Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No: 83080-DJ

PROJECT PAPER

FOR

A PROPOSED GLOBAL PARTNERSHIP FOR EDUCATION GRANT OF

US$3.8 MILLION

TO THE

REPUBLIC OF DJIBOUTI

FOR AN

ACCESS TO QUALITY EDUCATION PROJECT

December 3, 2013

Human Development SectorMiddle East and North Africa Region

CURRENCY EQUIVALENTS

(Exchange Rate Effective December 3, 2013)

Currency Unit = Djibouti Francs (DJF)

DJF 175 = US$1

FISCAL YEARJanuary 1 – December 31

ABBREVIATIONS AND ACRONYMS

ACIGEF Strengthening Institutional Capacity and Education Management System Project (Projet d’appui des capacités institutionnelles et de la gestion de l’éducation et de la formation)

AFPM Administrative and Financial Procedures ManualAFD French Development Agency (Agence Française de développement)AQEP Access to Quality Education ProjectBEPC Brevet d’études du premier cycleBD Bidding DocumentCAS Country Assistance StrategyCFEEF Training Center for Basic Education (Centre de formation des enseignants de

l’enseignement fondamental)CNMP National Commission for Public Procurement (Commission nationale des marchés

publics, CNMP)CPP Project Steering Committee (Comité de pilotage des projets)CRIPEN National Education Research and Information Production Center (Centre de recherche,

d’information, et de production pour l’éducation nationale)DGA Directorate for Central Administration (Direction générale de l’Administration)DGE Directorate for General Teaching (Direction générale de l’enseignement)DHU Department of Habitat and Urbanism (Département de l’habitat et de l’urbanisme)DPME Directorate of Projects, Maintenance and Equipment (Direction des projets, de la

maintenance et des équipements)DRHF Directorate for Human and Financial Resources (Direction des Resources humaines et

financières)ECE Early Childhood EducationEIRR Economic Rate of ReturnEFA-FTI Education for All – Fast Track InitiativeEMP Environmental Management PlanFM Financial ManagementGDP Gross Domestic ProductGER Gross Enrollment RateGPE Global Partnership for EducationICB International Competitive BiddingIDA International Development AssociationIFR Interim Financial ReportINDS National Initiative for Social Development (Initiative nationale de développement

social)

LEG Local Education GroupMDG Millennium Development GoalsM&E Monitoring and EvaluationMENFOP Ministry of National Education and Vocational Training (Ministère de l’éducation

nationale et de la formation professionnelle)MENSUP Ministry of National and Higher Education (Ministère de l’éducation nationale et

supérieure)MHUEAT Ministry of Habitat, Urbanism, Environment and Regional Development (Ministère de

l’Habitat, de l’Urbanisme, de l’Environnement et de l’Aménagement du Territoire)MOEFP Ministry of Economy, Finance and PlanningMOP Manual of Operational ProceduresMTEF Medium Term Expenditure FrameworkNCB National Competitive BiddingNER Net Enrollment RateOTI National standardized test to assess students’ learning outcomes (Objectif terminal

d’intégration)PAE National Education Action Plan (Plan d’action de l’éducation)

PAEQE Education Access and Quality Project (Projet d’accès a l’éducation et de qualité de l’enseignement)

PAAE School Access and Improvement Program (Programme d’amélioration de l’accès aux écoles)

PAAE2 Second School Access and Improvement Program (Programme d’amélioration de l’accès aux écoles 2)

PDO Project Development ObjectivePFS Project Financial StatementPIP Project Implementation PlanPRSP Poverty Reduction Strategy PaperPTA Parent Teacher AssociationQBS Quality-Based SelectionQCBS Quality-Cost Based SelectionRFP Request for ProposalSA Special AccountSGP Project Implementation Unit (Service de gestion des projets)SBD Standard Bidding DocumentSOE Statement of ExpendituresTVET Technical and Vocational Education TrainingUNDP United Nations Development ProgramUNESCO United Nations Educational, Scientific and Cultural OrganizationUSAID United States Agency for International Development

Regional Vice President: Inger AndersenCountry Director: Hartwig Schafer

Acting Sector Director: Enis BarisActing Sector Manager: Hana Brixi

Task Team Leader: Noah Yarrow

COUNTRYEducation Access and Quality Project

TABLE OF CONTENTSPage

I. STRATEGIC CONTEXT.................................................................................................1

A. Country Context.............................................................................................................1

B. Sectoral and Institutional Context.................................................................................2

C. Higher Level Objectives to which the Project Contributes...........................................4

II. PROJECT DEVELOPMENT OBJECTIVES................................................................5

A. PDO...............................................................................................................................5

B. Project Beneficiaries......................................................................................................5

C. PDO Level Results Indicators.......................................................................................6

III. PROJECT DESCRIPTION..............................................................................................6

A. Project Components.......................................................................................................6

B. Project Financing...........................................................................................................9

C. Program Objective and Phases....................................................................................10

D. Lessons Learned and Reflected in the Project Design.................................................10

IV. IMPLEMENTATION.....................................................................................................11

A. Institutional and Implementation Arrangements.........................................................11

B. Results Monitoring and Evaluation.............................................................................13

C. Sustainability...............................................................................................................13

V. KEY RISKS AND MITIGATION MEASURES..........................................................14

A. Risk Ratings Summary Table......................................................................................14

B. Overall Risk Rating Explanation.................................................................................14

VI. APPRAISAL SUMMARY..............................................................................................15

A. Economic and Financial Analysis...............................................................................15

B. Procurement and Financial Management....................................................................15

C. Social.............................................................................................................................16

D. Environment..................................................................................................................16

E. Other Safeguards Policies Triggered (if required)........................................................16

Annex 1: Results Framework and Monitoring.........................................................................17

Annex 2: Detailed Project Description.......................................................................................21

Annex 3: Implementation Arrangements..................................................................................26

Annex 4: Operational Risk Assessment Framework (ORAF).................................................40

Annex 5: Economic and Financial Analysis..............................................................................44

Map of Djibouti............................................................................................................................49

DATA SHEETRepublic of Djibouti

.

Middle East and North AfricaMNSHD

.

Basic InformationDate: December 3, 2013 Sector: Education

Country Director: Hartwig Schafer Themes: Education for All, Quality, Student Learning Outcomes and Assessment, Access

Acting Sector Manager/Acting Sector Director:

Hana Brixi/Enis Baris EA Category: B – Partial assessment

Project ID: P145323

Instrument: Investment Project Financing (IPF)

Team Leader(s): Noah Yarrow/Karine Pezzani

.

Recipient Republic of Djibouti

Executing Agency: Ministry of National Education and Vocational Training (“Ministère de l’éducation nationale et de la formation professionnelle”, MENFOP)

Contact: Daher Omar Obsieh

Title: Director of Projects, Maintenance and Equipment, MENFOP

Telephone No.: (253) 77 08 26 98 Email: daherphilo@yahoo.fr.

Project Implementation Period: Start Date: January 1, 2014 End Date: Dec. 31, 2016

Expected Effectiveness Date: April 1, 2014

Expected Closing Date: June 30, 2017.

Project Financing Data(US$M)[ ] Loan [ X ] Grant [ ] Other

[ ] Credit [ ] Guarantee

For Loans/Credits/OthersTotal Project Cost : 3.8 Total GPE Financing : 3.8

Total Cofinancing : 0.0 Financing Gap : 0.0

.

Financing Source Amount(US$M)BORROWER/RECIPIENT 0.0

GLOBAL PARTNERSHIP FOR EDUCATION (GPE) 3.8

Financing Gap 0.0

Total 3.8.

Expected Disbursements (in USD Million)

Fiscal Year FY14 FY15 FY16 FY17

Annual 0.91 1.58 1.28 0.03

Cumulative 0.91 2.49 3.77 3.80.

Project Development Objective(s)To improve the learning environment and instructional practices of teachers in the first three years of primary education..

ComponentsComponent Name Cost (USD Millions)

1. Access to Primary Education 1.6

2. Quality of Primary Education 1.9

3. Project Monitoring and Management 0.3.

CompliancePolicyDoes the project depart from the CAS in content or in other significant respects? Yes [ ] No [X].

Does the project require any exceptions from Bank policies? Yes [ ] No [X]

Have these been approved by Bank management? Yes [] No [ ]

Is approval for any policy exception sought from the Board? Yes [] No [ X]

Does the project meet the Regional criteria for readiness for implementation? Yes [X] No [ ].x

Safeguard Policies Triggered by the Project Yes NoEnvironmental Assessment OP/BP 4.01 X

Natural Habitats OP/BP 4.04 X

Forests OP/BP 4.36 X

Pest Management OP 4.09 X

Physical Cultural Resources OP/BP 4.11 X

Indigenous Peoples OP/BP 4.10 X

Involuntary Resettlement OP/BP 4.12 X

Safety of Dams OP/BP 4.37 X

Projects on International Waters OP/BP 7.50 X

Projects in Disputed Areas OP/BP 7.60 X.

Legal CovenantsName Recurrent Due Date Frequency

Description of Covenant

Team CompositionBank Staff

Name Title Specialization Unit UPI

Noah Yarrow Education Specialist, Task Team Leader

Education MNSHE

Karine Pezzani Operations Officer Operations MNSHE

Emma Etori Program Assistant Operations MNSHE

Walid Dhouibi Procurement Specialist Procurement MNAPC

Rock Jabbour Financial Management Specialist Financial Management MNAFM

Shinsaku Nomura Education Economist Education SASED

Fatou Fall Social Development Specialist Social Safeguards MNSSO

Helena Naber Environmental Specialist Environmental Safeguards MNSEN

Mustapha Ennaifer Consultant Teacher training MNSHD

Robert Prouty Consultant Learning outcomes assessment HDNED

Daniel Dupety Consultant Architect/engineer MNSHD

Jeff Davis Consultant Mathematics assessment MNSHD

Non Bank Staff

Name Title Office Phone City

Jean-Mathieu Laroche Education Specialist, UNICEF (Coordinating Entity)

(253) 21-31-41-52 Djiboutiville

.

Locations

Country First Administrative Division

Location Planned Actual Comments

Djibouti Djiboutiville.

I. STRATEGIC CONTEXT

A. Country Context

1. Djibouti is a country whose economy is largely dependent on its port activities and foreign direct investment (FDI). Although the country is demographically small with limited resources, Djibouti has shown positive economic growth rates of 4.8 percent on average from 2008-2012, and was designated an “IDA III” country in July 2012, meaning it is no longer eligible for IDA grants.1 During the same five-year period, FDI constituted 15 percent of Gross Domestic Product (GDP) on average. The overall unemployment rate is approximately 48.4 percent including discouraged workers2, and is estimated at above 70 percent for young people.3 The Government of Djibouti is exploring ways to diversify its economy through the development of the private sector and industries such as tourism, fishing, transport, and energy production. In order to boost growth in these sectors, the Government aims to overcome deep structural barriers such as the lack of basic infrastructure, the high labor cost relative to worker productivity, and the lack of skilled workers through greater investments in infrastructure, private sector development, and human capital.

2. Djibouti is endowed with a large portion of young people who could act as engine for economic growth and social development. Of Djibouti’s estimated population of 864,617, 38.5 percent are estimated to be under the age of 15. Lacking in natural resources, Djibouti’s development will need to profit from its human resources. According to the latest UNDP rating, Djibouti ranks 164 out of 186 countries in its Human Development Index (2013). However, over the past ten years, the Gross Enrollment Ratio (GER) in primary education increased from 32 percent in 1999/2000 to approximately 61 percent in 2012, while the 2012 poverty profile developed by the government suggests a rate of 82.8 percent for the GER.4 Girls’ attendance in primary school also significantly improved with the female/male ratio rising from 0.55 in 2005 to 0.88 in 2011. Secondary enrollments tripled during the same period. Despite these important advances, Djibouti is not likely to meet the Millennium Development Goals (MDGs) for achieving universal primary education, promoting gender equality and women’s empowerment, or reducing child mortality by 2015.5

3. Djibouti acknowledges the important role of education and devotes about a fifth of its national budget to the sector. In 2010, 19.8 percent of the national budget and about 8 percent of GDP went to education, which is high relative to regional and global averages. Djibouti’s National Development Initiative 2007 (Initiative nationale de développement social, INDS) highlights improvement in management of the sector to increase access, quality and relevance of education as a priority. The second pillar of the INDS aims to develop human

1Profil de la pauvreté en République de Djibouti, Ministère de l’Economie et des finances chargé de l’industrie et de la planification 2012 (this source uses the 2009 population figures from Recensement General de la Population et Habitat), and World Bank GDP Growth By Country http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG, accessed 7.17.2013 at 2:24 PM; IDA III countries are eligible for concessional financing only.2 If discouraged workers are not included, the unemployment rate is 26 percent.3 A New Growth Model for Djibouti, World Bank 2013.4 UNESCO Institute for Statistics http://stats.uis.unesco.org/unesco/TableViewer/tableView.aspx accessed 3.28.13 at 1:06 PM and Profil de la Pauvrete en Republique de Djibouti 2012 (DISED, 2012) The discrepancies in the ratio are most likely related to differences in the number used for the population denominator. 5 MDG Djibouti Country Report 2010.

1

resources and improve access to basic services, in particular by: (i) improving access to education while increasing the quality of education services; (ii) reducing gender and geographic disparities in the sector; and (iii) improving the management of the sector.

