior secondary for the lowest income quintiles. It was therefore agreed, that the project would be simplified to focus on public secondary schools to address poverty targeting and skills strengthening. Activities addressing private school regulation and policy will be supported by DFID through ESSPIN. III. IMPLEMENTATION

A. Partnership arrangements (if applicable) 29. The CPS delineates the partnership collaboration between the Bank, DFID, USAID and AfDB. The main external partner in the education sector in Nigeria is DFID, which is providing technical assistance, which although delivered separately, complements the implementation of

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SESP in Kaduna, Kano and Kwara. Similarly, DFID will complement IDA support for the Lagos Eko project under their new program –ESSPIN- which will provide a comprehensive range of technical assistance to support systemic reform in the delivery of basic education (beginning March 2009). ESSPIN is expected to provide flexible technical assistance to respond to state government priorities. Support under ESSPIN will aim to strengthen government systems for the planning, delivery, monitoring and resourcing of education in Lagos. Activities would cut across all levels of the education system, with a focus on basic education. A number of areas have been identified as potentially suitable for ESSPIN support. These include: reform of inspectorate services, communications, public financial management, EMIS, and private sector policy and regulation. A full description of ESSPIN’s proposed work program in Lagos will be provided in the project files and an initial summary is provided in Annex 15. 30. Given the commitment to harmonization and coordination of support in Nigeria, DFID and the Bank will work closely together to ensure that IDA activities and ESSPIN work in a complementary and collaborative way to support implementation of Lagos State’s education strategy. This may be within the context of an MOU between DFID, the Bank and Lagos across the full range of CPS development support to Lagos, and through coordination under the NESSC and/or education sector reviews. ESSPIN is expected to make technical assistance available to the Lagos Government and Federal Ministry of Education (and its agencies) by effectiveness. The State Project Advisory Committee (SPAC) established to oversee the project will also be used more broadly as the oversight committee for Lagos ESSPIN activities. This will encourage greater synergies and coordination of activities between the programs. An annual sector review led by Lagos may also be considered to evaluate progress in implementation of the ESP and donor supported projects. 31. International Finance Corporation provides some funding to support private education investments in Nigeria. One investment is through a Nigerian company "SocketWorks" which helps university students overcome the digital divide. IFC is investing in the establishment of a private boarding school (Day Waterman College) in Ogun State opening in September 2009. The Bank and IFC are working together to explore the possibility of supporting vocational and technical education in Lagos and other interested states through the National Board of Technical Education.

B. Institutional and implementation arrangements 32. The majority of project activities will be implemented at the State level. For the State activities, the State Ministry of Education will be the responsible agency for project execution in close coordination with the Education Districts, LGEAs, SUBEB, and federal agencies. The Federal Ministry of Finance (FMoF) will be the representative of the Recipient as it relates to the financial and legal obligations of the Government. Lagos State will sign a subsidiary financial agreement with the FMoF. The FMoE and FMoF will have oversight of the project and the FMoE will play a coordinating and monitoring role in the implementation of the project. The FMoE will also be responsible for implementation of the activities under Component 4. 33. A National Education Sector Steering Committee (NESSC), formerly the Federal Consultative Steering Committee (FCSC) under SESP, will be established to provide an annual forum where project performance and implementation issues can be discussed and knowledge shared at the State and Federal levels. The Committee would be managed and chaired by the FMoE or his/her representative and includes key stakeholders responsible for project monitoring and implementation. The mandate, structure and details of the NESSC will be jointly agreed by

