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Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 80615-BD

INTERNATIONAL DEVELOPMENT ASSOCIATION

PROJECT PAPER

ON A

PROPOSED ADDITIONAL CREDIT IN THE AMOUNT OF SDR 172.8 MILLION

(US$ 265 MILLION EQUIVALENT)

TO THE

THE PEOPLE’S REPUBLIC OF BANGLADESH

FOR THE

SECONDARY EDUCATION QUALITY AND ACCESS ENHANCEMENT PROJECT

November 5, 2013

Human Development Unit South Asia 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 September 30, 2013)

Currency Unit = Taka Taka 77.88 = US$1

US$1.53 = SDR 1

FISCAL YEAR July 1 – June 30

ABBREVIATIONS AND ACRONYMS

AC Additional Class ACT Additional Class Teacher ACF Award Conformation Form AD Assistant Director ADB Asian Development Bank AF Additional Financing APD Additional Project Director BANBEIS Bangladesh Bureau of Education Information and Statistics BBS Bangladesh Bureau of Statistics BISE Board of Intermediate and Secondary Education BP Bank Procedures BSK Bishwo Shahitto Kendro CAS Country Assistance Strategy CCT Conditional Cash Transfer CONTASA Convertible Taka Special Account DA Designated Account DD Deputy Director DEO District Education Officer DG Director General DID Difference in Difference DLI Disbursement Linked Indicator DO Development Objective DPHE Department of Public Health and Engineering DPP Development Project Proforma DRH Developing Reading Habit DSHE Directorate of Secondary and Higher Education EACM Education Awareness and Community Mobilization EL English Language EMF Environmental Management Framework EMP Environmental Management Plan FAPAD Foreign Aided Project Audit Disclosure FMS Financial Management Specialist FMA Financial Management Analyst

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FSSAP Female Secondary School Assistance Project FY Fiscal Year GAAP Governance and Accountability Action Plan GO Government Order GOB Government of Bangladesh HIES Household Income and Expenditure Survey HOI Human Opportunity Index HT Head Teachers ICT Information Communications Technology IDA International Development Association IE Impact Evaluation IFC International Finance Corporation IFR Interim Financial Report IPF Investment Project Financing KPI Key Performance Indicator LASI Learning Assessment in SEQAEP Institutions LGED Local Government Engineering Department MEW Monitoring and Evaluation Wing M&E Monitoring and Evaluation MIS Management Information System MoE Ministry of Education MoF Ministry of Finance MoPA Ministry of Public Administration MoU Memorandum of Understanding MPO Monthly Pay Order MTR Mid-Term Review NPV Net Present Value OP Operational Policies OARF Operational Risk Assessment Framework PAD Project Appraisal Document P-RAMS Procurement Risk Assessment management system PD Project Director PDO Project Development Objective PMT Proxy Means Testing PMTA Proxy Means Testing Administrator PPR Public Procurement Rules PPT Project Preparation Team PTA Parent-Teacher Association RCT Randomized Control Trial Design RD Regression Discontinuity Design RDPP Revised Development Project Performa RT Resource Teacher SESDP Secondary Education Sector Development Project SEQAEP Secondary Education Quality and Access Enhancement Project SMC School Management Committee SMF Social Management Framework

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SSC Secondary School Certificate SWAp Sector Wide Approach TDP Tribal Development Plan TA Technical Assistance USEO Upazila Secondary Education Officer

Vice President: Philippe H. Le Houerou Country Director: Johannes C.M. Zutt Sector Director: Jesko S. Hentschel Sector Manager: Amit Dar Task Team Leaders: Ayesha Y. Vawda and Dilip Parajuli

v

BANGLADESH

ADDITIONAL FINANCING SECONDARY EDUCATION QUALITY AND ACCESS

ENHANCEMENT PROJECT

CONTENTS

PROJECT PAPER DATA SHEET ................................................................................................ vi

I. INTRODUCTION ................................................................................................................... 1

II. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING ..................... 1

III. PROPOSED CHANGES .................................................................................................... 3

IV. APPRAISAL SUMMARY ................................................................................................. 6

Annex 1: Results Framework and Monitoring............................................................................. 10

Annex 2: Detailed Project Description ......................................................................................... 17

Annex 3: Project Costing by Component ..................................................................................... 25

Annex 4: Summary of Impact Evaluation Study .......................................................................... 26

Annex 5: Implementation Arrangements ...................................................................................... 28

Annex 6: Financial Management and Disbursement Arrangement .............................................. 31

Annex 7: Procurement Arrangements .......................................................................................... 35

Annex 8: Safeguards ..................................................................................................................... 39

Annex 9: Operational Risk Assessment Framework (ORAF) ...................................................... 41

Annex 10: Governance and Accountability Action Plan (GAAP) ............................................... 43

Annex 11: List of New Upazilas under SEQAEP AF .................................................................. 45

Annex 12: PMT Scheme ............................................................................................................... 48

Annex 13: Economic Analysis...................................................................................................... 51

MAP: IBRD 33368………………………………………………………………………………54

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BANGLADESH

ADDITIONAL FINANCING SECONDARY EDUCATION QUALITY AND ACCESS ENHANCEMENT PROJECT (P146255)

PROJECT PAPER DATA SHEET

Basic Information - Additional Financing (AF) Country Director: Johannes C.M. Zutt Sector Director: Jesko S. Hentschel Sector Manager: Amit Dar Team Leaders: Ayesha Y. Vawda and Dilip Parajuli Project ID: P146255 Project Implementation Start Date: January 1, 2014 Expected Effectiveness Date: January 1, 2014 Lending Instrument: IPF Additional Financing Type: Scale-up and Cost Overrun

Sectors: Secondary Education (92%); Public Admin Educ (8%) Themes: Education for All (100%) Environmental category: B Project Implementation End Date: December 31, 2017 Expected Closing Date: December 31, 2017 Joint IFC: NA Joint Level: NA

Basic Information - Original Project Project ID: P106161 Environmental category: B Project Name: Secondary Education Quality & Access Enhancement Project

Expected Closing Date: June 30, 2014

Lending Instrument: SIL Joint IFC: NA Joint Level: NA

AF Project Financing Data [ ] Loan [X] Credit [ ] Grant [ ] Guarantee [ ] Other: Proposed terms: 40-year maturity with a 10 year grace period

AF Financing Plan (US$m) Source Total Amount (US $m)

Total Project Cost: Cofinancing: Borrower: Total Bank Financing: IBRD IDA New Recommitted

280

15

265

Client Information Recipient: The People’s Republic of Bangladesh, Economic Relations Division, Ministry of Finance, Dhaka, Bangladesh Responsible Agency: Directorate of Secondary and Higher Education (DSHE), Ministry of Education (MOE), Dhaka, Bangladesh

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AF Estimated Disbursements (Bank FY/US$m) FY 2014 2015 2016 2017 2018 Annual 35 65 65 65 35 Cumulative 35 100 165 230 265

Project Development Objective and Description

Project development objective: The key project development objective is to improve quality of education and monitor learning outcomes systematically, and to increase access and equity in project upazilas.

Under the proposed Additional Financing, there is no change to the Project Development Objective.

Project description: The Additional Financing for SEQAEP Project will support four components, including, (i) improving quality, (ii) improving equitable access, (iii) strengthening institutional capacity, and (iv) establishing an effective monitoring and evaluation system.

Safeguard and Exception to Policies Safeguard policies triggered: Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waterways (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60)

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

Does the project require any waivers of Bank policies? Have these been endorsed or approved by Bank management?

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

Legal Covenants

Project Management: The Recipient shall maintain until the completion of the Project, the SEQAEP Unit and the MEW within DSHE, both with terms of reference and staffing acceptable to the Association; and the Recipient shall ensure that the Project is carried out in accordance with the Project Implementation Operations Manual, the Governance and Accountability Action Plan (GAAP), the Environmental Management Framework (EMF) and the Social Management Framework (SIMF).

Project Education Institutions (PEIs): The Recipient shall cause every PEI to establish and maintain until the completion of the Project, a SMC or a MMC, and a PTA with terms of reference acceptable to the Association; and the Recipient shall, by no later than December 31 of each year, and prior to declaring eligibility of a PEI and its students for grants and stipends (funds) for the subsequent Academic Year, enter into an annually renewable Cooperation Agreement with each such PEI, in form and substance satisfactory to the Association.

Implementing Partners: The Recipient shall cause MOE/DSHE to deploy, throughout the period of Project implementation, implementing partner agencies for PMT administration, Monitoring and Evaluation activities, and disbursement of stipends, Grants, and awards by entering into participation agreement/MOUs as appropriate set forth under terms and conditions satisfactory to the Association.

viii

Financing Reporting: The Recipient shall furnish to the Association: (i) within 45 days after the end of each calendar quarter, interim unaudited financial reports for the Project covering the quarter, in form and substance satisfactory to the Association; and (ii) within 6 months the audited Financial Statements for each fiscal year.

Disbursement Conditions: 1. Stipends or grants (Categories (1) and (2)) shall be disbursed only if (i) the expenditures have been made in conformity with the criteria and procedures described in the Project Implementation Manual; and (ii) the Association has approved the work program prepared by the Recipient for the forthcoming Academic Year. 2. The Recipient shall only request withdrawal for DLI Expenditures under Category (5) if the Recipient shall have: (i) complied with the submission to the Association of the applicable IUFR evidencing the incurrence of eligible DLI Expenditures during the respective DLI Period for which payment is requested; and (ii) furnished evidence satisfactory to the Association, in accordance with the verification protocol that the DLI Target for the respective DLI Period for which payment is requested has been achieved.

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I. INTRODUCTION 1. This Project Paper seeks the approval of the Executive Directors to provide an Additional Financing (AF) in an amount of US$265 million to the People’s Republic of Bangladesh for the Secondary Education Quality and Access Enhancement Project (SEQAEP, PID: P106161, IDA Credit 4475-BD). 2. The proposed AF would: (i) extend the current SEQAEP project to December 2017 and implement the expanded project activities (across more schools and for more students within SEQAEP upazilas) to deepen the impact of a well-performing project; (ii) initiate replication of successful activities in 90 additional upazilas for national roll-out of successful SEQAEP interventions; and (iii) allow adequate time for Ministry of Education (MOE) to evaluate and institutionalize successful interventions from the ongoing project under a more harmonized secondary education sector program that the Government of Bangladesh (GOB) is planning to initiate by 2018.

II. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING 3. Background: Bangladesh pioneered the use of conditional cash transfers for girls’ education with the launch of the Female Secondary School Assistance Program (FSSAP) in the early 1990s. The intervention led to a fourfold increase in female schooling, reversing the gender-gap (female to male ratio of 1.2:1) within a decade. However, access disparities across income groups remained unaddressed (these were especially pronounced for poor boys) and there were growing concerns about high dropout rates for both boys and girls (particularly for the poor) and low learning achievements. Building on the success of the earlier interventions and to address the remaining challenges, GOB launched SEQAEP in 2008, with IDA Credit financing of US$130.7 million and government counter-part funding of US$25 million. The project was approved on July 1, 2008 and declared effective on September 4, 2008. The project development objective is to improve the quality of secondary education, systematically monitor learning outcomes, and to increase access and equity in project upazilas. There are four project components: improving quality, improving equitable access, strengthening institutional capacity, and establishing an effective monitoring and evaluation system. The project provides Proxy Means Testing (PMT)-targeted stipends and tuition to economically poor girls and boys, and quality-enhancing incentive grants to schools, teachers and students (in grades 6-10) in some 7,000 secondary schools and madrasahs from 125 Upazilas1 (sub-districts) in the country. SEQAEP is one of the largest development projects under MOE. Currently, the secondary education sector receives about US$1,000 million total budget from GOB, of which US$140 million (14% of total budget) is allocated as development budget2. The World Bank and the Asian Development Bank (ADB) are the main development partners in the sector. To consolidate different projects under a unified sector plan and a more harmonized support, GOB is planning to launch a Sector-Wide Approach (SWAp) in the sector from 2018. 4. Development Objectives: The project is on track to meet its development objective (see Table 1 below for an update on progress in the original project outcome indicators). The end of project target, the end of FY 2013, set for the number of students appearing in the Secondary School Completion (SSC) exam and the secondary school completion rates have already been surpassed. Gender parity (boys to girls ratio) was 0.87 in 2012 against an end-of-project target of 0.92 and the percentage share of poor in secondary enrollment was 38% in 2010 (HIES data) against an end-line target of 39%. Two rounds of learning assessments are expected to be completed by 2013 (one already completed and second round in progress).

1 In 2008, there were 122 upazilas under SEQAEP. Because of splits of administrative areas, there are currently 125 SEQAEP upazilas (covering one-fourth of country’s 480 rural upazilas). 2 IDA support of $26m per year ($131m for five years) in the ongoing SEQAEP project is about 3% of total secondary education budget and 19% of the development budget. The proposed AF IDA support of $66m per year ($265m for four years) would be about 7% of total budget and about 47% of the development budget in secondary education.

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5. Implementation Progress: 100% of the original credit amount has been disbursed and both the PDO and IP ratings are Satisfactory. Satisfactory progress has been recorded in the implementation of all project sub-components. Proxy Means Testing (PMT) stipend and tuition program (under Access component), having completed five rounds of beneficiary-selection and award-disbursements, is the most advanced and has surpassed original targets. To date, 1.8 million students (about 3.8 million school years) have benefited from the targeted stipends and tuition for secondary education in Bangladesh, and 57 percent of these beneficiaries are girls. The quality component, so far, has benefited another 0.83 million students through performance-based monetary incentives (0.28 million), additional classes in English and Mathematics (0.1 million), and the Reading Habit Program (0.45 million). The Monitoring and Evaluation Wing (MEW), under the Directorate of Secondary and Higher Education (DSHE), now coordinates key M&E activities. Completed M&E activities include five rounds of annual school census, two rounds of PMT validation and institutional verification surveys, and two rounds of impact evaluation surveys. Importantly, the first ever systematic assessment of student learning assessment in secondary education was completed in July 2012.

6. Impact Evaluation: Findings from a rigorous impact evaluation study3, carried out 2 years after the project start, suggest that there is significant causal impact of the PMT stipends program on secondary school enrolments, and the effects are most pronounced among children from socio-economically disadvantaged families. The estimates suggest that children eligible to receive PMT-stipends are 21 percentage points more likely to be enrolled in secondary school than they would have not been able to receive the PMT-stipends. The impact is even more pronounced for boys (28 percentage points) and girls (26 percentage points) from the poorest two quintiles. In terms of learning outcomes, overall student test scores improved by 0.25 standard deviations between the two rounds of survey but there was no significant net impact on stipend recipients. It is important to note that the PMT-stipends attracted the poorest students into project schools and yet showed test score improvement for these beneficiaries. The finding is consistent with evidence from other studies that show that Conditional Cash Transfers (CCT) does not automatically increase student learning in the short-run. Annex 4 provides a summary of the impact evaluation study.

7. Rationale: The main rationale for the proposed AF is for IDA to maintain its support for a successful SEQAEP project, which contributes directly towards GOB’s commitment to enhancing opportunities for disadvantaged children, bringing them into the productive force for further economic growth of the country, and providing them with the tools to combat poverty. The project is well aligned with the National Education Policy (2010), Sixth Five Year Plan (2010/11-2014/15), the Perspective Plan 2021, and the Bank’s Country Assistance Strategy (CAS FY11-14, July 8, 2010, Report 57294). 8. Suitability of AF: The proposed AF meets the eligibility criteria under OP10.00. The ISR ratings for implementation progress (IP) and Development Objectives (DO) over the most recent 12 months have been rated moderately satisfactory or better. The project impact, as evidenced from the results recorded in the ISRs, is consistent with targets set out in the PAD. There has been substantial compliance with key legal covenants, including fiduciary and safeguards. Alternatives to AF approach – including processing of a new operation, repeater operation, reallocation of cost savings and financing by borrower and/or other donors – were considered. AF was preferred because: (a) the AF processing would bring procedural gains to the borrower; (b) expanded and scaled-up activities can be accommodated in the borrower’s existing implementation arrangements; and (c) the proposed AF activities are consistent with the project DOs and strategically aligned with the CAS.

3 The World Bank (2012). “Bangladesh’s Secondary Education Quality and Access Enhancement Project: Interim Impact Evaluation Report” Human Development Department, South Asia Region, Washington, DC. Impact evaluation is a sub-component of Monitoring and Evaluation in the project design. PMT-targeted stipends program was randomly phased-in (half of upazilas in the first year and the other half the following year). The randomized phased-in approach, coupled with baseline and follow-up household and school level surveys, allows the evaluation to establish the causal impact of SEQAEP stipends on secondary school enrolment and learning outcomes.

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III. PROPOSED CHANGES

9. PDO: The Project Development Objective of the proposed AF project will remain unchanged and will continue to be “to improve the quality of secondary education, systematically monitor learning outcomes, and to increase access and equity in project upazilas”.

10. AF Coverage: The ongoing project covers some 7,000 institutions from 125 rural upazilas (sub-districts) representing 61 districts (out of 64 districts) and all seven divisions in the country. The AF project would extend the operation into 90 additional upazilas from 50 districts, thus covering a total of 215 upazilas (out of the 484 rural upazilas in the country) representing all 64 districts. The project will continue to focus on rural areas, rural institutions and rural children. The selection of 90 additional most deprived upazilas (not supported by other development partners) is based on their ranking on the human opportunity index (HOI) which combines the school participation rate and completion rate in the respective age-group and the factors associated with schooling opportunity in each upazilas (Annex 11 New Upazila List for SEQAEP AF).

11. AF Beneficiaries: SEQAEP AF will finance: (i) continuation of SEQAEP interventions that benefit students and institutions in 125 project upazilas; and (ii) expansion of SEQAEP interventions in 90 new upazilas. The direct beneficiaries of SEQAEP AF would be 11,500 institutions from 215 upazilas which provide education to over 4.5 million students annually. The project would directly benefit poor students, teachers, school management committees and parent teacher associations (PTAs) in the project supported institutions.

12. AF Design: The four project components will remain the same as in the original project: (i) improving quality, (ii) improving equitable access, (iii) strengthening institutional capacity, and (iv) establishing an effective monitoring and evaluation system. Based on lessons learnt from the ongoing operation and in view of mainstreaming into the secondary SWAp planned from 2018, the AF project will aim to strengthen, expand and institutionalize key project interventions. Component 1 (quality) would include expansion of institutional achievement award to nation-wide coverage, addition of science subject to the currently supported English and mathematics under the additional classes sub-component, and expansion of the developing the reading habit scheme to all project institutions. The PMT-based stipends scheme (under component 2) would be strengthened through an updated PMT scoring formula and modified application booth operations to minimize exclusion and inclusion errors and through the use of student cash card for more efficient stipends disbursement. Under component 3, the AF would strengthen the role of school management committees (SMC) and parent teacher associations (PTAs) through the provision of SMC and PTA grants for school-level ICT monitoring, social audits and education awareness and community mobilization activities. Detailed Project Description under the AF is in Annex 2.

13. Component 4 (M&E): Component 4 (Establishing an effective Monitoring and Evaluation system) will be strengthened under the AF in two main ways. First, the AF project would equip the Monitoring and Evaluation Wing (MEW) – the focal agency for the component - with required financial and technical assistance support so that it can carry out the assigned activities autonomously. Second, the AF would elevate the importance of key activities under the component to the status of Disbursement Linked Indicators (DLIs) (described below under DLI section). 14. Results Framework: Outcome indicators, intermediate outcome indicators, and their targets have been revised to reflect scaled-up and enhanced project activities (see table 1 below). One of the KPIs from the original project, SSC pass rate, would be discontinued under the AF since the SSC examinations carried out by 8 different regional boards in the country do not have the same standards and SSC pass rates have fluctuated across time and boards, thereby putting the credibility of the indicator to measure competency based learning levels. The project would continue to track the SSC pass rate, but as an intermediate indicator. A new KPI, a core indicator, would be on the total number of direct project beneficiary students, broken down into total

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number and the share of females. Details on the modified Results Framework and Monitoring arrangements are shown in Annex 1.