B. Sectoral and Institutional Context

4. The education system in Djibouti has been undergoing reforms to increase access, enhance quality, and improve management of the sector. Djibouti’s education system consists of 2 years of preschool, 9 years of basic education (5 years primary and 4 years middle school), 3 years of general secondary education, 2-3 years of technical and vocational education and training (TVET) and 4-5 years of higher education and research. School attendance is compulsory for ages 6 to 16 years. In 2010, the Ministry of National Education and Vocational Training (Ministère de l’Education nationale et de la formation professionnelle, MENFOP) developed a 10-year National Education Strategy (Schéma directeur) (2010-2019) and a series of action plans focusing on improving access, equity, quality, and efficiency of the education system. This project has been prepared in parallel with the Government’s Education Action Plan (2013-2016), as per Global Partnership for Education (GPE) guidelines.

5. Access to education has improved, but Djibouti still faces serious challenges in the quality of its education and relevance to the country’s development needs. There are 159 primary schools in Djibouti, defined as grades one through six, 65 of which are in the capital, Djiboutiville. This represents an increase of 44% in the number of primary schools built and functioning since 2003. Only 37 of the total number of primary schools are private, representing 14 percent of primary education service provision. There are 63,368 primary students in the public and private system combined, of which 46% percent are female, and they are served by 1,550 public primary school teachers.6 The performance of students at the primary level indicates low levels of learning, as shown on national math and French language exams at the end of second and fifth grades. The small size of the private sector and a saturated public sector may explain the demand-side constraints to employment. There is wide consensus among stakeholders that young people do not have the required skills for the labor market. A study done by the MENFOP in 2007 concluded that: (i) the TVET training system did not provide graduates with practical knowledge; (ii) enterprises were not consulted in the design of work internships; (iii) theoretical courses were out of date; and (iv) youth lacked the necessary skills to understand how companies are organized and managed. At the other end of the spectrum, early childhood education (ECE) enrollments are at less than 2 percent of the student population estimated for this age cohort; there are six private kindergartens in the country (Djibouti Annuaire Statistique MENFOP 2012-2013). There has been some interest at the policy level in ECE but relatively little public service provision and light regulation of private providers to date.

6. Cognizant of these challenges, the 10-year National Education Strategy for 2010-2019 focuses on improving the efficiency of the education system and the quality and relevance of education with a focus on results. A series of diagnostic studies was conducted in recent years to assess the performance of the sector over the past decade and the progress made in reforming the sector, supported by multiple donors as well as by the MENFOP. These included in-depth analyses of all levels of education as well as the administrative structure and

6 Annuaire Statistique 2012-2013, MENFOP 2013.

2

management capacity. One study financed by the French Development Agency (Agence française de développement, AFD) was a situation analysis of the school system (RESEN, 2009); USAID financed an assessment of student performance in reading in the primary grades; the World Bank financed an organizational audit of the Ministry of Education; other studies undertaken by the MENFOP and other donors include an impact evaluation of social mobilization. Moreover, a Medium Term Expenditure Framework was prepared in 2009 to cover the period 2010-2013. Based on these studies, the new National Education Strategy (2014-2016) focuses on establishing an efficient system that concentrates on results and ensuring access to education for all, guaranteeing quality and relevance of education and training (Plan d’action de l’éducation 2014-2016, MENFOP forthcoming). The Plan d’action strategy is widely supported by the donor community and it links to essential regional and global education and human development strategies, e.g. the World Bank’s Learning for All Education Strategy 2020.

7. Access to education continues to be a major challenge, and varies with gender, income and location. The official UNESCO estimate for the net enrollment rate (NER) for Djibouti is 54.2 percent, but this is based on population data from 2009 and there is currently a lack of consensus on the actual NER and other key education statistics. The World Bank is working together with its partners and the Government to resolve this lack of clarity.7 The net intake rate (total) is estimated at 45 percent, with small but persistent differences between intake rates for boys (47 percent) and intake rates for girls (42 percent). The net intake rate is the number of new entrants in the first grade of primary education who are of the official primary school-entrance age, expressed as a percentage of the population of the same age.8 The fact that the net intake rate is lower than the net enrollment rate implies that some students are entering grade one at an older age than expected, which indicates there is an access issue, and that some are repeating the first grade, which is a quality issue.9 Djibouti’s net intake rate is in line with estimates for some other low income countries such as Cote d’Ivoire (45 percent), Mauritania (44 percent) and Yemen (50 percent). Nonetheless, there are significant equity issues by gender, income and location. There is a 21 percentage point difference in gross enrollment rate between the richest quintile and the poorest quintile in primary school. These wealth-correlated enrollment disparities increase as the system moves into middle, secondary and tertiary education. While of smaller magnitude than income-correlated differences, the percentage of girls in the primary student population in urban areas is 47%, while in rural areas it is 44%, indicating grater gender-based inequity in access in rural areas.10

8. Demand for schooling exceeds supply, particularly in urban areas. Fifty-five percent of public primary schools operate on a double-shift schedule, representing a great excess of demand for basic education services relative to current available supply (Annuaire Statistique, 2012-2013). The President and the Ministry have identified the elimination of the double-shift as a national priority, despite the large costs involved. Double-shifting is undesirable since the total

7Net enrolment rate, Primary, Total is the total number of pupils of the official primary school age group who are enrolled at the primary education level, expressed as a percentage of the corresponding population. UNESCO INSTITUTE FOR STATISTICS http://stats.uis.unesco.org/unesco/TableViewer/tableView.aspx?ReportId=183 accessed 3.26.2013 at 11:57 AM8 Education Indicators Technical Guidelines UNESCO 2009.9 The Djibouti Annuaire Statistique 2011-12 gives the public school grade one student population as 11,315 and the number of repeaters as 566 for a grade-one repetition rate of 5 percent. 10 MENFOP Annuaire Statistique 2012-2013.

3

numbers of classroom-hours for each shift are constrained, and the second-shift students work in often uncomfortably hot classrooms. Perhaps as a result of these factors, there is evidence that student achievement scores are lower in double-shift schools as compared to single-shift schools in Djibouti.11 Double-shifting is largely an urban phenomenon, since some demand challenges also exist, particularly in rural areas. Attempts to increase demand have been implemented, for example through enrollment-conditional transfers of foodstuffs for female students under an existing WFP program. While demand-side constraints are important, this GPE-financed project does not attempt to directly address them given (i) continuing and large supply-side constraints and (ii) the need to focus the investment in order to improve the chances of success.

9. Education system quality is another major challenge, both in terms of student learning outcomes and teacher training. About 5 percent of students in the primary system repeat a grade each year, but this figure reaches 8.5 percent at the end of the primary school cycle in fifth grade. Two analyses of national assessments of student learning outcomes in reading conducted in 2009 and 2010 on a sample of second grade students showed that about 7 students out of 10 did not master basic reading either well or at all. 12 It appears that the students perform at a level below what is required for all children to begin the transition from ‘learning to read’ to ‘reading to learn’ by the end of third grade. The mean score on the math portion was 11 points out of a possible total of 20 points, with very high heterogeneity (standard deviation of 5.9 points, more than half of the mean). This relatively weak performance in reading and math in early primary is linked to teacher training, among other challenges. Teachers are the frontline service providers in an education system, and one measure of system quality is the level of teacher preparation. Only 10 percent of public primary school teachers hold a university level degree, while 50 percent hold a baccalaureate degree, signifying the completion of 13 years of primary and secondary education. An additional 35 percent hold a BEPC or “Brevet d’études du premier cycle,” roughly equivalent to a high-school diploma and slightly below the baccalaureate credential.13 Teachers holding a baccalaureate degree are required to complete one year of pre-service training at the national teacher training center, the CFPEN (Centre de formation des personnels de l’education nationale), while those with a BEPC are required to complete two years of pre-service training. The relationship between pre-service teacher training and student achievement is not simple or direct, but a new competency-based teacher qualification framework has been introduced for teachers pursuing pre-service training, along with significant investments by the MENFOP and other donors into the national pre-service training institute.

C. Higher Level Objectives to which the Project Contributes

10. The proposed Access to Quality Education Project (Project d’accès a une éducation de qualité, AQEP) has been designed to support the access and quality components of the National Education Strategy 2010-2019 over a three-year period. The proposed Project will

11 The difference is relatively small in terms of scores on the 5th grade OTI scores in math and French and could be influenced by selection bias, but the difference is statistically significant at the 1% level (RESEN, 2009 pp 97-98). 12 Evaluation en lecture des élèves de 2ème année, Rapport d’analyse MENESUP 2009 and Evaluation des niveaux d’acquisitions des élèves de 2ème année de l’enseignement primaire en lecture et en mathématiques, Rapport d’analyse 2010, MENSUP.13 Répartition des enseignants chargés du secteur public selon le niveau de formation académique, Annuaire Statistique 2011-12 MENFOP. An additional 3% are “other” or “undeclared” and the residual is presumably explained by rounding.

4

be a central element of the Djibouti National Education Action Plan (Plan d’action de l’éducation, PAE) 2014-2016, which was developed by the MENFOP with the coordination of UNICEF, and presented to stakeholders and education donor partners in June 2013. The PAEhighlights the priorities of the education sector as well as the financing gap anticipated over the next three years. This project will complement the current IDA operation as well as other donors’ interventions in the sector, which are further detailed in paragraphs III.A.17 and III.A.18.

11. The World Bank's Country Assistance Strategy (CAS) for Djibouti highlights improvements of the education sector as one of the key priorities, and education is expected to be a focus of the upcoming Country Policy Strategy (CPS). The 2009 CAS14 is framed around three themes: supporting growth; supporting human development and access to basic services; and supporting governance and public sector management. The CAS identifies the weaknesses in the education system and specifies planned assistance to (i) further expand access to basic education, especially in rural areas and for girls, including by reducing dropout and repetition rates; and (ii) enhance the quality of education, especially by increasing teacher training and the availability of school books. A well-functioning education system will benefit the country as a whole in terms of better development of its human resources and the contribution of a better educated population to the social and economic development of the country.

II. PROJECT DEVELOPMENT OBJECTIVES

A. PDO

12. The Project Development Objective is to improve the learning environment and instructional practices of teachers in the first three years of primary education. Component 1 of the project seeks to increase access and improve the learning environment through the construction of one school and the extension and rehabilitation of selected schools in the rural areas of Arta, Dikhil, Tadjoura, and Ali Sabieh, based on a set of selection criteria. Component 2 focuses on improving student performance through investments in teaching and learning materials, as well as training for teachers, pedagogic counselors, school directors and inspectors. This component will further support investments in the expansion of pre-primary education. Component 3 provides supplemental financing to the existing project management unit, which supports multiple donor projects.

B. Project Beneficiaries

13. The direct beneficiaries of the project will be children who are enrolled – or about to enroll - in primary education and children in schools from rural and impoverished areas, in particular girls and children with special needs, and children from nomadic groups. All of these children will benefit from a more accessible and equitable basic education system with improved

14 The new CAS is currently under development; therefore the existing CAS (2009-2012) is used here.

5

quality. Teachers, school directors, pedagogical advisors and inspectors at the central and regional levels will also directly benefit from the project through a set of targeted training programs and materials which will enable them to increase their skills, competencies and ability to deliver higher quality teaching and educational services. The indirect beneficiaries will be parents and society at large, who will benefit from increased human capital and educational outcomes following from project interventions.

C. PDO Level Results Indicators

14. The key results of the Project will be:

(i) Percentage of teachers implementing at least three pedagogic practices in which they have received Project-supported training. Teachers will be trained on specific instructional strategies such as teaching number sense, basic operations, geometry and measurement as well as differentiated instruction and management of large classes. The use of these strategies in class will be measured using a revised teacher observation tool and collected for all grade 1-3 primary teachers who have received project-financed training.

(ii) Administration of enhanced national 2nd grade exam. The national standardized test to assess student learning outcomes (Objectif terminal d’intégration, OTI) exams will be revised during year one through project support to increase comparability between years and correspondence with the curriculum, and will be administered in Y2 and Y3 of the Project. This will enable the monitoring of student achievement in mathematics.

(iii) Percentage of school directors implementing at least three management practices in which they have received project-supported training. School directors will be trained in specific management strategies, while the implementation of these strategies will be monitored by inspectors in the course of their usual duties.

(iv) Number of direct project beneficiaries, by gender. The number of beneficiaries of school construction and rehabilitation will be monitored annually through the school survey and project progress reports, in addition to training reports and assessments which will capture beneficiaries of project investments in training.

III. PROJECT DESCRIPTION

A. Project Components

15. The project aims to address two central human development and education system challenges: access to education services and quality of education services. While a focused approach on just one area may have greater chances of success, current system performance levels for these two metrics do not allow either to be ignored at present. The proposed objectives are ambitious, but achievable in a country with a population of less than one million. The project results chain is that by investing in classroom and system level student assessment capacities, the Project will increase the ability of teachers and the system to monitor student performance in real time. When this data on student learning outcomes is combined with Project inputs in teacher

6

support systems, training and instructional tools, teachers will have access to appropriate resources to improve student learning of mathematics in primary classrooms. These investments in capacity and information will be linked to performance monitoring as part of school management changes, which will act as an incentive to changes in behavior. While the Project will work at the system, school and classroom level, the focus will be on classroom teachers, as this is where student learning occurs.

16. The Project will focus on early primary mathematics instruction, complementing planned investments by USAID in early primary literacy. Investments in Early Childhood Development (ECD) and school construction will contribute access goals as well as to quality learning outcomes, for example through the establishment of model community-based ECD programs, as led by UNICEF. Investments in school construction will further provide access for girls and vulnerable populations who have not benefitted from prior expansions in school infrastructure, as well as in areas where there is existing but severely inadequate supply. Finally, investments in materials for children with limited hearing and eyesight will allow these students to be more fully integrated into the classroom and improve their opportunities to learn.

17. The Project will benefit from current and prior IDA-financed capacity building initiatives with the MENFOP, work in primary grade literacy supported by USAID, as well as teacher training activities supported by a variety of donors including the French Cooperation Agency. Investments in teacher training in math could be programmed to coincide with training in reading instruction financed by USAID, for example, to save on transportation costs among other expenses. This Project will also support the work of other donors, for example by supporting the strengthening of all the OTI exam subjects. However, the GPE interventions are designed in such a way that the results will not depend on other donor financing.

