FOR OFFICIAL USE ONLY - Global Partnership for …...IDA 185.00 30.00 161.96 16 % Grants % The World Bank Nepal: Additional Financing for School Sector Development Program (P167047)

FOR OFFICIAL USE ONLY Report No: PAD3105

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

PROGRAM PAPER

ON A

PROPOSED RESTRUCTURING AND ADDITIONAL GRANT

IN THE AMOUNT OF US$23,958,000

TO

NEPAL

FOR A

SCHOOL SECTOR DEVELOPMENT PROGRAM

{ For RVP CLEARANCE DATE, enter the same date as on MOP }

Education Global Practice

South Asia Region

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

The World Bank Nepal: Additional Financing for School Sector Development Program (P167047)

CURRENCY EQUIVALENTS

(Exchange Rate Effective {Date} This is to be filled one month before negotiations)

Currency Unit = Nepalese Rupee (NPR)

NPR XX = US$1

FISCAL YEAR

July 16 – July 15

Regional Vice President: Hartwig Schafer

Country Director: Qimiao Fan

Senior Global Practice Director: Jaime Saavedra Chanduvi

Country Manager: Faris H. Hadad-Zervos

Practice Manager: Mario Cristian Aedo Inostroza

Task Team Leader(s): Shwetlena Sabarwal, Mohan Prasad Aryal


ABBREVIATIONS AND ACRONYMS

ADB Asian Development Bank AF Additional Financing ASIP Annual Strategic Implementation Plan AWPB Annual Work Plan and Budget CA Coordinating Agency CAPP Consolidated Annual Procurement Plan CB Classroom-based CDC Curriculum Development Center CDEC Curriculum Development and Evaluation Council CEHRD Centre for Education and Human Resource Development CIAA Commission for the Investigation of Abuse of Authority CPF Country Partnership Framework DACS Development Aid Coordination Section DEC District Education Committee DEO District Education Office DOE Department of Education DLI Disbursement-Linked Indicator DLR Disbursement-Linked Result DP Development Partner DRR Disaster Risk Resilience DTCO District Treasury Controller Office ECED Early Childhood Education Development EDCU Education Development Coordination Unit EGRA Early Grade Reading Assessment EGRP Early Grade Reading Program EMF Environmental Management Framework EMIS Education Management Information System ERO Education Review Office ESA Education Sector Analysis ESSA Environmental and Social Systems Assessment EU European Union FCGO Financial Comptroller General Office FM Financial Management FSA Fiduciary Systems Assessment GA Grant Agent GDP Gross Domestic Product GMU Grant Management Unit GON Government of Nepal GPE Global Partnership for Education GRC Grievance Redress Committee GRS Grievance Redress Service IECCD International Economic Cooperation and Coordination Division IRR Internal Rate of Return


IVA Independent Verification Agency JEMC Janak Education Material Center JFA Joint Financing Arrangement JFP Joint Financing Partner JICA Japan International Cooperation Agency LC Learning Center LEG Local Education Group LG Local Government LMBIS Line Ministry Budget Information System M&E Monitoring and Evaluation MOEST Ministry of Education, Science, and Technology MOF Ministry of Finance MOFAGA Ministry of Federal Affairs and General Administration MTEF Medium-Term Expenditure Framework NASA National Assessment of Student Achievement NCF National Curriculum Framework NEGRP National Early Grade Reading Program NER NFE

Net Enrolment Rate Non-Formal Education

NGO Nongovernmental Organization NRB Nepal Rastra Bank OAG Office of Auditor General OOSC Out-of-school Children PAC Public Accounts Committee PCF Per Capita Financing PDO Program Development Objective PEF Program Expenditure Framework PEFA Public Expenditure and Financial Accountability PFM Public Financial Management PforR Program-for-Results PPA Public Procurement Act PPD Private Printer-Distributer PPMO Public Procurement Monitoring Office PPR Public Procurement Regulation PPTS Pro-Poor Targeted Scholarship PRF Program Results Framework PSS Pro-Science Scholarship PTA Parent Teacher Association RC Resource Center REACH Results in Education for All Children RED Regional Education Directorate SDG Sustainable Development Goal SIP School Improvement Plan SMC School Management Committee SMF Social Management Framework SPF School Physical Facilities


SSDP School Sector Development Program SSRP School Sector Reform Program SWAp Sectorwide Approach TRO Teacher Record Office TSA Treasury Single Account TST Time-Spent-Teaching TSU Technical Support Unit UNDP United Nations Development Programme UNESCO United Nations Educational, Scientific and Cultural Organization UNICEF United Nations Children’s Fund USAID United States Agency for International Development VCDF Vulnerable Community Development Framework WASH Water, Sanitation, and Hygiene


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.

BASIC INFORMATION – PARENT (Nepal School Sector Development Program - P160748)

Country Product Line Team Leader(s)

Nepal IBRD/IDA Shwetlena Sabarwal

Project ID Financing Instrument Does this operation have an IPF component?

Practice Area (Lead)

P160748 Program-for-Results No Education

Implementing Agency: Ministry of Education, Science and Technology ADD_FIN_TBL1

Is this a regionally tagged project? Bank/IFC Collaboration

No No

Original Approval Date Effectiveness Date Closing Date

24-Mar-2017 19-Sep-2017

Original Environmental Assessment Category (IPF Component)

Current EA Category (IPF Component)

Partial Assessment (B) Partial Assessment (B)

Program Development Objective(s) The Program Development Objective is to improve the quality, equitable access, and efficiency of basic and secondary education in Nepal by supporting the Government's School Sector Development Program.

Ratings (from Parent ISR)

RATING_DRAFT_NO

Implementation Latest ISR


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28-Jun-2017 08-Jan-2018 23-Aug-2018

Progress towards achievement

of PDO S

S

S

Overall Implementation

Progress (IP) MS

MS

MS

Overall Risk S

S

S

BASIC INFORMATION – ADDITIONAL FINANCING (Nepal: Additional Financing for School Sector Development Program - P167047) ADDFIN_TABLE

Project ID Project Name Additional Financing Type Urgent Need or Capacity Constraints

P167047 Nepal: Additional Financing for School Sector Development Program

Scale Up Yes

Financing instrument Product line Approval Date

Will there be additional financing for the IPF component?

Program-for-Results Recipient Executed Activities

25-Mar-2019 No

Projected Date of Full Disbursement

Bank/IFC Collaboration

No

Is this a regionally tagged project?

No

Disbursement Summary (from Parent ISR)

Source of Funds Net

Commitments Total Disbursed Remaining Balance Disbursed

IBRD

%

IDA 185.00 30.00 161.96

16 %

Grants

%


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PROGRAM FINANCING DATA – ADDITIONAL FINANCING (Nepal: Additional Financing for School Sector Development Program - P167047)

PROJECT FINANCING DATA (US$, Millions) FIN_SUMM_WITH_IPF SUMMARY-NewFin1

Government program Cost 23.96

Total Operation Cost 23.96

Total Program Cost 23.96

Total Financing 23.96

Financing Gap 0.00

Financing (USD Millions)

Trust Funds 23.96

Education for All - Fast Track Initiative 23.96

COMPLIANCE Policy

Has the parent Program been under implementation for at least 12 months?

Yes

Have the DO and IP ratings for the parent Program been rated moderately satisfactory or better for at least the last 12 months?

Yes

Does the program depart from the CPF in content or in other significant respects?

No

Does the Program require any waivers from Bank policies?

No


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INSTITUTIONAL DATA

Practice Area (Lead)

Education

Contributing Practice Areas

Gender Tag Does the project plan to undertake any of the following? a. Analysis to identify Project-relevant gaps between males and females, especially in light of country gaps identified through SCD and CPF Yes b. Specific action(s) to address the gender gaps identified in (a) and/or to improve women or men's empowerment Yes c. Include Indicators in results framework to monitor outcomes from actions identified in (b) Yes

TASK TEAM

Bank Staff

Name Role Specialization Unit

Shwetlena Sabarwal Team Leader (ADM Responsible)

Economics GED06

Mohan Prasad Aryal Team Leader Education and Operations GED06

Shambhu Prasad Uprety Procurement Specialist (ADM Responsible)

Procurement GGOPZ

Timila Shrestha Financial Management Specialist (ADM Responsible)

Financial Management GGOES

Annu Rajbhandari Environmental Specialist (ADM Responsible)

Environment safeguards GEN06

Jaya Sharma Social Specialist (ADM Responsible)

Social safeguards GSU06

Alejandro Welch Team Member Program Assistant GED06


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Franck Bessette Team Member Financial Management GGOES

Hanna Jang Counsel Legal LEGES

Junko Funahashi Counsel Legal LEGES

Malek Abu-Jawdeh Team Member Education GED07

Mari Shojo Team Member Education GED06

Maya Sherpa Team Member Economics GED06

Rashmi K C Khadka Team Member Education GED06

Sandra X. Alborta Team Member ACS support GED06

Satish Kumar Shivakumar Team Member Finance WFACS

Seble Berhanu Counsel Legal LEGES

Sunita Gurung Team Member ACS support SACNP

Unika Shrestha Team Member Education GED06

Extended Team

Name Title Organization Location


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Nepal

Additional Financing for School Sector Development Program

TABLE OF CONTENTS

I. INTRODUCTION .............................................................................................................. 7

II. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING AND RESTRUCTURING ..... 8

III. PROPOSED CHANGES .................................................................................................... 12

IV. APPRAISAL SUMMARY .................................................................................................. 17

V. KEY RISKS ..................................................................................................................... 21