Table 1: Key Performance Indicators

PDO Level Results Indicators Baseline (2008)

Progress to date (AY 2012)

Original Target (FY 2013)

Revised Project End Target (AY 2017)

1. Completion rate in grade 10 (%) in project upazilas (a) Proportion of 16-20 year-old primary completers who have completed grade 10 (b) Percent of G6 entrants who have passed SSC exam

20

28

29 (2011)

46

27

38

34 (2015)

50

2. Number of students appearing in SSC (‘000) in project areas (a) Total students (b) Poor

187 -

292 97

220 70

485 160

3. SSC pass rate (%) in project areas (a) Poor (b) Non-Poor

30 65

89 (for all)

38 72

KPI Discontinued

under AF

4. Monitor learning levels in secondary schools (in Bangla, Maths and English)

- G8

(SEQAEP) Grade 6 & 8

(SEQAEP area) Grade 6 & 8 Nationally

5. Gender parity (male-female) in enrollment in grades 6 to 10 increases in project upazilas

0.82 0.87 0.92 0.92

6. Percentage share of poor children in total enrolment in secondary schools (%) in project areas 30 38 (2011) 39 41 (2015)

7. Total number of direct project beneficiary students: (a) total number (‘000), (b) share of female (%)

-

2,200 54%

(new indicator)

4,242 53%

Note: SSC pass rate, discontinued as KPI, will be tracked as intermediate indicator. 15. AF Project Period: The AF project would be implemented over a four-year period, beginning in January 2014 and ending in December 2017 to cover four academic years, in line with the proposed roll-out of the secondary education SWAp program from early 2018. In the first year, AY2014, current project interventions will continue in existing 125 upazilas and preparatory activities will be carried out in additional 90 upazilas for roll-out from AY2015. 16. Project Cost and Financing: The total project cost for SEQAEP AF is estimated to be US$280 million, and represents an increase of about 80% relative to the original project size of US$156 million (the increase, in large part, is accounted for by scaled-up project coverage to 90 additional upazilas relative to 125 original upazilas). The ongoing project financing includes IDA support of US$131 million and the AF project would receive an additional IDA support of US$265 million. Table 2 below shows project component costing and financing for the original project and the AF project4.

Table 2: Project component cost and financing (US$ million)

Component Cost Original

Cost Changes with

AF Revised Total

Cost 1. Improving Education Quality 37.4 72.3 109.7 2. Improving Equity and Access 106.7 179.6 286.3 3. Strengthening Institutional Capacity 9.9 21.4 31.3 4. Establishing an Effective Monitoring and Evaluation System 1.7 7.0 8.7 Total Cost 155.7 280.3 436.0 IDA Financing Amount 130.7 265.0 395.7 IDA Financing Share (%) 84% 95% 91%

4 As seen in table 2, while component 2 (on access and equity) would continue to receive the largest amount of resources under the AF, other three components (quality, institutional capacity and M&E) would see higher percentage increases (relative to their amounts in the original project).

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17. AF Financing: The total IDA credit, under the investment project financing (IPF) lending instrument, would be US$265 million, of which US$215 million would be transaction-based and US$50 million would be reimbursed on the basis of: (a) actual expenditure pre-financed by the government, and (b) achievement of the agreed performance targets (DLIs). Project component costing and financing under the AF are shown in table 3 below.

Table 3: AF Project Costing and Financing (US$ million)

Components Total cost Transaction-based IDA financing

DLI-based IDA financing and GOB contribution

1. Improving Education Quality 72 53 19

2. Improving Equity and Access 180 146 34

3. Strengthening Institutional Capacity 21 9 12 4. Establishing an Effective Monitoring and Evaluation System 7 7 0

Total 280 215 65 Note: Of the amount not financed through IDA’s transaction-based credit, IDA will reimburse up to US$50 million through DLI-financing upon achievement of agreed DLI targets and actual expenditures on eligible expenditure items pre-financed by GOB.

18. Disbursement-Linked Indicators: The main rationale for using DLI-based disbursements for a portion of AF credit is to provide incentives to the Government to strengthen M&E activities and institutionalize the M&E system. The DLIs are focused on M&E system strengthening that is expected to bring significant gains to improving service delivery, governance and accountability, and outcomes under all project components. Appropriate attention to and timely implementation of key actions to achieve the DLIs will directly contribute towards achieving the PDO and also generate downstream impact on the sustainability of a strong M&E arrangement for the entire secondary education sector, particularly for the expected roll-out of SWAp from 2018. The three DLIs are: (i) a systematic learning assessment is carried out periodically and on a nationally representative sample, (ii) Monitoring and Evaluation Wing (MEW) is institutionalized and brought under revenue budget at project end; and (iii) M&E surveys are conducted as scheduled and corrective actions are taken based on the findings of the surveys. The detailed results, pricing, and protocol (definition, responsible agencies, formality of process, and verification) are presented in table 3 in Annex 2. 19. The total value of the DLIs over the life of the AF project is priced at US$50 million. DLI-based financing is relatively small, representing only 19% of total IDA support, and at the same time denotes a reasonably large enough incentive amount for the government to focus on achieving the agreed DLI targets. DLI-based disbursement would be used to finance eligible expenditure items under the project that are not financed by IDA’s transaction-based credit. These eligible items are in three project components (as seen in table 3 above) and includes performance-based incentive awards under component 1; general stipends (non-PMT stipends) and tuition grants under component 2; and SMC and PTA grants under component 3. The particular eligible expenditure items have been chosen to be under the DLI-financing for the following reasons: they are currently being fully financed by the government counterpart funding (such as tuition grants, non-PMT general stipends); they are part of the nationwide expanded coverage that the government is keen on including in its regular budget (such as performance-based incentives); and they are those school grants that the government is introducing to strengthen school level capacity and accountability (such as SMC and PTA grants). All these items would be pre-financed by the government and up to US$50 million would be reimbursed from IDA as incentive for the DLI achievements. The detailed table on the financing categories under the transaction-based and the DLI-based financing is provided in Annex 6 (Financial management and disbursement arrangements).

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20. Implementation arrangements: Under guidance from an inter-ministerial Steering Committee chaired by MOE Secretary, DSHE would be responsible for AF project implementation. DSHE will continue to be supported by two units: SEQAEP Unit headed by a Project Director and MEW, headed by a Director, and reporting to the Director General, DSHE. As in the current project, project management and implementation capacity will be augmented through the use of several government and private specialized partner agencies (for example, services in areas such as PMT, disbursement of funds, reading habit program, additional support in EL and Math, Science, and data processing services etc.). The key actors at the field level such as school head-teachers, School Management Committees (SMCs), Parent Teacher Associations (PTAs) and Upazila Secondary Education Offices (USEOs) would work with guidance from Zonal Directors and District Education Offices. During the AF project period, implementation arrangements, including those for school grants, will be further streamlined to prepare for the proposed SWAp roll-out from 2018. Annex 5 presents detailed implementation arrangements. 21. Original IDA Financing: As mentioned earlier, 100% of original IDA credit is disbursed and this includes US$7.5 million that is in the Designated Account (DA) still to be fully documented. This amount is expected to be fully documented by the Original Financing Closing Date (June 30, 2014). Therefore, the Financing Agreement for the original IDA Credit 4475-BD will not be amended. Furthermore, the updated The Environmental Management Framework (EMF) and the Social Management Framework (SMF) for the AF project, described in the safeguards section below, will apply to activities financed under the AF IDA credit, and not to activities financed by the original IDA credit.

IV. APPRAISAL SUMMARY

A. Economic analysis 22. The results of the economic analysis for the AF suggest that the project remains economically justified. The main sources of data and parameter estimates used in the analysis come from SEQAEP Monitoring and Information System (MIS), HIES 2010, the impact evaluation study of SEQAEP (2009-2010), and the detailed costing exercise for SEQAEP Project Paper. Cost streams associated with the four-year SEQAEP AF period include the AF project costs, private costs that comprise direct household outlays as well as opportunity costs for schooling, and costs for additional teacher positions due to increased enrolments. The benefits come from primarily two sources: improved access and retention in secondary education resulting in increased number of secondary school (grade 10) completers who earn higher wages (relative to non-completers) and increased quality and relevance of education resulting in higher productivity and earnings for all grade 10 completers (relative to grade 10 completers of non-SEQAEP supported institutions). Based on a discount rate of 12 percent for the benefit and cost streams, the present discounted value of benefits is estimated to be $1,827 million while the present discounted value of costs is estimated to be $838 million; therefore, the net present value (NPV) of program benefits is $990 million. The internal rate of return (IRR) associated with this NPV is 22 percent. A large part of the benefits accrue from wage-premium for SEQAEP secondary school completers. Annex 13 provides further details on the economic analysis.

B. Technical feasibility

23. Quality Component: The objectives of this component remain the same, but the AF will further strengthen, expand and institutionalize activities in view of mainstreaming them into the secondary SWAp from 2018. The incentive schemes for encouraging rural students, teachers and institutions to reach and maintain better performance have been enhanced both in terms of the monetary amount and nation-wide coverage of institution achievement award. Additional Class (AC) implementation will be strengthened with technical assistance (TA) support based on the lessons learned that the current modality is too labor intensive. Science subject will be added to the current two subjects (English and Mathematics) to address the most problematic subjects in terms of students’ learning achievement. Developing reading habit (DRH) scheme will be expanded to additional 90 upazilas. Under the AF, the learning assessment sub-component would cover nationally representative samples.

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24. PMT Stipends Component: The AF project will support the PMT stipends and tuition program in current 125 project upazilas from second semester of AY2013 (until the AF project closes) and in 90 new upazilas from AY2015. Current PMT beneficiaries in 125 upazilas will continue to receive stipends upon a full and independent validation of the fulfillment of education compliance criteria. The new PMT beneficiaries (into grade 6 from AY2014) and 90 new upazilas (in all grades from AY2015) will be selected using the updated PMT formula. A modified PMT application booth operations carried out, in conjunction with the PMT validation exercise, is expected to reduce exclusion and inclusion errors. Details on the PMT stipends scheme are presented in Annex 12. In view of GOB’s interest to mainstream the PMT scheme nationally under a single harmonized stipend program, the new beneficiary selection threshold will be the bottom 2 quintiles of welfare distribution (with coverage of about one-third of total enrolment in grades 6-10)5. PMT stipends will be disbursed to individual students via banking system, including use of cash card, upon receipt of verified compliance information from the institutions that students enrolled in.

25. M&E Component: As mentioned above, the Monitoring and Evaluation component will be strengthened through (a) provision of required financial and TA support to MEW to enable it to autonomously carry out M&E and learning assessment activities; and (b) the selection of key M&E areas (Learning Assessment, Institutionalization of MEW, and Project Monitoring and Evaluation surveys and activities) as DLIs to emphasize the importance of M&E system for the project and the entire secondary education sector. This component will be implemented by MEW with support from project MIS cell at Bangladesh Bureau of Educational Information and Statistics (BANBEIS) and other specialized agencies. The agreed DLIs would be linked to disbursement of the portion of IDA credit that is not transaction-based. The DLIs, their pricing and detailed protocol are described in Annex 2. FM arrangement associated with the DLIs is described in Annex 6.

C. Fiduciary and Safeguards

26. Procurement: In terms of procurement arrangements under the proposed AF, the d key consultancy packages would be continued under AF with amendment of contracts. The AF project would continue the contracts with Bishwo Shahitto Kendro (BSK) for providing technical support to the implementation of developing the reading habit scheme. The use of DLI-based financing for the portion of IDA credit is not expected to affect procurement arrangements in the project. For procurement of goods, the implementing agency is expected to use the e-procurement system, developed and managed by Bangladesh Central Procurement Technical Unit (CPTU). Annex 7 provides detailed procurement arrangements.

27. FM: FM arrangements would follow the current mechanism for the transaction-based credit portion. Transaction-based portion of the AF credit will flow through two separate Designated Accounts (DAs): DA-A will be managed by the SEQAEP Unit (operated by Project Director) and will be used to finance activities under components 1 through 3 (except for component 1.4). A separate DA-B will be managed by DG, DSHE to meet the input based expenditures of component 4 and sub-component 1.4 of the project (to achieve the DLIs). For DLI-based portion of the credit, IDA will disburse the value of the DLI(s) to the Government treasury once one or more DLIs are achieved. Disbursement under DLI based financing will be made on the basis of reimbursement of eligible expenditures not less than the value of DLIs. Disbursement for DLIs attained for any year including such disbursements in the previous years will not exceed the total eligible expenditures on a cumulative basis. Detailed FM arrangements for both the transaction-based and DLI-based components are in Annex 6.

28. Safeguards: Since there will be no new safeguards triggers raised, existing legal covenants will continue to apply. The Environmental Management Framework (EMF) and the Social Management

5 Currently, the cutoff is 50th percentile of income distribution and coverage is about 40% of enrolments. The proposed reduction of coverage in the AF is to align with the current non-SEQAEP stipends programs (which cover only 30% of girls and 10% of boys, effective coverage of about 20% of all) and in view of sustainability after the harmonization of the stipend schemes in 2018.

8

Framework (SMF) have been updated to reflect expansion into new upazilas and disclosed through appropriate channels. Annex 8 elaborates on the safeguards arrangements in the AF project.

29. Social safeguards: In accordance with OP 4.10 Indigenous People and the SMF, the AF project will continue to include all tribal students, regardless of poverty status, under the targeted PMT stipend scheme. The PMT MIS would continue to maintain database on tribal students’ enrolment, retention and education achievement and periodically provide summary analysis. Similarly, the project extends stipend support to all disabled students. In terms of gender, the AF project would introduce grants to schools to incentivize Parent Teacher Associations (PTAs) to carry out community campaigns against girls eve teasing and encourage safe movement of girls between homes and schools. Since the AF project extends to new upazilas, the education awareness and community mobilization sub-component will also focus on the social safeguards aspects.

30. The project does not trigger OP 4.12 Involuntary Resettlement since there is no requirement for private land acquisition, displacement of people from public or private lands or adverse impact on livelihoods. Construction activities, installation of tube-wells and latrines are carried out strictly within school premises.

31. Environmental safeguards: As in the original project, operational policy OP/BP 4.01 will continue to be triggered and the current Environmental category B will remain the same under the AF. The AF project’s “improving school facilities” sub-component will provide safe drinking water (tube-wells, shallow tube-wells and other alternative sources) and sanitation facilities (twin latrines for boys and girls with running water facilities) to targeted schools based on agreed guidelines and provisions in the EMF. On a pilot basis, the activities will include WASH block with modern amenities to one school in each of the newly selected upazila (school selected based on needs). Activities would also include testing of existing and new project school tube-wells for arsenic, and manganese contamination, bacteriological tests for alternative sources of water and distribution of awareness and communication materials. Beneficiary institutions will be selected on need-basis and DPHE will provide technical services for safe water testing of tube-wells and other activities. The EMF guidelines will ensure that construction and works for water and sanitation facilities be carried out following community participation procedures. The pilot WASH block will be constructed under direct supervision of DPHE. The EMF will be part of the annually renewable cooperation agreement between the project and each beneficiary school.

D. Risks: Table 4: Risk Rating Summary

Stakeholder Risk Low Implementing Agency Risk

- Capacity Substantial - Governance Substantial

Project Risks - Design Moderate - Social & Environment Moderate - Program and Donor Moderate - Delivery Monitoring and

Sustainability Moderate

Overall Implementation Risk Moderate

32. Risks associated with the AF project are not expected to change in any significant manner compared to those under the current project. Given the prevailing political situation, country risk remains substantial. Despite the implementation agency capacity issues, project implementation risk is moderate in view of project

9

design and implementation arrangements with TA support agencies that make the implementation risk as moderate and manageable.

33. PMT-based stipends scheme is the largest component in terms of project financing. To minimize the potential inclusion (when non-poor are incorrectly included) and exclusion errors (when poor are incorrectly excluded), the PMT selection process combines household visit based validation exercise immediately after receiving the applications at the field level, and allowing an appeals mechanism for those who may have been incorrectly excluded. The project also has a provision to carry out education awareness on the eligibility criteria (poverty and educational) and to mobilize the community including the SMCs and PTAs to ensure that stipend recipients are in fact from economically poor households and also complying with the educational criteria for continued eligibility. School grants (for various activities) constitute the next largest financing category in the project. The project design includes appropriate measures to ensure that the selection criteria as well as the compliance criteria (on funds utilization) are strictly followed. An important instrument to ensure this is the award confirmation form (for both stipends and grants) that is processed using information sent from schools, verified by upazila education officials, and monitored by independent surveyors.

34. FM risk is substantial given the project design which delivers stipends and grants to a large number of students and schools. Procurement risk is also substantial given that the implementing agency has shortage of skilled procurement staff and the project is not immune to systemic issues affecting procurement efficiency and performance. SEQAEP AF is expected to address FM issues with placement of a full-time FMS specialist, trained accounts officers, disbursement cell at Agrani Bank, disbursement of funds through the Banking system including the use of cash card that enables immediate reconciliation of project funds, requirements for reconciliation reports from the bank branches, use of compliance monitoring including ICT-based schemes and audits (FAPAD, forensic, and social audits at the school/community level). Procurement risk would be managed through deployment of qualified procurement consultant to represent all procurement committees; training of procurement officers and project staff; prior and post-reviews of procurement contracts by the Bank team; monitoring by the World Bank team on the accountability of procurement staff and consultants vis-à-vis project director and MEW director; use of e-procurement for goods; and disclosure of all procurement transactions on project website (see Annex 9 on ORAF, new to the AF project, for details).

35. The AF introduces a Governance and Accountability Action Plan (GAAP) to address key governance and accountability risks that have been identified at the project level for which a number of mitigation measures have been proposed. The overall responsibility for the GAAP implementation will rest with the DSHE, SEQAEP Unit and MEW and the GAAP will be monitored regularly against agreed actions as reflected in the project progress reports and semi-annual World Bank mission aide memoires. (Annex 10 for GAAP).

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Annex 1: Results Framework and Monitoring

A. Results Framework

Revisions to the Results Framework Comments/ Rationale for Change

PDO Current (PAD) Proposed To improve the quality of secondary education, systematically monitor learning outcomes, and to increase access and equity in project upazilas

No change -

PDO indicators

Current (PAD) Proposed change*

1. Completion rate in grade 10 (%) in project upazilas (b) Proportion of 16-20 year-old primary completers who have completed grade 10 (b) Percent of G6 entrants who have passed SSC exam

Continued Increased target to reflect additional financing



3. SSC pass rate (%) in project areas (a) Poor (b) Non-Poor

Removed as KPI, but retained as intermediate indicator

Removed as KPI because SSC examinations and results fluctuate across time and 8 different boards and do not measure the competency-based learning levels. It is however tracked as IO


Continued Adjusted target to reflect additional financing



6. Percentage share of poor children in total enrolment in secondary schools (%) in project areas


7. Total number of direct project beneficiary students: (a) total number, (b) share of female (%)

New Newly added as per core indicator requirement

Intermediate Results indicators

Current (PAD) Proposed change*

1. Number of poor students receiving SSC pass award ('000) Continued Increased target to reflect additional financing

2. Number of institutions receiving SSC institution award Continued Increased target to reflect additional financing

3. Number of additional classes in mathematics, English & Science ('000)


4. Number of student members of reading habit program ('000) Continued Increased target to reflect additional financing

5. SSC pass rate in project upazilas New Was KPI under the ongoing project, now IO under AF

6. Number of eligible poor girls receiving stipend ('000) Continued Increased target to reflect additional financing

7. Number of eligible poor boys receiving stipend ('000) Continued Increased target to reflect additional financing

8. % of schools with safe drinking water in project upazilas Continued Adjusted target to reflect additional financing

9. % of schools with separate latrines for boys and girls in project upazilas


10. Proportion of project schools with functional PTA Continued Adjusted target to reflect additional financing

11. Implementation progress of quality, access, and capacity building components are regularly disseminated


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B. REVISED PROJECT RESULTS FRAMEWORK

Project Development Objective (PDO): To improve the quality of secondary education, systematically monitor learning outcomes, and to increase access and equity in project upazilas

PDO Level Results Indicators

Cor

e

UOM

Baseline Original Project Start

(2008)

Progress To Date (2012)

Cumulative Target Values

Frequency

Data Source/

Methodology

Responsibility

for Data

Collection

Comments 20136 2014 2015 2016 2017

1. Completion rate in grade 10 (%) in project upazilas (a) Proportion of 16-20 year-old primary completers who have completed grade 10 (b) Percent of G6 entrants who have passed SSC exam

% 20

28

28(2011)

46

27

38

-

47

33

48

-

49

-

50

Household

survey years

2005 HIES 2010 HIES 2015 HIES

BBS; MEW

(a) MTR: Target frequency revised; consistency of source introduced (b) MTR: New indicator


Num 187

- 292 97

220 70

300 102

380 140

470 150

485 160

Annual SSC Exam

Result

SEQAEPU from

BISE

MTR: New indicator AF: Definition of poor revised according to new PMT cut-off


Process - G8 G6 & 8 G6 & G8 National

G6 & G8 National

Twice 2014-17

Sample MEW

MTR: Bangla included; Year of assessment revised AF: National sample starting 2015


Num 0.82 0.87 0.92 0.88 0.89 0.90 0.91 Annual BANBEIS

Annual Census

BANBEIS

MTR: No change AF: Target to be readjusted based on actual progress and addition of new upazilas

6. Percentage share of poor children in total enrolment in secondary schools (%) in project areas

% 30 36

(2011) 39 - 39 - -

Household

survey years

2005 HIES 2010 HIES 2012 EHS 2015 HIES

MEW

MTR: Target frequency revised; source has been clarified AF: Non change

7. Total number of direct project beneficiary students (a) total number (‘000) (b) share of female (%)

Num

% -

2,200 54%

2,224 54%

2,288 54%

4,030 54%

4,150 54%

4,242 53%

Annual BANBEIS

Annual Census

BANBEIS

AF: Introduced as per core indicator requirement

6 AF covers from 2014-2017. Targets for 2013 for all indicators were set by the original PAD and/or updated at MTR in 2011, and they are kept here for indicative purpose. KPI3 (SSC pass rates) is removed as KPI and is now tracked as IO.