18. The Project will be complemented by parallel investments by other donors, including UNICEF, USAID and the French Development Agency (AFD), among others. These are outlined in Figure 1, below.

Figure 1: Djibouti Education Sector Donor Contributions Chart related to AQEP (based on the 2013 Mid-Term Expenditures Framework)

Financing (USD) Project focus Areas 2014 2015 2016 Total USD in 3 yr period

AFD French language/primary 4,998,056 1,178,761 1,085,719 7,262,537

IsDB Construction/secondary 2,541,167 1,137,667 TBD 3,678,834

IDA System capacity/all 2,456,545 935,716 303,274 3,695,535

GPE Math instruction/primary 1,842,467 1,311,267 646,267 3,800,001

WFP School feeding/primary 1,060,000 1,060,000 1,060,000 3,180,000

UNESCO Curricula/primary 10,000 10,000 10,000 30,000

UNICEF Pre-school 124,400 TBD TBD 124,400

USAID Reading/primary 1,635,000 1,740,000 1,625,000 5,000,000

Total n/a 14,667,635 7,373,411 4,730,260 26,771,306

19. In order to address the major challenge of access to quality primary education, the proposed Project will comprise the following three components:

7

Component 1: Access to Primary Education (estimated cost: US$1.6 million). The purpose of this component is to promote equitable access to quality primary education while improving physical learning environment in selected rural schools, in the four targeted areas of Dikhil, Arta, Ali Sabieh and Tadjourah. To achieve this objective, the project will finance: (i) the construction and equipping of a new primary school in Tawaoco Chiniley (Dikhil), which will also include one cafeteria/kitchen, one teacher/school director housing, six toilets, and the installation of solar panels; (ii) the rehabilitation of six existing schools in Dorra and Adaillou (Tadjourah), Sankal (Dikhil), Ali Addeh (Ali Sabieh) Omar Djagga and Wéa (Arta), and extensions in those same six schools to add a total of about 20 new classrooms and necessary additional toilets as necessary, with the aim of reducing overcrowding in those schools. The project will also finance the provision of the necessary furniture and equipment for these additional classrooms (i.e., desks, tables, chairs, cabinets, chalk boards, additional solar panels needed, etc.).

Component 2: Quality of Primary Education (estimated cost: US$1.9 million). The objective of this component is to improve students’ learning outcomes through the training of teachers, school directors, pedagogic counselors and inspectors, combined with support to pre-primary education. This Project will benefit from and contribute to a multi-donor effort to support pre- and in-service teacher training in Djibouti, including the French Agency for Development and UNESCO. In particular, this Project will leverage financing from USAID in early grade reading to support early grade math, providing a unified package of support for quality early primary instruction in Djibouti. Math and literacy are considered the two foundational academic skills of early primary education, and the two donor institutions have aligned their investments with their comparative advantage to better support the MENFOP. The project will:

(a) Provide in-service training for teachers, school directors, school inspectors and pedagogic counselors to increase teacher knowledge of student performance and support them to provide effective instruction in mathematics, in line with ongoing work in Djibouti in this sector. This support would include training on differentiated instruction, student formative assessment, lesson planning, support to low-performing students and effective math instruction. These trainings would use a mix of workshop and in-classroom training, and be supported with scripted lesson plans and classroom resources.

To support the implementation of the teacher and school director trainings, instructional resources will be purchased for existing regional training centers. In order to ensure follow-up and supervision of these investments, five primary inspectors will be trained and equipped under this component. Special trainings will also be financed for teachers of students with hearing and visual impairments, for example training in the use of sign language and braille.

(b) Support the development of a student assessment policy, including the development of in-class formative assessment tools for teachers focusing on early grade math as well as strengthening the existing national primary examinations system, with a focus on math.15

15 USAID is likely to fund a significant portion of activities in early grade reading, which would be complemented by this proposed investment in math.

8

This component will also support the implementation of at least one adapted Early Grade Math Assessment (EGMA-lite) or similar assessment to be implemented in partnership with an Early Grade Reading Assessment to be financed by USAID.

(c) Support the development and piloting of a community-based model for pre-school service provision in partnership with UNICEF. This component will support student learning outcomes in primary school targeted by the Project through improvements in student readiness for primary and age-appropriate enrollment. Training and instructional materials for providers of pre-school education will be financed.

Component 3: Project Monitoring and Management (estimated cost: US$0.3 million). The objective of this component is to support the project implementation unit within the Ministry of Education (Service de Gestion des Projets, SGP) in facilitating the implementation and monitoring and evaluation of the project, while continuing to reinforce the capacity of SGP. SGP is currently responsible for managing four donor-financed projects: ACIGEF, financed by IDA; Projet de Renforcement d’accès à l’enseignement fondamental (PRAEF) financed by Islamic Development Bank (IDB); Projet de construction et d'équipement d’un établissement de formation des enseignants de l’enseignement fondamental financed by Japan International Cooperation Agency (JICA); Projet Education pour tous à Djibouti (EPTD) financed by AFD as well as one nationally-financed project (Projet d'extension et de construction des écoles primaires). Two other donor-financed projects are currently in the pipeline: the Projet d'appui à l'enseignement secondaire général et technique (financed by AFD) and the Projet de construction d'un collège d'enseignement moyen à Balbala financed by a grant from the Government of China. In order to prevent an overload of SGP capacity, the project would finance: (i) incremental operating costs (communications, bank fees, consumables, fuel, office supplies, procurement advertisements), i.e. extra costs generated by the project; (ii) the recruitment of an accountant and a procurement specialist dedicated to the project; (iii) transportation fees related to the supervision of works and follow-up of environmental aspects by the SGP, Department of environment and DHU; (iv) audit expenses; and (iv) training in procurement, financial management and monitoring and evaluation of SGP staff dedicated to that specific project. These activities will be complementary to other capacity building and training activities already planned in the ongoing ACIGEF project for SGP and MENFOP departments.

B. Project Financing

Instrument

20. The project will be a grant from the GPE.

9

Project Cost and Financing

Project Components Project cost Grant Financing % Financing1. Access to Primary Education2. Quality of Primary Education3. Project management and monitoring

Total Baseline Costs Physical contingencies Price contingencies

1.461.700.30

3.460.140.20

1,461.700.30

3.460.140.20

100100100

100100100

Total Project CostsInterest During Implementation

Front-End FeesTotal Financing Required

3.80n.a.n.a.3.80

3.80n.a.n.a.3.80

100

100

C. Program Objective and Phases

21. Not applicable.

D. Lessons Learned and Reflected in the Project Design

22. The Project design takes into account the following lessons learned from prior World Bank and donor experience in Djibouti:

(i) Capacity building is a critical component of operations. Past projects have suffered from slow start-up (e.g. the previous GPE financed Primary Education Support Program), challenges in data tracking and reporting (e.g. PESP and Second School Access and Improvement Program), as well as slow disbursement overall (various). The Project is expected to benefit from supervision and activities financed by the current IDA operation (Strengthening Institutional Capacity and Management of the Education System Project), while this Project includes a significant portion of capacity building, for example training of Ministry staff teacher trainers.

(ii) Project design should be as simple as practicable and existing implementation arrangements should be used to the extent possible to minimize complexity and build on existing capacity. Given the limited absorption capacities of the sector, complex project designs are likely to require restructuring and may result in missed targets. The Project has been designed with simplicity as a key filter, and a large number of proposals and direct requests for additional component financing from both donors and the MENFOP were not included in the final design as a result. Incorporating the second lesson, the Project uses the existing SGP structure and uses existing institutions, such as the Centre de formation des enseignants de l’enseignement fondamental (CFEEF) and regional teacher training centers.

(iii) Result targets should align with existing capacity and project time-frame. While there are incentives to set ambitious targets, this project has not committed to specific student learning outcome goals since GPE financing is limited to a three-year timeframe. Other targets have been excluded or kept at modest levels in line with existing system practices and capacities.

10

(iv) As part of standard international practice, coordination among donors is essential to avoid duplication. The Project has undertaken extensive donor consultations. For example, the missions of May and June 2013 focused on design consultations with the Ministry, as well as presentations and discussions with donors including UNICEF, AFD, WFP, USAID and others, as described in the Aide Memoires for each respective mission. The ECE component of the project will be led by the Ministry with support from UNICEF, and USAID will finance the early grade reading activities, while this project will finance early grade mathematics.

(v) Operations should support the development of a results-based culture, which should focus on better learning-outcomes and improved outcomes sector-wide. The Projects investments in the national assessment system and formative assessment tools for teachers are expected to increase access to and awareness of results across the primary education system. The Project further incorporates global evidence-based research on education system change and teacher training, for example Yoon et al. (2007) on outcome-based in-service teacher training program design, and Clarke (2011) on student assessment system strengthening.

IV. IMPLEMENTATION

A. Institutional and Implementation Arrangements

23. The MENFOP will be responsible for project implementation, through the Project Implementation Unit (Service de Gestion des Projets, (SGP)), technical departments and a project steering committee, which will provide oversight.

24. Project Steering Committee. A Ministerial Decision Note establishing the Project Steering Committee (Comité de pilotage des projets, CPP) to oversee education projects was signed by the MENFOP on March 3, 2012. It states that the CPP is headed by the Secretary General of MENFOP and composed of the different Directors of the MENFOP, General Inspection, Executive Secretariat, technical advisors and the head of the SGP. The Ministerial Decision Note also specifies the terms of reference for the CPP which role is to: (i) ensure consistency of projects activities with sectoral policies; (ii) validate annual programs and follow their progress as well as the implementation of project activities; (iii) examine difficulties in project implementation and propose appropriate solutions; and (iv) take measures to ensure effective project implementation.

25. Project Implementation Unit. The SGP has acquired experience in the implementation of Government as well as donor-financed projects. This unit satisfactorily managed the implementation of the School Access and Improvement Program (Projet d’accès et d’amélioration de l’éducation, PAAE) and PAAE2, the multi-donor-funded Primary Education Support Program, Education For All-Fast Track Initiative (EFA-FTI) Catalytic Fund (Education Pour Tous - Initiative de mise en oeuvre accelerée, IMOA - Fonds catalytique, FC) and is currently responsible for coordinating the implementation of the Strengthening Institutional Capacity and Education Management System project (Projet d’Appui des capacités institutionnelles et de gestion de l’éducation et de la formation, ACIGEF). The SGP will continue to be responsible for the overall coordination and implementation of project activities,

11

including all fiduciary aspects and monitoring and reporting of project progress. The SGP is currently composed of a procurement specialist (international consultant), a financial management specialist, two accountants, a civil engineer and a monitoring and evaluation officer. Given that the AQEP will generate additional work, it was agreed that the MENFOP would continue to reinforce the capacity of the SGP, especially in the field of procurement, by recruiting one or two assistants to work closely with the procurement specialist. The AQEP will support activities to strengthen the capacity of SGP personnel dedicated to that specific project, in the various aspects of project management.

26. MENFOP Directorates. Under the leadership of their respective director general, the various directorates and departments of the MENFOP will be responsible for: (i) preparing the terms of reference for technical assistance, training, studies and specifications for equipment to be acquired through the project in collaboration with SGP; (ii) developing the annual work plans and budgets for their departments and units; (iii) monitoring progress in implementation of work programs; (iv) preparing quarterly progress reports for submission to the CPP and SGP; and (v) preparing annual reports evaluating program results and submitting them to the CPP. The main directorates at MENFOP which are involved in project planning and implementation include: the General Directorate of Teaching (Direction générale de l’enseignement, DGE), General Inspection, and the General Directorate of Central Administration (Direction générale de l’administration,DGA) (which includes the SGP). An organizational chart of the MENFOP is shown in Annex 3.

27. The Statistics Service and the Monitoring and Evaluation Service (formerly Department of Planning and Informatization, DPI), both under the authority of the Executive Secretary, will be responsible for the management of education indicators and monitoring and evaluation at the strategic level.

28. Supervision of school construction/rehabilitation and environmental safeguards. The Direction de l’Habitat et de l’Urbanisme (DHU), under the Ministry of Habitat and Urbanism (Ministère de l’Habitat, de l’Urbanisme, de l’Environnement et de l’Aménagement du Territoire, MHUEAT) is the entity responsible for monitoring school construction works, in collaboration with MENFOP, but the implementing agency remains the MENFOP. The DHU has experience in implementing Bank safeguards instruments in past education projects and they will receive support from the environment and social safeguards team members in the Bank team.

29. The Directorate of Environment, which is under the MHUEAT, will be responsible for the follow-up of environmental aspects on construction sites, with clear responsibilities described in the Environmental Management Plan (EMP). Focal points have been appointed at the Directorate of Environment and the SGP to coordinate tasks related to environmental aspects and implementation of the EMP.

30. Manual of Operational Procedures. A Manual of Operational Procedures (MOP) for the SGP was prepared under ACIGEF. The MOP describes SGP’s administrative procedures in general, in the areas of procurement, accounting, and financial management. The implementation plan, procurement plan, and tools to properly monitor and evaluate project activities will be integrated in the current MOP.

12

B. Results Monitoring and Evaluation

31. The project Results Framework will be used for monitoring and evaluation of the project (see Annex 1). Project performance monitoring will focus on progress in achieving the project objectives, as measured by the results indicators agreed during negotiations and reflected in the Results Framework.

32. Under the supervision of the CPP, the SGP, assisted by a specialist in monitoring and evaluation (M&E), will be responsible for preparing progress reports in collaboration with the Directors of the different departments. Brief, standardized quarterly reports will be produced by each department based on progress made in the implementation of the work program. These will be compiled by the M&E Specialist in SGP and submitted for review to the CPP before their quarterly meeting.