VI. WORLD BANK GRIEVANCE REDRESS .............................................................................. 22

VII. SUMMARY TABLE OF CHANGES .................................................................................... 23

VIII. DETAILED CHANGE(S) .................................................................................................... 23

ANNEX 1: RESULTS CHAIN FOR IDA PARENT PROGRAM AND AF ........................................... 26

ANNEX 2: RESULTS FRAMEWORK AND MONITORING INDICATORS ....................................... 29

ANNEX 3: DISBURSEMENT-LINKED INDICATORS AND VERIFICATION PROTOCOLS ................. 36

ANNEX 4: DETAILED PROGRAM DESCRIPTION ...................................................................... 54

ANNEX 5: INTEGRATED RISK ASSESSMENT ........................................................................... 69

ANNEX 6: TECHNICAL ASSESSMENT – ADDENDUM ............................................................... 70

ANNEX 7: FIDUCIARY SYSTEMS ASSESSMENT – ADDENDUM ................................................ 81

ANNEX 8: ENVIRONMENT AND SOCIAL SYSTEMS ASSESSMENT – ADDENDUM...................... 98

ANNEX 9: MODIFIED PROGRAM ACTION PLAN ................................................................... 101


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I. INTRODUCTION

1. This Program Paper seeks the approval of the Regional Vice President to provide an additional grant in the amount of US$23,958,000 through the Global Partnership for Education (GPE) Trust Fund for Nepal School Sector Development Program (SSDP, P160748, US$185 million), as well as a Level Two restructuring of the parent program to account for changes due to the Additional Financing (AF). The parent IDA program supports a five-year time slice of the Government’s School Sector Development Program (SSDP). It was approved by the Board on March 24, 2017; became effective on September 19, 2017; and is scheduled to close on July 15, 2021. The proposed GPE AF and Restructuring are in response to a request from the Government of Nepal (GON) and an indicative GPE allocation1 to Nepal. The World Bank has been selected as the Grant Agent (GA) for processing and supervising the proposed grant through the consensus of the GON and the Local Education Group (LEG)2.

2. The proposed GPE AF would be for three-years (2018–2021). It would maintain support for the Government’s SSDP to help the GON improve quality, equity, and efficiency within the education sector. It would also safeguard and maximize SSDP’s development impact during the ongoing federal transition. The AF will explicitly focus on education service delivery, especially for the most disadvantaged and setting strong foundations for the decentralized education systems. It will help mitigate risks to education quality and access given heterogeneity in capacity and quality of governance across local governments (LGs). This is being done through three channels: consensus-driven context-relevant design, impactful DLRs, and reinforced commitment to GPE’s eligibility requirements - a credible education sector plan, a commitment to financing the sector plan, and availability of data for sector monitoring and analysis. 3. Accordingly, AF will comprise of two parts: (a) Intermediate disbursement-linked results (DLRs) amounting to 60 percent of the total grant and (b) Output/outcome-linked DLRs related to equity, quality, and efficiency amounting to 40 percent of the total grant (known as the variable part in GPE parlance, with outcome DLRs being ‘stretch’3 indicators). 4. The proposed AF will follow the PforR instrument used in the parent IDA program. By doing so, it will continue to build on the existing momentum and results-focus by directly incentivizing the Government’s ownership and implementation of critical reforms and policies. It also offers more flexibility to tailor interventions to local contexts – which aligns well with the federal transition. The original Program Development Objective (PDO) of improving the quality, equitable access, and efficiency of basic and secondary education in Nepal by supporting the Government’s SSDP will remain unchanged. The AF will include 10 new DLRs and one new disbursement-linked indicator (DLI) within the existing program boundary – designed to enhance program’s development impact during the ongoing federal transition. The AF will be combined with a Level Two restructuring which includes a change in implementation arrangements to accommodate the new federal structure.

1 The GPE Board has approved a maximum country allocation of US$24.2 million, including US$15 million from the GPE multiplier fund for the 2018–2020 GPE Education Sector Program Implementation Grants (ESPIG) application for Nepal. 2 LEG comprises of civil society, international NGOs, development partners and GON. 3 Stretch indicator is defined as an action, strategy or policy in the three areas of equity, efficiency and learning outcomes that is deemed likely to lead to substantial progress in the medium term and hence to be transformational.


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5. Country-level GPE application process and partnership arrangements. The proposed GPE AF includes a regular country allocation (of US$9.2 million) and a Multiplier Fund (of US$15 million); the latter provides financial resources to catalyze more funds for investment in education. Nepal’s multiplier fund is linked to an indicative allocation of US$163.9 million from Asian Development Bank (ADB) to support disaster risk reduction and comprehensive school safety and US$3.5 million from U. S. Agency for International Development (USAID) for inclusive education. In Nepal, the LEG members, with representation from development partners (DPs), international/nongovernmental organizations (NGOs), and different civil society organizations, meet periodically to discuss joint support to ongoing programs, including the Government’s SSDP. This group is leveraged for the preparation of the GPE grant. A GPE representative, LEG, and the GON jointly prepared a proposal for potential GPE funding. The World Bank, as the GA in collaboration with the Coordinating Agency (CA) and other DPs, will assume full fiduciary oversight and implementation support for the GPE grant.

II. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING AND RESTRUCTURING

A. Country Context

6. Over the past decade, Nepal’s economy has performed reasonably well. Growth averaged 4.3 percent (at market prices) over 2005-15. Although declining as a share in the economy, agriculture continues to play a large role, contributing over 30 percent of value-added. The service sector has grown in importance, accounting for half of value-added in recent years. Industry and manufacturing have grown more slowly and their relative share in the economy has averaged 16 percent of gross domestic product (GDP) over the past decade. Similarly, exports continue to struggle, while imports are fueled by remittances. However, remittance as a share of GDP has recently been on a declining trend due to lower oil prices that have impacted economic prospects in those countries with large Nepalese migrants. Inflation was in single digits for most of the past decade, with the peg of the Nepalese rupee to the Indian rupee providing a nominal anchor. Fiscal balances remained sustainable owing to strong revenue growth and modest spending. The incidence of poverty, measured against the national poverty line, fell by 19 percentage points between 2003/04 and 2010/11. In 2010/11, 15 percent of the population was counted as poor. Most multidimensional indicators of poverty also showed improvements across regions in Nepal. However, these gains remain vulnerable to shocks and setbacks, as evidenced by the 2015 earthquakes which were followed by trade disruptions resulting, in GDP growth of 0.6 percent in 2016, the lowest in 14 years.

7. Data released by the Central Bureau of Statistic (consisting of a revision of the FY2017 growth rate and an updated estimate for FY2018), show that growth has been strong, despite the external shock from floods. In mid-August 2017, the worst flood in decades destroyed 64,000 hectares of standing crop, contributing to an estimated reduction in the agriculture growth rate from 5 to 2.8 percent (in FY2017 and FY2018, respectively). This contributed to a reduction in overall GDP growth from 7.9 to 6.3 percent in FY2018. Government revenue continued to perform well but spending also picked up significantly in FY2017 compared to previous years. Nevertheless, ambitious expenditure targets envisioned in the budget have not been met and the quality of spending has not improved with 60 percent of the capital spending occurring in the last quarter. Also, spending pressures have increased in the first half of FY2018 due to fiscal transfers, as well as spending on elections, capital goods and the transition to


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federalism. High inflation in the past two years has moderated sharply due to moderating inflation in India and improving supply side constraints.

8. Inflation slowed to 4.2 percent (y-o-y) in December 2017 but increased to 6 percent (y-o-y) in March 2018 owing to a sharp uptick in vegetable prices. Meanwhile, credit growth slowed to 16.7 percent (y/y) in early 2018 compared to its peak of 31.9 percent in 2017; but deposits growth continued to decline, pushing up interest rates. On the external side, the cumulative effect of a sharp trade balance deterioration and a slow growth of remittances is putting significant pressure on the current account. Economic activity, affected by the worst floods in decades, is particularly affecting agriculture output. This contributed to the slowdown in growth from its peak of 7.9 percent in FY2017 to an estimated 6.3 percent in FY2018.

9. A new government, backed by an unprecedented majority in Parliament, took office on February 15, 2018. This follows successful elections for all three tiers (local, state and federal) of the new state architecture defined by the 2015 constitution, marking a protracted-but-successful conclusion of a political transition that began with the signing of the Comprehensive Peace Agreement in November 2006. State governments largely mirror the coalition at the center. At the sub-national level, funds, functions and functionaries hitherto managed by the central, district and village authorities are moving to the seven new provinces and 753 local governments for which new legislation, institutions and administrative procedures are being formalized as constitutionally prescribed. Meanwhile, the central level authority is being streamlined with a focus on national policies and oversight. This profound level of state restructuring is expected to result in improved outreach and service delivery in the medium term but is likely to take time before becoming fully operational.

B. Sector Context

10. While Nepal has made impressive gains in education access, learning levels remain low and unequal. Net enrolment rate (NER) at the primary level increased from 81 to 95 percent between 2004 and 2017. At the secondary level, NER increased from 48 to 54 percent between 2007 and 2017.4 Nepal has also achieved gender parity in basic and secondary education. However, learning levels are low and unequal. National Assessment of Student Achievement (NASA) show that in Grades 3, 5, and 8 fewer than 20 percent of students master basic competencies in problem solving and reasoning. Moreover, there is strong inequality in learning outcomes across districts and by socioeconomic status, ethnicity, and language spoken.5

11. Education continues to be a priority for GON. Historically, Nepal has allocated more than 12 percent of total government budget on education. In absolute terms, the education budget has doubled since 2012/13.6 Provisions under the new constitution guarantee the right to free education up to the secondary level for all, along with an emphasis on gender and social inclusion in education access.7

4 UIS Education Database. 5 World Bank. 2016. Moving Up the Ladder: Poverty Reduction and Economic Mobility in Nepal, Synthesis Report. World Bank, Washington, DC. 6 Ministry of Finance, Red Book FY12/13; FY18/19. 7 Constitution of Nepal 2015 - Articles 38, 39, 42, and 287.