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FMoE, WB, DFID and other partners. This would be the main policy body for all state based education projects at the federal level. Funding for the meetings and monitoring will be supported under the federal component, while Lagos State participation in these meetings will be funded under the credit. The NESSC could provide oversight of all donor education programs (e.g., Lagos Eko, SESP and ESSPIN) to harmonize donor activities, improve coordination, monitor performance targets, enhance implementation, address cross-cutting issues, and ensure that States learn from each other and comply with ongoing federal reforms. 34. A State Project Advisory Committee (SPAC) will be established to govern the project in Lagos and would be chaired by the Hon. Commissioner of Education. This committee will review progress reports, approve/endorse annual work programs and budgets, advise on key implementation issues, and ensure that agreed activities are met. The SPAC will oversee implementation more broadly of the education sector plan, MTESS and other donor activities (e.g., ESSPIN). The SPAC membership will include key stakeholders responsible for the implementation of project components and will comprise key departments in the SMoE, as well as external agencies/parastatals involved in implementation of the Lagos Eko project and other education projects. The Commissioner of Education in Lagos will have overall responsibility for the SPAC. The SPAC may establish, on an as needed basis, working groups/committees to provide technical assistance and expertise. 35. The SPAC will be assisted by a Project Support Unit (PSU) which has been established to support the coordination, procurement management and monitoring and evaluation of project activities. The PSU is located in the office of the Commissioner of Education. PSU staff will be selected based on agreed TOR; will receive sufficient training in Bank-financed project implementation prior to effectiveness; and will receive support from consultants as needed. 36. At the Education District level,9 the Tutor General/Permanent Secretary in each of the six districts, will have implementation oversight and will coordinate project activities in each district, with close coordination from SUBEB and SMoE. The Project Implementation Manual (PIM) will provide greater detail on the roles and responsibilities of key officers who will be responsible for coordination and monitoring. The school grants will be the responsibility of the Tutor-General/Permanent Secretary of the district. They would chair a District Project Advisory Committee (DPAC) to provide policy oversight, evaluate and approve the school grant proposals, and oversee project implementation. DPAC would also establish ad hoc committees such as the Technical Review Committee (TRC) on an as needed basis. Zonal Project Administrators (ZOPAs) have been assigned in each district to help schools collect and maintain key data, strengthen their school improvement plans, prepare monitoring reports for the districts and provide overall implementation support as needed. They will play a key role in facilitating school grant implementation and management. The transfer of grant funds directly to the school account would be contracted through a commercial Bank. School based Project Implementation Committees (PICs) will be responsible for monitoring how the grants are executed with support from the SBMCs, individual school PTAs, and ZOPAs. The head teacher/principal would be the primary signatory of the school bank account. All schools receiving support under the project will be trained and well-versed in the School Development Grants Manual. 37. The secondary school grants for technical and vocational colleges will be governed by the newly established Lagos State Tech and Vocational Education Board (LASTVEB).

9 There are 6 Education Districts in Lagos State with each District overseeing 3 Local Government Areas

(LGAs). Two districts oversee 4 LGAs bringing the total number of LGAs in Lagos to 20.

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LASTVEB will oversee the public-private partnership grant proposals at the state level once it is established. Until then, a Technical Project Committee will assume these functions at the State level. The DPAC would approve the grant funding based on recommendations by the assigned TRCs. Technical assistance will be provided to strengthen the capacity of LASTVEB. 38. Implementation oversight for the standardized testing and school ranking will be carried out by the Lagos State Examinations Board. To enhance the standardized test revalidation and improve capacity, international consultants will provide support. 39. Teacher development activities will be managed by the PSU with support from international and national consultants to: (i) identify training providers; (ii) assess the quality of training programs; (iii) develop new training courses to improve the content and pedagogy of core subject areas, including conversion courses to increase the number of math, science and English teachers; and (iv) strengthen subject associations and their outreach efforts. 40. The Federal component of the project would be managed by the STEP-B Project Management Unit (PMU) within the FMoE. A technical officer would be added to the PMU to liaise with the Department of Basic and Secondary Education, which would be the component’s coordinating department within the FMoE. Any IDA resources used to support additional activities and strategies from States would be proposal-based. 41. The Lagos Project Financial Management Unit (PFMU) will be responsible for managing the financial affairs of the project at the State level. The Accounts Unit of the Federal Project Management Unit of the STEP-B project (AU/PMU) will be responsible for managing the financial affairs of the project at the Federal level. The PFMU is staffed with relevant qualified accountants and internal auditors who have been trained and are fully familiar with the procedures and requirements for Bank funded projects. An experienced and qualified internal auditor will be engaged from the OAGF for the AU/PMU. The PFMU and AU/PMU will be responsible for ensuring compliance with the financial management procedures manual, including, submission of un-audited consolidated Interim Financial Reports on a semester basis and audited annual consolidated financial statements to IDA. Regarding the flow of funds and banking arrangements, IDA will disburse the Credit through segregated Designated Accounts (DA), managed by the PFMU and AU/PMU respectively. PFMU and AU/PMU will maintain adequate FM arrangements to support the deployment of project resources in an economic, efficient, and effective manner to achieve the stated development objectives. The PSU and Federal PMU, supported by the PFMU and AU/PMU, will have overall accountability for financial management of their respective DAs, specifically responsible for (i) preparing activity budgets, monthly Designated Account (SA) reconciliation statements, Statement of Expenditure (SOE), Withdrawal Schedules, semester Interim Financial Reports (IFRs), and annual financial statements; and (ii) ensuring that the project financial management arrangements are acceptable to the government and IDA.