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Intermediate Results and Indicators

Intermediate Results Indicators

Cor

e

Unit of Measure

ment

Baseline Original Project Start

(2008)

Progress To Date (2012)

Target Values Frequen

cy

Data Source/

Methodology

Responsibility for

Data Collectio

n

Comments 2013 2014 2015 2016 2017

Intermediate Result 1: To (a) increase education quality through the provision of performance achievement awards to students, teachers and institutions; (b) improve student performance in English Language and Mathematics; (c) establish a program to develop the reading habit in students; and (d) measure systematically learning levels by administering internationally comparable and national curriculum-based numeracy and literacy testing, that raise awareness of policy makers and stakeholders and help them adjust policies and interventions accordingly.

1. Number of poor students receiving SSC pass award ('000)

Num - 55 35 57 77 101 105 Yearly School forms

SEQAEP Unit

MTR: No change AF: target number increased due to additional upazilas

2. Number of institutions receiving SSC institution award


SEQAEP Unit

MTR: Targets updated AF: Institution award nationalized

3. Number of additional classes in mathematics, English & Science ('000)


SEQAEP Unit

MTR: No change, AF: AC in additional upazilas and science subject added

4. Number of student members of reading habit program ('000)


SEQAEP Unit

MTR: Updated , AF: target increased due to additional upazilas

5. SSC pass rate in project areas % 55 89 AF: New IO Intermediate Result 2: To increase access and retention of poor girls and boys; ensure their completion of secondary schooling through provision of stipends and tuition based on pro-poor targeting and educational criteria; and improve school environmental conditions by selectively providing water and sanitation facilities.

6. Number of eligible poor girls receiving stipend ('000)

Num - 517 325 525 575 640 650 Half

yearly

PMT & school forms

PMTA, SEQAEP

unit

MTR: Targets are reset. AF: PMT cut-off redefined

7. Number of eligible poor boys receiving stipend ('000)

Num - 418 288 410 475 530 550 Half

yearly

PMT & school forms

PMTA, SEQAEP

unit

MTR: Targets are reset. AF: PMT cut-off redefined

8. % of schools with safe drinking water in project upazilas

% - 93% 95% 95% 95% 96% 96% Annual Annual census

Banbeis

9. % of schools with separate latrines for boys and girls in project upazilas

% - 96% 98% 98% 98% 99% 99% Annual Annual census

Banbeis Modified to measure % of schools; targets to be set

Intermediate Result 3: To (a) strengthen the existing structure for managing and implementing the proposed project; (b) develop and strengthen the capacity to implement programs aimed at increasing educational quality, and to deliver financial support to targeted beneficiaries effectively; (c) strengthen accountability at school and upazila level; and (d) raise education awareness amongst stakeholders with focus on education quality, targeting, and accountability. 10. Proportion of project schools with functional PTA % - N/A 20 25 30 40 50 Yearly

Compliance survey

MEW MTR: New indicator.

Intermediate Result 4: To (a) systematically document all project input, process, output, and outcomes; and (b) link project interventions with outcomes.

11. Implementation Progress of quality, access, and capacity building components are regularly disseminated

Process - Partial Yes Yes Yes Yes Yes Annual MEW,

Partners, SEQAEP

MEW MTR: New indicator.

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C. Arrangement for Monitoring and Evaluation

1. Given the data-intensive design and the diverse nature of the project components, the results monitoring arrangement aims to facilitate a systematic and integrated data collection and utilization system. There are five major agencies in this arrangement: (i) SEQAEP unit; (ii) PMT Administrator (LGED); (iii) external monitoring agency (BANBEIS); (iv) Monitoring and Evaluation Unit of DSHE (MEW); and (v) independent impact evaluation survey firm and learning assessment agency. Yet, information from different sources were not consolidated and analyzed for reliability checks, utilization and timely decision-making. Mid-Term Review (MTR) mission pointed out the absence of an integrated system of data management and analysis, and streamlined the various monitoring activities and reorganized the responsibilities as in the following Table. Table: Data collection, processing, and monitoring schedule

Administrative data Verification data

No Data Area

Info. Who Output Use of data Info. Who Output Use of data

1 PMT PMT registration

PMT welfare

PMTA PMT annual report

PMT administration

PMT validation

MEW and BANBEIS

PMT validation report

Correcting PMT procedures for better targeting

February - (i) July, (ii) Dec.

April - June Aug-Sept

2 PMT student qualification

ACF PMTA ACF report

Awarding 20% check institution survey

MEW and BANBEIS

20% of school verification report

-Compliance check - Disbursement check -To take corrective measures

May - October 3 Incentives,

Additional class, Reading habit, ISF, SMC and PTA Grants, USEO

Non-PMT school grants

SEQAEP Unit and BANBEIS through USEO

- Administration of the component

June - - Jul.-Aug. - October - 4 SSC SSC Info. SEQAEP

Unit - Awarding - - - -

May-Jun. Jun.-July - Aug. - - - - 5 School level

information School info. Infra, enrolment

SEQAEP Unit through USEO

- Administration

School info. Infra, enrolment

BANBEIS

BANBEIS Annual Census report

Progress review, yearly plan

Jan.-Feb. March - - June - November Jan.

6 Overall monitoring of the project

Consolidation of all info.

MEW Semi-annual monitoring report

Monitoring project

- - - -

(i) Jan., (ii) July

2. For the Additional Financing (AF) period, a further enhanced mechanism is going to be implemented for overcoming remaining difficulties in effective monitoring, which is partly due to heavy reliance on consultants which jeopardized the data collection and processing when consultants are not available. 3. Monitoring and Evaluation Wing (MEW) will serve as the focal agency for overall supervision of M&E activities so as to strengthen the capacity of DSHE to monitor, review and evaluate the project regularly; and coordinate the dissemination of national assessment of learning achievement, and maintain a repository of integrated databases, relevant reports and studies. MEW will be brought under revenue budget by 2017 and AF will provide incentive in the form of results-based disbursement linked to achievement of MEW transfer to revenue budget. 4. BANBEIS will establish the Management Information System (MIS) cell for undertaking data processing. BANBEIS, the MOE’s statistical agency that has a pool of technical staff and reliable IT

14

infrastructure in their office, will be taking a role for collecting and processing data associated with non-PMT related activities, including Award Confirmation Form (ACF) of non-PMT grants. SEQAEP and BANBEIS will coordinate in these tasks by signing the Memorandum of Understanding (MOU). The BANBEIS would also be a partner agency for the MEW in implementing the field work of these surveys, namely: (a) PMT validation survey, (b) compliance verification survey, and (c) impact evaluation surveys. 5. The design of surveys and monitoring activities are also modified for the AF period. 6. The PMT Validation survey: PMT validation survey would be carried in conjunction with the PMT booth operations (administered by PMTA) and provide immediate correction on any false reporting by the applicants. Enumerators deployed by BANBEIS will go to all the booths and randomly verify applications by conducting household visits. This mechanism is expected to be implemented from 2014 booth operation. 7. The compliance verification survey: Institutional compliance monitoring survey will be carried out for all institutions every year in order to verify that beneficiary schools are indeed complying with agreed project guidelines. The use of ICT, such as smart-phones, would be introduced for compliance monitoring. The results of the compliance monitoring would be provided to the project unit and USEOs both for implementation support as well as necessary corrective actions. DSHE will sign an MOU with BANBEIS specifying the deliverables and service charges. Impact Evaluation Strategy 8. Building on the success of the earlier interventions and to address the remaining challenges, the Government of Bangladesh launched Secondary Education Quality and Access Enhancement Project (SEQAEP) in 2008, with the support of IDA. The project, totaling US$155, million has been implemented in 122 Upazilas of Bangladesh covering about 6,700 institutions. The overall objective of the SEQAEP is to improve quality of education and monitor learning outcomes systematically, and to increase access and equity in project upazilas. In response to successful implementation of the project, SEQAEP is going to be extended with additional US$265 million until 2017. 9. To evaluate the impact of introduced PMT stipends in 2008, the SEQAEP had an embedded impact evaluation component in its design. First two rounds of detailed household and school surveys were carried out in 2008 (baseline) and 2009 (first follow-up). The first follow-up survey has discovered positive impact of the PMT stipends on retention of the students while no impact on the learning outcomes within one year of introducing the stipend program. The first two rounds of surveys did not assess the impact of the quality interventions because such interventions started slightly later than the covered period. 10. In order to evaluate the medium-term impact of the stipends program and the quality interventions, a few sets of impact evaluation surveys will be carried out during the AF period. Taking into consideration the earlier surveys, three separate sets of impact evaluation are proposed, including: (i) evaluation of the PMT stipends program, based on the earlier surveys, and (ii) evaluation of the Additional Classes (AC) program in new project areas, and (iii) evaluation of Developing Reading Habits program in new project areas. For the evaluation of PMT stipends, one follow-up survey in old SEQAEP upazilas will be expected in 2014. For AC and DRH, respectively two rounds of survey, including baseline and follow-up, will be expected in 2013 and 2015 in new project upazilas. IE surveys for AC and DRH will be carried out in conjunction with implementation arrangements on Learning Assessment sub-component (1.4) in terms of test items, field level test administration, data processing and data analysis. Table 1: Impact Evaluation plans

Survey Years

Activities to be evaluated

Treatment upazilas

Outcome variables Baseline

year First

follow-up survey

Second follow-up

survey

Evaluation 1: PMT Stipends

2008 2009 2014 PMT stipends Old SEQAEP Upazilas

Enrollment, Learning outcomes (English, Math)

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Evaluation 2: AC 2014 2016 - AC - English and Math

New SEQAEP Upazilas

Learning outcomes (English, Math)

Evaluation 3: DRH 2014 2016 - Developing Reading Habits

New SEQAEP Upazilas

Learning outcomes (Bangla, English)

Evaluation 1: PMT stipends program 11. Background: The Evaluation 1 aims to evaluate the impact of the newly introduced intervention, the PMT stipend program. The PMT poverty-targeted stipends component was implemented in a phased manner. Of the total 122 project upazilas, 61 randomly chosen upazilas introduced the scheme during the first year of the project for cohort entering January 2009, the remaining 61 upazilas from the second year. The randomized phased-in approach, coupled with baseline and follow-up household and school level surveys, allows the evaluation to establish the causal impact of SEQAEP stipends on secondary school enrolment and learning outcomes. The baseline survey was carried out in 2008 and the follow-up survey in 2009. The household sample survey interviewed 2,400 households, 99 percent of whom were re-interviewed in the follow-up. In addition, the evaluation survey included school census covering more than 1,550 schools, detailed survey covering about 370 secondary schools, and learning achievement tests for some grade 6 & 8 students. SEQAEP Interim Impact Evaluation Report 2012 analyzed the baseline and follow-up survey data and the findings suggests that the SEQAEP stipends scheme had a significant causal impact on secondary school enrolment and no differential impact on test scores. 12. Scope of Work during the Additional Financing period: During the Additional Financing period (2014-2017), one follow-up round of the impact evaluation survey is expected. The objective of the second follow-up survey is to assess medium-term impact of the PMT stipends on a range of schooling outcomes, including enrolment, attendance, grade progression, transition to higher levels of education and learning levels. This follow-up round will survey households, students and schools in the same communities/villages from the baseline and first follow up round. Evaluation 2: Additional Classes program 13. Background: The Evaluation 2 aims to evaluate the impact of the Additional Classes sub-component. This component aims to: (a) improve classroom teaching-learning processes in English Language (EL), Mathematics (Math), and Science in targeted project institutions; and (b) assist targeted students in improving their performance in respective subjects. The objective is to improve learning levels of students in these three subjects that are identified as the most problematic subjects for secondary school students in the country. This sub-component has been refined based on lessons learned from two rounds of pilot schemes on support of EL and Math subjects. As of July 2013, approximately 1,000 Resource Teachers (RTs) have been contracted in EL and Math subjects and providing AC in 400 institutions in 55 upazilas. The impact evaluation will be focused on the 200 institutions that start receiving interventions in 2015. 14. Scope of Work during the Additional Financing period: During the Additional Financing period (2014-2017), two round of the impact evaluation surveys, including the baseline in 2014 and the following in 2016 are expected. The objective of this evaluation is to assess impact of AC on learning outcomes of students, especially in English and Math. The impact evaluation survey will include households, students and schools in target communities/villages. MEW will carry this IE survey with support from BANBEIS and in conjunction with the Learning assessment field level test administration. 15. Impact of AC will be rigorously evaluated by using the Regression Discontinuity (RD) design. Intervention schools are selected on the basis of low academic performance as measured by SSC examination, which will be used as an RD index. Sampling will take place around the cut-off score, including treatment institutions that fall below the cut off and control institutions that stand just above the cut-off score. Institutions are selected first by upazila level SSC score and then school level SSC score. Thus, the proposed cut-off score would be subject to the upazila, resulting the design a fuzzy RD. Instruments to be used for assessing learning outcomes will be English and Mathematics tests developed from LASI to monitor learning outcomes of grades 6-10 students. For an accurate assessment of the AC impact, the treatment and control schools should not receive the DRH program for at least 2 years although the schools can receive PMT stipends and other award programs.

16

Evaluation 3: Developing Reading Habits (DRH) program 16. Background: The Evaluation 3 aims to evaluate the impact of the Developing Reading Habits (DRH) program. This activity helps students develop the reading habit, with focus on Bangla and English, using a participatory approach through establishment of library systems and comprehensive reading programs. The project has so far supported the DRH program in all SEQAEP institutions and 670,000 readers and will continue to benefit these institutions under AF project. 17. Scope of Work during the Additional Financing period: During the Additional Financing period (2014-2017), two round of the impact evaluation surveys, including the baseline in 2014 and the following in 2016 are expected. The objective of this evaluation is to assess impact of DRH on learning outcomes of students, especially in Bangla and English. The impact evaluation survey will include households, students and schools in target communities/villages. MEW will carry this IE survey with support from BANBEIS and in conjunction with the Learning assessment field level test administration. 18. Impact of DRH will be rigorously evaluated by using the Randomized Control Trial (RCT) design. Intervention schools are randomly assigned to treatment and control institutions. Because the DRH program is to be rolled out to all institutions in the project upazilas, the DRH program will be implemented in phased-in approach. Control institutions will not receive the DRH program for 2 years in order accurately assess the impact of the DRH program while they can receive PMT stipends and other award programs. AC program will not be overlapped in these DRH impact evaluation institutions. The students learning outcomes will be assessed by using instruments based on LASI Bangla and English module. For estimating externalities in other subjects, Math is also tested.

17

Annex 2: Detailed Project Description

The key project development objectives continue to be “to improve the quality of secondary education, systematically monitor learning outcomes, and to increase access and equity in project upazilas”. Project Components Project components and sub-components will be continued in existing 125 SEQAEP project upazilas from 2014 and once preparatory activities are completed in 2014, these interventions will be introduced in 90 additional upazilas from academic year 2015. Component 1 – Improving Education Quality and Monitoring Learning Levels (Original: US$ 37.4 million, AF: US$ 72.3 million) 1. The objectives of this component are to: (a) increase education quality through the provision of performance achievement awards to students, teachers and institutions; (b) improve student performance in English Language and Mathematics; (c) establish a program to develop the reading habit in students; and (d) measure systematically learning levels by administering internationally comparable and national curriculum-based numeracy and literacy testing, that raise awareness of policy makers and stakeholders and help them adjust policies and interventions accordingly. The objective of the AF is to further strengthen, expand and institutionalize activities under this component. Sub-Component 1.1: Incentive Awards to Students, Teachers and Institutions 2. This sub-component finances provision of monetary incentives, in the form of awards, to rural students, teachers and project educational institutions to encourage them to reach and maintain higher levels of achievement. Directorate of Secondary and Higher Education (DSHE) will scale-up the incentive schemes in phases to extend the development impact. These incentives will be evaluated before project completion and the findings will be used to consider mainstreaming them into secondary SWAp from 2018. Incentives to be provided include: • Best Student Achievement Award: The best performing girl and boy student in the final examination in

Grades 6, 7 and 9 (six in co-educational institutions and three in other institutions), and students achieving highest grade point average in the junior secondary completion examinations for grade 8 (can be more than two students in co-education institutions depending upon the number of students who achieve A+ grade) will receive Taka 1000 per awardee at the annual Upazila Education Fair. The incentive award amount will be disbursed as school grant.

• PMT SSC Pass Award: All Proxy Means Test (PMT) stipend recipient students who have passed the

SSC or equivalent examination have been receiving a one-time incentive of Taka 1,500. Given that SSC graduates are no longer part of the concerned institutions, both ACF processing and disbursement of awards have been difficult. In view of this, the AF would support refined ACF preparation through MIS Cell and disbursement through debit card.

• Institution Achievement Award: Institutional Achievement Award (IAA) will be provided to two best

performing schools and one best Madrasa in each Upazila every year. The best performing institutions/Madrsah in each Upazila will be ranked according to Secondary School Completion examinations results. SSC results data will be collected from respective BISE boards and processed at project MIS Cell located at BANBEIS. The awardee institutions can be repeated after a one year gap. The selected institutions will receive BDT 1,00,000 disbursed as school grant. The award will be distributed as follows: (a) teacher (15% Math, 15% English, and 30% others); b) Head-teachers (15%)/Assistant HT (10%); and (c) SMC discretionary (15%). The award scheme would be rolled-out in all upazilas from AY 2014.

Sub-component 1.2: Support for English Language and Mathematics and Science Subject Learning and Teaching 3. This sub-component aims to: (a) improve classroom teaching-learning process in English Language (EL), Mathematics (Math) and Science Subjects in targeted project institutions; and (b) assist targeted

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students in improving their performance in EL, Math and Science. The objective is to improve learning levels of students in these three subjects that are identified as the most problematic subjects in terms of students’ learning achievement in secondary education in the country. This sub-component has been refined based on lessons learned from the existing Additional Class (AC) intervention. The AC scheme would be evaluated further for replicability and sustainability under Sector Wide Approach program (SWAp) from 2018. 4. This sub-component finances (a) provision of additional class grants to project educational institutions for resource teachers and additional class teachers of English language, sciences and mathematics; (b) organization of additional classes in Project Educational Institutions before/after regular classes or during holidays; and (c) provision of management, technical and supervisory services associated with the additional class scheme in said institutions. 5. The project will support provision of EL and Math resource teachers (RTs) in the current modality in AY2014 and EL, Math and Science AC teachers through a refined modality to be fully implemented from AY2015. Beneficiary institutions under this sub-component are selected in three steps: (a) selection of targeted AC upazilas from the pool of AF project upazilas (215) based on poverty criteria; (b) identification of inaccessibility in these upazilas; and (c) selection of low performing institutions on SSC examination results for the past three years. Currently, additional support in EL and Math subjects is implemented in 400 institutions in 55 upazilas. The number of target institutions will be gradually increased based on the agreed selection criteria7 from 400 in 2014 to 2,000 by 2017. AC teachers (ACT) will be enlisted by the project based on agreed qualification criteria. Part-time teachers who are already recruited and are serving in the selected institutions will get priority as ACTs. The enlisted ACTs will be contracted by SMCs/MMCs and be responsible to take regular subject classes in schools where there is no subject teacher and take additional classes before or after school hours. 6. Remuneration for ACTs will be: (i) base regular teacher salary; (ii) AC incentive (5,000 taka per month) for taking 10 additional classes per month; and (iii) remote upazila incentive (2,000 taka). The remuneration scheme and contractual arrangements have been designed in view of possible regularization of ACTs which would require following the government regulations including NTRCA accreditation, into the MOE system at project end. Disbursement of funds to RTs and ACTs will be made through Agrani Bank based on ACF forms prepared using data provided and certified by the institutions. SMS tracking monitoring system is being introduced to monitor AC implementation. MIS Cell will be responsible for ACF preparation. 7. Given that the current AC modality is too labor intensive and requires a lot of resources, AC implementation arrangements will be refined with TA support of implementing partner(s). TA/consulting firms will support development of teaching-learning materials and training modules, training of ACTs, supervision, on-site support to beneficiary institutions, and quality control of ACTs selection process. Implementing partners will be deployed by the project for this purpose. The implementation will follow agreed procedures and guidelines in the updated AC operational manual. Sub-Component 1.3: Developing the Reading Habit 8. The objective of the sub-component is to help students develop the reading habit, with focus on Bangla and English, using a participatory approach through establishment of library systems and comprehensive reading programs. The AF project will support the DRH program in all institutions (6700) in existing 125 upazilas and all 5,000 institutions in the new 90 upazilas. One of the main expected outcomes of DRH is improvement in reading skills. 9. The sub-component finances (a) setting up of a reading program at classroom levels for grades 6 to 10, in project educational institutions; (b) the acquisition of age- and ability-appropriate books in Bangla and English, including books for awards to high performing student readers; (c) provision of grants to institutions to finance incentive for librarian and teacher-coordinators to maintain the institution’s library and reading program; and (d) the management, technical and supervisory services associated with the developing reading habit schemes including annual students reading tests. BSK will continue as service agency. Each institution is expected to have 100 student readers (on average 20 in each grade). The project will have a four-year framework contract with distributors/publishers which will deliver books to BSK. Packaging and delivery of books to institutions is BSK’s responsibility. Payment to distributors will be conditional on book delivery

7 Selection criteria of Upazila is poverty index and inaccessibility and of institutions is SSC pass rate trend from 2011 to 2013 and inaccessibility.