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12. GON’s SSDP – implemented by Ministry of Education, Science, and Technology (MOEST) with financing from GON and DPs - is focused on improving quality, equity, and efficiency in the school sector. The SSDP is expected to contribute to the Sustainable Development Goal (SDG) targets for education. It is currently supported by a US$478 million financing from 14 DPs8, while the GON contributes US$5,739 million. DPs’ support for the Government SSDP follows a results-based approach. The joint financing partners (JFPs) subscribe to a common set of 10 DLIs - nearly 40 percent of which are tied to quality-related indicators. Overall SSDP DLIs can be grouped under three results areas:

• Results Area 1: Improved teaching-learning and student learning outcomes

• Results Area 2: Improved equitable access to basic and secondary education

• Results Area 3: Strengthened education system, sector planning, management, and governance

13. The transition to federalism presents a historic opportunity for transforming the education system to ensure learning for all. The Local Government Operations Act of October 2017 places planning, monitoring, and management basic and secondary education under the jurisdiction of the new LGs. The 2015/16 Education Sector Analysis (ESA)9 identified the introduction of a federal system as a major imperative for increasing equity, quality, and efficiency in the education sector. These findings were echoed by a World Bank study10 that showed strong support for federalism at the frontlines. Over 80 percent of the surveyed head teachers believed that the LGs would be more accountable to the local community and provide more support to improve quality. These findings underline the strong yet untapped potential for bridging gaps between the Government, schools, and the community.

14. Whether the federal transition improves education delivery depends on LG-level capacity and governance systems. There is tremendous heterogeneity across LGs on these dimensions, posing various risks. First, there is the risk of short- to medium-term disruptions to education service delivery as systems get reconfigured. These disruptions could have long term consequences for students. Second, implementing national-level programs across a large number of governments at different tiers entails substantial risks of technical and political misalignments. Third, heterogeneity in LG capacity/ governance could heighten existing inequities. To mitigate these risks, strong foundations for LGs’ governance systems and capacity need to be put in place early in the federal transition.

15. As the nuts and bolts of the new federal structure are being finalized, this AF can help GON set this transition on an optimal trajectory. This AF will be used to build capacity and help safeguard and boost interventions linked to learning and equity. This will strengthen the foundations, outreach, and evidence-base for SSDP full restructuring which is planned for mid-2019. Given that some details of federal transition are still being defined, it is currently premature to fully restructure SSDP. However, an AF at this time is opportune to safeguard and boost service delivery, maximize readiness, and minimize risks before moving towards full restructuring.

16. The MOEST continues to serve as the executing agency for the SSDP. Under the original SSDP implementation arrangements, the now defunct Department of Education (DOE) served as the main

8 JFPs include the ADB, the European Union (EU), Finland, Japan International Cooperation Agency (JICA), Norway, United Nations Children’s Fund (UNICEF), and the GPE/ Results in Education for All Children (REACH). The non-joint financing DPs include USAID, World Food Program, UNDP, UNESCO, and others. 9 Through the support of a GPE Education Sector Program Development Grant. 10 A study on risks and opportunities associated with federal transition in education sector was conducted in November 2017.


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implementation agency. This responsibility has been transferred to a newly established Centre for Education and Human Resource Development (CEHRD) under MOEST11. Further updates to align SSDP implementation arrangements with the federal structure are being finalized12 (for details on transitional implementation arrangements, see Annex 6- Section B).

C. Summary of the Program Description, Implementation Progress and Results

17. Performance of the parent IDA program has been Moderately Satisfactory or higher since its approval. The likelihood of achieving the PDO has been rated Satisfactory. The Year 1 targets for two PDO-level indicators (PDO 1 and PDO 2) have been achieved. Competency-based NASA at Grade 8 has been conducted, and a baseline has been established as a first step in tracking grade-level competency on core subjects. Policy and guidelines to improve teacher time-spent-teaching (TST) have also been set. Despite falling short of meeting the targets for other two PDO-level indicators (PDO 3 and PDO 4), good progress has been made. Additionally, nine of twelve Year 1 intermediate results indicators have been fully achieved. The overall implementation progress, environmental and social systems, and fiduciary ratings are Moderately Satisfactory. The technical system has been rated Satisfactory. 18. Achievement of DLIs has been satisfactory. DLIs for the IDA program13 are a subset of the 10 DLIs adopted by JFPs. Progress on achievement of Year 1 DLIs has been satisfactory. All Year 1 DLRs (see below) have been achieved and independently verified.

(a) Enhanced fiduciary system in place (DLR 1.1) (b) Pro-poor targeted scholarship (PPTS) and pro-science targeted scholarship (PSS) schemes

approved (DLR 2.1) (c) Revised Grants manual approved for community schools (DLR 5.1) (d) Revised policy and guidelines on reallocation of teachers and to improve teacher time-spent-

teaching (TST) approved (DLR 6.1)

19. Other key achievements of the parent IDA program include– i) implementation of the consolidated equity index with targeted interventions to bring out-of-school children (OOSC) into schools and learning centers (LCs) in the 10 most disadvantaged districts, ii) revision of scholarship guidelines at the secondary level (Grades 9–12) and phased implementation of the same in 25 districts14, iv) classroom-based (CB) early grade reading assessment (EGRA) for Grades 2 and 3 conducted in 5,600 community schools, and v) approval of single subject certification policy for Grades 10, 11, and 12.

D. Rationale for GPE Additional Grant and Restructuring

11 Three agencies, namely the DOE, Non-formal Education Center, and National Center for Education Development, have been merged to form the CEHRD. 12 Government of Nepal, Ministry of Education, Science, and Technology. October 2018. Transitional Plan and Roadmap for Implementation of SSDP in Federal Setup. 13 Note that some DLIs are also being supported through an ongoing GPE/REACH Trust Fund which was bridge funding (approved by the GPE Board in May 2015) designed to support the last year of SSRP, predecessor to the SSDP, and the first two years of the SSDP. The World Bank is the supervising entity for the GPE/REACH Trust Fund. 14 With provisions for Pro-poor targeted scholarships and pro-science targeted scholarship


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20. The proposed AF will help reduce the current financing gap in the SSDP and support decentralization. It has been requested by the GON to help minimize the current financing gap of US$247 million in the broader SSDP. In addition, proposed AF will help set foundations for a strong LG-level governance structure in education (with focus on system accountability and incentives). This will complement ongoing efforts to counter capacity and resource constraints at the local level.

21. Federalism offers a unique window of opportunity to reshape the education system for greater accountability and effectiveness. The proposed AF will help ensure this opportunity is used most effectively by strengthening LG governance and incentives towards quality and equity in education. A World Bank study15 suggests that incentives for service delivery may be misaligned at the LG level. For example, surveyed head teachers were relatively more optimistic about timely delivery of school funds that are more ‘politically visible’ such as textbooks and teacher salaries than for funds that only some students receive (scholarship grants) or funds that are discretionary (school renovation grants). Focus group discussions with head teachers also indicated some political economy concerns due to increased clientelism and vulnerability of education delivery to political infighting.

22. The proposed AF would also help mitigate risks from potential disruptions in service delivery during federal transition. Since the federal system is in its formative stage, there might be delays in clarifying roles and responsibilities across agencies and in deputation/recruitment of education officials to province and local levels. By supporting crucial SSDP activities at the local level, the proposed AF would help ensure that SSDP objectives are achieved and education delivery is shielded from disruptions.

23. The proposed AF is well aligned with the World Bank Group’s Nepal CPF 2019–202316. The CPF has three priority areas: public institutions, private sector-led jobs and growth, and inclusion and resilience. The AF will contribute to the above themes through ‘strengthened institutions for public service delivery’ (CPF Objective 1.2) and ‘improved equity in access to quality education’ (CPF Objective 3.1). These will directly contribute to poverty reduction and shared prosperity at the country level. It is also aligned with the World Bank’s Human Capital Project through its results-based focus on education access and learning.

III. PROPOSED CHANGES

24. The proposed AF will run from 2018-2021 and not entail any changes to the original PDO, program boundary, or results areas. The AF will entail adding 10 new DLRs and introducing a new DLI within the existing program boundary and is aligned with existing results areas. These are all designed to protect and enhance education service delivery during the ongoing federal transition. They help address emerging gaps in the original results chain due to decentralization. Specifically, the new DLRs focus on ensuring SSDP’s agenda of improving quality, equity and efficiency remains a priority for LGs (See table 1). They also minimize risks of disruption to critical interventions, especially for the most vulnerable children. (Detailed results chain for the AF DLRs is given in Annexes 1 and 6) Furthermore, additional focus would be given to demand side interventions from LGs and schools with extended citizen engagement. Ongoing SSDP technical assistance supported in close coordination by DPs would help LGs and schools

15 Aryal Mohan, Shwetlena Sabarwal, Maya Sherpa, and Unika Shrestha. 2018. “What might Federalism mean for education service delivery in Nepal?”. Working Paper. World Bank. 16 Report No. 121029-NP. http://bit.ly/2N1wUO1.

http://bit.ly/2N1wUO1


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with overall planning, monitoring, fiduciary management and upward reporting consistent with the LG Operations Act, Appropriate Acts and other regulatory provisions in federal setup.