33. Through technical assistance, the SGP and the directorates responsible for the implementation of the project will develop an M&E tool to help them in the monitoring of project activities. An M&E tool was described under the ACIGEF project, and funds were secured to train designated personnel in the directorates as well as the M&E specialist at the SGP, once recruited, in using the tool.

C. Sustainability

34. The share of government expenditure in Djibouti for the education sector remains one of the highest in the world, representing 17 to 26% of total national expenditures between 1999 and 2006. At the same time, the sector is somewhat dependent on external funding for education expenditures other than salary payments. The ongoing ACIGEF project supports activities to reinforce the technical and institutional capacity of the MENFOP to improve the delivery of education services and the efficiency in use of resources over time. The proposed AQEP project will focus on the quality of education at the school level, and will support activities to build the technical capacity of teachers, school directors and inspectors in teaching and using assessment tools. The combination of these two projects, in addition to other donors’ interventions in the sector, is expected to result in a more efficient and quality education system in the long-term.

13

V. KEY RISKS AND MITIGATION MEASURES

A. Risk Ratings Summary Table

Stakeholder Risk Risk Rating

Implementing Agency Risk

- Capacity S

- Governance S

Project Risk

- Design M

- Social and Environmental M

- Program and Donor L

- Monitoring and evaluation of services S

Overall Implementation Risk SL: Low; M: Moderate; S: Substantial

B. Overall Risk Rating Explanation

35. The MENFOP’s project implementation unit, the SGP, has implemented donor-funded projects for many years, including several education projects financed by the World Bank, the Islamic Development Bank, the African Development Bank, the Arab Fund for Economic and Social Development and the French Agency for Development (AFD). The SGP is familiar with the World Bank’s disbursement policies and procedures and was recently strengthened with the recruitment of specialists in procurement, accounting, civil engineering, and monitoring and evaluation. The SGP is currently responsible for implementing the IDA-financed project “Strengthening the Institutional Capacity and Management of the Education System” (Projet d’Appui des capacités institutionnelles et de la gestion de l’éducation et de la formation) (ACIGEF). A Manual of Operational Procedures (MOP) - including the Administrative and Financial Procedures Manual of the SGP - was developed under ACIGEF and workshops to adapt the MOP to the new organizational structure of MENFOP are scheduled to take place during 2013 and 2014 with MENFOP and SGP staff. The performance of the SGP staff has improved over the past two years, but training is still needed to strengthen/refresh staff skills in the areas of procurement, financial management and monitoring and evaluation. The ongoing ACIGEF project is expected to address this, as it focuses on capacity building at all levels of the MENFOP and includes a budget line for SGP staff training. Among other support, the World Bank team organized a three-day training workshop on fiduciary arrangements for all projects management units in Djibouti in March 2013. The World Bank will continue to provide technical advice and hands-on training as needed throughout the implementation of the project.

36. There are challenges which constrain the implementation capacity of the MENFOP and pose a risk to the implementation of the new project. These are summarized as: high turnover of key personnel, recent changes in the organizational structure of MENFOP, and the fact that roles and responsibilities of the various MENFOP departments are not clearly defined. These challenges are known to the MENFOP and the donor community, and are the subject of the

14

ACIGEF project which is expected to mitigate implementation risks by addressing the issue of institutional capacity. In particular, ACIGEF’s first component is to define the roles, responsibilities, and procedures of the MENFOP and train all MENFOP departments in planning and budgeting. The MENFOP, as well as donors, are fully on-board with the objectives of ACIGEF as well as the AQEP. Nonetheless, the recent political developments in the country which include: (i) the nomination of a new Minister at MENFOP in April 2013; and (ii) the reshuffle of key MENFOP staff in June 2013 (including the head of the SGP) suggest an important transition period for the MENFOP as well as potential delays in project implementation. For this reason, the implementation risk is rated “Substantial.” An Operational Risk Assessment Framework (ORAF) is attached as Annex 4, detailing the key risks and mitigating measures.

VI. APPRAISAL SUMMARY

A. Economic and Financial Analysis

37. The benefits of the project are projected to exceed the costs, with an Economic Internal Rate of Return (EIRR) of 31.1 percent, indicating the economic viability of this project. The various quality improvement measures of the project are expected to reduce repetition and dropout rates in primary education and improve student learning performance, thereby reducing the number of years required to produce primary education graduates. The project also expects to result in more graduates with better skills and competencies, who will produce better economic outcomes. The benefits stream has been quantified by estimating: (i) more children completing primary education as a result of improved retention rate, (ii) reduced “years invested per graduate” due to reduced repetition and dropout, and (iii) lower opportunity cost incurred to students in post-primary education life due to fewer years invested in completing primary education. It is not possible to calculate the benefits of improved learning directly in terms of earnings or other metrics as this data is not available (Please see Annex 5 for details).

B. Procurement and Financial Management

38. Procurement and FM statement. Capacity assessments of the SGP to implement procurement and financial activities were carried out in March 2013. Overall, these assessments concluded that the staffing and qualifications of the SGP, which is responsible for implementing project activities, were satisfactory. However, there is a constant need to enhance capacity of the SGP in procurement and financial management due to high staff turnover. The assessments mention a set of recommendations which were taken into account in the project design. The main recommendations are: i) to update an Administrative and Financial Procedures Manual (AFPM), in particular the new organization chart, the restructuring of the financial and accounting department, and the implementation of a unique procurement department for the SGP (which was completed before negotiations); (ii) to finalize the customization of the accounting software to enable the project to generate the required periodical financial reports (to be completed before negotiations); (iii) to recruit an internal auditor to regularly evaluate the financial and physical execution of project activities; and (iv) to hire an external auditor with terms of reference satisfactory to the Bank (to be completed no later than three months after effectiveness date; and (v) to recruit an additional procurement specialist.

15

C. Social

39. OP 4.12 will not be triggered. Mobilization of land for purposes of building one school and extending/rehabilitating existing schools will be done on state owned land and documented in consultation and agreement with relevant traditional and administrative authorities. MENFOP has confirmed that these construction and extension/rehabilitation works will not cause involuntary land acquisition or involuntary displacement of people leading to loss of access to resources and /or revenues. MENFOP submitted copies of official signed documents attesting to land mobilization, with prior consultation and non-compensated agreement prior to appraisal of the project.

D. Environment

40. The project is classified as a B and the Environmental Assessment policy OP/BP 4.01 is triggered due to site specific and less adverse impacts associated with the construction and expansion/rehabilitation of schools. The Environmental Management Plan (EMP) of the EFA-FTI grant is being revised and updated. Consultations with affected communities were carried out by the Borrower before July 8, 2013 and were documented in minutes, reviewed by the Bank and attached as an annex to the EMP. The EMP was disclosed in-country on the MENFOP website on August 26, 2013 and in the World Bank Infoshop on August 23, 2013.

41. The main environmental issues associated with the project include: possible negative impacts associated with construction and rehabilitation activities. Other main issues that are identified for consideration include: water availability, and sanitation and hygiene. In order to ensure that water is available in schools, availability of water was one of the criteria for new school location selection. In addition, the project will ensure availability of water and sanitation (water point rehabilitation, latrines rehabilitation in expanded/rehabilitated schools). The project will work with sanitation and hygiene specialist to ensure that proper sanitation and hygiene measures are included early on in the design.

E. Other Safeguards Policies Triggered (if required)

42. No other safeguards will be triggered.

16

Annex 1: Results Framework and MonitoringREPUBLIC OF DJIBOUTI: Access to Quality Education

Project Development Objective (PDO): To improve the learning environment and instructional practices of teachers in the first three years of primary education.

PDO Level Results Indicators*C

ore Unit of

Measure BaselineCumulative Target Values**

Frequency Data Source/Methodology

Responsibility for Data

Collection

Description (indicator

definition etc.)YR 1 YR 2 YR3 YR 4 YR5Indicator One: Percentage of teachers implementing at least three pedagogic practices in which they have received Project-supported training

Percent 0 0 50% 80% Inspector and Pedagogic Counselor reports

MENFOP (CEFF, General inspection)

Teacher level indicator: Teachers will be trained on specific instructional strategies such as teaching number sense, basic operations, geometry and measurement as well as differentiated instruction and management of large classes. The use in class of strategies in which they have received training will be measured using a revised teacher observation tool and collected for all grade 1-3 primary teachers who have received Project-financed training.

Indicator Two: Enhanced versions of grade 2 math and French exams administered

Yes/No No No Yes Yes Analysis of end of 2nd grade OTI

MENFOP Student level indicator: The OTI exams will

17

scores be revised during year one through project support to increase comparability between years and correspondence with the curriculum, and will be conducted in Y2 and Y3 of the Project

Indicator Three: Percentage of school directors implementing at least three management practices in which they have received Project-supported training.

Percent 0 0 40 60 Inspector reports

MENFOP School directors’ indicator for learning achievement: Directors will be trained in specific management strategies. These strategies will be monitored by school inspectors

Indicator Four: Direct project beneficiaries (number), of which female (percentage)

XNumber and Percent

0 0 0 1,200, 50%

MENFOP Number of students using classrooms built or renovated using project funds, number of teachers and school principals trained

INTERMEDIATE RESULTS

Intermediate Result (Component One): Access to Primary Education

Intermediate Result indicator One: Number of classrooms built

X Number 0 0 0 47 Project reports

MENFOP Number of classrooms built

18

or rehabilitated resulting from Project interventions, of which primary

or rehabilitated using Project funds which are used for instruction

Intermediate Result (Component Two): Quality of Primary EducationIntermediate Result indicator One: Person days of training provided to primary school teachers, Pedagogic Counselors, School Directors and Inspectors (by gender)

Number 0 1000 6000 9000 Training reports, end-of-training assessments

MENFOP Cumulative

Intermediate Result indicator Two: person days of training provided to pre-school service providers (by gender)

Number 0 0 500 750 Training reports, end-of-training assessments

MENFOP, PIU Cumulative

Intermediate Result indicator Three: Percentage of teachers providing evidence that they have conducted classroom-based assessments of student learning

Percentage

n/a 30 50 80 Inspector reports

MENFOP The use of formative and summative evaluations designed by teachers for their students will be measured through student work and teacher notes (e.g. lesson plans, recorded scores in grade book)

Intermediate Result indicator Four: 2nd grade national math exam revised

Y/N N Y Exam paper MENFOP The OTI exams will be revised during year one through project support to increase comparability between years and correspondence with the curriculum,

19

Intermediate Result indicator Five: Unified teacher observation form adopted for all primary school inspectors

Y/N N Y Official Decision note

MENFOP A revised teacher observation tool will be designed and adopted for use in observations of all grade 1-3 primary teachers

Intermediate Result (Component Three): Project Monitoring and Management

Intermediate Result indicator One: Comité de Pilotage des Projets (CPP) meets at least two times per year and validates Project progress report

Percent No Yes Yes Yes Validated Project progress report

MENFOP As a key element of Project governance, the CPP meets to discuss progress toward Project goals at least twice every twelve months

20

Annex 2: Detailed Project Description

REPUBLIC OF DJIBOUTI : Access to Quality Education Project

1. Component 1: Access to Primary Education (estimated cost: US$1.6 million). The purpose of this component is to promote equitable access to quality primary education while improving physical learning environment in selected rural schools, in the four targeted areas of Dikhil, Arta, Ali Sabieh and Tadjourah. To achieve this objective, the project will finance: (i) the construction and equipping of a new primary school in Tawaoco Chiniley (Dikhil), which will also include one canteen (cafeteria/kitchen and storage), one teacher/school director accommodation, six toilets (dry latrines), the upgrading of an existing traditional well located next to the selected site and the installation of solar panels; (ii) the rehabilitation of six existing school facilities in Dorra and Adaillou (Tadjourah), Sankal (Dikhil), Ali Addeh (Ali Sabieh), Omar Djagga and Wéa (Arta), and extensions in those same six schools to add a total of about 20 new classrooms as well as necessary sanitary facilities (additional toilets) and the repair of existing water supply systems (water wells, supply mains, water taps and tanks), with the aim of reducing overcrowding in those schools. The project will also finance the provision of the necessary furniture and equipment for those additional classrooms (i.e. desks, tables, chairs, cabinets, chalk boards, additional solar panels needed, etc.) as well as the replacement or repair of broken furniture and equipment in existing facilities to be rehabilitated.

2. Details of the civil works program is summarized in table 2.1 below:

School RegionEductional

levelActual number

of students

Class R WC Accomod. Canteen Office Class R WC Accomod. CanteenAdaillou Tadjoura Basic education 192 3 10 1 1 1 5 6 0 0Omar Djagga Arta Basic education 173 3 6 0 1 0 2 2 0 0Dorra Tadjoura Basic education 190 4 10 1 1 1 3 4 0 0Ali-Addeh Ali Sabieh Basic education 268 3 6 2 1 1 4 6 0 0Wéa Arta Basic education 336 6 7 0 1 1 3 4 0 0Sankal Dikhil Primary 300 3 6 1 0 0 3 4 1 1Taowoco ChinileyDikhil Primary 0 0 0 0 0 5 6 1 1

Total 1459 22 45 5 5 4 25 32 2 2

School construction, extension and rehabilitation program financed under PAEQE

Rehabilitation Construction / extension

3. The country currently counts 1080 existing classrooms in primary schools. However, the PAE 2014-2016 presented to donors in June 2013 shows that the need for additional classrooms and school rehabilitation over the next three years remains very high:

21

Need for additional classrooms and rehabilitation during the period 2012-2016

Primary schools

Number of additional classrooms

needed

Number of classrooms built in 2013 Number of

classrooms to be

rehabilitated

Number of classrooms planned to be rehabilitated

in 2013Classrooms financed on

the Government

budget

Classrooms financed through external

resources

Classrooms financed on

the Government

budget

Classrooms financed through external

resourcesDjiboutiville 279 169 (built) - 525 247 36

Regions 89 - 13 (built) 323 - 24Total 368 848 -

Already built (program 2012-

2013) (or about to be completed)

169 13

Already rehabilitated

(program 2012-2013 (or

about to be completed)

247

60

Remain to be built/rehabilitated over the next three years (2013-2016)

186 - - 541 - -

4. Given the small amount allocated to infrastructure under this project, representing approximately 42% of total Project costs, specific criteria were chosen to select the schools and sites which would benefit from project interventions. The priority objectives are to reduce overcrowding to reach a number of about 45 students by classroom (some classrooms currently count 60 children) and eliminate double shifts, thus creating a better learning environment for children. The selected criteria are :

(i) For existing schools:

Schools with high degree of over-enrollment; Schools with double shifts and/or incomplete cycles; Schools with damaged buildings that can be repaired.