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confirmation from BSK and BSK service fees will be disbursed upon verification of book delivery to institutions. BSK service contract will be amended for changed scope of work. Sub-component 1.4: Assessment of Education Quality 10. This sub-component aims to systematically measure the quality of learning in Bangla, English and Mathematics by administering competency-based learning assessment on a sample basis. The results of these independent assessments will be fed back to policymakers and stakeholders to raise their awareness about the quality of education, and adjust quality-related policies and interventions accordingly. The long-term vision is to build the appropriate capacity to mainstream the assessment system. The sub-component finances: (a) the development of testing instruments for Bangla, English and Mathematics; (b) the administration of such instruments, and processing and analysis of data; and (c) dissemination/feedback to stakeholders at all levels. MEW will be the focal agency to carry out this activity with technical assistance from international and national specialized agencies. One round of assessment has been completed in SEQAEP institutions and another round is expected to be carried out in 2013. AF will finance at least two additional round of assessment, with nationally representative samples (i.e. Covering SEQAEP as well as non-SEQAEP areas). Learning assessment is one of the DLIs in the AF project (details are in Table 3 in this annex). Component 2 – Improving Equity and Access (Original: US$ 106.7 million, AF: US$ 179.6 million) 11. The objective of this component is to increase access and retention of poor girls and boys; ensure their completion of secondary schooling through provision of stipends and tuition based on pro-poor targeting and educational criteria; and improve school environmental conditions by selectively providing water and sanitation facilities. Sub-component 2.1: PMT-based Stipends and Tuition to the Poor 12. This sub-component aims to increase access and retention of poor girls and boys, based on pro-poor targeting and educational criteria. This sub-component finances: (a) provision of stipends to girls and boys from poor households in project institutions based on Proxy-Means Testing (PMT)-based pro-poor targeting; (b) provision of tuition grant to eligible educational institutions on behalf of the PMT stipend recipient students in (a) above; (c) provision of non-consulting services to administer the PMT scheme; and (d) provision of operating costs related to the disbursing bank’s service charges for PMT-based stipends. The AF project will support the PMT stipends and tuition program in current 125 project upazilas from second semester of AY2013 and in 90 new upazilas from AY2015. 13. All students from households in the bottom 4 deciles of welfare distribution (as bottom 40 percent in per capita household’s consumption) would receive the stipend benefit. The stipend beneficiaries would include students in grades 6-10 during the AF project period, which covers 9 semesters (second semester of 2013 and eight semesters of four academic years 2014-2017). In view of GoB’s interest in mainstreaming the PMT scheme nationally under a single harmonized stipend program, the stipends rates will remain at the current level. PMT Stipends will be provided to eligible boys and girls twice a year at the stipulated rates given in Table 1 below.

Table 1 – Stipend Allowance Rates for PMT-based Stipends Program (in Taka)

Grade Monthly Stipend

SSC Exam Fees (annual)

First Semester

Second Semester

6 100 600 600 7 125 750 750 8 160 960 960 9 180 1,080 1,080 10 200 750 1,200 1,950

14. Repeat Beneficiaries: Current PMT beneficiaries in 125 upazilas will continue to receive stipends upon a full and independent validation of the fulfillment of education compliance criteria: (a) maintaining 75 percent average attendance; (b) successful promotion to next grade; and (c) remaining unmarried till completion of secondary school (grade 10).

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15. New Beneficiaries: New PMT beneficiary students will be selected following criteria (identification of poor boys and girls using updated PMT formula) and procedures (invitation of PMT applications, PMT booth operations to collect filled applications, sample validation through household visit surveys, processing of application data, publication of draft beneficiary list, enrolment confirmation, processing of appeals, and Award Confirmation Form (ACF) preparation). The new PMT applications in 125 current upazilas (into grade 6 from AY2014) and 90 new upazilas (in all grades from AY2015) will be processed using the updated PMT formula to ensure that all poor eligible children are selected for PMT stipends (details on PMT scheme is in Annex 12). Details will be elaborated in the revised PMT Stipends Operations Manual. 16. ACF for each academic semester is prepared based on compliance information provided by institutions and certified by USEOs. PMT Stipend will be disbursed via the banking system, including the use of cash card. USEOs will be accountable in ensuring that compliance information from institution is verified and forwarded to SEQAEP Unit/PMTA within scheduled date and USEO grant will be linked to these outputs. 17. Tuition: Tuition support (stipulated rates given in Table 2) will be provided directly to eligible educational institutions on behalf of all PMT stipend students. During the project period (four academic years of 2014-2017), it is estimated that more than 5 million student-years of secondary education would benefit from tuition support. ACF for tuition will be linked to ACF for PMT stipends.

Table 2 – Tuition Subsidy for PMT-based Stipends Program (in Taka)

Grade

Monthly Tuition

First Semester Second Semester

6 25 150 150 7 25 150 150 8 25 150 150 9 30 180 180 10 30 180 180

18. Implementation Arrangement: The services of LGED as PMT Administrator will continue until project ends. PMTA will be responsible for (a) selection of PMT stipend and tuition beneficiaries, (b) ACF preparation for PMT stipend and tuition beneficiaries, and (c) maintenance of integrated database. For PMT stipends and tuition benefits each eligible institution (current or new) will be required to enter into an annually renewable Cooperation Agreement (after physical verification) specifying their commitment to comply with project rules and regulations. Sub-component 2.2: General Stipends and Tuition Program 19. This program was phased out in 2010 academic year, after the PMT based stipend and tuition program was introduced in 125 project Upazilas. Under the AF, this sub-component finances the Government’s provision of ongoing general stipends program in new 90 upazilas in AY2014; the PMT-based scheme will be implemented in all 215 project upazilas from AY2015. Sub-component 2.3: Improving School Facilities 20. This sub-component is intended to attract and retain girls and boys in schools, through the provision (using community participation) of safe drinking water and sanitation facilities to selective schools based on needs assessment. The provision of improved school facilities is likely to lead to better health outcomes for children and increase their aptitude to learn. This sub-component finances: (a) provision school facilities grants to project institutions for (i) acquisition of safe drinking and twin latrine facilities, and (ii) construction of twin latrines for boys and girls with running water facilities; (b) the provision of technical advisory services for testing of existing and new project institutions’ tube-wells for arsenic, salinity and manganese contamination; and (c) provision of field test kits for testing activities in (b) above. Beneficiary institutions for the sub-component will be selected on need-basis. DPHE will provide services for safe water testing of tube-wells including 5% sample laboratory testing and other technical services such as carrying out awareness programs on school health and sanitation and advisory services on construction and works for water (tube-wells) and sanitation facilities which will be carried out by school management committees using community participation procedures as per agreed project guidelines.

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Component 3 – Institutional Capacity Strengthening (Original: US$ 9.9 million, AF: US$ 21.4 million) 21. The objectives of this component are to: (a) strengthen the existing structure for managing and implementing the proposed project; (b) develop and strengthen the capacity to implement programs aimed at increasing educational quality and to deliver financial support to targeted beneficiaries effectively; (c) strengthen accountability at school and Upazila level; and (d) raise education awareness amongst stakeholders with focus on education quality, targeting and accountability. Sub-component 3.1: Project Management 22. In order to ensure smooth project implementation, the project management structure will be strengthened. The overall responsibility for the project lies with the Directorate of Secondary and Higher Education (DSHE), as the implementing agency. It will be assisted by two units: DSHE/SEQAEP Unit, led by a Project Director and DSHE/Monitoring and Evaluation Wing (MEW), led by a Director. Upazila Secondary Education Office (USEO) will serve as the focal agency at the field level under the supervision of Zonal Directors and District Education Offices. MEW is described in Component 4 below. This sub-component finances: (a) technical advisory services, goods and logistics assistance to SEQAEP Unit to facilitate the carrying out of the different activities under components 1, 2 and 3; and (b) operating costs to support implementation of same activities. 23. SEQAEP Unit: The objective of this Unit is to enable DSHE to establish a strong management capacity to implement project activities. SEQAEP Unit’s main functions will be to plan, manage, implement and coordinate project activities. In addition, project management and implementation capacity will be augmented through the use of several government and private specialized partner agencies (for example, services in areas such as PMT, banking, reading habit program, additional support in EL and Math, Science, and data processing services etc.). As per original design, SEQAEP Unit will be staffed with a modest number of key technical, procurement, and financial management staff, and a number of long-term national consultants to provide technical and implementation support. To enhance horizontal and vertical communication and coordination for smooth project implementation, the MTR recommended a revised project organogram to account for the provision of Additional Project Director (professor level), removal of deputy director positions, redeployment of existing positions and addition of select critical positions. In view of the changed project scope and revised implementation arrangements, deployment of staff would be adjusted. 24. Zonal Director, District Education Offices and Upazila Secondary Education Offices (USEOs): SEQAEP Unit, with support from DSHE, will mobilize field level officials including USEOs to facilitate field level implementation of project activities. To ensure that the field level tasks are implemented in a timely and effective manner, SEQAEP will provide grant support of Taka 50,000 annually to cover the operational expenses of USEOs based on the following results: (i) completion of PMT beneficiary selection scheme together with PMTA (first trimester payment); (ii) submission of verified institutional data forms for processing first semester stipends and school grant (second trimester payments); and (iii) submission of verified institutional data forms for processing second semester stipends and school grants (third trimester). The USEO operating grant will be disbursed in three installments according to the agreed guidelines in the Implementation Manual. Sub-Component 3.2: Institutional Capacity Building 25. The objective is to strengthen the capacity of MoE to provide services at central, district, upazila, and community levels. Staff development will be an essential part of capacity-building, especially for a project that has many new and innovative initiatives that require careful monitoring for program learning. In addition, it is planned that staff capacity at the secondary Upazilas offices be strengthened mainly through focused training. This sub-component will finance (a) focused orientation and workshops, and (b) in-country and international training. In-country training will be implemented based on agreed plan and international training will be carried out on selective basis (with prior concurrence from IDA). Sub-Component 3.3: School Management Accountability 26. The objective is to support MoE’s efforts to increase accountability and transparency at the school level through the strengthening of School Management Committees (SMCs) and Madrasah Management Committee (MMCs) and Parent Teacher Associations (PTAs). Under this sub-component, AF project will finance the provision of the following grants to project institutions: (a) ICT support grant of Taka 800 per

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month to all institutions and SMC/MMCs for use of internet in monitoring and communication; and (b) Social Audit grant of Taka 5,000 per year to all PTAs to organize parent assembly and disseminate school performance information through school report card. PTA and SMC activities under this sub-component will be implemented in coordination with education awareness and community mobilization (sub-component 3.4) to enhance the impact of other sub-components such as PMT stipends and all quality interventions. Sub-Component 3.4: Education Awareness and Community Mobilization 27. The objective is to build and increase awareness among all key stakeholders, with emphasis on the community and beneficiaries. Since the project places greater focus on quality, due diligence in management and administration of incentives and grants and pro-poor targeting based on proxy means testing, it is important that these messages are effectively communicated to all stakeholders. Two types of activities will be supported: (i) educational awareness programs; and (ii) community mobilization. Activities would include the use of technical advisory services and multimedia campaign services to identify and deliver key messages, and mobilize PTAs and SMCs at the community level. The sub-component financing would include provision of EACM grant of Taka 5,000 per year to all PTAs to carry out community/school mobilization activities including campaign against girls eve teasing and for bringing dropouts back to school. The important synergies between sub-components 3.3 and 3.4 can be brought about through focused awareness campaigns, and strengthened roles of the Parent Teacher Associations (PTAs) and School Management Committees (SMCs). Component 4 - Monitoring and Evaluation (Original: US$ 1.7 million, AF: US$ 7.0 million) 28. The objective of this component is to: (a) systematically document all project input, process, output, and outcomes; and (b) link project interventions with outcomes. The AF will finance the provision of technical advisory services, equipment and logistical assistance, and operating cost to facilitate the carrying out of activities under component 4 and sub-component 1.4 (learning assessment). 29. Monitoring (4.1) and Evaluation (4.2): The objective of sub-component 4.1 is to strengthen capacity to monitor inputs, processes, outputs, and outcomes. Monitoring activities under this sub-component include: (a) Results monitoring (KPIs and intermediate indicators); (b) System monitoring (EMIS) through annual census of all project institutions; (c) PMT validation survey (to check accuracy of PMT application information); and (d) Compliance monitoring survey (compliance of criteria and procedures of all activities). The sub-component 4.2 aims at carrying out rigorous impact evaluation of key project interventions. This involves multiple rounds of household and school surveys. The baseline survey was carried out in 2008 and the first follow-up of the same schools and households in 2009. The first phase of the impact evaluation has established the short-run impact of a Proxy Means Testing (PMT) stipends program. Under the AF, this sub-component finances the provision of support to evaluate the impact of the Project on access, equity and quality of education through qualitative assessments and quantitative impact evaluations including the design of evaluation strategy for main project interventions (PMT, Additional Class, DRH), carrying out of baseline and follow-up surveys, analysis of data and dissemination of findings.

30. Implementation Arrangement: Aactivities under this component will be implemented MEW with support from MIS Cell located at BANBIES. MEW will serve as the focal agency for overall supervision of M&E activities so as to strengthen the capacity of DSHE to monitor, review and evaluate the project regularly; coordinate the dissemination of national assessment of learning achievement; and maintain a repository of integrated databases, relevant reports and studies. This component will be implemented by MEW with support from project MIS cell at BANBEIS and other specialized agencies. Results monitoring (KPI and immediate indicators) will be updated by MEW with data from PMTA at LGED, project MIS Cell at BANBEIS, BSK and SEQAEP Unit/MEW. Annual school census, PMT validation, compliance monitoring and impact evaluation surveys will be carried out by MEW with support from MIS Cell located at BANBIES. In addition, MIS Cell located at BANBEIS will support SEQAEP on data processing of non-PMT activities. 31. PMT validation survey would be carried out in conjunction with the PMT booth operations (administered by PMTA) and provide immediate correction on any false reporting by the applicants. Institutional Compliance monitoring would be carried out for all institutions every year in order to verify that beneficiary schools are indeed complying with agreed project guidelines. The use of ICT, such as smart-phones, would be introduced for compliance monitoring. The results of the compliance monitoring would be provided to the project unit and USEOs both for implementation support as well as necessary corrective

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actions. DSHE will sign an MOU with BANBEIS specifying the deliverables and service charges. Details of the M&E and MIS activities and arrangements will be elaborated in M&E Manual.

32. M&E focused DLIs: The importance of M&E system is elevated even further by triggering a portion of IDA credit to achievement of key results under this component. These DLIs include carrying out the learning assessment nationally; bringing MEW under revenue budget at project end, and conducting M&E surveys as scheduled. Details of these DLIs, pricing and verification arrangements are provided in Table 3 below.

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Table 3: Disbursement Linked Indicators Areas Indicator Baseline 2013

(Year 0) 2014 (Year 1)

2015 (Year 2)

2016 (Year 3)

2017 (Year 4)

Protocol/Verification

Learning Assessment (Responsible agency: MOE, MEW/DSHE) DLI Value

DLI 1: Learning Assessment carried out nationally

One round completed in SEQAEP upazilas in 2012

MOE/DSHE to determine that learning assessment be carried out on nationally representative sample US$4 m

Secondary education learning assessment carried out on nationally representative sample US$4 m

Report of secondary education learning assessment disseminated Framework for the 2017 national learning assessment approved US$4 m

2014 and 2016- MOE letters approving the learning assessment frameworks for 2015 and 2017 assessments, respectively. Framework to include objectives, subjects, grades, time frame, and implementation arrangements, including implementing bodies. 2015- Nationally representative sample defined as relevant grade to be represented at all BISE. 2016- Learning assessment report with proof of dissemination to key stakeholders

Institutionalization of MEW (Responsible agency: DSHE/MOE, MOPA, MOF) DLI Value

DLI 2: MEW institutionalized and financed through revenue budget

MEW under SEQAEP project budget

MOE to submit proposal along with DSHE organogram to create new positions in DSHE’s permanent structure to the O&M wing of the Ministry of Public Administration (MOPA) US$7 m

Final proposal for MEW submitted by MOE and received by MOPA for processing US$4 m

MEW proposal, including job descriptions approved by MOPA and forwarded to MOF US$4 m

MOF concurs with the proposal forwarded by MOPA and informs MOE. MOE issues a Government Order to the effect that MEW would be transferred to revenue budget beginning from January 2018 US$4 m

All arrangements made for MEW staff to be paid under revenue budget from January 2018 US$3.5 m

2013- DSHE to submit to the Association a copy of the proposal sent to MOPA 2014- MOE submits to the Association copy of the receipt of the final proposal by MOPA. 2015- Copy of the decision endorsed by MOPA forwarded to the Association. 2016- Copy of issued Government Order forwarded to the Association. 2017- A letter from MOE/DSHE confirming the arrangements in place for transfer of MEW staff salary and recurrent cost to revenue budget from January 2018

Monitoring & Evaluation activities (Responsible agency: MEW/DSHE) DLI Value

DLI 3: Monitoring and Evaluation surveys conducted as scheduled

Last round of Impact Evaluation (IE) survey in 2009 Last round of validation in 2010 Last round of compliance survey in 2010

Impact evaluation baseline survey conducted DSHE approve the list of corrective actions based on findings of 2013 PMT validation and compliance survey reports US$4 m

PMT validation and compliance survey conducted incorporating the approved finding of the 2013 PMT validation and compliance survey reports US$4 m

DSHE approve the list of corrective actions based on findings of 2015 PMT validation and compliance survey reports US$4 m

Impact evaluation follow-up survey completed by March PMT validation and compliance survey conducted incorporating the finding of 2015 reports US$3.5 m

2014 - DSHE submit survey reports and proof of corrective action taken based on the respective survey report to IDA 2015 - DSHE submit survey reports and proof of corrective action taken based on the respective survey report to IDA 2016 - DSHE submit proof of corrective action taken based on the respective survey report to IDA 2017 - DSHE submit survey reports and proof of corrective action taken based on the respective survey report to IDA

Submission of achievement report

December 2013 October 2014 October 2015 October 2016 June 2017

Verification by IDA

January 2014 November 2014 November 2015 November 2016 July 2017

Disbursement February 2014 December 2014 December 2015 December 2016 August 2017 Number of DLIs Total: 12 1 3 3 3 2 Pricing (US$ m) Total US$50m 7m*1=7m 4m*3=12m 4m*3=12m 4m*3=12m 3.5m*2=7m

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Annex 3: Project Costing by Component

Academic (calendar) yearly Cost Estimates

By Component 2013-2014 2015 2016 2017 Total

1. Improving Education Quality

11.1

16.5

20.7

24.0

72.3

2. Improving Equity and Access

52.9

42.2

41.6

42.8

179.6

3. Institutional Capacity Strengthening

4.4

5.7

5.7

5.6

21.5

4. M&E

1.8

1.8

1.8

1.8

7.0

Total

70.2

66.1

69.8

74.2

280.3

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Annex 4: Summary of Impact Evaluation Study 1. Objective: To experiment and learn from a newly introduced PMT-targeted stipends program, the SEQAEP project incorporated an impact evaluation component. PMT-targeted stipends component was implemented in a phased manner. Of the total 122 project upazilas, 61 randomly chosen upazilas introduced the scheme during the first year of the project for cohort entering January 2009, the remaining 61 upazilas from the second year. The randomized phased-in approach, coupled with baseline and follow-up household and school level surveys, allows the evaluation to establish the causal impact of SEQAEP stipends on secondary school enrolment and learning outcomes. The baseline survey was carried out in 2008 and the follow-up survey in 2009. Because the new scheme was targeted to the poor, both boys and girls, the impacts are estimated by gender and poverty status separately.