25. The AF comprises two parts: (i) intermediate DLRs (in GPE terms -fixed part) accounting for 60 percent of the total grant; and (ii) output/outcome-linked DLRs related to equity, quality and efficiency (in GPE terms- variable part) accounting for 40 percent of the total grant.

Table 1. Addressing urgent federalism needs

New DLRs DLR Focus How it supports federal transition

Intermediate Indicators (US$ 14.2 million)

1.7, 1.9 LGs integrate SSDP activities into annual work plans and budget

Align LG incentives with SSDP

Output/Outcome Indicators (US$ 9.8 million)

1.8, 1.10, 1.11 LGs publish open data on grants released to schools

Strengthen information systems for LG accountability

2.6, 2.7 LGs reduce number of out of school children (improve equity index)

Safeguard focus on most vulnerable

7.1-7.3 LGs roll-out early grade reading program Protect and boost critical service delivery

26. The AF will be combined with a restructuring to reflect a change in implementation arrangements. While the MOEST will continue to lead SSDP implementation as the executing agency, CEHRD, which was formed under the federal setup by combining three central level agencies including the DOE, will be the main implementing agency. Other arrangements at the central level including key players will remain intact except for renaming of some units/ sections .

27. The AF and restructuring are proposed as there is urgent need to safeguard service delivery and set foundations for a strong LG-level governance structure. This will also help maximize available financing to GoN under current GPE window. Transitional arrangements are still being finalized; the full restructuring will be done after the program’s midterm review to re-define the SSDP implementation arrangements structure in line with the new federal structure.

28. The proposed AF design hinges on the four core guiding principles. First, the design is fully aligned with SSDP. Second, it maximizes value added given current country context by incentivizing added investment in quality, equity and efficiency by LGs. Third, it is pragmatic and realistic, and accounts for heterogeneity in LGs’ capacity. Fourth, the AF design is aligned with GPE’s three strategic goals of improved and equitable learning outcomes, increased equity and inclusion, and effective and efficient

education systems as specified in the GPE 2020 Strategic Plan.17

Intermediate new DLRs (GPE Fixed Part, US$14.2 million)

29. Support LGs to prioritize SSDP activities and maintain focus on learning. The AF will introduce the following two DLRs.

17 GPE 2020: Improving learning and equity through stronger education systems.


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• DLR 1.7: SSDP activities have been integrated in annual work plan and budget (AWPB) by at least 75 LGs (US$7,100,000).

• DLR 1.9: SSDP activities have been integrated in AWPB by at least 140 LGs (US$7,100,000).

30. DLRs 1.7 and 1.9 are designed to align LGs’ incentives with SSDP goals. While the SSDP was designed to improve education quality at the national level, the GON is likely to face challenges in implementing its activities across 753 LGs. Given technical capacity issues and misaligned incentives that LGs may face, there are nontrivial concerns that locally formulated education plans and institutional setup may not be technically aligned with the SSDP goals. These DLRs aim to strengthen ownership and credibility of the SSDP among LGs as well as to incentivize LGs to pursue quality and equity improvements through activities embedded in SSDP. Notable activities include implementing targeted scholarship schemes for poor and marginalized children at the secondary level, expanding school-based early childhood education, tracking teacher TST, conducting social audits, and administering conditional grants to community schools. Incorporating these activities in LGs’ AWPBs along with the ongoing capacity building initiatives are expected to help build ownership, align local education programs with SSDP goals and safeguard progress made in quality education service delivery thus far.

31. Since AWPBs represent the most concrete and standardized documentation of LGs’ annual programs, disbursement is linked to LGs’ integration of SSDP activities as reflected in their AWPBs. Systems to document LG programs and their implementation are still being developed during the transition period. Thus, these DLRs aim to ensure LGs incorporate SSDP activities as documented in their planning stage. (For detailed description, see Annex 4)

Output/outcome-linked new DLRs (GPE Variable Part - US$9.8 million)

32. Ensure provision of open data on school grants by local governments to facilitate information for accountability (GPE efficiency indicator)

• DLR 1.8: Data on conditional grants released to individual schools, consistent with the Grant Management Guideline, is made public on user-friendly websites (or accessible spaces) by at least 200 LGs (US$800,000).

• DLR 1.10: Data on conditional grants released to individual schools, consistent with the Grant Management Guideline, is made public on user-friendly websites (or accessible spaces) by at least 300 LGs (US$800,000).

• DLR 1.11 Data on conditional grants released to individual schools, consistent with the Grant Management Guideline, is made public on user-friendly websites (or accessible spaces) by at least 400 LGs (US$800,000).

33. While the MOEST collects an impressive amount of school-level data, there is further scope for using data to improve transparency at the LG and community levels. Since 2004, community schools have been incentivized to report data on school inputs through the Flash questionnaires twice a year as the data determine per capita funding amounts to schools. However, data collected by the MOEST have been primarily used for central-level planning and monitoring. The parent IDA program further supports improved data use for enhancing feedback and accountability mechanisms at the local/school levels by linking school profile cards to social audits, and using targeted interventions based on an equity index.


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The federal transition generates an opportunity to further leverage data that are already collected to develop platforms for greater transparency and accountability at the LG level.

34. As a foundational step in ensuring information for accountability, the AF will support three new DLRs (1.8, 1.10, and 1.11) on provision of open data on flow of conditional grants18 released from LGs to schools on accessible websites and/or physical spaces. These DLRs fall under parent IDA DLI 1. These DLRs build on the parent IDA program’s efforts to use data beyond central-level planning and for facilitating transparency and potential feedback mechanisms in the medium to long term. Provision of open data on fund flows by LGs to schools represents a strategic and timely intervention during the transition process to strengthen the education system. It is expected to lay the foundation for boosting accountability through information at the local level and support meaningful engagement by schools and the community. Moreover, it does so without disrupting local level accountability mechanisms that are still in their nascent stages and that may vary across LGs. (For detailed description, see Annex 4)

35. Targeted interventions to bring OOSC into schools or LCs to improve access to basic education (GPE equity indicator):

• DLR 2.6: 30% reduction in OOSC in 15 targeted districts (based on equity index) (US$1,200,000).

• DLR 2.7: OOSC in basic education age group reduced to 5% in the relevant age group nationwide (US$1,200,000).

36. Despite progress in improving access to basic education and narrowing equity gaps in access in the past decade, a nontrivial number of children remain out of school. An estimated 500,000 children—14 percent of children ages 5–12— are out of school.19 Most of these OOSC are from disadvantaged groups and are likely to be vulnerable during the federal transition. More than half of OOSC are likely clustered around 10 districts in the Terai belt. In addition, net enrolment at the secondary level remains low at 54 percent. Children from poor households are much less likely to transition to the secondary level. While the transition of education responsibilities to LGs augurs better access to education officials and shortened accountability routes for schools and parents, these benefits may not necessarily hold for children from disadvantaged backgrounds who are at greater risk of being out of school.20

37. Through DLRs 2.6 and 2.7, the AF will ensure continued support to the GON’s ongoing efforts to reduce the number of OOSC in the most disadvantaged areas. While these represent new DLRs in the parent IDA program, they offer additional incentives to existing DLIs in the GON SSDP DLI framework.21 Activities to reduce the number of OOSC under the SSDP include targeted scholarships and enrolment campaigns in formal schools, development of diverse non-formal education packages and special packages for children with disabilities, and bridge courses for reentry into formal education. The GON plans to refine the equity index to a local-level equity index to strengthen analysis and planning at the

18 Individual LGs will receive information of federal government’s subhead-wise conditional grant release to LGs in the web-based Line Ministry Budget Information System (LMBIS). 19 SSDP Project Appraisal Document (PAD). 20 Indeed, participants from one district in the World Bank scoping study expressed concerns of being neglected by local governments because their schools serve children from poor migrant families that are not part of the local officials’ constituencies. 21 Specifically, DLI 6.3 and DLI 6.5 of the GON SSDP DLI framework. These DLIs are supported by the EU.


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local level. With the availability of a more targeted index to identify OOSC, added support to the GON’s efforts to reduce the OOSC rate can lead to transformative improvements in bridging equity gaps in access. (For detailed description, see Annex 4)

38. Strengthening reading proficiencies and habits in early grades (GPE learning indicator):

• DLR 7.1: National early grade reading program (NEGRP) minimum package implemented in at least 80% of community schools by LGs in at least 20 districts (US$1,000,000).

• DLR 7.2: NEGRP minimum package implemented in at least 80% of community schools by LGs in at least 29 districts (US$1,979,000).

• DLR 7.3: NEGRP minimum package implemented in at least 80% of community schools by LGs in at least 38 districts (US$1,979,000).

39. The AF will support the GON’s strategy of implementing the NEGRP minimum package to safeguard investment in early learning during the federal transition. DLI 7 is drawn from the GON SSDP DLI framework but represents a new DLI in the parent IDA.22 Improving education quality forms the cornerstone of the GON’s national education strategy particularly since low learning levels and inequity in learning are the biggest challenges in Nepal’s education sector. NASA results from 2011 to 2015 indicate low competencies among students across grades at the basic education level. Moreover, gaps in learning outcomes persist by geographical location, socioeconomic status, and ethnicity. Additional investment in improving learning in early grades is particularly critical in the context of the federal transition. Global experience suggests that decentralization often reduces focus on ‘soft’ investments such as improving pedagogy by shifting attention toward hard investments (for example, infrastructure).

40. As part of a diagnostic step, the MOEST has conducted standardized CB- EGRAs for Grades 2 and 3 with parents’ participation in over 5,600 community schools that have created a strong foundation for rolling out the NEGRP.23 These findings will continue to inform the design of the NEGRP package. Components of the NEGRP minimum package include providing supplementary early grade reading materials and free textbooks, mentoring and classroom support training to headteachers, community mobilization including distributing CB-EGRA results to parents, teacher training in early grade reading and setting book corners. (For detailed description, see Annex 4).