(ii) For new schools:

Regions with highest levels of population; Sites with water access within a perimeter of 500 meters; Sites accessible by 4X4 vehicle; Availability (or planned) of health services; Ability to ensure sustainability of the investment by selecting sites where populations

are likely to stay.

5. School design: The MENFOP will use the norms and standards for school construction which were developed under PAAE 2 (P086994) and used for construction under the EFA-FTI Catalytic Fund - Additional Financing Grant. However, during project preparation, it was agreed

22

that the MENFOP would review the design of latrines (architectural design and septic tank), and of kitchens/cafeterias (addition of a covered exterior cooking area).

6. School maintenance: Under the PAAE2, a strategy for maintenance was developed and is expected to be implemented by the newly established Service for Maintenance, under the authority of the DPME. The ongoing ACIGEF project also includes activities to reinforce the capacity of this service so that it can fully play its role in planning and managing the maintenance of educational assets.

Component 2: Quality of Primary Education

7. The objective of this component is to improve learning outcomes for all students in a sustainable manner, with an emphasis on the most vulnerable children. This will be done by financing improvements to the capacity of the system to provide ongoing classroom-level support for the learning process, and by financing measures to ensure that all children are able to receive the benefit of basic education services. The project will finance:

(i) in-service professional development for teachers, pedagogic counselors, school directors, inspectors, and pre-service training for teachers and inspectors. These programs will be designed to support an ongoing dialogue about the importance of raising the levels of learning for all children, and will include piloting of promising approaches at the regional level, and will include production of teaching and learning materials for effective instruction focused on student achievement in math in the first three grades of primary school. In support of this training, the development and use of teaching and learning materials will be coordinated with the professional development program to ensure maximum impact on learning. These investments, along with those described in section (ii) below will be institutionalized at the school level through the school learning achievement plan;

(ii) support for development of a comprehensive student assessment policy and implementation of both in-class and system-wide assessments of learning. This sub-component will support assessment of mathematics outcomes in the early grades of primary schooling, while a complementary program to be supported by USAID will support assessment of reading outcomes; and

(iii) further development and implementation of a community-based model for pre-school education, with overall leadership from UNICEF and the Government. This approach is intended to greatly improve pre-school access for children, and will aim to improve school readiness and age-appropriate enrollment in primary schooling. This component will also include training and support to teachers for use of Braille and sign language as well as appropriate materials.

8. Sub-component 2.1.: Pre-service training and in-service professional development. Pre-service training of teachers is managed centrally. Support under this program to in-service professional development will compliment and be coordinated with investments by other donors in pre-service teacher training programs focused on supporting teachers to understand and respond to individual student learning needs.

23

9. At the regional level, the Pedagogic Resource Centers will become the locus for the in-service professional development of teachers, pedagogic counselors and school directors. In-service programs will focus on implementation of a results-oriented approach, with particular support under the project for mathematics in the early grades. It is anticipated that school pilots will be developed in several regions, under guidance from the regional inspectors and pedagogic counselors, to better link training and implementation. These pilots will have a direct mandate to measure the impact of programs on student learning. They will provide a low-risk opportunity for the government to consider options for improved outcomes in mathematics and reading, and to involve parents, teachers and school directors in an ongoing dialogue to raise expectations for student learning, and to achieve a significant increase in outcomes. All pilot programs will be designed for scalability.

10. Support under the current project will be limited to the production of teaching and learning materials necessary for the training programs described above. Scripted lessons for mathematics instruction will be developed for use in the early grades to provide additional support to under-qualified teachers. Materials will be prepared by CRIPEN (National Education Center for Research, Information and Production) in collaboration with the inspectors, pedagogic counselors and international expertise.

11. Sub-component 2.2.: Assessment of learning outcomes. The success of a results-oriented approach relies heavily on the availability of information about learning: what levels of learning are being achieved? Who is learning and who is not? What factors are associated with positive learning outcomes? This information needs to be available at the classroom level to inform the teaching and learning process, and at the regional and national levels to inform policy development and decision-making. This sub-component includes two major activities:

The first activity will provide teachers with the knowledge and opportunity to carry out meaningful classroom-level formative and summative assessments of mathematics achievement. A parallel program supported by USAID will support similar efforts for reading. The assessments will help teachers understand expected rates of learning in class, and track the progress of all children. The programs will be implemented by the pedagogic advisors as part of their regular school visits, and will help to shift the tenor of these visits more heavily toward instructional rather than purely administrative purposes. This component will further support the sharing of periodic summaries of the findings of these and other assessments (see OTI, below) with parents and community members of the school.

The second activity will support system-wide testing by improving the existing OTI examination process. The OTI exam is given at the end of Grade 2 and Grade 5, but the test items are not designed in such a way that meaningful information about year-to-year trends is available. Under this activity, consultant support will be recruited to help the ministry improve the technical quality of the OTIs for math. The aim is to both ensure greater validity, namely that the test is effectively measuring the skills that children are expected to learn, as well as greater reliability over time, namely that the tests given from year to year provide comparable results. All support will be designed to be consistent with existing capacity within the ministry, and will be evaluated on the basis of transfer of skills to ministry personnel. The improvements to the national OTI census exam will

24

be informed by a sample-based Early Grade Mathematics Assessment, to be completed in the first year of the program in parallel with a USAID-financed Early Grade Reading Assessment. It is expected that the joint implementation and analysis of results will lower the total cost of this component and increase its potential impact.

12. Sub-component 2.3.: Pre-school education. The public pre-school gross enrollment rate in Djibouti has declined in recent years and is currently provides services for about 550 children, representing approximately 1 percent of the eligible age cohort, according to the Annuaire Statistique 2012-2013. This is one of the lowest rates in the world, and indicates almost no provision for children from poor families. Given the known impact of pre-school education on age appropriate primary school enrollment and overall school readiness and persistence, an increase in pre-school availability has significant potential for a positive impact on student learning outcomes in Djibouti. UNICEF has taken the lead within the local education group in Djibouti for increasing access to pre-school education, particularly for children from poor families. This has led to agreement in country on piloting a community-based model of pre-schooling targeted to rural areas as described in the sectoral Plan d’Action 2014-2016. The pre-school sub-component of this project will support the community-based model by financing training for providers and instructional materials.

Component 3: Project Monitoring and Management (estimated cost: US$0.3 million)

13. The objective of this component is to support the SGP in facilitating the implementation and monitoring and evaluation of the project, while continuing to reinforce the capacity of SGP. Specifically, the project would finance: (i) incremental operating costs (communications, bank fees, consumables, fuel, office supplies, procurement advertisements), i.e. extra costs generated by the project; (ii) the recruitment of an accountant and a procurement specialist dedicated to the project; (iii) transportation fees related to the supervision of works and follow-up of environmental aspects by the SGP, Department of environment and DHU; (iv) audit expenses; and (iv) training in procurement, financial management and monitoring and evaluation of SGP staff and relevant MENFOP staff involved in project implementation..

25

Annex 3: Implementation Arrangements

REPUBLIC OF DJIBOUTI: Access to Quality Education Project

Project Institutional and Implementation Arrangements

Project administration mechanisms

1. The MENFOP will be responsible for project implementation, through the SGP, technical departments and a Steering Committee which will provide oversight.

2. Project Steering Committee. A Ministerial Decision Note establishing the Project Steering Committee (Comité de pilotage des projets, CPP) to oversee donor-financed education projects was signed by the MENFOP on March 3, 2012. It states that the CPP is headed by the Secretary General of MENFOP and composed of the different Directors of the MENFOP, the General Inspection, the Executive Secretariat, technical advisors and the head of the SGP. The Note also specifies the terms of reference for the CPP which role is to: (i) ensure consistency of projects activities with sectoral policies; (ii) validate annual programs and follow their progress as well as the implementation of project activities; (iii) examine difficulties in project implementation and propose appropriate solutions; and (iv) take measures to ensure effective project implementation.

3. Project Implementation Unit. The SGP, which is under the authority of the Directorate of Projects, Maintenance and Equipment (Direction des Projets, de la Maintenance et des Equipements, DPME), has acquired experience in the implementation of Government as well as donor-financed projects. This unit satisfactorily managed the implementation of the two projects of the School Access and Improvement Program (Programme d’accès et d’amélioration de l’éducation, PAAE), the multi-donor-funded Primary Education Support Program, EFA-FTI Catalytic Fund (Education Pour Tous - Initiative de mise en oeuvre accelerée, IMOA - Fonds catalytique, FC) and is currently responsible for coordinating the implementation of the ACIGEF project.

4. The SGP will continue to be responsible for the overall coordination and implementation of project activities, including all fiduciary aspects and monitoring and reporting of project progress. The SGP is currently composed of a project director, a procurement specialist (international consultant), a procurement assistant, a financial officer (FO), two accountants, a civil engineer and a monitoring and evaluation (M&E) officer. Given that the AQEP will generate additional work, it was agreed that the MENFOP would continue to reinforce the capacity, especially in the area of procurement. The AQEP will support activities to strengthen the capacity of SGP personnel dedicated to that specific project, in the various aspects of project management. These activities will be complementary of other capacity building / training activities already planned in the ongoing ACIGEF project for SGP and MENFOP departments

5. MENFOP Directorates. Under the leadership of their respective director general, the various directorates and departments of the MENFOP will be responsible for: (i) preparing the terms of reference for technical assistance, training, studies and specifications for equipment to be acquired through the project in collaboration with SGP; (ii) developing the annual work plans and budgets for their departments and units; (iii) monitoring progress in implementation of work

26

programs; (iv) preparing quarterly progress reports for submission to the CPP and SGP; and (v) preparing annual reports evaluating program results and submitting them to the CPP. The main directorates involved in project planning and implementation include:

a. the General directorate of teaching (Direction générale de l’enseignement, DGE); and

b. the DGA which includes the DPME and its related services (SGP, maintenance, school cafeteria, and information technology), the Directorate of financial affairs and the Directorate of human resources. The organizational chart of the MENFOP is shown further below.

c. The Inspection de l’Enseignement de base (Primary Inspectorate) under the Inspection Generale de l’Education Nationale (General National Education Inspectorate).

6. Monitoring and evaluation at the strategic level. The Service of statistics (Service statistique) and Service of monitoring and evaluation (Service suivi et évaluation) both placed under the authority of the Executive Secretary, will be responsible for the management of education indicators and monitoring and evaluation at the strategic level.

7. Supervision of school construction/rehabilitation and environmental safeguards. The Directorate for Housing and Urbanism (Direction de l’Habitat et de l’Urbanisme, DHU), under the Ministry of Housing, Environment and Urbanism (Ministère de l’Habitat, de l’Urbanisme, de l’Environnement et de l’Aménagement du Territoire, MHUEAT) is the entity responsible for monitoring school construction sites. They have experience in implementing Bank safeguards instruments of past education projects and they will receive support from the environment and social safeguards team members in the Bank team.

8. The Directorate of Environment, which is under the MHUEAT, will be responsible for for following-up on environmental aspects on construction sites, with clear responsibilities have been described in the Environmental Management Plan (EMP). Focal points have been appointed at the Directorate of Environment and the SGP to coordinate tasks related to environmental aspects and implementation of the EMP.

9. Manual of Operational Procedures. A Manual of Operational Procedures (MOP) for the SGP was prepared under ACIGEF. The MOP describes SGP’s administrative procedures in general in the areas of procurement, accounting, and financial management and refers to World Bank as well as national procedures. The implementation plan, procurement plan, and tools to properly monitor and evaluate project activities will be integrated in the current MOP. The SGP also has an Administrative and Financial Procedures Manual (AFPM) which was prepared under previous Bank-financed projects, and was integrated and was integrated into the MOP. However, various chapters of the AFPM needs to be updated to reflect the new MENFOP organizational chart, in particular the restructuring of the financial and accounting department, the implementation of a unique procurement department for the SGP. The update of this AFPM is in its final stage; a copy was commented by the Bank and the final version is expected to be completed by negotiations.

27

ORGANIZATIONAL CHART OF THE MINISTRY OF NATIONAL EDUCATION AND VOCATIONAL TRAINING (MENFOP)

28

Financial Management, Disbursements and Procurement

a. Financial Management

10. The Republic of Djibouti has a body of complete and sufficient texts for a sound management of its public finances. The legal framework of Djibouti includes notably: (i) the Constitution of September 4, 1992; and (ii) the law n°107/AN/00 relating to the finance laws which set the rules relating to the determination of the resources and expenses, the preparation and the vote on annual budget, the execution, and the control of the budget.

11. The institutional framework contains the structures necessary for public financial management. The institutional framework meets the needs as regards preparation as well execution and control of the budget. However, some practices affect the efficiency of the texts. This is the case in particular for: (i) the use of the derogatory procedures of public expenditure; and (ii) a certain lack of budgetary discipline.