2. Findings: Analysis of baseline and follow-up survey data suggests that the SEQAEP stipends scheme had a significant causal impact on secondary school enrolment (Chart 1). • Boys eligible to receive PMT-stipends are 21 percentage points more likely to be enrolled in

secondary school than they would have had they not been able to receive the PMT-stipends. • The impact is even more pronounced for boys from the poorest households. The enrolment increase

among boys in the bottom two income quintiles is an estimated 28 percentage points. In other words, close to three out of ten PMT-stipend recipients from poor households would have dropped out in the absence of the program.

• Relative to the FSSAP stipend program, the average effect of the PMT-stipends on girls is 19 percentage points increase in school enrolment. While this is not surprising given a much higher cash amount in the PMT stipends compared to the FSSAP stipends (two to four times higher depending on the grade), the magnitude of impact increases with poverty level. PMT stipends program causes girls from economically poor families 26 percentage points more likely to enrol in secondary school.

• For girls from relatively richer households who are now not directly benefiting from the PMT program, there is no adverse impact of taking away the FSSAP stipends.

• Overall, the results appear generally robust across the various alternative specifications. The magnitudes of the estimated effects of the Bangladesh pro-poor targeted stipends program are impressive given the relatively low monetary value of the stipend (average stipend amount is $25 per year, varies by grade). These impacts are higher than those reported for similar programs such as the PROGRESA CCT program in Mexico but comparable to the ones reported for a poverty targeted scholarship program in Cambodia.

3. In terms of learning outcomes, overall student test scores improved by 0.25 standard deviations between the two rounds of survey but there is no differential effect (positive or negative) effects of the PMT-stipends program. The pattern holds across both subjects –English and Mathematics- in grades 6 and 8. Separate estimates for boys, poor boys, girls, and poor girls confirms the same result that the PMT-stipends did not have any statistically significant impacts on the students’ learning after one year of implementation. The finding is consistent with evidence from other studies that show that CCT does not automatically increase student learning in the short-run. It is important to point out that PMT stipends attracted the poorest students into the system and yet had positive improvement in test scores.

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Chart 1: Net Impact of PMT-based Stipends Program on Secondary School Enrolment

Source: Authors’ calculations. Note: The impact estimate is derived from difference-difference combined with nearest neighbour matching estimator.

4. Implications: The findings from the IE study have provided the Government and the World Bank with a number of implications: • Impressive and unambiguous effect of the PMT-based stipends program on increasing secondary

school enrolment among boys and girls alike, particularly for the poor validates the government’s decision to fully implement the PMT-based stipends program in all SEQAEP areas and expand the program in additional 90 upazilas under the AF.

• The finding that there are no short-run impacts of PMT-based stipends on learning outcomes is not surprising given an interval of only one year between the two survey rounds and a widely held consensus that quality enhancement is a longer term process. More importantly, the SEQAEP AF has built in rigorous IE to explore the impacts of major quality interventions such the additional classes and the reading habit program, on learning outcomes.

• The interim impact evaluation focused on outcome indicators associated with school enrolment and student test scores. However, as with any large-scale operation, implementation process and institutional arrangements play an influential role in the quality and magnitude of impacts. As such, the Government of Bangladesh (GOB) and its development partners including the World Bank should also encourage the process evaluation of the PMT-based stipends scheme in order to refine and institutionalize the PMT-based identification of poor students, monitoring of educational compliance criteria to confirm stipend awards, and appropriate procedures to disburse funds through the banking system. Cost effectiveness analysis is also equally important for any consideration to scale up the scheme nationwide.

0.0 5.0 10.0 15.0 20.0 25.0 30.0

All Girls

Poor Girls

All Boys

Poor Boys

Impact On Enrolment (percentage points)

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Annex 5: Implementation Arrangements

1. The implementation arrangements under the AF project would largely remain the same with enhanced role of DSHE as the main implementation agency in view of institutionalization of project activities. DSHE would continue to be supported by two units: SEQAEP Unit headed by a Project Director, and MEW, headed by a Director. In order to ensure smooth project implementation, the project management structure will be strengthened and some refinements in the organogram would be made. Upazila Secondary Education Office (USEO) will serve as the focal agency at the field level under the supervision of Zonal Directors and District Education Offices. 2. SEQAEP Unit: SEQAEP Unit’s main functions will be to plan, manage, implement and coordinate project activities for sub-components under components 1 (except sub-component 1.4), 2 and 3. As per original design, SEQAEP Unit will be staffed with a modest numbers of key technical, procurement, and financial management staff, and a number of long-term national consultants to provide technical and implementation support. To enhance horizontal and vertical communication and coordination for smooth project implementation, to serve the needs of the expanded project scope, several key positions have been added, including one Additional Project Director (professor level) and 4 deputy project directors (See Attachment 5a for Job Descriptions of Project Director and Additional Project Director for SEQAEP Unit).

3. Monitoring and Evaluation Wing (MEW) will implement sub-component 1.4 (learning assessment) and 4.1 (monitoring) and 4.2 (evaluation) and serve as the focal agency for overall supervision of M&E activities so as to strengthen the capacity of DSHE to monitor, review and evaluate the project regularly; and coordinate the dissemination of national assessment of learning achievement, and maintain a repository of integrated databases, relevant reports and studies. MEW will be brought under revenue budget by project end. All activities under component 4 and sub-component 1.4 will be implemented by MEW. Total number of staff at MEW, including the officer level positions, will be according to DSHE’s staffing proposal to bring MEW under revenue budget. 4. Participating Specialized Agencies: Under the AF, SEQAEP project will continue to be supported by the following partner agencies: (a) Local Government Engineering Department (LGED) for PMT administration, (b) Agrani Bank for funds disbursement, (c) Department of Public Health and Engineering (DPHE) for improving school facilities sub-component, (d) BANBEIS for M&E activities (MEW supervised activities) and project MIS (SEQAEP supervised activity), and (e) Bishwo Shahitto Kendro (BSK) for providing technical support to the implementation of developing the reading habit scheme. For the continued service, participation agreements (for non-consulting services) and contracts (for consulting services) would be amended to reflect changed scope of work and project duration. In addition, technical assistance will be provided by national and international agencies for additional class sub-component and learning assessment sub-component.

5. Upazila Level Coordination: SEQAEP Unit, with support from DSHE and from Zonal Director, District Education Offices, will mobilize upazila secondary education offices for field level implementation support. SEQAEP will provide grant support to cover USEOs’ operational expenses based on following results: (a) completion of PMT beneficiary selection scheme together with PMTA (first trimester payment); (ii) submission of verified institutional data forms for processing first semester stipends and school grants (second trimester payment); and (iii) and submission of verified institutional data forms for processing second semester stipends and school grants (third trimester). 6. Educational Institutions: As in the ongoing project, the AF will ensure that the project enter into a annually renewable Co-operation Agreement with participating educational institutions (schools

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and madrasahs), specifying the obligations of participating educational institutions (e.g. compliance with project criteria and procedures, level of project support, and reporting requirements). The key requisite for educational institutions to become eligible for participation in project activities would be the formation and functioning of a School Management Committee (SMC) and a Parent-Teacher Association (PTA). 7. Implementation Manual: The Project would be implemented according to an agreed Project Implementation Manual (consisting of sub-manuals on different project sub-components, including PMT Stipends Manual) and detailed agreed guidelines. Agreed amendments to these manuals and guidelines will be made periodically to incorporate adjustments, as needed, during project implementation. 8. GAAP, EMF, SMF: Governance and Accountability Action Plan (GAAP), Environmental Management Framework (EMF) and Social Management Framework (SMF) would be part of the implementation arrangements.

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Attachment 5a: TORs for Key Staff Positions Position Key tasks Education/

Qualifications Experience and Skills

Project Director • Provide technical and project management leadership to a team comprising of staff and consultants in carrying out project activities under SEQAEP, including procurement and financial management, reporting directly to the Director General, DSHE

• Plan, implement, manage, supervise, monitor, and coordinate all SEQAEP activities

• Be responsible for regular reporting on SEQAEP activities to IDA

• Master’s Degree, preferably in the field of educational management or related field

• Trained in educational development, and project management

• Minimum 10 years of project management and monitoring and evaluation experience, preferably from education cadre

• Ability to work in foreign aided projects in a team environment

• Ability to coordinate with various ministries and agencies

• Proficiency in writing and speaking English

• Basic computer skills (Word, Excel, etc.)

Additional Project Director (Proposed)

• Provide implementation support to the Project Director, Assistant Directors and their field-level officials

• Support DSHE to mobilize USEOs for field level SEQAEP Implementation

• Build synergies across components and partner agencies

• Coordinate among all SEQAEP partner agencies having entered into a Participation Agreement or Memorandum of Understanding or consultants engaged in SEQAEP activities

• Consolidate component progress reports and implementation plans

• Report directly to the Project Director

• Master’s Degree, preferably in the field of educational management or related field

• Trained in educational development, project management, and M&E

• Minimum 10 years of experience in education projects, must be from education cadre (Professor or Associate Professor level)

• Substantial experience in IDA funded education projects

• Proven track record in stipends program

• Proven Experience in coordinating with various partner agencies

• Proven ability to mobilize USEOs in education projects

• Proficiency in writing and speaking English

• Basic computer skills (Word, Excel, etc.)

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Annex 6: Financial Management and Disbursement Arrangement

1. Financial Management Assessment: A financial management assessment has been carried out mainly by revisiting the institutional capacity and systems of the Directorate of Secondary and Higher Education (DSHE) under the Ministry of Education (MOE) that have been implementing the ongoing SEQAEP through SEQAEP Project Unit and MEW wing. The capacity and systems of the country and sector public financial management and accountability institutions have also been factored into FM assessment. Project financial management functions have been carried out by project specific FM staff including a Project Financial Management Specialist hired for the project at the DSHE, like most of the Government departments, does not have an adequate FM organization. The FM arrangement as agreed for SEQAEP will be applicable for the additional financing as well with add-on arrangement as reflected in the FM arrangement. The FM arrangement is adequate to meet the fiduciary safeguards for the project funds and to provide financial support for the smooth project implementation.

Project Financing Arrangements 2. There will be two financing modalities in SEQAEP Additional Financing (1) direct input based financing for major part of the project, and (2) DLI based financing for meeting specified performance targets. The total project cost for SEQAEP AF is estimated to be US$280 million. The total IDA credit would be US$265million, of which US$215 million would be on traditional input (transaction) based financing and US$50 million that would be initially financed by the Government, would be reimbursed on the basis of achievement of the agreed performance targets (DLIs). Project financing by cost-category for the transaction-based IDA credit are shown below in table 1.

Table 1: Financing Categories (US$ Million) for IDA Credit

Category IDA

Financing IDA share % Sub-components

1. PMT-based Stipends 129.9

100% PMT stipends (Component 2.1)

2. School Grants 38.7 100%

School grants for Additional Class (1.2), Reading Habit (1.3), Improving School Facilities (2.3)

3. Consultant and non-consulting services, training, goods and operating cost 39.4

91%

Consulting (firms and individuals) for Additional Class (1.2), DRH (1.3) & project management (3.1); non-consulting technical assistance from LGED for PMT stipends and tuition (2.1) and DPHE for school facilities (2.3); training under capacity building (3.2); goods under component 1,2,3 and operating costs under PMT stipends (2.1) and project management (3.1).

4. Consultant and non-consulting services, training, goods and operating cost 7

100%

Consultant and non-consulting services, training, goods and operating cost under learning assessment (1.4) and M&E (4.1 & 4.2).

5. DLI expenditures 50

Incentives (awards) under component 1.1, tuition grants under 2.1, General stipends (non-PMT) under 2.2, and school grants under SMA (3.3) and EACM (3.4).

Total 265

3. Eligible expenditures for reimbursement under the DLI-based IDA credit financing will include the expenditure items specified under category-5 (DLI expenditures) in table 1 above. It includes Incentives (awards) under component 1.1, tuition grants under 2.1, General stipends (non-PMT) under sub-component 2.2, and school grants under SMA (3.3) and EACM (3.4). Economic codes of the eligible expenditure items under DLI expenditure category would be clearly mentioned in the Government’s revised Development Project Proposal (RDPP) and the AF Financing Agreement between IDA and the Borrower. The reimbursement will be claimed accordingly, attaching the relevant expenditure statements to the Interim Financial Reports (IFRs).

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4. On achieving one or more DLIs, the Bank will disburse value of the DLI (s) to the Government treasury. Disbursement under DLI based financing will be made on achievement of DLI targets on the basis of reimbursement of eligible expenditures not less than the value of DLIs. Disbursement for DLIs attained for any year including such disbursements in the previous years will not exceed the total eligible expenditures on a cumulative basis. FM arrangements 5. Staffing: The project organogram for SEQAEP AF is strengthened by two additional FM personnel: one consultant Accounts Officer (increasing the current number to 2) at the SEQAEP unit and one Financial Management Analyst (FMA) at the office of the DG DSHE. The current FM positions, including FMS, Accounts Officer and Accountants at the SEQAEP unit will need to be confirmed by SEQAEP to ensure the FM support from the beginning of the AF project. Additionally, a Financial Management Analyst (FMA) will be required at the office of DG, DSHE in order to provide financial management support for implementing the component 4 and sub-component 1.4 of the project by MEW. FMA’s responsibilities will include keeping books and records, prepare and submit a separate set of IFRs, assisting the DG, DSHE in operating a separate Designated Account, and also to help submitting the withdrawal applications for the DLI based part of funding. The FMA will be a professionally qualified accountant with minimum of 2 years of post-qualification experience and will be responsible to the DG, DSHE for duly discharging all project FM functions. The TOR for the FMA will be agreed and the selection of the appointee would be finalized before negotiations in order for the person to be in place right from the startup of the project. Provision for these FM staff should be reflected in the DPP/RDPP and the Procurement Plan as applicable. 6. Designated Account and Fund Flow: IDA’s transaction-based project funding on AF will mainly flow through two separate Designated Accounts (DAs) in the form of Convertible Taka Special Account (CONTASA) to be opened in Agrani bank. DA-A to be managed by the SEQAEP Unit will be used to finance major activities (excepting the activities to be implemented by MEW) under the AF. The Project Director shall operate this DA and submit withdrawal applications for the initial and subsequent advances to the DA and documentation of eligible expenditures under input based financing. A separate DA-B will be opened and managed by DG, DSHE to meet the input based expenditures of component 4 and sub-component 1.4 of the project. The Project Director and the DG, DSHE/ Director, MEW will independently prepare the Request for Authorization to Use their respective Designated Accounts and will submit the same to the Finance Division of the MOF through the MOE. The DLI based financing will be disbursed to the Government treasury on submission of Withdrawal Applications by DG, DSHE based on the Interim Financial Reports (IFRs) attached with statement of eligible expenditures and evidence of achievement of DLIs. Treasury account details will be provided to IDA at the time of negotiations.

7. Documentation under original financing: 100% of original IDA credit is disbursed and this includes US$7.5 million that is in the Designated Account (DA) still to be fully documented. This amount is expected to be fully documented by the Original Financing Closing Date (June 30, 2014). Therefore, the Financing Agreement for the original IDA Credit 4475-BD will not be amended.

8. Disbursement: In order to simplify processes, report-based disbursements’ using the Interim Financial Reports (IFRs) will serve as the basis for withdrawal of funds from the IDA credit. Advances would be made to the Designated Accounts (DAs) for the input based financing part of the credit based on six months projections. The amount to be disbursed under DLI-based financing, , will be fully on reimbursement basis to be paid to the Government treasury.

9. The disbursement on meeting performance targets-DLIs, will also be required to be identified with project expenditures for the agreed eligible expenditure heads to be evidenced by expenditure prepared and submitted by DSHE.

10. Accounting and Reporting: The project will follow GOB Project Accounting Manual in maintaining books of accounts and in complying with monthly, quarterly and annual financial reporting requirements of various government agencies as well as the WB. An off the shelf accounting software has been in operation in the original project to record financial transactions and produce financial information in order to prepare and submit quarterly interim financial reports (IFRs) acceptable to IDA. The same software will be used in the AF as well. The project will provide two sets of Interim Un-audited Financial Reports

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(IFRs), for input and result based financing respectively. The project has been submitting quarterly IFRs for the original project and this arrangement will continue for the input-based part of the AF. For the DLI-based activities, quarterly IFRs will be prepared by the DSHE. Upon achieving the Year 0 result, the DSHE may submit an IFR including expenditures on eligible expenditure heads for the Calendar Year 2013, or a part of it. From Year 1 onwards, quarterly IFRs will be prepared and submitted.

11. External Audit: The annual consolidated financial statements of SEQAEP AF including receipts, expenditures and balance in the DA to be operated by DG, DSHE will be audited by the Foreign Aided Project Audit Directorate of C&AG and the audited financial statements will be submitted to IDA within six months of the end of each fiscal year. DG, DSHE assisted by the Financial Analyst will submit its part of the annual project accounts to the Project Director for its inclusion in the consolidated project financial statements and will be responsible to meet audit queries on the financial transactions carried out by the MEW. A Statement of Audit Needs (SAN) will be agreed with the C&AG extending the audit focuses on testing controls preventing corruption and detecting transactions with corrupt practices. The following audit report will be monitored in the Audit Report Compliance system (ARCS) – see Table 2 below:

Table 2: Audit Arrangements Implementing Agency Audit Type Auditor Deadline

Directorate of Secondary

and Higher Education

(DSHE)

Project’s Annual Financial

Statements including IDA and

GOB financed expenditures

Foreign Aided Project Audit

Directorate under Comptroller &

Auditor General

Six months from

the end of each

fiscal year

12. There are a few audit observations material to IDA on the original SEQAEP, still to be resolved; therefore, the project will prepare an action plan and act on to deal with the audit issues by December 2013. Amounts relating to unresolved audit observation results in questionable costs. At the end of December 2013, the Association will assess and determine if the amounts relating to these audit observation results into ineligible expenditure. In case these amounts become ineligible, the project will have to refund the amounts to IDA. Subsequently, upon successful resolution of the observations, the project will be able to get these amounts back. However, for the AF, the project shall resolve/settle any audit issues within six months of receiving the final audit report.

13. Internal Audit on the basis of a TORs agreed with the Bank will be conducted by a reputed firm of Chartered Accountant for every two years of AF operations. Adequate resource will be included as part of the project costs. The internal audit for main project had not been completed on a timely manner and there is a backlog as such the implementation of AF Internal Audit will need special attention.

14. FM Risks: Overall FM risk is assessed as “Substantial” mainly due to having project activities dispersed across the country and new modalities of financing under the SEQAEP AF. The delay in addressing external audit issues, non-completion of Internal Audit on time, the delay on having the FM staff on board initially and on staff turn-over and some set back on continuous operation of the computerized accounting system as noted during the original project operation, have also been factored into overall project FM risk .

15. Supervision plan: Considering that the overall risk of the projects is “Substantial”, a formal supervision mission will be conducted just after the project effectiveness and thereafter at least every six months. However, and more importantly, the in-country based FMS will provide, as is current practice, on-going FM implementation support on a regular basis. The supervision mission will provide reasonable assurance that adequate financial management arrangements are maintained for the project, both at the DSHE and the SEQAEP PMU. There will also be extended review visits at some of the Upazillas as deemed appropriate. Regular reviews will be carried out to ensure that the expenditures incurred by the project remain eligible for Bank’s funding especially for DLI based financing and the IUFRs are timely submitted with all bank statements along with reconciliations. The project will be included in the CMU’s forensic audit plan.

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Annex 7: Procurement Arrangements

1. Procurement for the proposed project would be carried out in accordance with the World Bank’s "Guidelines: Procurement Under IBRD Loans and IDA Credits" dated January 2011 (Procurement Guidelines); and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated January 2011 (Consultant Guidelines)) and the provisions stipulated in the Project Agreement. 2. All anticipated major procurement of works and consultants’ services have been announced in the General Procurement Notice (GPN), published in the Bank external website and United Nations Development Business (UNDB). 3. Procurement Responsibility: The overall responsibility of project implementation would be with DSHE. 4. Particular Methods of Procurement of Goods and Works: Except as otherwise agreed in the procurement plan, works and goods may be procured on the basis of International Competitive Bidding. Procurement of Goods and Works having estimated value less than the ceiling stipulated in the Procurement Plan may follow National Competitive Bidding (NCB) and Shopping. Direct Contracting (Goods/Works) and Single Source Selection (Consultants) may be allowed under special circumstances with prior approval of the Bank. NCB would be carried out under Bank Procurement Guidelines following procedures for Open Tendering Method (OTM) of the People’s Republic of Bangladesh (Public Procurement Act 2006 - PPA, 1st amendment to PPA (2009) and The Public Procurement Rules 2008, as amended in August 2009) using standard bidding documents satisfactory to the Bank. The “Request for Quotation” document based on PPA is acceptable to IDA for shopping. For the purpose of NCB the following shall apply: Post bidding negotiations shall not be allowed with the lowest evaluated or any other bidder; Bids should be submitted and opened in public in one location immediately after the deadline for

submission; Rebidding shall not be carried out, except with the Association’s prior agreement; Lottery in award of contracts shall not be allowed; Bidders’ qualification/experience shall be mandatory; Bids shall not be invited on the basis of percentage above or below the estimated cost and contract

award shall be based on the lowest evaluated bid price of compliant bid from eligible and qualified bidder; and

Single-stage two-envelope procurement system shall not be allowed.