Institutional Arrangements 41. The MOEST has revised implementation arrangements to accommodate the new federal structure. Implementation responsibilities that were previously assigned to Regional Education Directorates (REDs) have been transferred to school education sections at the provincial level under the Ministry of Social Development. Functions that were previously executed by District Education Offices (DEOs) will be divided between the Education Unit in the LG office and the district-level Education Development Coordination Units (EDCUs) housed within the District Administrative Offices. SSDP activities at the school level will be run per original arrangements.

22 Specifically, DLIs 1.3, 1.4, and 1.5a in the GON SSDP DLI framework. These DLIs are supported by the EU. 23 Parents observed the classroom-based assessments. Results were shared and discussed with parents. Assessments were carried out in 2,605 schools in FY2016/17 and in 3,00 community schools in FY2017/18.


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42. Consistent with the parent IDA program, the MOEST will continue to lead SSDP implementation as the executing agency. CEHRD will be the main implementing agency. A SSDP Steering Committee (SC) chaired by the MOEST Secretary will be maintained to oversee the coordination, monitoring and verification of implementation progress of SSDP activities. The SSDP Program Implementation Committee (PIC) established under CEHRD will take over the main functions of supporting program implementation previously assumed by the SSDP Implementing Committee. Financial management, budgeting, audit reports and reporting on DLI achievement will be handled by the MOEST’s Development Assistance Coordination Section (DACS) previously known as the Foreign Coordination Section (FCS). The Financial and Budget Management Support Committee (FBMSC) is also in place under the SSDP implementation arrangement. This will be documented in the next revised version of the SSDP Transitional Plan. To ensure overall quality standardization ,central level agencies will retain the responsibility for national curriculum, large scale national assessments and standardized high-stake examinations. They will also be responsible for capacity building of sub-national governments as clarified in the transitional roadmap for SSDP implementation in the federal setup.

(For additional details on implementation support, see Annex 6- section B)

43. Monitoring arrangements. The MOEST’s Planning and M&E Divisions supported by the TSU are responsible for monitoring achievement of SSDP indicators and results including DLI verification. DLI achievement will be verified by an IVA. At the provincial level, dedicated M&E units, with support from EDCUs, will be tasked with SSDP reporting requirements, including financial reporting based on SSDP requirements. CEHRD will prepare progress reports against DLI achievements. (For further details see Annex 6 – Section C)

44. SSDP financing has been revised with a provision of the AF, as shown in table 2. Financing gap will be reduced to US$220 million.

Table 2. Financing Table (US$, millions)

Source Original Program AF Total

Total program Cost 6,461 — 6,461

Financing Sources

• Government 5,739 — 5,739

• IDA/World Bank 185 — 185

• Other JFP/Non-JFP 293 — 293

Original Financing Gap 247 —

• GPE AF 23.95 23.95

Revised Financing Gap 223 Source: SSDP PforR PAD. Note: DPs’ financing is estimated based on commitments indicated so far: ADB (US$120 million), EU (US$72 million), Finland (US$23 million), GPE and REACH MDTF (US$22 million), Norway (US$21 million), UNICEF (US$3 million), JICA (US$15 million), and non-JFPs (US$14 million).

IV. APPRAISAL SUMMARY

A. Technical


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45. The parent IDA program as well as the proposed AF design is strategically relevant as it supports the GON’s Development Strategy 2030 and is aligned with ongoing developments within the country. The SSDP’s focus on quality improvements through strategic interventions is expected to provide young people with relevant cognitive and noncognitive skills for further education and success in the labor market. Moreover, the proposed AF strengthens support to the GON to leverage a critical stage in Nepal’s federal transition. The efficacy of the SSDP and any effort to strengthen education system will depend largely on how LGs operate under the new federal structure. The transition to federalism presents an opportunity for strategic and timely investment to strengthen the education system.

46. The parent IDA program and proposed AF are technically sound as they are underpinned by a robust results chain (See Annex 1), and include actionable targets based on the results chain. The results chain uses both local and global evidence as well as contextual guidance derived from extensive consultations with education service providers, government stakeholders, and other DPs. Global evidence suggests that there is rarely a silver bullet that can lead to dramatic and sustained improvements in education quality. Therefore, the program design tackles various key problems at once. The AF design also draws from a World Bank scoping study24 that suggests a need for strengthening support in areas of access, improved learning, and greater transparency. The activities in the SSDP are clearly defined and are implementable in the practical sense. The parent IDA as well as the AF activities were designed in view of the existing implementation structures and decision processes. This is particularly important given the uncertainty around LGs’ capacity to plan and implement crucial education activities in the face of rapid decentralization.

47. Economic justification. The SSDP would remain economically viable with the proposed AF. The cost-benefit analysis presents an assessment of benefits and costs associated with the Program using a ‘counterfactual’ identification approach in the absence of the SSDP whereby the Program ‘investment’ is the estimated additional cost over and above the current spending. Based on a discount rate of 12 percent for the benefit and cost streams described above, the net present value of SSDP benefits is estimated to be $383 million and the estimated internal rate of return (IRR) is 15.9 percent. These estimates are likely to be conservative. The AF would help mitigate risk of disruptions in service delivery during the federal transition and hence help maintain the program’s efficiency gains from reduced dropouts relative to the counterfactual scenario without the AF.

B. Fiduciary

48. Inadequate preparation for fiduciary management during the federal transition poses significant fiduciary risks. A key risk includes weak evidence of intended utilization of SSDP funds by LGs due to absence of adequate reporting mechanisms on conditional grants. Weakness in internal controls at the federal level combined with non-existent internal controls at LGs pose a risk that World Bank proceeds might be expensed in contradiction with the legal and regulatory framework. Furthermore, the absence of adequate accountability mechanisms that are commensurate with the complexity of the SSDP expenditure framework with 761 cost centers and 28,000 schools pose a substantial risk. Federal parliamentary oversight and the capacity of the Public Accounts Committee (PAC) remains fragile while local parliamentary oversight is yet to be established. Insufficient capacity in assessing program

24 Aryal Mohan, Shwetlena Sabarwal, Maya Sherpa, and Unika Shrestha. 2018. “What might Federalism mean for education service delivery in Nepal?”. World Bank.


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performance, implementation and procurement at all levels of government, particularly at the LG level add to fiduciary risks.

49. While proposed AF DLRs 1.8, 1.10 and 1.11 aim to address some fiduciary risks by making information on release of conditional grants public, the assessment suggests the following main mitigation principles. These include: (i) developing mechanism for LGs to report back on the activities implemented, and financial and performance audits to provide assurance of intended utilization of program funds; (ii) citizen engagement at LG and school levels through social audits under the SSDP’s joint capacity building technical assistance; (iii) establishment of a Fiduciary Management Committee led by MOF, fiduciary capacity building at all 3 tiers of government and in community schools, engaging a procurement expert and establishing a system to share complaints received regarding fraud with the World Bank. The ongoing support on fiduciary capacity building including the development of Sub-National Treasury Regulatory

Application (SuTRA) for LGs would help strengthen upward reporting. (See Annex 7 for more details)

C. Environment and Social

50. Given the unchanged objective, scope, and activities of the AF, the environmental and social impact remains the same as in the parent IDA program. Although the environmental and social impacts are low, the Environmental and Social Systems Assessment (ESSA) had identified systemic gaps with regard to institutional mechanisms and arrangements for implementation, budgeting, coordination, and monitoring and enhancing of institutional capacity through training and better guidelines. The ESSA identified action plans for improving environmental and social management of the program. These included updating the Environmental Management Framework (EMF) and Social Management Framework (SMF)/Vulnerable Community Development Framework (VCDF) used in the predecessor SSRP, establishment of environmental and social due diligence procedure, grievance redressal mechanism, monitoring, evaluation, and provision of budget for capacity building/training.

51. Provisions for monitoring and verification of self-reported school data including data on environmental and social aspects in SSDP were in place. However, implementation has been weak. Both SSDP implementation and transition to federal structure started simultaneously in FY 2016 and the GON was heavily involved in federal transition. While the fund flow to schools, and teaching and learning activities were uninterrupted, monitoring and reporting was weak due to lack of clarity in roles and responsibilities of the GON counterparts for reporting and monitoring of LGs during the transition

52. The capacity of the LGs appears to be inadequate both in terms of human resource and knowledge to address the safeguard issues. The change in the institutional arrangement has created new challenges on the already inadequate capacity of the Program in implementing environmental and social safeguard activities. An effective communication strategy and capacity building of the subnational government staffs with adequate budget for monitoring are critical for the effective implementation of safeguard provisions. (See Annex 8 for further details)

53. To ensure effective implementation of the EMF and SMF/VDCF in the program and for refinement in the AF, the following measures are recommended: (a) revision of the EMF and SMF/VDCF to reflect the change in implementation arrangement; (b) translation of the executive summaries of the two frameworks in the Nepali language; (c) a dedicated technical person, preferably an environmental specialist in the CEHRD, assigned to monitor the construction activities; (d) periodic monitoring from the


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CEHRD and other concerned agencies (EDCUs); and (e) training of officials from the CEHRD, EDCUs, LGs and representatives from SMC to deal with issues related to the environment.