C. Monitoring and evaluation of outcomes/results 42. The project will support the establishment of a Monitoring and Evaluation system in Lagos to monitor the project’s performance and ensure project accountability. The system will also provide continuous feedback to improve performance as the project rolls out over the four-year period. To achieve these objectives, SMoE will continue to strengthen the existing M&E system in order to address the data and monitoring and evaluation requirements. The system will be required to include both public and private education data as available to ensure

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comprehensive coverage of the education sector. In order to include private education information, the SMoE will work closely with LASGEMs. Results based monitoring will be employed under the project with most of the data coming from the EMIS, school surveys, school assessments, project progress reports and school exam data. Collection of school data will be facilitated by the ZOPAs. An oversight function by the DPAC will help make sure the funds are used in the most effective way to achieve the school’s objective of improving student learning outcomes. M&E officers at the district level will consolidate school data and provide district-wide reporting. These reports would be submitted to the PSU for further consolidation and linkage with the state level M&E system. The Results Framework in Annex 3 details the expected outcomes to be achieved through this project, and the agreed key performance indicators. 43. The project will support the SMoE to implement the M&E system with adequate training, computerization, and on-the-job support. ESSPIN is expected to provide long and short term technical assistance to strengthen the EMIS and results-based monitoring system. 44. To determine how schools actually use the discretionary funds to improve learning outcomes and test scores of their students, a rigorous impact evaluation will be conducted using randomized evaluation techniques. Some schools may opt to improve learning outcomes by providing more incentives to teachers, or by buying more learning materials, or some may simply improve the classroom environment by providing improved blackboards, or better furniture. The grants are provided as discretionary funds to schools, and thus, they have the authority to spend according to their school needs. The randomized impact evaluation, which will be conducted in the second and third year of the project, will help in preparing future guidelines to schools on how best to use these funds to achieve higher impacts on learning outcomes in the State. It will be critical for the project to measure the success or lack of success of chosen interventions in order to scale up activities in the future. 45. A school grants technical review also will be conducted annually to better understand how the grants are being used, review the management of the grants, and give real-time feedback to the schools on what strategies are working and the successes achieved by other schools.

D. Sustainability 46. Both the Federal and Lagos State governments are committed to education reforms, including the achievement of the MDGs and universal basic education, and have finalized long-term education sector plans which will be the basis for future interventions in the education sector. Lagos has requested the Bank’s support for implementing several priority areas of their ESP. There is strong demand for quality education in Nigeria, evidenced by the high gross enrollment rates in Lagos State, for example. The willingness of low income parents to send their children to private school is equally telling. Ownership of the program at the district and school level, particularly for the SDG, is crucial to the long-term sustainability of the project. 47. The activities initiated by the project are likely to generate additional post-project costs, including continuation of grants, maintenance and operation costs for EMIS and the costs of designing, validating and delivering the standardized achievement tests. Post-project sustainability will depend on sufficient allocations from the State budget for operational costs, retention of qualified staff and school-level allocations for performance based grants. On the assumption that 75 percent of the total project costs would continue beyond the fourth year of project execution, it is estimated that the recurrent costs would amount to about 6 percent of the