5. Procurement of non-consulting services: Except as otherwise agreed in the procurement plan, non-consulting services may be procured on the basis of International Competitive Bidding. Procurement of non-consulting services having estimated value less than the ceiling stipulated in the Procurement Plan may follow National Competitive Bidding (NCB). The agencies will carry out such procurement using Bank Guidelines. 6. Community Participation (CP): Water and sanitation facilities, involving deep tube-wells, shallow tube-wells and latrines at the community level estimated cost less than US$5,000 equivalent may be procured through Community Participation. These works ensure that all students in the schools have access to clean drinking water and all girls to safe, private sanitation facilities. These works will be spread over widely dispersed geographical areas across the country and will be implemented throughout the project period through Community Participation (CP). Similarly, the sanitation works with individual contract of very small amount, estimated to cost less than US$5,000 equivalent, will be carried out by the community through a School Managing Committee (SMC) in accordance with agreement between the Project Authority and the SMC, as per existing procedure. A Project Committee at the community level will plan and implement the actual construction works under the overall supervision and monitoring by SMC. Communities will contribute 20 percent of the cost of water and sanitation facilities. In the case of deep tube-wells, communities' contribution will be 10 percent. 7. Methods of Procurement of Consultants’ Services: Selection of Consultants will follow the Bank Consultant Guidelines. The following methods will apply for selection of consultants: Quality- and Cost-Based Selection (QCBS), Quality-based selection (QBS), Fixed Budget Selection (FBS), Consultants’

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Qualification (CQ), Least-Cost Selection (LCS), and Single-Source Selection (SSS). Shortlist of consultants for services estimated to cost less than US$500,000 equivalent per contract may be composed entirely of national consultants. The Procurement Plan will specify the circumstances and threshold under which specific methods will be applicable. 8. Incremental Operating Costs: These costs will include incremental operating costs for office utilities, office supplies and stationeries, operation and maintenance of equipment and vehicles, hiring of vehicles, fuel, office rent, souvenirs, events, bank charges, advertising costs, and salaries and contractual allowances of contracted staff, but excluding salaries of Government officials. 9. Assessment of the Agency’s Capacity to Implement Procurement: Bangladesh has a nodal procurement policy agency and a Public Procurement Act (PPA) 2006 with associated Public Procurement Rules 2008 (PPR) and bidding documents. It created a critical mass of about 39 procurement professionals and, as of now, provided training to over 4800 staff of about 350 organizations. To sustain the reform, with Bank’s assistance, the Government has been implementing a second procurement reform project since late 2007, focusing largely on the implementation and monitoring of PPA including introduction of e-government procurement at key sector agencies. 10. Notwithstanding the above progress over the past years, recently the new Government made a number of amendments to the PPA, part of which were found not consistent with the Bank’s Guidelines, and as such the Bank allowed local procurement using the PPA/PPR with those exceptions. 11. A procurement capacity assessment of DSHE has been carried out with a view to: evaluate the capability of the implementing agencies and of the adequacy of systems in place to administer Bank-financed procurement and assess the risks that may negatively affect ability of the agency to carry out the procurement process. DSHE is the implementing agency of “Secondary Education Quality and Access Improvement Project” and has adequate knowledge on World Bank-financed project. However, in Financial Year (FY) 2011 procurement post review IDA found inappropriate bidding practices in 23 contracts and declared these contracts as misprocurement. The refund amount was US$102,684.60 and the refund process is expected to be completed by Negotiations of AF project. After identification of the inappropriate bidding practice a time bound procurement capacity building action plan has been implemented and DSHE achieved good result over last two years period. The FY2012 and FY2013 procurement post review reports found no serious anomalies in procurements. However, DSHE still has weaknesses in bid evaluation and contract management. In addition to adequate staffing for procurement needs, emphasis also needs to be placed on areas of internal control, documentation, information dissemination, administration of contract including delivery follow-up, payments, handling complaints etc. The project is rated as having “Substantial-Risk” from the procurement operation and contract administration viewpoint. These assessments and agreed action has been captured in the web based Procurement Risk Assessment Management System (P-RAMS). 12. In order to minimize procurement associated risks, the following measures have been agreed with the Government:

i. Procurement focal point (PFP) in DHSE: Previous PFP has been transferred and DHSE has

nominated a new procurement focal point for this Project. The appointed focal point will take necessary training, both on PPR 2008 and Bank Procurement Guidelines. The focal person will help DSHE in day-to-day procurement follow-up, preparation of periodic procurement reporting and mandatory member of the bid evaluation committee.

ii. Procurement Consultant: At present DHSE has a qualified procurement consultant as full time basis. DHSE will continue the service of a qualified procurement consultant as full time basis for the whole period of the project.

iii. e-Government Procurement (e-GP): Central Procurement Technical Unit (CPTU) of Bangladesh has introduced a web-based central e-GP system and it is fully functional. It has been agreed that DHSE will introduce of e-tendering for goods contracts under this project.

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iv. Procurement Training: For a smooth implementation of procurement, adequate procurement training for relevant staff under DHSE is essential. DHSE will prepare and implement a procurement training plan for the project.

v. Introduce a Procurement Risk Mitigation Plan (PRMP) by DHSE through reports submitted to IDA

on a periodic (semi-annual) basis with a set of features as mentioned below. 13. The PRMP will have following features:

i. Alert bidders in pre-bid meeting: DHSE through a notification will alert bidders during pre-bid

meeting on consequences of corrupt practices (fraud and corruption, collusion, coercion, etc.). The alert messages, among others, will include that if bidders are found to have adopted such practices, there may be remedial actions including debarment from bidding processes in conformity with the Bank’s Guidelines. For national competitive bidding, national bidders debarred, under the PPA will not be able to participate. In addition, in the pre-bid meeting, clarification will be provided to bidders to help preparation of bids correctly.

ii. Alert internal officers/staff: DHSE will issue alert letter(s) to all relevant staffs notifying them the

fraud and corruption indicators, and the possible consequences of corrupt and similar behavior in procurement practices and action to be taken against the official staff if they are involved in such practices. Moreover, DHSE will highlight that, in case of noncompliance or material deviation from IDA’s Procurement Guidelines, IDA may take remedial actions (i.e., withdrawal of funds, declaration of mis-procurement) for concerned contracts.

iii. Bid opening minutes: During the same day of bid opening, photocopies of the Bid Opening Minutes

(BOM) with the read out bid prices of participating bidders will be submitted by BEC for circulation to all concerned. For prior review packages, such BOM will be shared with the IDA.

iv. Low competition among bidders and high price of bids: The case(s) of low competition (not solely

based on number of bidders) in ICB and NCB cases, coupled with high-priced bids will be inquired into and further reviewed by DHSE. The review and decision in this regard would be in the context of qualification criteria, the contract size (too small or too large), location and accessibility of the site, capacity of the contractors, etc.

v. Measures to reduce coercive practices: Upon receiving allegations of coercive practices resulting in low competition, DHSE will look into the matter and take appropriate measures. For prior review contracts, observations of DHSE will be shared with IDA, along with the evaluation reports. DHSE may seek assistance from law enforcing agencies to provide adequate security for bidders during bid submission. For ICB contracts, provision for bid submission through international/national courier services will be allowed and confirmation of the receipt of the bid will be informed to the bidders through e-mail.

vi. Rebidding: In case of re-bidding, DHSE will inquire into the matter, record and highlight the grounds

of re-bidding (i.e. corruption or similar, high bid prices etc.) along with recommended actions to be taken. For prior review of cases, all such detailed reports will be sent to IDA.

vii. Filing and record-keeping: DHSE will preserve all records and documents regarding their public

procurement in accordance with provisions of the PPA. These records will be made readily available on request for audit/investigation/review by the Development Partners and the Government.

viii. Publication of award of contract: DHSE will publish contract award information within two

weeks of contract award on its website and Central Procurement Technical Unit’s (CPTU’s) websites with the following information: identity of contract package, date of advertisement, number of bid documents sold, number of bids submitted along with names, bid prices as read out at bid opening, name and evaluated price of each bid, number of responsive bids along with name of bidder, name of bidders whose bids were rejected and brief reasons for rejection of bids, name of

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the winning bidder and the price it offered, proposed completion of date of contract, as well as a brief description of the contract awarded.

14. Procurement Plan: A procurement plan covering all major procurement packages for entire life of the project has been prepared and agreed. It will also be available in the Project’s database and in IDA’s external website for this project. The Procurement Plan will be updated in agreement with DHSE, at least annually, to reflect the actual project implementation needs and adjustments thereof.

15. Review by IDA of Procurement Decisions: The review by IDA of procurement decisions and selection of consultants will be governed by Appendix 1 of the Bank’s Guidelines. For each contract to be financed by credit, the threshold for prior review requirements and post review contracts will be identified in the Procurement Plan. During the first 18 months of the project, IDA will carry out prior review of the following contracts. This prior review threshold will be updated annually based on the performance of DHSE:

i. For Goods. All the ICB Contracts and Direct Contracts irrespective of estimated cost. The NCB

Contracts estimated cost equivalent or more than US$ 1,000,000. ii. For Works. All the ICB contracts and Direct Contract irrespective of estimated cost. The NCB

Contracts estimated cost equivalent or more than US$ 10,000,000. iii. For Non-consulting service. The Contracts estimated cost equivalent or more than US$ 1,000,000. iv. For Consultant’s Services. Prior review will be required for consultants’ services contracts estimated

to cost US$ 500,000 equivalent or more for firms and US$ 200,000 equivalent or more for individuals. All single-source contracts will be subject to prior review by and in agreement with IDA. All Terms of References of the consultants are subject to the IDA’s prior review.

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Annex 8: Safeguards

1. The environmental and social safeguard performance is rated as “satisfactory” based on the due diligence demonstrated by the implementing agency in the past one year in environmental safeguard implementation. SOCIAL SAFEGUARDS: 2. As in the ongoing project, the SEQAEP AF project would finance: (i) PMT-targeted stipends to poor girls and boys to improve equitable access and retention, (ii) grants to institutions (schools and Madrasahs) for enhancing service delivery and education quality, and (iii) operating and services costs associated with implementation and monitoring of project activities. 3. The project does not require the acquisition of private land; nor will it displace people from private or public lands or have any adverse impacts on livelihoods. Hence OP 4.12 Involuntary Resettlement will not be triggered for the project. Construction of tube-wells and latrines will strictly be limited to within school premises. 4. The project will operate in areas where tribal people live, and will cater to tribal children. The tribal population living in the project area is, however, quite small. Out of the 121 upazilas in the Bank-funded project area, only 19 upazilas have significant tribal households: 7.6% of children in those 19 upazilas come from tribal households. The overall indigenous population in the 121 project upazilas is less than 2%. Nevertheless Bank OP 4.10 Indigenous People has been triggered for this phase of the project as was done for the original project. The existing legal covenants on the social safeguards would continue to apply. The Social Management Framework (SMF) has been updated to reflect lessons learned from the previous project and the scaled-up operation in 90 new upazilas. 5. Social Inclusion: The tribal people lives in remote or hilly areas of the country and are found to be among the poorest quintiles. Hence the AF, like the original project will deem all indigenous children in the project area eligible for the stipend program, regardless of their individual poverty status. The project adopts a similar policy towards disabled children as well. Besides this the PMT process is targeted towards the poorest households, based on clear and objective criteria. 6. The Local Government Engineering Department (LGED) has maintained a database on the enrollment of tribal children, retention rates and performance since the beginning of the original project. The data is gender segregated. LGED will continue to collect data in similar fashion, analyze, document and report it regularly to the MOE and to the Bank. The Bank will receive on a semi - annual basis a report on the above issues. The lessons learned from the previous reports have been used to update the SMF. 7. Gender: The safety of adolescent girls traveling to school has been a general issue of concern in the sub-continent given the propensity for eave-teasing and in some cases more serious criminal and offensive behavior of men towards young girls. The project is cognizant of these challenges and based on the learning from the previous phase will include some preventive measures to improve the safety and security of girls traveling to schools. A brief assessment will be carried out to understand the types and level of challenges facing the girls and some options will be explored with the girls, teachers and concerned parents to design preventive measures. For example the Parent Teacher Associations can together identify clusters and assign a parent to accompany each group of girls to the schools each week. A group of community elders can be incentivized to form “walking-groups” for health benefits and also for accompanying groups of girls to schools. The schools may rent designated “rickshaw vans” to pick up students who have to walk from afar. The assessment and recommendations will be incorporated in the updated SMF. 8. Information and Education Campaign: The project has been engaging with a local NGO to carry out an Information and Education campaign to raise awareness and mobilize targeted stakeholders. The IEC uses several modalities as part of its outreach including local media, posters, town-halls, miking and focus groups. In areas where tribal populations live, the IEC is focused in specific needs and is carried out in local languages in a culturally compatible manner.

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9. Social Accountability: The project will adopt modalities to imbibe and improve social accountability approaches. The IEC will be used for awareness-raising of these issues as well. Citizen’s engagement in gauging the success of the project is crucial. Community scorecards, grievance committees and the already established Parent Teacher Associations can be used as some tools and platforms for example. There are also provisions for third party monitoring to garner an independent assessment of the project. ENVIRONMENTAL SAFEGUARDS 10. Activities with Environmental Footprint: The AF project’s “improving school facilities” sub-component will provide safe drinking water (tube-wells, shallow tube-wells and other alternative sources) and sanitation facilities (twin latrines for boys and girls with running water facilities) to targeted schools based on agreed guidelines and provisions in the EMF. Beneficiary institutions for tubewell and toilet will be selected on need-basis. On a pilot basis, the activities will include WASH block with modern amenities to one school in each of the the newly selected 90 upazilas. 11. Possible Environmental Impact & Environmental Category: As in the current project, the main environmental concern for the proposed AF project is to ensure the provision of safe drinking water and sanitation facilities to the students. Arsenic content poses the major environmental and health risk. In absence of proper testing facilities and alternative option, students may be subject to contact with contaminated water in the arsenic affected areas of the project. The other environmental risks observed from the original projects include: (i) possible adjacent location of toilets to tube-wells leading to groundwater contamination, and (ii) lack of proper design, construction and maintenance of tube well and toilet. Considering the nature and magnitude of potential environmental impacts from installation of sanitation facilities and safe drinking water and scope for successful implementation of mitigation measure, the proposed operation would be classified as category ‘B’ for AF.

12. Lessons Learned: The environmental safeguard performance is rated as “moderately satisfactory” based on the due diligence demonstrated by the implementing agency in the past one year in environmental safeguard implementation. The need for strong environmental management will be continued under the AF. Strengthening monitoring for the ISF, regular reporting on arsenic test and efficient database management are the key areas of improvement under AF. The project unit will do due diligence in reporting and environmental safeguard management in the field. A part time Environmental Specialist is deployed in the project and the performance of environmental management is expected to continue improving under the AF.

13. Approach to ensure Safe Drinking water: Activities would include testing of existing and new project schools tube-wells for arsenic, and manganese contamination, bacteriological tests for alternative sources of water and distribution of awareness and communication materials. Given the scope of the additional financing II, the Environmental Management Framework (EMF) adopted for the original SEQAEP project adopted by the implementing agency will also be applicable to the Additional Financing. The EMF outlines the environmental management procedures that already practiced in original project during the construction period and also in the operation & maintenance period to minimize the negative impacts and implementation of enhancement measures.

14. Implementation Arrangement: The overall responsibility of project implementation rests with the Directorate of Secondary and Higher Education (DSHE) through a Project Unit (SEQAEP Unit). An Additional Director will be responsible for the overall ISF sub-component. SEQEP will continue the MoU signed with DPHE to obtain technical services for safe water testing of tube-wells and other activities. Besides the routine monitoring by field test kits, SEQAEP will hire the services of quality lab to collect and test 5% of total sample by laboratory analysis method. The annual Arsenic test report and monitoring report should be shared with World Bank with due diligence. To record and the water quality testing, project will take the support of DPHE and BANBEIS. DPHE Upazilla level Sub-Assistant Engineer will also support the School Management Committee in supervision of construction work of water supply and sanitation facilities.

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Annex 9: Operational Risk Assessment Framework (ORAF)

Stage: Appraisal

1. Project Stakeholder Risks

1.1. Stakeholder Risk Rating Low

Description: Risk Management:

Primary stakeholders in the project are secondary educational institutions, communities, and the Government. Given SEQAEP is a third generation education project building on the success of the pioneering female school stipends program, there is very limited stakeholder risk. Expansion of the project to new institutions in new upazilas and new school communities would demand greater communication for them to understand the project interventions.

Continued dialogue with relevant stakeholders, including different levels of Government and local communities/schools through community mobilization, communications, consultations, and regular follow up.

Resp: Client

Stage: Preparation & Implementation

Recurrent:

Due Date: Frequency: Status: Not Yet Due

2. Implementing Agency Risks (including fiduciary)

2.1. Capacity Rating Substantial


Key risk is competency and continuity in the position of the project director, MEW Director and their capacity to effectively manage staffing, consultants, implementing partners and field level stakeholders. Other risks include staff vacancies and limited capacity in administrative, technical and fiduciary aspects of project implementation. This becomes even more important when the project plans to scale up operation in additional institutions and upazilas under AF.

SEQAEP implementation arrangement includes partnerships with other government agencies (LGED, Agrani Bank, BANBEIS, DPHE) and specialized agencies such as Biswo Shahitto Kendro (BSK) to provide technical and managerial support in implementation of various components under the project. SEQAEP AF would continue to employ implementing partners. There will be some refinements in the organogram to reflect the enhanced DSHE role and recommendations from the Mid-Term Review. The Bank will be involved in continuous dialogue with the counterparts to see that project staffing, specially project director and MEW Director, is appropriately managed. The project also would have technical assistance from individual consultants for FM, procurement, communication and M&E including ICT technology.

Resp: Both

Stage: Implementation

Recurrent:


2.2. Governance Rating Substantial


Providing grants/stipends to schools and students are a critical element of the project. Therefore, the main governance issues emanate from potential misrepresentation of data to identify project beneficiaries and once identified, in transferring funds to potential beneficiaries.

Project will follow agreed guidelines and procedures as per Project Operations Manual. Selection of PMT stipends beneficiaries already follows a systematic targeting scheme (Proxy Means Testing) carried out by a third party PMT Administrator (LGED) and also involves appeals and validation schemes. Selection of schools would be based on data from independent sources (such as BANBEIS or Exam Boards) and also on verification process. Disbursement of stipends and grants are based on award confirmation form (ACF) system that collects and processes data on compliance criteria for each student and school every academic semester.

Resp: Client


Recurrent:


Fraud and Corruption (sub-category of Governance risk)

Rating Substantial


Financial management (FM) risk is substantial given the project design which delivers stipends and grants to a large number of students and schools. Procurement risk is also substantial given that the implementing agency has shortage of skilled procurement staff and the project is not immune to systemic issues affecting procurement efficiency and performance.

SEQAEP AF addresses FM issues with placement of a full-time FMS specialist, trained accounts officers, disbursement cell at Agrani Bank, disbursement of funds through the Banking system including the use of cash card that enables immediate reconciliation of project funds, requirements for reconciliation reports from the bank branches, use of compliance monitoring including ICT-based schemes and audits (FAPAD, forensic, and social audits at the school/community level). Procurement risk would be managed through deployment of qualified procurement consultant to represent all procurement committees; training of procurement officers and project staff; prior and post-reviews of procurement contracts by the Bank team; monitoring by the World Bank team on the accountability of procurement staff and consultants vis-à-vis project director and MEW director; and disclosure of all procurement transactions on project website.

Resp: Client


Recurrent:


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3. Project Risks

3.1. Design Rating Moderate


The main risk associated with the AF project is the uncertainty with institutionalizing key project interventions (PMT stipends, developing reading habit (DRH), additional classes (AC) support in English, Science and Maths subjects), sustaining M&E arrangements and continued buy-in for DLIs in certain areas of project implementation.

In order to consolidate and institutionalize these interventions (PMT, AC, DRH) and M&E arrangements, it is important that the AF provide appropriate incentives and adequate time. Disbursement Linked Indicators (DLIs) in the AF will be used to link portion of the IDA funding to a set of agreed outputs/indicators for the consolidation/institutionalization. Details of the DLI modality – including indicators, pricing, and verification and fund-flow arrangements have been discussed and agreed with the borrower.