54. Climate and disaster risk. Nepal is exposed to a wide range of hazards, including earthquakes, floods, landslides, droughts, and glacial lake outburst floods. The Disaster Risk Resilience (DRR) subresults area under the parent IDA program aims to enhance schools’ physical infrastructure and provide children a safe, secure, and conducive learning space. The SSDP builds on the existing school safety framework and strengthens soft components of school safety (for example, curriculum integration, teacher training, communication, school drills, and DRR in SIPs) and the need-based maintenance and retrofitting of school buildings. Hence, the overall risk to the intended Program outcome continues to be low to moderate.

55. Gender. Nepal has made impressive gains in gender equity in key education outcomes. For example, gender parity in NER has been achieved at both basic (Grades 1–8) and secondary (Grades 9–12) levels. The survival rate to basic education (Grade 8) for girls is 77.4 percent which is higher than that for boys at 75.9 percent. The percentage increase in survival rate of both boys and girls in basic education can be attributed to a series of enabling strategies adopted by the national-level programs such as the SSRP, SSDP scholarships and incentives, girls’ toilets, and water, sanitation, and hygiene (WASH) facilities. Yet some challenges remain. For example, girls are more likely than boys to drop out of secondary level. (See Annex 8 for more details). However, due to the lack of gender-disaggregated data of the survival rate to Grade 12, the exact gender gap is not available.

56. The AF will continue to support the interventions of the parent IDA program related to equitable access and learning outcomes at both the basic and secondary levels. These include providing scholarships for girls at the basic level and pro-poor scholarships to support retention at the secondary level for need-based students many of whom are girls from poor and marginalized households. Additionally, the parent program also supports pro-science scholarships for girls to enable girls to be more competitive for employment in the high demand science, technology, engineering, and mathematics (STEM) sector. The AF will further support in enhancing the current EMIS to collect and report gender-disaggregated data for more efficient targeting to reduce inequity and improve the education outcomes for girls. Key activities to track gender-disaggregated data are (a) measurement of PDO Indicator 3: Survival rate to Grade 8 and Grade 12 (disaggregated by gender), and (b) PDO Indicator 4: measurement of NER in basic and secondary education in 15 most disadvantaged districts as ranked in the equity index disaggregated by gender); and (c) strengthening of the EMIS.

57. Citizen engagement. This is an important part of the program. At the central level, the program will continue to be supported and monitored by the LEG represented by civil society, international NGOs, DPs, and the Government. At the school level, beneficiaries (parents and other stakeholders) are directly engaged through their participation in SMCs and parent-teacher associations (PTAs). Importantly, social audits and school report cards provide public information on school performance and accountability. The parent IDA program uses an intermediate outcome indicator on social audits to monitor the enhancement of feedback mechanisms to schools. For increased effectiveness, the quality of social audit needs enhancement. Moreover, the new DLRs (1.8, 1.10, and 1.11) will incentivize stakeholders, LGs, and implementers to access and use the data in the federal context to ensure evidence- and needs-based planning and transparency. This will help both LGs and schools be more accountable. The communication strategy as a part of the capacity building initiative of the joint DPs technical assistance would also provide an avenue for citizen engagement leading to accountability in LGs and schools.


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58. Grievance Redress Committee (GRC). The GRC at the SMC level and at the district level existed, as part of the Good Governance Act, to facilitate processes to address grievances relating to school activities. The SMC-level GRC comprises five members, including the head teacher, parents, community, and vulnerable group representatives. The District Education Committee (DEC), now dissolved, used to work as the district-level GRC receiving complaints unresolved at the SMC level and settled these grievances in a consultative manner, reported to the aggrieved parties about the decision or solution, and forwarded the unresolved cases to higher authorities. During the SSDP, GRM Guideline 2074 was prepared and implemented in select districts on a need basis. At the school level, grievance boxes were also maintained but minimal grievances were received through this. Stakeholders, including students these days, prefer to use the national wide hotline service ‘Hello Sakar’ to file complaints, which then gets forwarded to the respective agencies/institutions at the central level for redressal. Both the MOEST and CEHRD have provision of a central-level GRC.

V. KEY RISKS

59. The project risks are summarized in line with the Systematic Operations Risk-Rating Tool (SORT). Compared to the parent IDA program, the overall program risk, including for the proposed AF, has been reclassified to High. This is largely due to the ongoing federal transition because several new institutional arrangements are in the process of being solidified. The main risks to achieving the intended results are political and governance risks, and risks related to institutional capacity for implementation.

60. Political and governance risk remains High in view of insufficient preparation for transition to federal structure; poor enforcement of anticorruption laws and public sector ethic regulation; and inadequate transparency in funds allocation, distribution, and use, especially at the local and school levels. The risk rating for institutional capacity for implementation and sustainability has increased to High due to greater challenges in program implementation by a large number of governments with varying degrees of implementation capacity—federal government, 7 provincial governments, and 753 LGs. While the MOEST has developed transitional implementation arrangements that include technical and monitoring support to LGs in implementing SSDP activities, inadequate preparation in human resource management and in communicating clearly defined roles across agencies at the local level generate significant risks.

61. Fiduciary risk is rated Substantial because of inadequate preparation on fiduciary management during federal transition, persistent delays in financial reports and audit reports, inadequate internal controls at the federal level and nonexistent internal controls at LGs, less-than-developed complaint mechanisms, and an inefficient procurement system. Furthermore, the absence of adequate accountability mechanisms that are commensurate with the complexity of the SSDP expenditure framework with 761 cost centers pose a substantial risk. In view of the challenging but transformational reforms tied to the DLIs and DLRs, and risks from insufficient implementation arrangements, the proposed program design risk is rated as Substantial. While the Program is not expected to have significant negative effects on environmental and social aspects, this risk is rated Substantial given that LGs will be largely responsible for implementing the programs with relatively insufficient experience in monitoring and supervision of schools.

62. These risks will be mitigated through (a) sustained policy dialogue, launching communication strategy, and initiating provincial- and local-level capacity-building packages to direct the focus on results


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and incentives to bring critical changes/reforms; (b) use of DLIs (monetary incentives) to bring intended results in outcomes, processes, and reforms; (c) clarity of roles and responsibilities for implementation, coordination, and M&E arrangements of the federal and provincial levels, LGs and schools/LCs; (d) fiduciary capacity building at all levels through the TSU for supporting the MOEST and CEHRD; (e) establishment of a Fiduciary Management Committee to provide strategic guidance and monitor progress on DLRs and agreed mitigation measures; and (e) close monitoring of the key Program Action Plan to enhance the implementation and M&E capacity of the implementing agencies at the federal, provinces, local, and school levels.

VI. WORLD BANK GRIEVANCE REDRESS

63. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org


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VII. SUMMARY TABLE OF CHANGES

Changed Not Changed

Change in Program Action Plan ✔

Change in Implementing Agency ✔

Change in Project's Development Objectives ✔

Change in Program Scope ✔

Change in Results Framework ✔

Change in Loan Closing Date(s) ✔

Cancellations Proposed ✔

Reallocation between Disbursement Categories ✔

Change in Disbursements Arrangements ✔

Change in Safeguard Policies Triggered ✔

Change of EA category (IPF Component) ✔

Change in Legal Covenants ✔

Change in Technical Method ✔

Change in Fiduciary ✔

Change in Environmental and Social Aspects ✔

Change in Implementation Schedule ✔

VIII. DETAILED CHANGE(S)

PROGRAM DEVELOPMENT OBJECTIVE

Current PDO

The Program Development Objective is to improve the quality, equitable access, and efficiency of basic and

secondary education in Nepal by supporting the Government's School Sector Development Program.

Proposed New PDO


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Expected Disbursements (in US$) DISBURSTBL

Fiscal Year Annual Cumulative

2017 0.00 0.00

2018 0.00 0.00

2019 40,095,042.00 40,095,042.00

2020 57,883,958.00 97,979,000.00

2021 30,979,000.00 128,958,000.00

2022 80,000,000.00 208,958,000.00

2023 0.00 208,958,000.00

COMPLIANCE

Change in Safeguard Policies Triggered

No Safeguard Policies Triggered Safeguard Policies Current Proposed

Projects on International Waterways OP/BP 7.50 No

Projects in Disputed Areas OP/BP 7.60 No

Environmental Assessment (EA) Category (IPF Component)

Change of EA Category Original EA Category

Partial Assessment (B)

Current EA Category Proposed EA Category

Partial Assessment (B)


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LEGAL COVENANTS2

LEGAL COVENANTS – Additional Financing - Nepal: Additional Financing for School Sector Development Program (P167047)

Sections and Description

OPS_LEGAL_CONVENANT_CHILD_NODATA No information available

Conditions


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ANNEX 1: RESULTS CHAIN FOR IDA PARENT PROGRAM AND AF

Results Area 1 Improved teaching-learning and student learning outcomes

ECED and EGRP

• Remuneration, salary, and benefits for teachers

• Training of teachers

• Grants for setting book corners/library

Curriculum textbook and learning materials

• Revision of NCF and development of textbooks and supplementary learning materials

Student assessment and examination system

• NASA implementation in Grades 5, 8, and 10 and item bank preparation

Improved ECED and EGRP

• Percentage of Grade 3 students reading grade level text with fluency

• Number of schools meeting minimum standards for ECED

• Number of schools implementing CB-EGRA Improved curriculum textbook and learning materials

• Revised NCF approved (DLR)

• Revision of curriculum for Grades 9–12 prepared and approved (DLR)

• Grade 9 new curriculum implemented (DLR) Improved student assessment and examination system

• NASA institutionalized

• Analysis of results for nationally representative and competency-based NASA Grade 8 disseminated with specific time-bound action plan for relevant agencies (DLR)

• Single subject certification policy for Grades 11 and 12 implemented (DLR)

• Percentage of students displaying grade-level competency on core subjects in Grade 8 measured through NASA

• Share of schools tracking teacher time-spent-teaching (DLR)