12. The proposed AQEP will be implemented in Djibouti according to the World Bank guidelines and through the human resources of the project implementation unit SGP. The project funds will be disbursed from grant account established by IDA using advance to a designed account, direct payments, and withdrawal for eligible expenditures accompanied by supporting document or for statements of expenditure for sums less than predefined thresholds for each expenditure category, following the applicable procedures and the World Bank's Disbursement Handbook. Interim Unaudited Financial Reports and Annual Financial Statements will be used as a financial reporting mechanism and not for disbursement purposes.

13. Transparency and governance : The 2012 corruption perception index compiled by Transparency International ranks Djibouti 94th out of 174, an improvement of six places compared to 2011. Overall, procurement laws, rules and regulations are fairly adequate. There are a number of weaknesses in the procurement management process, such as thresholds for open bidding procedures not being systematically applied. However, the government is actively strengthening capacities and transparency. Corruption is actively prosecuted and has led to several arrests in the past few years. The creation of the Court of Accounts as an independent Court, the strengthening of the capacity of l’Inspection Générale de l’Etat and l’Inspection Générale des Finances are important steps for uncovering and prosecuting corruption cases.

Past Experience in the Sector14. The World Bank and Ministry of National Education and Vocational Training (Ministère de l’éducation nationale et de la formation professionnelle, MENFOP) have had previous experience in the sector through PAAE, PAAE II, and the Djibouti Primary Education Support Program-EFA-FTI Catalytic Fund. In addition, MENFOP is currently implementing ACIGEF which became effective in January 2013. This SGP was also entrusted with several other projects financed by World Bank and other donors. Thus it has acquired significant experience in managing projects implemented through external financing. Therefore, this project can capitalize upon the experience acquired by the SGP.

Administration arrangements

29

15. The project will be carried out by the SGP under the supervision of the MENFOP’s CPP. The SGP is attached to the General Direction of Central Administration of the MENFOP.

16. The SGP will report periodically to the CPP and will be able to call on the resources and capacity of the CPP to solve issues that arise during the project design and implementation phase.

17. The SGP will be responsible for project financial management and accounting in compliance with general accepted accounting principles. It will be responsible for preparing periodic reports on project implementation progress and on both physical and financial achievements (by component and by expenditure category).

18. The SGP will maintain the project bookkeeping and will produce annual Project Financial Statements (PFS) and quarterly Unaudited Interim Financial Reports (IFR) within 45 days of the end of each calendar quarter.

19. Overall, the SGP will be responsible for maintaining a financial management system that is acceptable to the World Bank.

Financial management Risk Assessment and Mitigation measures20. An assessment of the financial management (FM) capacities of the SGP which will be managing the fiduciary aspects of this project was conducted as part of project preparation in March 2013. The SGP has several years of experience in implementation of IDA-financed projects and has implemented successfully the two phases of the PAAE (over a ten-year period) as well as the various phases of the Djibouti Primary Education Support Program-EFA-FTI Catalytic Fund and is currently implementing the recently approved ACIGEF. The FM assessment identified the following risks: (i) the SGP’s AFPM has been updated but not all procedures have been implemented; (ii) External audit: the SGP is entrusted with several projects financed by the World Bank and other donors. An auditor will be appointed for the project. Based on the recommendations from the assessment, the MENFOP will explore the possibility of having one external auditor for all the projects managed by the SGP, as a good practice currently followed by other countries; (iii) the accounting software, even though capable of recording all transactions, is still undergoing customization and is unable to produce the required periodical financial reports.

21. In view of the risks identified and the weaknesses observed, the overall financial management risk is deemed to be moderate. The SGP should satisfy the following recommendations in order to maintain an acceptable financial management system. The main recommendations are to: (i) update and AFPM, in particular the new organization chart, the restructuring of the financial and accounting department, and the implementation of a unique procurement department for the SGP; (ii) finalize the customization of the accounting software to enable the project to generate the required periodical financial reports; (iii) recruit an internal auditor to regularly evaluate the financial and physical execution of project activities; and (iv) hire an external auditor with terms of reference satisfactory to the Bank not later than six months after effectiveness.Proposed FM and Disbursement Arrangements

30

22. Staffing : The SGP has a Financial Officer (FO) who has been responsible for handling the overall FM aspects of all Bank financed education projects (previous and current). The FO has the necessary experience in managing the FM function for bank financed projects and has attended the fiduciary workshop conducted in Djibouti by the financial management, procurement and disbursement units of the Bank. The SGP has been fortified with the recruitment of two additional accountants who will be working on the ongoing education project (ACIGEF) in addition to this new project. The accountants will be reporting to the financial officer who, in her turn, will be reporting to the project manager.

23. Budgeting : The SGP will prepare an annual budget for the financial commitments for each component The SGP capacity assessment reveals that the process of planning and budgeting should be improved based on the following recommendations: (i) The procurement cell should book up to date all the project commitments on “Success” management software; (ii) “Success” software should be configured for an automated management of the procurement plan; (iii) An annual budget and a disbursement plan should be prepared in the end of each fiscal year.

24. Project Accounting System : The transactions will be registered on the accounting system by the accountant under the control of the FO. The project FO is responsible for preparing the IFRs before their transmission to the project manager for approval. Periodical reconciliation between accounting statements and IFRs is also done by the FO.

25. The general accounting principles for the project are as follows: (i) project accounting will cover all sources and all uses of project funds including payments made and expenses incurred. All transactions related to the project will be entered into the accrual accounting system and the appropriate reports. Disbursements made from the project’s Designed Accounts will also be entered into the project accounting system; (ii) project transactions and activities will be distinguished from other activities undertaken by the SGP. IFRs summarizing the commitments, receipts, and expenditures made under the Project should be produced every quarter using the templates established for this purpose and sent to the SGP; and (iii) The Project chart of accounts will be compliant with the classification of expenditures and sources of funds indicated in the project documents and the general budget breakdown. The chart of accounts should allow for data entry to facilitate the financial monitoring of project expenditures by component and sub-component, expenditure classification, disbursement category and source of funds.

26. Internal Control : The project will be carried out by the SGP attached to the General Direction of Central Administration of the MENFOP which has acquired significant experience in managing projects implemented through external financing. Therefore, this project can capitalize upon the experience acquired by SGP.

27. The SGP also has an AFPM which was prepared under previous Bank-financed projects, and was integrated and was integrated into the MOP. However, various chapters of the AFPM needs to be updated to reflect the new MENFOP organizational chart, in particular the restructuring of the financial and accounting department, the implementation of a unique procurement department for the SGP. The update of this AFPM is expected to be completed and submitted to the Bank before negotiations. Moreover in order to strengthen weaknesses in the role and

31

responsibilities of current staff and the need to match skills with the needs of the work program. The SGP will also need to hire an internal auditor in charge of internal control supervision.

28. Project commitments will be subjected to the local procurement procedures through the National Procurement Committee, for amount exceeding the threshold fixed by the local regulations. This Committee will then be involved in the control of all the procurements steps.

29. Payments of eligible expenses will be done based on instructions signed by both the MENFOP and of the MOEFP (Foreign Finance Department-FFD). The FFD will then be responsible for controlling all expenses eligibility character.

30. Project reporting : The project financial reporting will includes unaudited IFRs and yearly PFSs.

(i) IFR should include data on the financial situation of the project. These reports should include: (a) a statement of funding sources and uses for the period covered and a cumulative figures, including a statement of the bank project account balances; (b) a statement of use of funds by component and by expenditure category; (c) a reconciliation statement for the Designated Account; and (d) a budget analysis statement indicating forecasts and discrepancies relative to the actual budget. The SGP should produce the IFRs every quarter and send them to the World Bank within 45 days from the end of each quarter.(ii) PFS should be produced annually. The PFS should include (a) a cash flow statement; (b) a closing statement of financial position; (c) a statement of ongoing commitments; and (d) an analysis of payments and withdrawals from the grant account.

(iii) IFR and PFS should be produced based on the accounting system and should be submitted to an external financial audit.

31. Audit of the project financial statements : An annual external audit of the project accounts will cover all aspects of the project and all uses of funds and all the committed expenditures of the Project. It will also cover the financial operations, internal control and financial management systems and would also include a comprehensive review of statements of expenses.

32. An external auditor will be appointed according to terms of reference acceptable to the Bank and should conduct the audit in accordance with international auditing standards. The auditor should produce: (i) an annual audit report including his opinion on the project's annual financial statements; (ii) a management letter on the project internal controls; and (iii) a limited review opinion on the IFRs. The annual reports should be submitted to the World Bank within six months from the closure of each fiscal year and the limited review opinion should be submitted to the World Bank with the IFRs.

33. Flow of funds : Payment will be instructed by the double signature of the MENFOP and the Ministry of Economy, Finance and Planning (MOEFP) and in order to facilitate the management of funds and disbursement procedures for eligible expenses, a single segregated Designated Account in US Dollars will be opened at the Central Bank of Djibouti or a commercial bank in

32

Djibouti acceptable to the World Bank. Advances from IDA grant account will be disbursed to the designed account to be used for the project expenditures.

34. Each Ministry will appoint a person authorized to sign jointly the payment requests. MENFOP authorized payment requests will be sent to the MOEFP, which should verify the supporting documents and the eligibility of the expenses in light of procedures and official agreements with the Bank and will then proceed with the joint signature of the payment instruction. The SGP will file the original supporting documents.

35. Summary of actions to be implemented : Project implementation support actions are summarized below:

Actions Deadline

Update and apply the various chapters of the AFPM, in particular the new organization chart, the restructuring of the financial and accounting department, the implementation of a unique procurement department for the SGP.

By negotiations

Finalize the customization of the accounting software so to enable the generation of the periodical financial reports.

By negotiations

Hire an internal auditor and accountant in charge of internal control supervision

3 months from effectiveness

Hire an external auditor with terms of reference acceptable to the Bank. 6 months from effectiveness

36. Supervisory Schedule : The frequency and scope of World Bank supervisory missions will be adapted to the needs of this project and will be delivered both at central and regional levels. Supervisory frequency will be half-yearly, though this may be increased if needed.

b. Disbursement37. The IDA fund will be disbursed according to the World Bank guidelines and should be used to finance project activities.

38. The project funds will be disbursed from grant account established by IDA using advance to a designed account, direct payments, reimbursements, special commitments and withdrawal for eligible expenditures accompanied by supporting document or for statements of expenditure for sums less than predefined thresholds for each expenditure category, following the applicable procedures and the World Bank's Disbursement Handbook.

39. The Bank will honor eligible expenditures for works completed, services rendered and goods delivered by the Project closing date. A four months' grace period will be granted to allow for the payment of any eligible expenditure incurred before the grant closing dates.

33

40. Designated Account . To facilitate fund and disbursement management for eligible expenditures, a Designated Account in US Dollars will be opened at the Central Bank of Djibouti or at a commercial bank in Djibouti acceptable to the World Bank. Advances from IDA grant account will be transferred to the designed account to be used for the project expenditures.

41. Payments of eligible expenses will be done through the Designated Account based on the instruction signed by both the MENFOP and of the MOEFP.

42. The authorized allocations of the Designated Account will be US$ 400’000, covering four months of eligible expenses financed by the grant.

43. The MENFOP will be responsible for submitting replenishment requests on a monthly basis, accompanied by appropriate supporting documentation for expenditures made and reconciled bank statements.

44. Statement of expenditures . All requests for withdrawals of grant funds should be fully documented, with the exception of: (i) work under contracts costing less than a counter value of US$500 000; (ii) goods under contracts costing less than a counter value of US$200 000; (iii) consultant firms under contracts costing less than a counter value of US$100 000; and (iv) individual consultants or training programs costing less than a counter value of US$50 000 , for which reimbursement may be requested based on expenditure statements.

45. Documentation of the expenditures listed above will be maintained and made available for review by the Bank missions and by project auditors.

46. All disbursements will be subject to the terms of the Grant Agreement and to the procedures defined in the disbursement letter.

Procurement

47. Project Management : The MENFOP, as the agency responsible for implementing project activities, is subject to the rules and regulations under the Procurement Code of the Government of Djibouti.  The Procurement Code was updated in 2009/2010 to be in line with best international practice.

48. The SGP will be the unit administering all procurement-related transactions to be financed under the project. The SGP has been familiar with Bank procurement guidelines and procedures since 2000, as it has been implementing IDA-financed projects and therefore will be capable of providing the necessary management oversight of compliance with the Bank’s procurement guidelines. The procurement specialist at the SGP in charge of the ACIGEF project currently underway will also be in charge of overseeing all procurement under the AQEP.

49. Procurement of works : Works procured under this project would include: (i) the construction of a new primary school in Tawaoco Chiniley (Dikhil), which will also include one cafeteria/kitchen, 1 teacher/school director dormitory, 6 toilets; (ii) the rehabilitation of six

34

existing schools in Dorra and Adaillou (Tadjourah), Sankal (Dikhil), Ali Addeh (Ali Sabieh), and Omar Djagga and Wéa (Arta); and (iii) extensions in those same six schools to add a total of about 20 new classrooms and necessary educational facilities (additional toilets), with the aim of reducing overcrowding in those schools.

50. Procurement will be carried out using the Bank’s Standard Bidding Documents (SBD) for all International Competitive Bidding (ICB), National SBD agreed with and satisfactory to the Bank and shopping procedures.

51. Procurement of Goods : Goods to be procured under this project would mainly include: (i) the equipping of a new primary school in Tawaoco Chiniley (Dikhil); (ii) the installation of solar panels in this school; (iii) the provision of the necessary furniture, and equipment for additional classrooms (i.e. desks, tables, chairs, cabinets, chalk boards, additional solar panels needed, etc.); and (iv) instructional materials for mathematics.