Resp: Client


Recurrent:

Due Date: Frequency:

Status: Not Yet Due

3.2. Social and Environmental Rating Moderate


Implementation agency may have limited capacity to review and update the existing social and environmental guidelines for safe drinking water and sanitation facilities in LCs, and a social inclusion plan to address gender, IP and poverty.

SEQAEP AF will continue to use existing safeguard policies. It will continue to benefit from partnership with DPHE on monitoring of environmental guidelines on sanitation and safe drinking facilities and with LGED PMTA on inclusion of IP, poverty and gender in the selection and tracking of student stipend beneficiaries.

Resp: Both

Stage: Recurrent:

Due Date: Frequency: Status: In Progress

3.3. Program and Donor Rating Moderate


Because of multiple discrete projects in secondary education, there may be issues of coordination. GOB’s interest in scaling-up SEQAEP to additional 90 upazilas requires objective selection of these new upazilas.

The ongoing SEQAEP project coves specific geographic areas (125 upazilas and 7000 schools) and the main interventions such as the PMT stipends, and quality grants/incentives schemes are quite unique to SEQAEP. The scaling-up of these interventions in 90 additional upazilas is being managed carefully through: (i) use of objective criteria (such as the human opportunity index) to select the upazilas from government stipend project areas; and (ii) phased-in implementation in these upazilas taking into account the existing capacity of the implementing agency. In general, long-standing partnership between GOB and IDA (since the early 90s) and mutual commitment is expected to support both project preparation and implementation.

Resp: Bank

Stage: Preparation & Implementation

Recurrent:

Due Date: Frequency: Status: In Progress

3.4. Delivery Monitoring and Sustainability

Rating Moderate


Field level service delivery and monitoring relies on the role of SMCs/PTAs and USEOs to carry out their management, monitoring and communications functions.

In addition to the central level partnerships with specialized agencies, the proposed AF project will provide results-based grants to USEOs as incentives/operating expenses to carry out data collection, verification and timely submission to project unit and its implementing partners. AF project would provide PTA school grants to enable PTAs to mobilize communities (EACM), and carry out social audits; SMC school grants to enable internet-based communications with project and implementing partners (ICT grants), and to mobilize matching grants to implement institutional facility (ISF).

Resp: Client


Recurrent:


4. Overall Risk

Implementation Risk Rating: Moderate

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Annex 10: Governance and Accountability Action Plan (GAAP)

1. Project preparation has identified the following key governance and accountability risks at the project level for which a number of mitigation measures are proposed in the GAAP Matrix. While the overall responsibility for the GAAP implementation will rest with the DSHE, SEQAEP Unit and MEW, the GAAP will be monitored regularly against agreed actions as reflected in the project progress reports and semi-annual World Bank mission aide memoires (Table 1 on risks and mitigating actions).

2. Project Management and Capacity. SEQAEP project implementation depends critically on capacity of the Project Unit to effectively manage staffing, consultants, implementing partners and field level stakeholders. Staff vacancies, frequent turnovers and limited capacity in administrative, technical and fiduciary aspects make it imperative that the government partner with specialized agencies in service delivery and monitoring aspects. This becomes even more important when the project plans to scale up operation in additional institutions and upazilas under AF. While the partner agencies will deliver services in certain areas, an effective governance interface between the project management and these specialized agencies to ensure their accountability will also be key to the success of the project.

3. Field Level Capacity and Accountability. The key actors at school level are head-teachers, school management committee (SMCs), Parent Teacher Associations (PTAs) and Upazila Secondary Education Offices (USEOs) with guidance from Zonal Directors and District Education Offices. It is important that head-teachers, SMCs and PTAs are strengthened with clearly assigned roles and responsibilities, particularly in the use of school grants for school level interventions and ensuring compliance with the renewable Cooperation Agreement signed with SEQAEP Unit. Proper selection of stipend recipient students, following the criteria for receiving stipend, implementation of various quality enhancing measures, including additional classes and other activities at the field need close monitoring and supervision from various actors. Building their capacity to effectively discharge these responsibilities will be important. It will be equally important to put in place monitoring and verification mechanisms to ensure that criteria and procedures for beneficiary selection (across all sub-components) are enforced.

4. Financial Management. As per design, the project delivers grants and stipends to a large number of schools and students, with the potential risk of misuse of the grants and misrepresentation of the data (e.g., inflating student number). FM risk is substantial. It is necessary to manage this risk carefully from DSHE as well as at the school and upazila level.

5. Procurement Capacity and Transparency: Procurement risk is also substantial given that the implementing agency has shortage of skilled procurement staff and the project is not immune to systemic issues affecting procurement efficiency and performance. Therefore, it is necessary to ensure that there is adequate procurement capacity and transparency in procedures.

6. Social Accountability: Transparency and Citizens Participation. Given project interventions are at school/community level, there are challenges associated with public information disclosure, citizens’ oversight and vigilance, inclusion of various groups of people including ethnic and religious minorities, grievance redress mechanism, and clarity in roles and reporting arrangements. Much of it comes from political interference in school governance and mostly through SMCs. While the schools need political support in their respective communities, caution needs to be taken to ensure transparency in all these areas. SMCs will be trained on their roles and responsibilities to fend off undue extraneous interferences. SEQAEP also relies strongly on PTAs for school level monitoring (teacher attendance, funds utilization, social audits) and community participation. Thus, it is important to continue supporting PTAs and SMCs in a systematic manner with adequate resources.

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Table 1: GAAP Matrix for SEQAEP AF Issues / Risk Mitigating Actions to be taken Agency

Responsible Project Management and Capacity 1. Key risk is competency and continuity in the

position of the project director, MEW Director and their capacity to effectively manage staffing, consultants, implementing partners and field level stakeholders.

2. Other risks include staff vacancies and limited capacity in administrative, technical and fiduciary aspects of project implementation. This becomes even more important when the project plans to scale up operation in additional institutions and upazilas under AF.

1.1 Continuous dialogue between GOB and WB to ensure that project staffing, especially Project Director, MEW Director and other key positions, are filled with candidates meeting qualification mentioned in job description. 1.2 Financing Agreement will include the requirement for adherence to agreed TORs with respect to deployment and transfer of a Project Director and MEW Director. 2.1 Project would continue to have specialized implementing partners such as LGED PMTA, BSK for quality improvement, BANBEIS for project MIS Cell and Agrani Bank for funds disbursement which will take up responsibilities based on comprehensive ToRs. Their activities will be monitored both by stakeholders at the field such USEOs, SMCs and PTAs and from the project office. 2.2 Competent individual consultants for FM, procurement, and M&E including ICT technology will be employed.

World Bank MOE DSHE MEW Technical Assistance agencies

Field Level Capacity and Accountability 3. Without adequate support and incentives for

SMCs/PTAs and USEOs to carry out their management, monitoring and communications functions, service delivery and monitoring at the field level will not be effective.

4. There is potential for misreporting on PMT applications and on school level data to influence improper selection of students and schools for various project interventions.

3.1 AF the project will provide operating expenditure grants to USEOs as incentives to carry out data collection, verification and timely submission to project unit and its implementing partners. SMCs and PTAs receive school grants to mobilize communities (EACM), carry out social audits, and operate internet-based communication with project and implementing partners. SMCs and PTAs will be trained to perform these responsibilities. 4.1 PMT stipend selection includes application booth operations at the field level, computerized scoring of welfare status, validation exercise to address inclusion errors, appears process to address exclusion errors, and compliance monitoring to verify educational eligibility. Selection of schools for targeted programs would be based on verified data and compliance with agreed guidelines.

SEQAEP Unit DSHE/MEW USEOs SEQAEP Unit LGED, SMC PTA

Financial Management 5. FM risk is substantial given project design that

delivers grants and stipends to a large number of schools and students, with the potential for misuse of the grants and misrepresentation of the data (inflation of student number).

5.1. Establishment of Disbursement Cell at Agrani Bank 5.2. Deployment of a full-time FMS consultant as chief of FM Unit 5.3. Yearly full compliance monitoring of all SEQAEP institutions receiving project

benefits by MEW with support from project MIS cell 5.4. Disbursement of funds through the banking system including the use of cash card

that enables immediate reconciliation of project funds 5.5. FAPAD Audits 5.6. Annual social audit by PTAs 5.7. Prior clearances by World Bank for workshops and training 5.8. Setting up and use of computerized financial system

DSHE SEQAEP Unit MEW Project MIS Cell Agrani Bank Other Implementing Partners, Audit firms,

Procurement Capacity and Transparency 6. Procurement risk is also substantial given that

the implementing agency has shortage of skilled procurement staff and the project is not immune to systemic issues affecting procurement efficiency and performance.

6.1. Full-time qualified procurement consultant to support both procurement units at SEQAEP Unit and MEW and to work in all procurement committees

6.2. Monitoring by the World Bank team on the accountability of procurement staff and consultants vis-à-vis project director and MEW director

6.3. Prior and post-reviews of procurement contracts by the Bank team 6.4. Disclosure of all procurement transactions on DSHE website

MOE DSHE SEQAEP MEW

Social Accountability: Transparency and Citizens Participation 7. There are challenges associated with public

information disclosure, citizens’ oversight and vigilance, grievance redress mechanism, and clarity in roles and reporting arrangements.

8. There is potential for political interference at the SMC level, therefore, SEQAEP also relies strongly on PTAs for school level monitoring (teacher attendance, funds utilization, social audits) and community participation.

9. Potential risks on compliance with grants

utilization at the school level

7.1 Project implementing agency to comply with RTI (right to information) and disseminate information to community through various channels (such as school report card, community events related to schools, display of school performance in public places in schools, communities and upazila offices and project website). 8.1 Bank Team to monitor compliance of project activities as per approved project Implementation Manual; SMCs/PTAs to be strengthened through SMC/PTA grants (ICT-based communication, social audits); SMCs and USEOs to display school performance information (physical and financial) at a publicly visible place; and SMS monitoring of teacher absenteeism, receipts of stipends and grants, utilization of grants 9.1 Award Conformation Forms (ACF) – the instrument used by the project to confirm the awards and disburse the funds - would verify that grants in previous semesters were utilized appropriated as per Cooperation Agreement.

DSHE SEQAEP Unit World Bank SMCs PTAs USEOs RTs BANBEIS

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Annex 11: List of New Upazilas under SEQAEP AF

1. Human Opportunity Index (HOI) is considered as the targeting indicator to rank upazilas for the following :

• HOI combines schooling opportunity (both school participation and completion in secondary level for

appropriate age-group) as well the circumstances (or determinants) that are correlated with schooling opportunity using MICS 2009 household survey data collected by BBS.

• HOI serves the purpose of the project development objective that is to improve equitable access and completion of secondary education for children from under-served areas. It accounts for the factors that are associated with opportunity of access and completion (poverty, education, location, gender and other household features) in one indicator. It is based on opportunity and equality framework which attempts to combine average rate of secondary education opportunity and how equally this opportunity is distributed in that upazila.

• HOI methodology is widely accepted and is used in more than 50 developing countries (in Latin America, Africa and South Asia including Bangladesh).

• HOI is based on MICS data that is representative at the upazila level. MICS provides comprehensive information of children who either have never enrolled or dropped out of school as well as their household level variables (poverty proxy indicators, parents’ education, siblings, geographic, and gender).

2. All upazilas are first ranked from most to least disadvantaged ones as measured in terms of HOI. Existing SEQAEP upazilas and ADB supported upazilas are excluded from eligibility for new SEQAEP upazilas. Some adjustment has been made to reflect the need for a geographic balance. At least one upazila per district is selected, with a few exceptions. Based on this, the list of 90 upazila is presented in Table 1 below.

Table 1: Additional Upazilas under AF project No. Division District Upazila HOI Score Overall Rank

1 Sylhet Habiganj AJMIRIGANJ 5.7 8 2 Sylhet Habiganj BAHUBAL 16.2 78 3 Sylhet Habiganj MADHABPUR 7.2 15 4 Sylhet Maulvibazar RAJNAGAR 16.1 76 5 Sylhet Sunamganj BISHWAMBARPUR 8.7 26 6 Sylhet Sunamganj CHHATAK 8.8 27 7 Sylhet Sunamganj DAKSHIN SUNAMGANJ 8.1 21 8 Sylhet Sunamganj DERAI 13.3 60 9 Sylhet Sunamganj JAGANNATHPUR 12.8 53

10 Sylhet Sunamganj JAMALGANJ 9.5 32 11 Sylhet Sunamganj SULLA 9.3 30 12 Sylhet Sunamganj TAHIRPUR 3.2 2 13 Sylhet Sylhet JAINTIAPUR 10.4 35 14 Sylhet Sylhet SYLHET SADAR 14.6 66 15 Rajshahi Bogra SHIBGANJ 12.8 54 16 Rajshahi Dinajpur BIRAL 14.6 67 17 Rajshahi Gaibandha PALASHBARI 12.9 56 18 Rajshahi Kurigram CHAR RAJIBPUR 9.7 33 19 Rajshahi Naogaon ATRAI 11.7 45 20 Rajshahi Natore SINGRA 12.4 51 21 Rajshahi Nilphamari NILPHAMARI SADAR 13.1 58 22 Rajshahi Pabna FARIDPUR 15.9 73 23 Rajshahi Panchagarh DEBIGANJ 13.6 62 24 Rajshahi Rangpur TARAGANJ 14.7 69 25 Rajshahi Sirajganj ROYGANJ 12.2 48

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No. Division District Upazila HOI Score Overall Rank 26 Rajshahi Sirajganj ULLAH PARA 14.1 64 27 Rajshahi Sirajganj SHAHJADPUR 14.3 81 28 Rajshahi Thakurgaon RANISANKAIL 16.1 77 29 Khulna Bagerhat SARANKHOLA 13.3 61 30 Khulna Chuadanga CHUADANGA SADAR 12.1 47 31 Khulna Jessore KESHABPUR 20.3 88 32 Khulna Khulna RUPSA 18.6 83 33 Khulna Kushtia KHOKSA 16 75 34 Khulna Magura MAGURA SADAR 22.1 90 35 Khulna Satkhira DEBHATA 17 80 36 Dhaka Dhaka KERANIGANJ 19.5 84 37 Dhaka Faridpur SALTHA 11.3 43 38 Dhaka Gopalganj GOPALGANJ SADAR 15.4 72 39 Dhaka Kishorganj AUSTAGRAM 5.8 9 40 Dhaka Kishorganj BAJITPUR 11.2 39 41 Dhaka Kishorganj BHAIRAB 14.6 68 42 Dhaka Kishorganj ITNA 6.6 11 43 Dhaka Kishorganj KATIADI 8.6 25 44 Dhaka Kishorganj MITHAMAIN 7.2 16 45 Dhaka Madaripur KALKINI 18.4 82 46 Dhaka Manikganj SINGAIR 19.9 86 47 Dhaka Munshiganj TONGIBARI 19.7 85 48 Dhaka Mymensingh GAURIPUR 15.3 71 49 Dhaka Narayanganj BANDAR 4.5 5 50 Dhaka Narsingdi NARSINGDI SADAR 12.7 52 51 Dhaka Netrakona ATPARA 10.5 36 52 Dhaka Netrakona KHALIAJURI 7.3 17 53 Dhaka Netrakona MADAN 9.2 29 54 Dhaka Netrakona NETROKONA SADAR 13.2 59 55 Dhaka Rajbari GOALANDA 14.9 70 56 Dhaka Shariatpur SHARIATPUR SADAR 11.2 40 57 Dhaka Tangail MADHUPUR 15.9 74 58 Chittagong Bandarban ALIKADAM 5.3 7 59 Chittagong Bandarban LAMA 7.3 18 60 Chittagong Bandarban NAIKHONGCHHARI 4.1 3 61 Chittagong Bandarban ROWANGCHHARI 11.9 46 62 Chittagong Bandarban RUMA 2.7 1 63 Chittagong Bandarban THANCHI 4.2 4 64 Chittagong Brahmanbaria ASHUGANJ 11.2 41 65 Chittagong Chandpur HAIM CHAR 14.1 65 66 Chittagong Chittagong SITAKUNDA 20.2 87 67 Chittagong Comilla TITAS 16.7 79 68 Chittagong Cox's Bazar COX'S BAZAR SADAR 12.8 55 69 Chittagong Cox's Bazar KUTUBDIA 9.9 34 70 Chittagong Cox's Bazar PEKUA 5.2 6 71 Chittagong Cox's Bazar RAMU 11.2 42 72 Chittagong Khagrachhari DIGHINALA 9.3 31 73 Chittagong Khagrachhari LAKSHMICHHARI 6.1 10 74 Chittagong Khagrachhari MAHALCHHARI 11.5 44 75 Chittagong Khagrachhari MANIKCHHARI 8.4 22 76 Chittagong Khagrachhari PANCHHARI 13 57 77 Chittagong Noakhali SUBARNACHAR 13.7 63 78 Chittagong Rangamati BAGHAICHHARI 7 14 79 Chittagong Rangamati BARKAL 8.5 24 80 Chittagong Rangamati BELAI CHHARI 6.9 13 81 Chittagong Rangamati JURAI CHHARI 7.5 20

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No. Division District Upazila HOI Score Overall Rank 82 Chittagong Rangamati KAWKHALI (BETBUNIA) 12.2 49 83 Chittagong Rangamati LANGADU 8.9 28 84 Chittagong Rangamati NANIARCHAR 10.9 38 85 Barisal Barguna PATHARGHATA 21 89 86 Barisal Barisal HIZLA 12.3 50 87 Barisal Bhola BURHANUDDIN 10.8 37 88 Barisal Bhola LALMOHAN 6.8 12 89 Barisal Bhola MANPURA 7.3 19 90 Barisal Patuakhali KALAPARA 17.3 81

Source: Calculation of HOI using Multiple Indicator Cluster Survey of 2009 (MICS 2009), fielded by Bangladesh Bureau of Statistics (BBS).

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Annex 12: PMT Scheme

1. The Government of Bangladesh (GoB) introduced a poverty-targeted stipend program to address large disparities across different income groups in Secondary Education Quality and Access Enhancement Project (SEQAEP) that covers 125 upazilas in the country. Under SEQAEP, proxy-means testing (PMT) method, which generates a welfare score for applicants based on a set of observable household characteristics, was developed and implemented. PMT stipends and tuition program is detailed in the PMT stipends manual (fuller description of the PMT scheme is found in the original project appraisal document (PAD)). Implementation experience (including validation exercise) on the PMT selection process indicates that some non-poor students are incorrectly included in and some poor-children are incorrectly excluded from the scheme. As part of the continuous effort to enhance targeting efficiency (to reduce inclusion and exclusion errors), PMT beneficiary selection procedures, including specific measures such as PMT formula, awareness, booth operations, training and data processing has been updated during the Mid-Term Review in 2011. It was discussed and agreed during the Additional Financing (AF) pre-appraisal mission that the implementation of PMT stipend program and technical properties of PMT model should be further reviewed and updated as part of the continuous effort to enhance targeting efficiency and improve implementation.

2. Implementation of PMT program: Implementation of the PMT stipends scheme has been successfully managed by the PMTA under LGED. While no substantial changes are required, a few marginal changes are proposed based on lessons learnt. The proposed changes will be incorporated in the revised PMT stipends manual.

3. PMT Validation: SEQAEP has implemented two rounds of PMT validation surveys in 2009 and 2010. These surveys aimed (i) to validate if the information provided by applicants are accurate or not, and (ii) to estimate the size of inclusion and exclusion errors. Findings from the PMT validation surveys indicate that the overall inclusion error during implementation is about 14%. These surveys have been implemented by a consulting firm after the booth operation has been completed.

4. Under the AF project, the PMT validation would be conducted immediately after or during the booth operation to be more effective in preventing potential false reporting by applicants. Under the proposed new arrangement, PMT validation enumerators will join the booth operation and conduct validation by visiting randomly selected applicants households. Any intentional false reporting would result in ineligibility of their applications, and potentially ineligibility of the all applicants from the same booth if such a false reporting occurs systematically for a large proportion of applicants in the same booth. The applicants who are declared through validation would not be able to apply for the PMT for two years. The purpose of the sanction is for strengthening deterrence for false reporting. Therefore, it is the community’s and the PTA’s responsibilities to ensure that all the applicants correctly understand these rules and provide honest information.

5. This PMT validation mechanism is expected to be implemented from 2013 booth operation. A consulting firm would be expected to undertake the task on a sample basis in 2013 for testing if the mechanism would work. From 2014, it is expected that BANBEIS would take the responsibility and conduct the validation checks on a census basis.