• Survival rate to Grade 8 and to Grade 12

Improved Quality of Education

SSDP Results Area

Activities Intermediate Outcomes Outcomes


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• Implementation of single subject certification in Grades 10 and 12

Teacher management and TST

• Salary and benefits

• Grants to schools

• Teacher professional development training

School management

• Performance and block grants

• School operation cost remuneration for non-teaching staff

• Standardized and improved annual examination conducted at the end of Grade 10 nationwide

• The ERO has analyzed and reported Grade 10 standardized examinations of NEB results and NASA results for the previous year in actionable form (DLR)

Improved Teacher Management and Accountability

• Reduction in number of teachers to be redeployed (DLR)

Improved School Management and Accountability System

• Number of schools receiving block grants (DLR)

• Number of schools implementing performance-based grants for meeting minimum accountability requirements (DLR)

(disaggregated by Gender)

Improved Efficiency

Results Area 2 Improved equitable access to basic and secondary education

• Grants to LCs and schools for OOSC

• Preparation of OOSC database

• Pro-poor scholarships for poor and marginalized students

• Pro-science scholarships for secondary students

• Administration of pro-poor and pro-science scholarships/grants

• Incentive grants to secondary schools for offering science stream in Grades 11 and 12

• Number of OOSC brought to schools or learning centers (DLR)

• Implementation of PPST and pro-science targeted scholarships (DLR)

• Number of secondary schools receiving pro-science grants to offer science stream (DLR)

• Share of students enrolled in science subjects in Grades 11 and 12 (DLR)

NER in basic and secondary education in 15 most disadvantaged districts as ranked in the equity index (disaggregated by gender)

Improved Equitable Access

Results Area 3 Strengthened education system, sector planning, management, and

• Computerized Government Accounting System (training, equipment, and survey)

• Enhanced fiduciary System in place (DLR)

• Improved grants management system operational (DLR)

• Web-based EMIS operational in 25 districts (DLR)

• Improved teacher and student data accuracy in self-reported EMIS data by schools (DLR)

Percentage of funds disbursed to schools in compliance with eligibility and

Improved Efficiency


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governance • The GMU established in each district (provision for staff, training, logistics, equipment)

• Implementation of web-based EMIS

• Independent verification of EMIS data

• Social audits

• Program support facility for program management

• Integration of SSDP activities by LGUs in AWPBs

• Provision of open data on LGU fund flows to schools

• Satisfactory completion of capacity strengthening AWPB on key PSF activities

• Audit observations decreased (DLR)

• Enhanced feedback mechanism to schools

• Number of LGUs that have integrated SSDP activities in their annual plans and budgets (DLR)

• Number of LGUs that provide open data on conditional grants released to schools (DLR)

utilization guidelines

Note: ECED = Early Childhood Education Development; EGRP = Early Grade Reading Program.


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ANNEX 2: RESULTS FRAMEWORK AND MONITORING INDICATORS

Indicators DLI # Unit of

Measure-ment

Baseline (2015–2016)

Year 1 (2016–2017)

Year 2 (2017–2018)

End Target- Year 5 (2020–2021)

Data Collection and Reporting

Frequency Data Source Responsible

Party

PDO Indicator 1: Percentage of students displaying grade-level competency on core subjects in Grade 8 measured through NASA

Percentage — First competency-based test conducted for Grade 8

Baseline established, including minimum competency score

Second competency-based test conducted for Grade 8, which reported 3 percentage point increase from baselinea

Every 3 years starting 2017

NASA/ERO reports

ERO

PDO Indicator 2: Share of schools tracking teacher time-spent-teaching (TST)

6 Text, Percentage

Limited teacher accountability (low levels of TST)

Policy and guidelines aimed at improving approved TST

TST enhancing monitoring system operational in 15% of all community schools

TST enhancing monitoring system operational in 90% of all community schools

Annual EMIS/Status report from classroom-based monit- -oring per guidelines

MOEST

PDO Indicator 3: Survival rate to Grade 8 and to Grade 12 (disaggregated by gender)

Percentage Grade 8 All: 76.6 Boys: 75.9 Girls: 77.4 Grade 12 All: 11.5

Grade 8 All: 79.5 Boys: 78.7 Girls: 80.3 Grade 12 All: 13 EMIS will start tracking disaggregated percentage by gender.

Grade 8 All: 82.4 Boys: 81.7 Girls: 83.3 Grade 12 All: 15 Boys: 2 percentage point increase from Year 1 Girls: 2 percentage point increase from Year 1

Grade 8 All: 92 Boys: 91.2 Girls: 93 Grade 12 All: 25 Boys: 12 percentage point increase from Year 1 Girls: 12 percentage point increase from Year 1

Annual EMIS/Flash reports

CEHRD

PDO Indicator 4: NER Percentage Basic Basic Basic Basic Annual EMIS/Flash CEHRD


Page 30 of 101


Measure-ment


Year 1 (2016–2017)

Year 2 (2017–2018)




Party

in basic and secondary education in 15 most disadvantaged districts as ranked in the equity index (disaggregated by gender)b

All: 85.3 Boys: 86.7 Girls: 83.9 Secondary All: 31.9 Boys: 33.2 Girls: 30.7



All: 92.9 Boys: 94.3 Girls: 91.5 Secondary All: 48.0 Boys: 49.3 Girls: 46

reports

PDO Indicator 5: Percentage of funds disbursed to schools in compliance with eligibility and utilization guidelines

Percentage n.a. n.a. 80 95 Annual Progress report/ Survey

CEHRD

IO Indicator 1.1: Percentage of Grade 3 students reading grade-level text with fluency

Percentage 27.2 29.2 31.2 37.2 Annual EMIS/Assessments

CEHRD

IO Indicator 1.2: Improved ECED and EGRP

Text, Number of schools/ECED centers

n.a. Classroom-based EGR Assessment carried out in 2,600 community schools

Classroom-based EGR Assessment carried out in 3,000 community schools

Number of schools meeting minimum standards for ECED is 8,000


CEHRD

IO Indicator 1.3: National Curriculum Framework (NCF) revised and implemented

3 Text Secondary curriculum does not adequately serve the needs of diverse student

The Curriculum Development and Evaluation Council

Revised NCF approved

Grade 9 curriculum implemented

Annual Curriculum Development Center (CDC) /CDEC reports

CEHRD


Page 31 of 101


Measure-ment


Year 1 (2016–2017)

Year 2 (2017–2018)




Party

population. (CDEC) provides consent for the revision of the NCF with policy directives on articulating issues to be addressed, including, among others, catering to the needs of secondary students with diverse learning needs, and approves a plan of action for the revision of the NCF.

IO Indicator 1.4: Assessment and examination system reforms undertaken to improve teaching and learning

4 Text Letter grading and single-subject certification introduced at Grade 10

NASA institutionalized at the ERO with the ERO signing partnerships with

Analysis of results for nationally representative and competency-based NASA Grade 8 (carried out in February–

The ERO has analyzed and reported Grade 10 standardized examinations of the NEB results and NASA results for the

Annual ERO/NEB/CDC reports

CEHRD


Page 32 of 101


Measure-ment


Year 1 (2016–2017)

Year 2 (2017–2018)




Party

Inadequate capacity to carry out high-quality competency-based assessments Public examinations (Grades 8, 10, and 12) not standardized

international and national agencies

March 2017) disseminated by July 2017 with specific, time-bound action plan for relevant agencies

previous year in actionable form.

IO Indicator 1.5: Improved teacher management and accountability

6 Text, Percentage

Number of teachers identified nationally for redeployment

Revised policy/guidelines on reallocation of teachers based on status and norms of teacher deployment approved

Number of teachers to be redeployed reduced by 10% of the baseline

Number of teachers to be redeployed reduced by 60% of the baseline

Annual EMIS/IVA reports/Report on teacher and students’ status endorsed by the SSDP Steering Committee

MOEST

IO Indicator 1.6: Number of schools receiving block grants

5 Text, Number of schools

Serious accountability problems in the current model of community schools are hard to address.

Revised Grants manual approved for community schools including guidelines for block grants

50 700 Annual EMIS/Flash reports

CEHRD


Page 33 of 101


Measure-ment


Year 1 (2016–2017)

Year 2 (2017–2018)




Party

to eligible unaided (permitted) community schools

IO Indicator 1.7: Number of schools implementing performance-based grants for meeting minimum accountability requirements

5 Text, Number of Schools

Accountability and performance issues are hard to be addressed through a supply-based approach.

