Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF PROJECT TO IMPROVE EDUCATION QUALITY IN MALAWI PROJECT LOAN TO THE REPUBLIC OF MALAWI DECEMBER 14, 2011 Report No:
ABBREVIATIONS AND ACRONYMS APL DEM EIMU FTI-CF FM GPE MASAF NLGFC PIEQM SIPS SMC TST Adaptable Program Loan District Education Manager Education s Infrastructure Management Unit Fast Track Initiative Catalytic Fund Financial Management Global Partnership For Education Malawi Social Action Fund National Local Governance Finance Committee Project to Improve Education Quality in Malawi School Improvement Plans School Management Committee Technical Support Team Regional Vice President: Country Director: Sector Manager / Director: 2 Obiageli Katryn Ezekwesili Kundhavi Kadiresan Peter Nicolas Materu
Task Team Leader: Muna Salih Meky 3
MALAWI PROJECT TO IMPROVE EDUCATION QUALITY IN MALAWI P114847 CONTENTS Page A. SUMMARY... 6 B. PROJECT STATUS... 6 C. PROPOSED CHANGES... 7 4
Restructuring Restructuring Type: Level two 1. Basic Information Project ID & Name P114847: MW-Proj to Improve Education Quality in Country Malawi Task Team Leader Muna Salih Meky Sector Manager/Director Peter Nicolas Materu Country Director Kundhavi Kadiresan Original Board Approval Date 06/17/2010 Original Closing Date: 06/30/2015 Current Closing Date 06/30/2015 Proposed Closing Date [if applicable] EA Category B-Partial Assessment Revised EA Category B-Partial Assessment-Partial Assessment EA Completion Date 02/27/2009 Revised EA Completion Date 2. Revised Financing Plan (US$m) Source Original Revised BORR 0.00 0.00 DEG 25.00 25.00 DFID 90.00 90.00 GPE 90.00 90.00 IDA 50.00 50.00 UNCF 1.00 1.00 Total 256.00 256.00 3. Borrower Organization Department Location Government of Malawi Malawi 4. Implementing Agency Organization Department Location Ministry of Education Malawi 5
5. Disbursement Estimates for IDA (US$m) Actual amount disbursed as of 12/14/2011 5.09 Fiscal Year Annual Cumulative 2011 0.00 5.09 2012 0.00 5.09 Total 5.09 6. Policy Exceptions and Safeguard Policies Does the restructured project require any exceptions to Bank policies? N Does the restructured projects trigger any new safeguard policies? If yes, please select from the checklist below and update ISDS accordingly before submitting the package. N 7a. Project Development Objectives/Outcomes Original/Current Project Development Objectives/Outcomes To increase access and equity and enhance quality of the teaching and learning environment in basic education 7b. Revised Project Development Objectives/Outcomes Not Applicable 6
PROJECT TO IMPROVE EDUCATION QUALITY IN MALAWI RESTRUCTURING PAPER SUMMARY 1. This Project Paper seeks approval for additional implementation arrangements for primary classroom construction which falls under Component 1 of the Project to Improve Education Quality in Malawi (P114847). The Borrower s request to add the Local Development Fund as an additional mechanism for school infrastructure motivated by slow implementation progress by the Ministry of Education, Science and Technology through its Education s Infrastructure Management Unit (EIMU). The EIMU is currently responsible for implementing school infrastructure. The EIMU built only 118 classrooms in FY11 well below the 1,500-2,000 annual target. PROJECT STATUS 2. The Project to Improve Education in Quality (PIEQM) consists of resources from International Development Association (IDA) (US$50 million) and the Global Partnership for Education (GPE) Fund, previously called the Fast Track Initiative Catalytic Fund (US$90 million). The IDA credit was approved on June 17, 2010. The jointly funded IDA/GPE project became effective in February 1, 2011. In FY 2010/2011 US$21 million has been disbursed (US$5.09 million IDA and US$15million GPE). In the last year, the program has experienced impressive movements in critical interventions. An innovative distance teacher training program has been launched and 10,000 student teachers have been placed in rural schools. A joint World Bank/Ministry of Education Impact Evaluation of this program has completed the collection of baseline data. The school bursary program has successfully provided bursaries to approx. 6,000 students last school year. In addition, all schools in planned Phase 1 districts (6 districts) have developed School Improvement Plans (SIPs). Based on these SIPs substantial resources have been disbursed to schools. The SIPs and subsequent school grants increase transparency of funding at the local level as well as provide schools the opportunities to buy vital education inputs. However as noted above there has been delays in the civil works and based on this as well as slow disbursements and challenges related to budgeting and planning, the implementation progress is currently rated Moderately Satisfactory. 7