52. Procurement will be carried out using the Bank’s Standard Bidding Documents (SBD) for all ICB, National SBD agreed with and satisfactory to the Bank and shopping procedures.

53. Consultants’ services: Consultancy services financed under this project will mainly include: (i) trainers for teachers, school directors and inspectors; (ii) teaching material designers; (iii) subject and assessment specialists; and (iv) technical assistance to the SGP.

54. Non-consulting services: Non-consulting services financed under this project will mainly include: (i) organization of training workshops and associated costs (such as rental of premises, coffee break, lunch, writing materials, etc.). Shopping would be the appropriate selection method.

55. SGP capacity to execute procurement activities : A capacity assessment of the SGP to implement procurement activities was carried out in January 2013. Overall, this capacity assessment concluded that in the Djibouti country context- along with the capacity to be developed under the new project activities - the SGP, which already has many years of experience in implementing Bank-financed projects in Djibouti, will be capable of adhering to the applicable procurement procedures for the new project. The overall assessment of Procurement Risk is “moderate.” This capacity could be improved provided that the recommended actions are taken according to the table below. The frequency of procurement supervision including procurement post review/audit will be every 6 months.

56. The Action Plan for strengthening procurement is summarized below:

35

Analysis of Procurement Capacity

Issues/Risks Mitigation Measures

1. Organization The SGP is overloaded with the implementation of the ongoing ACIGEF and other donors-financed projects

Make the implementation arrangements including coordination and procurement responsibilities clear in the project’s MOP.

2. Facilities, Support Capacity and Staffing/Professional Experience

There are some doubts about the full availability and retention of the current procurement specialist and procurement assistant.

*Assign current procurement specialist on ACIGEF to this project as well and provide additional support from an additional procurement specialist to ensure hand-over of tasks and continuity of the procurement function. * Carry out a training to brief and update the MENFOP/SGP staff involved in implementing the project on the main Bank’s procurement procedures-expected to be used in the project implementation-before its start.

3. Record Keeping and Filing System

Weak capacity to cope with the volume of the project transactions and insufficient space for records keeping.

Provide the SGP with: (i) sufficient space in furnished offices, (ii) record keeping instructions, and (iii) training to ensure that project specific files are kept for all procurement and related transactions and recorded contract by contract in an adequate manner.

4. Procurement Planning Procurement Plan not ready before effectiveness.

The SGP shall draft the project Procurement Plan by project negotiations based on the project cost table.

5. Monitoring/Control Systems

Procedures used are not fully compliant with the Bank ones and cumbersome/slow prior review by the Commission Nationale des Marchés Publics (CNMP).

The SGP’s MOP describes in a clear manner the procedures to follow for the implementation of the project, and (ii) expedite the prior review by CNMP.

6. Capacity to meet Bank’s Reporting Requirements

Reports not provided on time or in required format.

Make sure that periodic progress report has a chapter regarding procurement.

57. The methods to be used for procurement under this project, and the estimated amounts for each method, as well as the prior review thresholds are set in Table A below. The prior review thresholds could be revised after each Procurement Post Review depending on the findings and recommendations of the reviewer in view of the improvement (or otherwise) of the procurement implementation and the subsequent risk assessment.

36

Table A. Prior review and Procurement Method Thresholds

Prior Review Thresholds (in USD)

Procurement Type Moderate Risk Implementing Agency Prior Review Thresholds

Works0.5 million

Goods 0.2 millionIT Systems and Non-consulting Services 0.2 millionConsulting Firms 0.2 millionIndividual Consultants 0.075 millionProcurement Method Thresholds (in USD)

Djibouti Goods/Non-consulting Services WorksICB NCB Shopping ICB NCB Shopping

> 150,000 ≤ 150,000

≤ 25,000 > 1 million

≤ 1 million

≤ 200,000

Procurement Planning

58. The applicable procurement procedures as well as the detailed procurement plan for the first 18 months of project activities which should be approved by the project negotiations will be included and described in the Project’s Manual of Operational Procedures

ICB Works and Goods

59. Goods to be purchased through ICB under the project include IT equipment, and, possibly, glasses and hearing prostheses.

60. Consultants’ Services. No consulting assignments with a short-list of international firms are foreseen under the project.

Environmental and Social (including safeguards)

Social61. OP 4.12 is not triggered. However, land use both for the new school to be built and for extension/rehabilitation works has been documented. OP 4.12 will not be triggered. Mobilization of land for purposes of building one school and extending/rehabilitating existing schools will be done on state owned land and documented in consultation and agreement with relevant traditional and administrative authorities. MENFOP has confirmed that these construction and extension/rehabilitation works will not cause involuntary land acquisition or involuntary displacement of people leading to loss of access to resources and /or revenues. MENFOP submitted copies of official signed documents attesting to land mobilization, with prior consultation and non-compensated agreement prior to appraisal of the project.

Environment

37

62. The project is classified as a B and the Environmental Assessment policy OP/BP 4.01 is triggered due to site specific and less adverse impacts associated with the construction and expansion/rehabilitation of schools. The Environmental Management Plan (EMP)16 of the EFA-FTI grant was revised and updated. Consultations with affected communities were carried out by the Recipient before July 8, 2013. Consultations were documented in minutes, reviewed by the Bank, and attached as an annex to the EMP. The EMP was disclosed in-country on the MENFOP website on August 26, 2013 and in the World Bank Infoshop on August 23, 2013.

63. The main environmental issues associated with the project include: possible negative impacts associated with construction and rehabilitation activities. Other main issues that are identified for consideration include: water availability, and sanitation and hygiene. In order to ensure that water is available in schools, availability of water was one of the criteria for new school location selection. In addition, the project will ensure availability of water and sanitation (water point rehabilitation, latrines rehabilitation in expanded/rehabilitated schools). The project will work with sanitation and hygiene specialist to ensure that proper sanitation and hygiene measures are included early on in the design.

Monitoring & Evaluation

64. The project Results Framework will be used for monitoring and evaluation of the project (see Annex 1). Project performance monitoring will focus on progress in achieving the project objectives, as measured by the results indicators agreed during negotiations and reflected in the Results Framework. 65. Under the supervision of the CPP, the SGP- assisted by a specialist in monitoring and evaluation (M&E) - will be responsible for preparing progress reports in collaboration with the Directors of the different departments. Short standardized quarterly reports will be produced by each department based on progress made in the implementation of the work program. These will be compiled by the M&E Specialist in SGP and submitted for review to the CPP before their quarterly meeting.

66. Through technical assistance, the SGP, and the directorates responsible for the implementation of the project will develop an M&E tool to help them in the monitoring of project activities. An M&E tool was described under the ACIGEF project, and funds were secured to train designated personnel in the directorates as well as the M&E specialist at the SGP, once recruited, in using the tool.

Role of Partners

67. The project will funded by the GPE, through a recipient-executed grant. The World Bank has been designated as the Supervising Entity for the project by the MENFOP and the Local Education Partners Group, which consists of the following entities: MENFOP, JICA, AFD, WFP, World Bank, USAID, FAO, UNESCO, UNICEF and WHO. UNICEF has been 16 A project's environmental management plan (EMP) consists of the set of mitigation, monitoring, and institutional measures to be taken during implementation and operation to eliminate adverse environmental and social impacts, offset them, or reduce them to acceptable levels. The plan also includes the actions needed to implement these measures.

38

designated as the Coordinating Agency by the MENFOP and LEG, and has provided technical assistance to finalize the PAE 2014-2016. The proposed AQEP would include significant partnership and coordination with UNICEF and USAID during implementation. UNICEF will lead the ECE component, while USAID will finance an early grade reading activity that will be closely linked to the early grade math activities financed by the proposed Project. Currently, donors are supporting several interventions in the sector which are monitored in regular partner group meetings in the country. It is expected that during the implementation of AQEP, joint-review meetings would be organized to monitor and evaluate various donors’ interventions in the sector.

39

Annex 4: Operational Risk Assessment Framework (ORAF)

REPUBLIC OF DJIBOUTI: Access to Quality Education Project

1. Project Stakeholder Risks Rating MDescription: There is a risk that high turnover of key personnel in the MENFOP, the absence of clear definition of roles and responsibilities within MENFOP, as well as recent changes in MENFOP’s organizational chart will slow implementation.

Risk Management: An implementation procedures manual was prepared under the new IDA-financed education project (Strengthening the Institutional Capacity and Management of the Education System Project (ACIGEF)) to clarify roles and responsibilities of implementing units within the MENFOP. The new ACIGEF is also directly addressing the issues of roles, responsibilities, procedures, and capacity building within the MENFOP.

In addition to the regular meetings that the MENFOP holds with the local partners of the GPE, the MENFOP also created the CPP, composed of representatives of different departments of the MENFOP and under the leadership of the Secretary General of the MENFOP, to ensure technical oversight of all education projects.Resp: Client Due Date: Recurrent Status: Completed

2. Implementing Agency Risks (including fiduciary)Capacity Rating: S

Description:Project management: There is a risk that the recent reshuffle of key MENFOP staff (in June 2013) may slow implementation. Many key officials of the MENFOP, including the Secretary General and head of SGP have been re-assigned to other functions. Newly appointed staff is not necessarily familiar with the MENFOP administration and operations. It will take time for new staff to be acquainted with their new functions and have a full grasp of education projects.M&E, Procurement and Financial Management: There is a risk that the performance of MENFOP in M&E, procurement and financial management be hindered due to staff turnover and capacity issues. While the existing staffing and qualifications of the project implementation unit (Service de Gestion des Projets, SGP), responsible for implementing project activities, were assessed to be satisfactory in March 2013, there is a constant need to enhance capacity of the SGP in procurement and

Risk Management: The Bank team will continue to work closely with the SGP staff to ensure smooth transition through continuous communication with MENFOP and SGP staff, and increased supervision.

The MENFOP recently recruited and M&E consultant, a civil engineer and an additional accountant. The contracts for the procurement specialist and one accountant, who were financed under the EFA-FTI Catalytic Fund - Additional Financing Grant (P117424) have been renewed under the ACIGEF project. The ongoing ACIGEF has a budget line to provide periodic training and updating of knowledge to all SGP staff. The Bank team recently organized a three-day training workshop on fiduciary arrangements for all projects management units in Djibouti and will also provide technical assistance as needed. Moreover, the project will also devote resources to hire an additional procurement specialist.

40

financial management, especially after the recent ministerial reshuffle.There is a risk of inconsistent project financial reporting, as the accounting information system presents some difficulties and the procurement module is not used.

The update of the AFPM needs to be finalized and the manual various chapters, mainly the new organization chart, the restructuring of the financial and accounting department, the implementation of a unique procurement department for the SGP, should be implemented.

A consultant from the IT firm which developed the accounting software (“Success”) is reviewed and updated the system. The system will continue to be updated and will enable the implementing unit to fully utilize its capacity and generate the required financial reports. A maintenance contract needs to be kept with the information system supplier in order to guarantee the system well working and all the system modules should be regularly used.Resp: Client Due Date: Negotiations Status: Completed

Governance Rating: SDescription: There is a risk that weak management processes, especially with regard to procurement (such as postponement of bid opening sessions and very cumbersome contract signing process) may favor corruption.

There is a risk that laws related to property rights may not be properly implemented, due to the weak capacity of institutions assigned to protect these property rights as well as a lack of awareness of new legal development.

There is a risk of political interference and lack of accountability and oversight by the new MENFOP leadership.

Risk Management: The 2012 transparency index compiled by Transparency International ranks Djibouti 94th out of 176 while Djibouti was ranked 102nd in 2008. There is no strong indication of corruption in Djibouti. Overall, procurement laws, rules and regulations are fairly adequate since 2009 and all bidders are required, since May 2010, to sign, as part of their bids, the ethical charter Form enacted as Annex 3 by the Decree # 2010-0085PRE dated May 8, 2010. The government is actively strengthening capacities and transparency. Corruption is actively prosecuted and has led to several arrests in the past few years. The creation of the Court of Accounts as an independent Court, the strengthening of the capacity of l’Inspection Générale de l’Etat and l’Inspection Générale des Finances are important steps for uncovering and prosecuting corruption cases. The business environment is mixed, with a highly favorable regime in the free zone, and a more restrictive set of regulations in the rest of the country (although in view of the size of Djibouti, most enterprises can establish themselves in the free zone).

With regards to property rights, the right of private property is secured by Djibouti’s constitution, and there are legal provisions for corporate matters such as information access, equity and profit sharing, stakeholder participation and transparency. In 2009, a new investment code was issued. It includes provisions to guarantee commercial freedom and to regulate contractual rights as well as bankruptcy.

The Project has been prepared based on the Education Action Plan developed by the MENFOP. The task team, along with GPE partners, will work closely with the MENFOP new leadership to mobilize new MENFOP appointees and get them familiarized with the Project’s objectives, expected results and implementation procedures.

41

The Project has been prepared based on the Education Action Plan developed by the MENFOP. The task team, along with GPE partners, will work closely with the MENFOP new leadership to mobilize new MENFOP appointees and get them familiarized with the Project’s objectives, expected results and implementation procedures.Resp: Both Due Date: Recurrent Status: Completed

3. Project RisksDesign Rating: MDescription: There is a risk that the project design is too ambitious, as the project aims to address two key challenges: access to education services and quality of education services; these are ambitious objectives.

Risk Management: The proposed objectives are achievable in a country with a population of less than one million. During the preparation mission, project interventions will be further focused and detailed, based on lessons learned from previous donor-financed projects. The Project will benefit from current IDA-financed capacity building initiatives with the MENFOP, work in primary grade reading supported by USAID, as well as teacher training activities supported by a variety of donors including the French Cooperation Agency.Resp: Client & World Bank Due Date: 08/30/2013 Status: Completed

Social & Environmental Rating: MDescription: There is a risk of land ownership regarding schools to be built/extended.