6. Update of the PMT model: The weights in the welfare scores in the PMT model were originally determined using a statistical regression analysis of consumption expenditure based on the Household Income and Expenditure Survey (HIES) 2005, and were updated at the Mid-Term Review by using HIES 2010. The AF mission has reviewed and updated the PMT model by revising the list of variables used for predicting the poverty status and their weights. The model continues to be constructed on HIES 2010. The list of variables has been updated in order to simplify the data collection while maintaining the technical accuracy of the PMT model. Main changes include: (a) reduction of the number of variables for simplicity of data collection, (b) modifying the way of asking questions to minimize reporting errors, (c) changing the weights of the variables as a result of above

49

mentioned changes, (d) introducing mock questions that are asked to households but not used in the model in order to manage the effect of potential false reporting, e) reflecting geographical difference in poverty level through district level weights, and f) modifying the PMT cut-off of the poor to reflect decreasing trend of national poverty rate. The definition of the poor is defined as the households below the national poverty line (40th percentile of PMT score is 7.44046; log of per capita consumption). The PMT questionnaire will be updated for taking these changes into consideration. The updated weights of the variables as well as the district-level weights are shown in Table 1.

Table 1-1: Weights of each variable for PMT

Variable HIES 2005 HIES 2010

MTR HIES 2010 AF

Division grouping: Khulna, Barisal, Rajshahi -0.1631 -0.0879 Total land owned > 0 & <= 1.5 acres 0.0847 0.0435 Total land owned > 1.5 acres 0.2580 0.1272 0.0965 Head Agriculture day laborer -0.0883 -0.1006 -0.0772 Head Non-Agriculture day laborer -0.0596 -0.0590 -0.0561 Non Head Agriculture day laborer in HH -0.0348 -0.0390 Non Head Non-Agriculture day laborer in HH -0.0385 -0.0627 Own at least three Cattles 0.0549 0.0803 0.0796 Wall-CI Sheet/Wood -0.1060 -0.1017 -0.0680 Wall-Mud Brick -0.1374 -0.0574 -0.0811 Wall-Hemp/hay/bamboo -0.1654 -0.1021 -0.1496 Roof-CI Sheet/wood -0.1899 -0.1888 -0.1902 Roof: Hemp/hay/bamboo -0.2248 -0.2033 -0.2288 Sanitary-Water Seal-Pacca Toilet 0.1153 0.0943 Permanent Kacha Toilet 0.0832 0.0411 Temp Kacha Toilet 0.0673 0.0157 Own Tubewell for Drinking Water 0.1035 0.0379 No electricity -0.0664 -0.0434 -0.0397 TV 0.1196 0.1431 0.1285 Own Home Phone 0.2577 0.2476 Mobile Phone 0.1468 Bicycle 0.0470 0.0721 0.0509 Number of rooms in house is 2 0.0696 0.1162 0.1137 Number of rooms in house is 3 0.1281 0.1804 0.1792 Number of rooms in house is 4 or more 0.2376 0.3015 0.3204 Children <15yrs in household=1 -0.0985 -0.0998 -0.2169 Children<15yrs in household=2 or 3 -0.1786 -0.1518 -0.3841 Children<15yrs in household=4 or more -0.2638 -0.2199 -0.5791 Number of Adults >=15 yrs is 2 -0.1089 Number of Adults >=15 yrs is 3 -0.1889 Number of Adults >=15 yrs is 4 -0.3186 Number of Adults >=15 yrs is 5 -0.3838 Number of Adults >=15 yrs is 6 or more -0.4219 Household size (2 members) -0.1729 -0.1469 Household size (3 members) -0.3048 -0.2672 Household size (4 members) -0.3961 -0.3642 Household size (5 members) -0.4676 -0.4501 Household size (6 members) -0.5165 -0.5222 Household size (7 members) -0.5500 -0.5632 Household size (8 members) -0.5924 -0.5946 Household size (9 or more members) -0.6374 -0.6337 Head education level - grade 5 to 9 completed 0.0798 0.0718 0.0692 Head education level - SSC_HSC 0.1088 0.1668 0.1724 Head education level - BA plus 0.1907 0.1920 0.2207 Spouse education level - SSC_HSC 0.1154 0.1184 0.1072 Spouse education level - BA plus 0.2671 0.2322 0.2419 Remittance from Abroad 0.1486 0.1443 0.1555 Distressed Household Head -0.0387 -0.0430 -0.0378 Constant 7.4876 7.4384 R-squared 0.5800 0.5078 0.5674

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Table 1-2. District-level PMT weights

District District Weights




Bandarban 8.1244 Pabna 8.0101 Nilphamari 8.0345 Dhaka 8.0112 Barguna 8.0734 Rangamati 8.0823 Sunamganj 8.1475 Nawabganj 8.0212 Barisal 7.7054 Jessore 7.7292 Netrokona 8.0845 Moulvibazar 8.0897 Bhola 8.0554 Thakurgaon 8.0292 Pirojpur 7.7206 Tangail 8.0087

Bogra 8.0014 Jhenaidah 7.9457 Ghazipur 7.9667 All other districts

7.8573

Brammonbaria 8.0054 Khagrachhari 8.0823 Naogaon 8.0632 Chandpur 7.6824 Khulna 7.9335 Habiganj 8.1339 Chittagong 8.1264 Kishoreganj 8.1238 Noakhali 8.3417 Netrokona 8.0834 Narail 8.0586 Magura 7.7421 Sylhet 8.1693 Kushtia 8.3324 Manikganj 8.0297 Cox's Bazar 8.107 Norshingdi 8.0819 Meherpur 8.0682

7. Exclusion and Inclusion Errors and Misreporting: Using the updated PMT model with eligibility cut-off score at 40th percentile, exclusion error is estimated to be 32 percent, of which, 71 percent falls in the 3rd or 4th decile groups, and inclusion error is estimated to be 22 percent, of which, 67 percent belongs to the 5th and 6th decile groups (Table 1-3). Incidence of errors from the proposed PMT model is higher than that from the previous model estimated in 2008; however, the model is estimated to minimize the systemic measurement error and bias occurred during the implementation of 4 years of PMT operation. Certain variables, such as type of toilet and household size, would decrease exclusion errors and inclusion errors of PMT model, however, validation exercise conducted in 2011 found that these variables are likely to be misreported, leading to exclude the targeted poor and include the non-poor. Therefore, these variables are excluded from the model. Furthermore, we expect the enhanced community mobilization and PMT booth operation to guide the targeted poor would prevent the exclusion bias and, at the same time, PMT validation exercise would minimize the inclusion bias from intended misreporting.

Table 1-3. Distribution of Beneficiaries and Predication Errors at 40th percentile cut-off score

Decile (Actual

Consumption)

Cumulative Distribution of Beneficiaries

Distribution of Excluded Poor

(exclusion error)

Distribution of Included Beneficiaries

(Inclusion error)

1 25 9

2 46 20

3 64 31

4 78 40

5 87

41 6 93

26

7 96

16 8 99

11

9 100

5 10 100

2

Total 100 100 100

8. Disbursement of stipends: Disbursement procedures – including processing of ACF forms and disbursement of stipends to students – would be refined in the updated PMT stipends manual and would also reflect changes including the use of cash card to remit the funds to address some of the potential governance issues and to enable immediate reconciliation of funds. Agrani Bank would continue to provide the disbursement services and their participation agreement would be amended to account for increased scope and refined procedures.

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Annex 13: Economic Analysis

1. The economic analysis presented in this annex is an assessment of future benefits and costs associated with the Bangladesh SEQAEP project activities during the AF period, 2014-2017. Costs include program costs and private costs that comprise direct household outlays as well as opportunity costs for schooling. Similarly, the benefits are taken to be those changes in the quantity, quality and reduction in internal inefficiency of education produced over the period as a result of SEQAEP AF. The main sources of data used in the analysis come from SEQAEP MIS, HIES 2010 and the cost tables for SEQAEP AF. The economic analysis presented here focuses on Additional Financing period, 2014-2017.

I. Benefits of SEQAEP

2. For the purpose of this analysis, benefits from the following two sources are quantified: i. improved access to and retention in secondary education of the poor by providing them stipends,

resulting in increased number of secondary school (grade 10) completers who earn higher wages (relative to non-completers);

ii. increased quality and relevance of education through improved education quality resulting in higher productivity and earnings for all grade 10 completers (relative to grade 10 completers from non-SEQAEP institutions).

3. Underlying the analysis is the projection of: (a) non-poor students completing grade 10 in SEQAEP institutions and (b) poor students completing grade 10, based on improved internal efficiency due to SEQAEP. Increased retention rate through the pro-poor stipend program is estimated as 20% according to impact evaluation studies of SEQAEP interventions conducted during 2009-2010, and it is assumed the increased internal efficiency for non-poor students due to education quality interventions to be 3%. These estimates are used to calculate the number of grade 10 completers during the project periods. The projections of grade 10 completers and impacts of SEQAEP on number of grade 10 completers are shown in Table 1. The number of students completing grade 10 over the four years due to SEQAEP is estimated about 135 thousand and these students would not have completed the secondary cycle without SEQAEP intervention.

Table 1: SEQAEP Grade 10 completers and its impact on the number of Grade 10 Completers

2014 2015 2016 2017

Non-poor Grade 10 Completers 226,498 497,775 667,540 704,740

Poor Grade 10 Completers 65,051 213,456 355,172 499,373

Impacts on Number of Completers 24,335 67,580 104,411 135,112

4. The grade 10 completers will earn the wage-premium compared to the primary completers who have not completed grade 10. Wage level of grade10 completers is estimated from HIES 2010 and then projected to account for inflation for future years (the earning differential in 2010 is estimated to be about Taka 33,800 or US$433 per person annually). 5 percent of wage of grade 10 completers for quality premium due to increased relevance through SEQAEP quality interventions applies to all grade 10 completers. The benefit stream accruing from life-time earnings for the four cohorts is assumed to continue for 33 years (even though a typical primary completer will earn beyond 33 years, “discounting” will make the values insignificant beyond this time). II. Costs of SEQAEP

5. SEQAEP costs are estimated based on projected the stipend beneficiaries and number of institutions expected to be supported for quality interventions, and monitoring and evaluation cost estimates. Four-year cost estimates, shown in table 2 below, total about US$1,148 million (per student cost US$74). Per student private household

52

expenditure of secondary education is about US$101 in 2010 as estimated using HIES 2010 data and projected for future years. From the same data, opportunity cost (forgone earnings) per student per year while attending school is estimated to be US$433 per student for grade 5 completers aged 14 to 17 years old in 2010, and it is assumed that 50 percent of non-schooling children would work for wage. Schooling cost and opportunity cost are accounted for the students who would have not enrolled in school in the absence of SEQAP interventions. Finally, cost of teacher salary added in order to account for the increased number of teachers needed due to increased enrollment.

Table 2: SEQAEP Costs and Household Costs (US$ million)

2013-14 2015 2016 2017 Total

SEQAEP Project Cost 70 66 70 74 280

Private HH Schooling Cost 33 62 68 75 239

Opportunity Cost 71 132 146 161 510

Teacher Salary 19 32 33 34 119

Total Cost 193 292 317 344 1,148

III. Net Present Values of Benefits and Costs and Internal rate of Return

6. Based on a discount rate of 12 percent for the benefit and cost streams described above, the present discounted value of benefits for the base-case scenario is estimated to be $1,827 million while the present discounted value of costs is estimated to be $838 million, and therefore the net present value (NPV) of program benefits is $990million. The internal rate of return (IRR) associated with this NPV is 22 percent. Discounted present values of each sources of benefit and cost streams in the base case scenario are shown in table 3 below. As expected, large part of the benefits accrue from quality premium for SEQAEP secondary school completers. In terms of costs, household education and opportunity cost constitutes the largest category.

Table 3: Discounted Present Values of Benefits and Costs streams, SEQAEP program 2014-2017

Category US$ million

Grade 10 completers 952

Relevance/Quality premium 875

Total Benefit (PV) 1,827

Household Education and Opportunity Cost 550

Project Cost 200

Teacher Salary 88

Total Cost (PV) 838

Net Present Value 990

Internal Rate of Return 22%

Note: Discount Rate of 12% is used in deriving the DPVs

7. In table 4 below, we present a sensitivity analysis of IRR and NPV under different scenarios – allowance for varying employment rate (external efficiency) and progress in internal efficiency. Under the base case with assumption that SEQAEP secondary school completers would have 5 percent higher wage than non-SEQAPE secondary school completers and retention rate of poor student is 20 percent higher with PMT stipend program (base case scenario), the IRR is 22%. As seen in the table 4 below, IRR varies between 19% and 22% under varying scenarios.

53

Table 4: Sensitivity analysis of IRR under multiple scenarios External Efficiency

5 % Quality Premium (base case)

3 % Quality Premium (low case)

Internal Efficiency

20 % increased retention rate, poor student (base case)

22% 19%

15 % increased retention rate, poor student (low case)

23% 19%

8. The above results, including the robustness analysis, with the IRR - ranging from 19% to 22%, clearly suggest that SEQAEP is expected to be a sound investment. In fact these are conservative lower-bound estimates, given that they do not yet account for externality benefits arising from healthier, more educated and a more equitable/ inclusive society.

R A J S H A H IR A J S H A H I

D H A K AD H A K A

S Y L H E TS Y L H E T

K H U L N AK H U L N A

B A R I S A LB A R I S A L

C H I T T A G O N GC H I T T A G O N G

PANCHAGARPANCHAGAR

THAKURGAONTHAKURGAONNILPHAMARINILPHAMARI

LALMONIRHAT

LALMONIRHAT

DINAJPURDINAJPUR

RANGPURRANGPURKURIGRAMKURIGRAM

GAIBANDHAGAIBANDHA

JOYPURHATJOYPURHAT

NAOGAONNAOGAON

NOWABGANJNOWABGANJ

RAJSHAHIRAJSHAHI

NATORENATORE

BOGRABOGRA

JAMALPURJAMALPUR

SERPURSERPUR

NETROKONANETROKONA

MYMENSINGHMYMENSINGH

TANGAILTANGAILSERAJGANJSERAJGANJ

PABNAPABNA

KUSHTIAKUSHTIA

MEHERPURMEHERPUR

CHUADANGACHUADANGA

JHENAIDAHJHENAIDAH MAGURAMAGURA

RAJBARIRAJBARI

FARIDPURFARIDPUR

MANIKGANJMANIKGANJ

DHAKADHAKA

GAZIPURGAZIPUR

KISHORGANJKISHORGANJHABIGANJHABIGANJ

SUNAMGANJSUNAMGANJ

SYLHETSYLHET

MOULVI BAZARMOULVI BAZAR

BRAHMANBRAHMANBARIABARIA

NARSINGDINARSINGDI

NARAYNGANJNARAYNGANJ

MUNSHIGANJMUNSHIGANJ

SARIATPURSARIATPUR CHANDPURCHANDPUR

COMILLACOMILLA

MADARIPURMADARIPURGOPALGANJGOPALGANJ

NARAILNARAILJESSOREJESSORE

SATKHIRASATKHIRA

KHULNAKHULNA

BAGERHATBAGERHAT

PEROJPURPEROJPUR

BARISALBARISAL

JHALUKATHIJHALUKATHI

PATUAKHALIPATUAKHALIBHOLABHOLA

BARGUNABARGUNA

LUXMIPURLUXMIPUR

NOAKHALINOAKHALI FENIFENI

KHA

GRA

CH

HA

RI

KHA

GRA

CH

HA

RI

RANGAMATIRANGAMATI

CHITTAGONGCHITTAGONG

BANDARBANBANDARBAN

COX’SCOX’SBAZARBAZAR

RangpurRangpur

GaibandhaGaibandha

DinajpurDinajpur

BograBogra

SerajganjSerajganjNatoreNatore

JoypurhatJoypurhat

NaogaonNaogaon

NowabganjNowabganj

JamalpurJamalpurSerpurSerpur

NetrokonaNetrokona

SunamganjSunamganj

PabnaPabna

KushtiaKushtia

RajbariRajbariMeherpurMeherpur

ChuadangaChuadanga

JhenaidahJhenaidahMaguraMagura

NarailNarail

SatkhiraSatkhira

BagerhatBagerhat

PerojpurPerojpur

JhalukathiJhalukathi

GopalganjGopalganj

MadaripurMadaripurSariatpurSariatpur

FaridpurFaridpur

JessoreJessore

NoakhaliNoakhali

KhagrachhariKhagrachhari

PatuakhaliPatuakhali

BholaBhola

BargunaBarguna

ComillaComilla

Moulvi BazarMoulvi Bazar

MymensinghMymensingh

TangailTangail

ManikanjManikanj

RangamatiRangamati

BandarbanBandarban

Cox's BazarCox's Bazar

ThakurgaonThakurgaon

NilphamariNilphamari LalmonirhatLalmonirhat

KurigramKurigram

PanchagarPanchagar

FeniFeni

GazipurGazipurNarsingdiNarsingdi

NaraynganjNaraynganj

MunshiganjMunshiganj

ChandpurChandpur

LuxmipurLuxmipur

BrahmanbariaBrahmanbaria

HabiganjHabiganj

KishorganjKishorganj

RajshahiRajshahi

KhulnaKhulna

SylhetSylhet

BarisalBarisal

ChittagongChittagong

DHAKADHAKA

JJaammuunnaa

GGaannggeess

GGaannggeess

MMeegg

hhnnaa

Kaptai KaptaiLakeLake

GG aa nn gg ee ss DD ee ll tt aa

SS uu nn dd aa rr bb aa nn ss

R A J S H A H I

D H A K A

S Y L H E T

K H U L N A

B A R I S A L

C H I T T A G O N G

PANCHAGAR

THAKURGAONNILPHAMARI

LALMONIRHAT

DINAJPUR

RANGPURKURIGRAM

GAIBANDHA

JOYPURHAT

NAOGAON

NOWABGANJ

RAJSHAHI

NATORE

BOGRA

JAMALPUR

SERPUR

NETROKONA

MYMENSINGH

TANGAILSERAJGANJ

PABNA

KUSHTIA

MEHERPUR

CHUADANGA

JHENAIDAH MAGURA

RAJBARI

FARIDPUR

MANIKGANJ

DHAKA

GAZIPUR

KISHORGANJHABIGANJ

SUNAMGANJ

SYLHET

MOULVI BAZAR

BRAHMANBARIA

NARSINGDI

NARAYNGANJ

MUNSHIGANJ

SARIATPUR CHANDPUR

COMILLA

MADARIPURGOPALGANJ

NARAILJESSORE

SATKHIRA

KHULNA

BAGERHAT

PEROJPUR

BARISAL

JHALUKATHI

PATUAKHALIBHOLA

BARGUNA

LUXMIPUR

NOAKHALI FENI

KHA

GRA

CH

HA

RI

RANGAMATI

CHITTAGONG

BANDARBAN

COX’SBAZAR

Rangpur

Gaibandha

Dinajpur

Bogra

SerajganjNatore

Joypurhat

Naogaon

Nowabganj

JamalpurSerpur

Netrokona

Sunamganj

Pabna

Kushtia

RajbariMeherpur

Chuadanga

JhenaidahMagura

Narail

Satkhira

Bagerhat

Perojpur

Jhalukathi

Gopalganj

MadaripurSariatpur

Faridpur

Jessore

Noakhali

Khagrachhari

Patuakhali

Bhola

Barguna

Comilla

Moulvi Bazar

Mymensingh

Tangail

Manikanj

Rangamati

Bandarban

Cox's Bazar

Thakurgaon

Nilphamari Lalmonirhat

Kurigram

Panchagar

Feni

GazipurNarsingdi

Naraynganj

Munshiganj

Chandpur

Luxmipur

Brahmanbaria

Habiganj

Kishorganj

Rajshahi

Khulna

Sylhet

Barisal

Chittagong

DHAKA

I N D I A

I N D I A

I N D I A

MYANMAR

BHUTAN

Jamuna

Ganges

Ganges

Meg

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KaptaiLake

B a y o f B e n g a l

M o u t h s o f t h e G a n g e s

To Dispur

To Dispur

To Dispur

To Silchar

To Goalpara

To Patna

To Katihar

To Katihar

To Gangtok

To Sittwe

To Calcutta

To Calcutta

G a n g e s D e l t a

S u n d a r b a n s Mt. Mowdok(957 m)

26ºN

25ºN

24ºN

23ºN

22ºN

21ºN

25ºN

24ºN

23ºN

22ºN

21ºN

88ºE 89ºE 90ºE 91ºE

89ºE 90ºE 91ºE 92ºE

92ºE

BANGLADESH

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

0 10 20 30 40

0 10 20 30 40 50 Miles

50 Kilometers

IBRD 33368R

MARCH 2008

BANGLADESHDISTRICT CAPITALS

DIVISION CAPITALS

NATIONAL CAPITAL

RIVERS

MAIN ROADS

RAILROADS

DISTRICT BOUNDARIES

DIVISION BOUNDARIES

INTERNATIONAL BOUNDARIES

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