PROPOSED CHANGES Fiduciary Arrangements Financial Management 1. The change in fund flow that has been introduced is depicted in the diagram below. The Local Development Fund (LDF) will use existing financial management arrangements in the implementation of the construction of staff houses and school blocks. The FM arrangements are guided by the Local Development Fund Financial Management Handbook which is an FM manual covering FM and funds flow including the aspects dealing with local communities. The proposed FM arrangements have been reviewed and are Satisfactory. The Funds will be transferred to the District Councils through National Local Governance Finance Committee (NLGFC). The communities will get the funds from the District Councils. LDF Funds Flow for PIEQM Resources Funds from Development Partners (External Resources) Funds from Malawi Government (Internal Resources) Reserve Bank of Malawi Development Partners Designated US$ Special Account Pool Fund Holding Account (Malawi Kwacha) National Level NLGFC/ LDF HOLDING TST Operating Account Commercial Bank (with corresponding Holding Account) 8
LA LOCAL DEVELOPMENT FUND ACCOUNTS (WITH CORRESPONDING HOLDING ACCOUNTS AT RBM) Local Authority Fund Window Account Community Fund Window Account Urban Fund Window Account Performance Fund Window Account LA Level Community sub-projects Bank Accounts (commercial type) 3. The LDF and National Local Government Finance Committee will be responsible for ensuring that the funds are used for the intended purposes and reported accordingly, ensuring that supporting documentation is kept at the district and LDF as appropriate, and available for inspection by the auditors and the Bank. 4. The LDF fund flow mechanism has been introduced in order to speed up the school construction under component 1(a) of the Project and meet the agreed upon targets. The Ministry of Finance has proposed to use the Local Development Fund as an additional mechanism to build classrooms. The Local Development Fund (LDF) is an Inter-governmental Fiscal Transfer mechanism established under the Public Finance Management Act, 2003 in the Ministry of Finance. The Local Development Fund, through facilitation from a Technical Support Team has been supporting construction at the local level under the IDA project Malawi Social Action Fund (MASAF) 3 Adaptable Program Loan (APL) II (P121065). 5. Using the LDF, additional classrooms, teachers houses, pit latrines, administrative blocks including external works, and solar panels will be constructed in all the 30 education districts. The Ministry of Education will provide standard designs of the buildings and bills of quantities that will be used in the construction program. The number of in each district will be determined using the intergovernmental Fiscal Transfer formula, a statutory formula that was approved by Parliament in 2004. The beneficiary schools will be identified by the District Education Managers (DEMs) based on the relative need of the schools. The selected units will be approved by the District Council Consultative forum. Each District will be provided with a list of schools that are being targeted directly by Ministry of Education. The District will not allocate the units to schools that are already earmarked to benefit from Ministry of Education. Procurement 9
6. The LDF will use existing procurement arrangements in the implementation of construction of staff houses and school blocks. The procurement arrangements are guided by the Local Development Procurement Handbook for LDF. The Handbook was reviewed and accepted by the World Bank before rolling out the MASAF 3 APL II. The proposed procurement arrangements have been reviewed and are Satisfactory. Safeguards 7. The LDF will use existing safeguard arrangements as detailed in the cleared Resettlement Policy Framework and Social and Environment Framework. Legal Agreement 8. The detailed implementation arrangements for component 1(b) are not specified in the Financing Agreement but are set forth in the Project Appraisal Document. There is thus not a direct provision in the legal agreements regarding responsibility for implementation of specific components. This means that the Government's request to decentralize infrastructure funds and channel directly to the LDF to undertake constructions will not contravene the legal agreements. However the proposed restructuring is being done to reflect the changes to the responsibilities of the EIMU as provided for in the Project Appraisal Document. 10