There is a risk with sanitation and hygiene in schools which are planned to be built and extended/rehabilitated, mostly in rural areas.

Risk Management: Risk Management: Schools will be built on publicly owned land and land mobilization is documented for all relevant works. Consultations with affected communities were carried out in July 2013 and were documented in minutes, which are attached as an annex to the Environmental Management Plan (EMP). The EMP is based on the previous plan prepared for the EFA-FTI grant and was revised and approved by the Bank on August 9, 2013. The EMP will be disclosed in-country and on the World Bank Infoshop website prior to appraisal. A maintenance strategy was also prepared under the IDA-financed “School Access and Improvement project” (P086994) and, if effectively implemented and resourced, combined with broader, regular environmental monitoring in the EMP, would represent an effective risk management strategy. The counterpart will establish that the new school location is not in area of with flash flood risk.

The project selection criteria for new school site include availability of water. In addition, the project in schools marked for expansion /rehabilitation will rehabilitate latrines / water points to ensure adequate sanitation is available. The counterpart will establish the adequate and relevant documentation to land mobilization and provide copies to the Bank team prior to appraisal.Resp: Client Due Date: 07/31/2013 Status: Completed

Monitoring and Evaluation Rating: SDescription: There is a risk with poor monitoring of Risk Management: (i) An M&E Officer was recruited by the SGP to ensure M&E at the

42

project results as M&E is generally weak and not systematic. This does not allow and accurate and coherent follow-up of the performance indicators of the education sector.

project level.(ii) The ongoing ACIGEF project focuses on strengthening systems and ensuring sustainability; it is expected to play a major role in mitigating the risk.Resp: Client Due Date: Recurrent Status: Completed

Program and Donor Rating: LDescription: There is a risk that activities may not be well coordinated with other donors, which might result in redundancies (in particular for capacity building at the school level and teacher training activities) or gaps. Thus, the need for close coordination with other donors and ongoing IDA-financed project ACIGEF in implementation of project activities to ensure complementarities.

Risk Management: The project is prepared in close collaboration with other donors (GPE local partners) in order to ensure complementarity of interventions. Activities related to teacher training and capacity building will continue to be fine-tuned during preparation to take into account existing interventions in these areas. The local partners for education meet regularly and project documents will be shared regularly with them to validate activities supported by the project.

Resp: Both Due Date: 08/30/2013 Status: Completed

4. Overall Risk Rating: SComments: The SGP team has been reinforced and the MENFOP, as well as donors, are fully on-board with the objectives of the new operation. However, given the fact that the Minister of Education is newly appointed, as well as key MENFOP staff recently changed, the risk for overall implementation is “Substantial”.

43

Annex 5: Economic and Financial Analysis

REPUBLIC OF DJIBOUTI: Access to Quality Education Project

I. Financial Analysis

1. The development of the education sector in Djibouti has been one of the country’s top priorities. The share of education expenditure is one of the highest in the world, ranging between 17 to 26 percent of total governmental expenditure between 1999 and 2006.17 Nominal public education expenditure increased from DJF 7.1 billion DJF in 2000 to DJF 13.5 billion 2011 (approx. US$75 million). Recurrent expenditures represent the largest category of the education budget at 79 percent.18

2. The proposed GPE Grant will support the government’s National Education Strategy (2014-2016) by providing US$3.8 million from 2014 to 2017. The proposed amount will account for 3.8 percent of primary education budget for the 2014-16 period or 1.1 percent of the MENFOP budget. The government expects US$15 million from external resources during the 2014-16 period, and the GPE is contributing 23 percent of the expected external financing.

Table 1: Primary Education Budget Forecast and Project Cost, 2014-2016Million USD

2014 2015 2016 2017Total

2014-16Primary

Recurrent 29 30 31 … 90Capital 7 6 6 … 19Total 36 36 37 … 109

MENFOPRecurrent 77 81 85 … 243Capital 25 18 17 … 61Total 102 99 103 … 304

GPE Project 0.4 1.0 2.4 0.4 3.4% of GPE project in primary education budget 1.4% 3.3% 6.4% … 3.8%% of GPE project in MENFOP budget 0.4% 1.0% 1.9% … 1.1%

Note: Calculated at US$1=DJF180 Source: MENFOP and UNICEF, “Medium Term Expenditure Framework” (version of July 23, 2013)

II. Economic and Sensitivity Analyses

1. Cost Benefit Analysis

3. The benefits of the project are projected to exceed the costs, with an Economic Internal Rate of Return (EIRR) of 31.1%, indicating economic viability of this project.

17 Agence Française de Développement. 2009. Le système éducatif Djiboutien. Diagnostic sectoriel et perspectives pour la politique éducative.18 MENFOP and UNICEF, “Medium Term Expenditure Framework” (version of July 23, 2013)

44

Benefits

4. The various quality improvement measures of the project are expected to reduce repetition and dropout rates in primary education and improve student learning performance, thereby reducing the number of years required to produce primary education graduates. The project also expects to result in more graduates with better skills and competencies, who will produce better economic outcomes. The benefits stream is quantified by estimating: (i) more children completing primary education as a result of improved retention rate, (ii) reduced “years invested per graduate” due to reduced repetition and dropout, and (iii) lower opportunity cost incurred to students in post-primary education life due to fewer years invested in completing primary education. It is not possible to calculate the benefits of improved learning directly in terms of earnings or other metrics as this data is not available.

5. Although the primary education cycle in Djibouti lasts five years, due to high repetition and dropout rates, which are especially high at the last grade of primary education, the numbers of years invested per primary graduate in 2012 were estimated to be 6.22 for boys and 7.06 for girls.19 By improving the quality of primary education, in the base scenario, the years invested per student are expected to improve to 6.10 (boys) and 6.95 (girls) in by the end of the three year project implementation period, and to 5.75 and 6.48 respectively by the end of 20 th year since project commencement.

6. The annual public expenditure per student cost incurred on primary education is estimated as DJF 91,041 (US$511) in 2008.20 Assuming that the real cost per student will remain unchanged, the savings generated from reduced number of years per graduate are estimated as USD 31.2 million over 20 years as indicated in Table 3 (or present value equivalent of US$9.6 million at discount rate of 10 percent). Theoretical students’ foregone earnings after graduation from primary education (US$600)21 will also be reduced by the reduction in the number of years invested per graduate (i.e. smaller loss of working years after primary education due to less years spent in primary school). This will generate savings of US$37 million over 20 years as indicated in Table 3 (or present value of US$11 million). Assumptions and different policy parameters for calculating these economic costs and benefits are presented in Table 2.

Costs

7. The cost stream is estimated on the basis of: (1) project investment cost, (2) recurrent costs incurred from the project, which include (i) maintenance cost for civil works, furniture, equipment, and learning materials, (ii) increased teacher salary for teaching increased number of students, and (iii) continuing annual learning assessment. Foregone earnings of students are not included as costs since this is a primary education project.

19 Author’s calculation using Annuaire Statistique MENFOP 2011-2012 and 2012-2013. 20 Exchange rate of US$1=DJF17821 According to data from surveys in the capital, Djiboutiville, median monthly salary of primary school graduating wage workers is DJF 60,000 (US$333) in 2011. The annual salary is approximately DJF 720,000 (US$4,000). Only about 15% of primary school graduates have waged work (and others are either not working, daily laborers, or self-employed). Therefore, this analysis assumes 15% of US$4,000, US$ 600, as expected value for primary school graduate’s wage.

45

8. The estimated project cost is US$3.8 million, financed by the Global Partnership for Education (GPE) between 2014 and 2017. The approximate average annual recurrent cost resulting from the project for 17 years after project end (until Year 20 of the project) is US$118,000.

Table 2: Assumptions for Estimation of Cost-Benefit AnalysisCONTEXT

Grade 1 enrollment growth rate 1.9 percent (equal to population growth rate)

Pupil teacher ratio 34.0 (no change over time)Number of teachers at baseline 1/ 1852Expenditure per student 2/ DJF 91,041 (2008) (=US$ 505)

BENEFITS1. Assumed improvements

Annual improvement in the grade promotion rate (percentage points) Grades 1-3 Grades 4-5Low Scenario 0.1 pp 0.05 pp

Lower- middle scenario 0.2 pp 0.075 ppBase Scenario 0.3 pp 0.1 pp

Upper-middle scenario 0.4 pp 0.125 ppHigh Scenario 0.5 pp 0.15 pp

2. Wage differentialsMedian monthly wage of primary school graduate 3/ FDJ 60,000 (US$ 333)Median monthly wage of non-educated 3/ FDJ 55,000 (US$ 305)

COSTSProject Cost US$ 3.8 millionLearning assessment cost US$ 10,000 per year from Year 5Maintenance and operational costs - civil works 0.5% during first 10 years; 1.5% during next

10 years of total value of the buildingMaintenance and operational costs - furniture and equipment 5% of installment costTeacher salary 4/ US$ 10,000 per year per teacher

1/ Ministère de l’Éducation Nationale. Annuaire Statistique MENFOP. 2012-2013. République de Djibouti.2/ Ministère de l’Éducation Nationale et de l’Enseignement Supérieur. 2009. Analyse Économique du Secteur de l’Éducation À Djibouti. Réalisations 2002-2008 et perspectives 2009-2015. République de Djibouti.3/ Author’s calculation using the World Bank Household Survey 2012 4/ MENFOP and UNICEF, “Medium Term Expenditure Framework” (version of July 23, 2013)

EIRR Simulation Result

9. Table 3 shows the summary of both cost and benefit streams. The EIRR of the project will be 31.1%, and the Net Present Value (NPV) will be US$11.4 million using a discount rate of 10%.

46

Table 3: Summary of Cost and Benefit Streams and EIRRYears since project started

(real USD '000)

Year 1 Year 2 Year 3 Year 4 Year 5 Year 19 Year 20 Project

2014 Total

PROJECT OUTCOMESIncreased number of G5 graduates due to project - 14 30 68 122 1,532 1,638 15,900Average promotion rate (G1-5) 88% 88% 88% 88% 89% 92% 92% -Average repetition rate (G1-5) 8.1% 7.9% 7.7% 7.5% 7.4% 5.6% 5.3% -Average dropout rate (G1-5) 4.3% 4.2% 4.1% 4.0% 3.9% 2.8% 2.7% -

Total saved years per primary graduate due to improved internal efficiency (student-year) - 0.03 0.05 0.08 0.11 0.45 0.48 -

Total saved unit cost per primary graduate due to improved internal efficiency (USD) - 13 27 41 54 227 244 -

BENEFIT STREAMIncreased earnings of graduates - 5 10 23 41 511 546 5,300Total saved unit cost - 125 259 394 533 3,218 3,543 31,180Total saved foregone earning for all graduates - 149 307 467 632 3,818 4,203 36,988

Total Benefits - 279 576 884 1,206 7,547 8,292 73,467

COST STREAMProject Cost 400 1,000 2,000 400 - - - 3,800Increased teacher salary due to increased

students - 316 334 504 670 1,189 1,209 17,516Increased maintenance cost for civil works - - - 2 2 5 5 54Increased maintenance cost for furniture - - 3 3 3 3 3 47

Total Costs 400 1,316 2,337 908 684 1,207 1,226 21,577

Net Benefits (40

0) (1,03

8) (1,76

1) (2

4) 521 6,340 7,066 51,891

IRR 31.1%  NPV at discount rate of 10% 11,433

2. Sensitivity Analysis

10. The sensitivity analysis was conducted by changing key parameters from the base scenario presented above. The proposed Project will generate economic benefits due to increased access and increased quality of education. The largest benefit generated from the Project will be reduced public expenditure per student due to reduced years invested per student due to reduced repetition and dropouts. Therefore, the sensitivity analysis presents different scenarios for improving these internal efficiency indicators. The base scenario assumes that the grade promotion rate will improve annually by 0.3 percentage point among grades 1-3 students and 0.1 percentage points among grades 4-5 students. As a result, the primary school average promotion rate will improve from the original promotion rate of 87.4 percent for the entire primary education to 91.9 percent by 20th year. Repetition rate will decrease from 8.9 percent to 5.3 percent; dropout rate will decrease from 3.8 percent to 2.7 percent over the same period. The low scenario assumes the improvement is annually 0.1 percentage point among grades 1-3 students and 0.05 percentage points among grades 4-5 students. Improvement of promotion rate will be up to 89.3 percent in this scenario, and this scenario will generate EIRR of 10.4 percent, approaching to a risk of NPV falling to almost zero. On the other hand, in the high scenario, where grade promotion rate will improve annually by 0.5 percentage point among grades 1-3 students and 0.15 percentage points among grades 4-5 students, the estimated EIRR will be 47.8 percent.

47

11. This sensitivity analysis shows that improvement in the quality of education should result in an improvement in the retention rate in order to produce a quantifiable monetary benefit. Improved retention rate will reduce the wastage in public investment and reduced opportunity costs of students while they are in school. Additional expected results include higher productivity of workers and better quality of life through improvement of social indicators. Increased number of primary education graduates will increase enrollment in post-primary education. However, these externalities are not included in this economic analysis.

Table 4: Sensitivity AnalysisBaseline in 2012 Expected outcome in Year 20

Simulated EIRRPromotion

RateRepetition

RateDropout

RatePromotion

RateRepetition

Rate Dropout Rate

Low Scenario

87.4% 8.9% 3.8%

89.3% 7.0% 3.6% 10.4%Lower Middle Scenario 90.7% 6.2% 3.1% 22.0%Middle (Base) Scenario 91.9% 5.3% 2.7% 31.1%Upper Middle Scenario 92.9% 4.6% 2.6% 39.6%High Scenario 93.7% 4.4% 1.9% 47.8%

48

Map of Djibouti

49