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Lagos education budget, and roughly less than 1 percent of the projected total state expenditures for 2014 and beyond. This indicates that the incremental recurrent costs and the counterpart funding would not impose a significant fiscal burden to Lagos State. More reassuring is the recent rise in State Government revenues resulting from its expenditure policies and better revenue mobilization mechanisms, which means that the share of incremental costs to the total state budget is going to remain small and within its fiscal capacity. Most importantly, this project presents a paradigm shift in budgeting. If this system works and the project achieves results, then the government is likely to continue to allocate education resources in this decentralized manner. The decentralization of resources will likely reduce unit costs for inputs and transaction costs. The emphasis on efficiently using existing resources, such as retraining and conversion of existing teachers, teacher mentoring, etc., further ensures that the system remains viable. 48. The project will strengthen the capacity of the SMoE, districts, and schools to plan, manage and monitor service delivery. The SMoE and Districts will have stronger capacity to monitor and support quality improvements and schools will have greater autonomy and capacity to meet the demands and expectations of their students. The project will also provide schools with greater financial flexibility to continue those activities which increase learning outcomes.

E. Critical risks and possible controversial aspects 49. Nigeria’s record in human development indicates a high-risk and high-benefit program.

Potential Risks Risk Rating Risk Mitigation/Minimization Measures Residual Risk Rating

Inadequate technical capacity at the Ministry, Districts, and school levels to implement the project.

S MoE has put together an experienced Project Preparation Team and hired consultants through PHRD and PPF funding.

The project will prepare a clear implementation plan with an emphasis on training/capacity building.

Guidelines and procedures will be developed for school administrators, Districts, LGAs and the SMoE to clearly and simply detail their responsibilities in school level activities.

M

Implementation delays in school development grants

M Ensure wide participation of community, design communications strategy and public information system and establish bottom up monitoring arrangements at the school level.

Develop simple implementation guidelines and train/sensitize State, District, LGA and school personnel prior to effectiveness.

M

Weak M & E system and poor quality of existing data

H M&E system will measure progress and whether the development objectives have been met. Support from ESSPIN technical assistance for M&E and EMIS.

The project will focus on collection of test data and school-level information to support improvement of real-time data collection.

ZOPAs have been identified to facilitate this activity.

S

Commitment to reform agenda

S Maintain high-level policy dialogue and hold regular consultations with key stakeholders to increase ownership of the reform program.

Develop and report on project implementation and achievements. Strong communication strategy to raise awareness about results.

L

Exam malpractice S The project will provide state of the art examinations equipment to ensure computerized grading and reporting of test scores.

Random sample reviews will be conducted to monitor exams.

M

(6) Unpredictable and poor budget execution

S The Lagos government will design and implement public finance management reform including in financial modeling and MTESS for state revenue and expenditures.

M

(7) Delays in launching S Federal component to encourage engagement by the FMoE. M

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Potential Risks Risk Rating Risk Mitigation/Minimization Measures Residual Risk Rating

project because of approval procedures at Federal level.

All legal documents such as the Subsidiary Financing Agreement will be finalized prior to effectiveness.

(8) Weak financial management may weaken accountability for use of funds.

S Practical, simple and sound financial procedures manual and training provided to the FM team.

Strong and robust systems and controls including institution of independent and effective internal audit function.

Risk-based supervision and external audit.

M

(9) Insufficient experience with Bank procurement may cause implementation delays

S Procurement and implementation training will be provided to key staff during project implementation.

Procurement Manual will be provided to specify all procedures. Intensive supervision by the World Bank Procurement Specialist.

M

Overall Risk Rating S With mitigation M 50. Due to the minor civil works that may be associated with the rehabilitation of schools under the school grants, OP 4.01 policy will be triggered. An Environmental and Social Management Framework (ESMF) has been prepared and was disclosed in-country and at InfoShop on December 15, 2008.

F. Loan/credit conditions and covenants 51. Standard Conditions of Effectiveness

(i) Subsidiary Financing Agreement signed between the Federal MoF and Lagos State. (ii) Ratification and Legal Opinion.

52. Other Key Covenants

(i) Carry-out the project in accordance with the Financing Agreement and PIM and shall not amend, suspend, abrogate, repeal or waive any provision of the PIM without prior approval of the Bank.

(ii) Maintain PFMU with sufficient staff and resources acceptable to the Bank. (iii) Ensure monitoring of agreed project performance indicators and progress benchmarks. (iv) During the implementation of the project, provide the Bank for its review, a quarterly

report on the progress achieved in the carrying out of the Project no later than 45 days after the end of the period