Revised Grants manual approved for community schools including guidelines for performance grants to unaided schools eligible for block grants and community schools meeting basic accountability requirements

3,000 7,500 Annual EMIS/Flash reports

CEHRD

IO Indicator 2.1: Number of out-of-school children brought to schools or LCs

2 Number of students

— 100,000 150,000 280,000 Annual EMIS/Flash reports

CEHRD/MOEST

IO Indicator 2.2: Implementation of

2 Text, Number of

Scholarship schemes are not

PPTS and PSS schemes

(a) PPTS scheme implemented in

(a) PPTS scheme implemented in


CEHRD/MOEST


Page 34 of 101


Measure-ment


Year 1 (2016–2017)

Year 2 (2017–2018)




Party

pro-poor targeted scholarships (PPTS) and pro-science targeted scholarships (PSS)

students pro-poor targeted Share of science enrolment in Grades 11 and 12 is very low.

approved Grades 9 and 11 in 25 districts (b) PSS scheme implemented in Grade 11 in 25 districts

Grades 9, 10, 11, and 12 in all districts (b) PSS scheme implemented in Grades 11 and 12 in all district

IO Indicator 2.3: Number of secondary schools receiving pro-science grants to offer science stream

2 Number of schools

Low enrolment of students in science streams

Revised Grants manual approved for community schools, including pro-science enhanced grants

100 500 Annual EMIS/Flash reports

CEHRD/MOEST

IO Indicator 2.4: Share of students enrolled in science subjects in Grades 11 and 12

2 Percentage Low enrolment of students in science streams

— 4 15 Annual EMIS/Flash reports

CEHRD/MOEST

IO Indicator 3.1: Strengthened governance, fiduciary management, data systems, and institutional capacity for results-based program implementation

1 Text, Percentage

Enhanced fiduciary system is not in place. 85% accuracy in self-reported student and teacher data (from the 2014 Public Expenditure

(a) Enhanced fiduciary system in place (b) First round of EMIS verification conducted

(a) GMS operational (b) Satisfactory completion of capacity-strengthening AWPB on key PSF activities

(a) Audit observations decreased to 4% of total non-salary grants to schools (b) 97% accuracy in self-reported student and teacher data (from third round of EMIS verification)

Annual Flash and survey data/MOEST report endorsed by the SSDP Steering Committee/OAG

CEHRD


Page 35 of 101


Measure-ment


Year 1 (2016–2017)

Year 2 (2017–2018)




Party

Tracking Survey) Absence of a system to verify school funds eligibility and utilization compliance Need for enhanced and specific institutional capacity (TA) for results-based program implementation

IO Indicator 3.2: Enhancing feedback mechanism to schools

Text School profile cards not used for conducting social audits in schools

District and school profile cards piloted and used in social audits in 10% schools

District and school profile cards piloted and used in social audits in 25% schools

District and school profile cards used in social audits in all schools by linking with school performance grants

Annual EMIS/Flash data

CEHRD

Note: a. This target is to be met in Year 4 (2019–2020). b. The data presented as baseline were for Year 1 (2016–2017) targets, which were mistakenly produced as baseline data. These will be corrected after the April 2018 Budget Review Meeting.


Page 36 of 101

ANNEX 3: DISBURSEMENT-LINKED INDICATORS AND VERIFICATION PROTOCOLS

Table 3.1. Revised Disbursement-Linked Indicator Matrix

DLI

Total Financin

g Allocated to DLIa

As % of Total

Financing Amount

Original New DLRs to be Supported by GPE AF

Year 1 (Date of

Agreement –July 15,

2017)

Year 2 (July 16,

2017–July 15, 2018)

Year 3 (July 16,

2018–July 15, 2019)

Year 4 (July 16,

2019–July 15, 2020)

Year 5 (July 16, 2020–Closing Date)

Year 3 (July 16, 2018–July 15, 2019)

Year 4 (July 16,

2019–July 15, 2020)

Year 5 (July 16,

2020–July 15, 2021)

DLI 1: Strengthened governance, fiduciary management data systems and institutional capacity for results-based program implementation

DLR 1.1: Enhanced fiduciary system in place

DLR 1.2: Grants Management System (GMS) operational DLR 1.3: Satisfactory completion of capacity strengthening AWPB on key program support facility (PSF) activities

DLR 1.4: 4 percentage points improvement in teacher and student data accuracy compared to discrepancy in the sample verification survey carried out in Year 1, or 95% accuracy in the sample verification survey

DLR 1.6: Audit observations decreased to 2% of total non-salary grants to schools

DLR 1.7: SSDP activities have been integrated in annual work plan and budget (AWPB) by at least 75 LGs DLR 1.8: Data on conditional grants released to individual schools, consistent with the Grant Management Guideline, is made public on user-friendly websites (or accessible spaces) by at least 200 LGs

DLR 1.9: SSDP activities have been integrated in AWPB by at least 140 LGs DLR 1.10: Data on conditional grants released to individual schools, consistent with the Grant Management Guideline, is made public on user-friendly websites (or

DLR 1.11: Data on conditional grants released to individual schools, consistent with the Grant Management Guideline, is made public on user-friendly websites (or accessible spaces) by at least 400 LGs


Page 37 of 101

DLI

Total Financin

g Allocated to DLIa

As % of Total

Financing Amount


Year 1 (Date of


2017)

Year 2 (July 16,

2017–July 15, 2018)

Year 3 (July 16,

2018–July 15, 2019)

Year 4 (July 16,

2019–July 15, 2020)


Year 3 (July 16, 2018–July 15, 2019)

Year 4 (July 16,

2019–July 15, 2020)

Year 5 (July 16,

2020–July 15, 2021)

carried out in Year 3 DLR 1.5: Satisfactory completion of capacity strengthening AWPB on key program support facility (PSF) activities

accessible spaces) by at least 300 LGs

US$, millions 52.6 25% 6 12 12 — 6 7.9 7.9 0.8

Status of Achievement/ Disbursement

Achieved; disbursed US$6 million

DLI 2: Improved access to basic and retention in secondary schools

DLR 2.1: Pro-poor targeted scholarship (PPTS) and pro-science scholarship (PSS) schemes approved

DLR 2.2: Pro-poor targeted scholarship (PPTS) in Grades 9 and 11, and pro-science scholarship (PSS) in

DLR 2.3: Pro-poor targeted scholarship (PPTS) in Grades 9, 10, 11, and 12, and pro-science scholarship

DLR 2.4: 250,000 cumulative number of Out of School Children (OOSC) brought to schools or

DLR 2.5: Retention rate of poor students to Grade 12 in community schools is 80%

DLR 2.6: 30% Reduction in OOSC in 15 targeted districts (based on equity index)

DLR 2.7: OOSC in basic education age reduced to 5% in the relevant age group nationwide


Page 38 of 101

DLI

Total Financin

g Allocated to DLIa

As % of Total

Financing Amount


Year 1 (Date of


2017)

Year 2 (July 16,

2017–July 15, 2018)

Year 3 (July 16,

2018–July 15, 2019)

Year 4 (July 16,

2019–July 15, 2020)


Year 3 (July 16, 2018–July 15, 2019)

Year 4 (July 16,

2019–July 15, 2020)

Year 5 (July 16,

2020–July 15, 2021)

Grade 11 implemented in 25 districts

(PSS) in Grades 11 and 12 implemented in additional 50 districts

Learning Centers (LC)

US$, millions 32.4 16% 6 6 6 6 6 1.2 — 1.2



DLI 3: National Curriculum Framework (NCF) revised and implemented

DLR 3.1: Revised NCF approved

DLR 3.2: Revision of curriculum for Grades 9–12 approved

DLR 3.3: Grade 9 new curriculum implemented

No change

US$, millions 24 11% — 8 — 8 8 — — —


DLI 4: Assessment and examination system

DLR 4.1: Analysis of results for nationally representati

DLR 4.2: Single subject certification policy for

DLR 4.3: ERO has analyzed and reported

No change


Page 39 of 101

DLI

Total Financin

g Allocated to DLIa

As % of Total

Financing Amount


Year 1 (Date of


2017)

Year 2 (July 16,

2017–July 15, 2018)

Year 3 (July 16,

2018–July 15, 2019)

Year 4 (July 16,

2019–July 15, 2020)


Year 3 (July 16, 2018–July 15, 2019)

Year 4 (July 16,

2019–July 15, 2020)

Year 5 (July 16,

2020–July 15, 2021)

reforms undertaken to improve teaching and learning

ve and competency-based NASA Grade 8 (carried out in February–March 2017) disseminated by August 2017 with specific time-bound action plan for relevant agencies

Grades 11 and 12 implemented

Grade 10 standardized examinations of NEB results and NASA results for the previous year in actionable form

US$, millions 18 9% — 6 6 — 6 — — —


DLI 5: Improved School Management and Accountability System

DLR 5.1: Revised Grants manual approved for community schools, including

DLR 5.2: Performance-based grants for schools meeting minimum accountability

DLR 5.3: Number of unaided schools receiving block grant reaches 500

DLR 5.4: Performance-based grants for schools meeting minimum accountability

No change


Page 40 of 101

DLI

Total Financin

g Allocated to DLIa

As % of Total

Financing Amount


Year 1 (Date of


2017)

Year 2 (July 16,

2017–July 15, 2018)

Year 3 (July 16,

2018–July 15, 2019)

Year 4 (July 16,

2019–July 15, 2020)


Year 3 (July 16, 2018–July 15, 2019)

Year 4 (July 16,

2019–July 15, 2020)

Year 5 (July 16,

2020–July 15, 2021)

guidelines for block grants to eligible unaided (permitted) community schools, performance grants to unaided schools eligible for block grants and community schools meeting basic accountability requirements, and pro-science enhanced grants

requirements implemented in 3,000 schools

requirements implemented in 7,500 schools

US$, millions 32 15% 8 8 n.a. 8 8 — — —


Page 41 of 101

DLI

Total Financin

g Allocated to DLIa

As % of Total

Financing Amount


Year 1 (Date of


2017)

Year 2 (July 16,

2017–July 15, 2018)

Year 3 (July 16,

2018–July 15, 2019)

Year 4 (July 16,

2019–July 15, 2020)


Year 3 (July 16, 2018–July 15, 2019)

Year 4 (July 16,

2019–July 15, 2020)

Year 5 (July 16,

2020–July 15, 2021)



DLI 6: Improved Teacher Management and Accountability

DLR 6.1: Revised policy and guidelines on reallocation of teachers based on status and norms of teacher deployment; and policy and guidelines aimed at improving teacher time-spent-teaching (TST) approved

DLR 6.2: TST enhancing monitoring system operational in 15% of all community schools

DLR 6.3: Number of teachers to be redeployed reduced by 25% of the baseline

DLR 6.4: TST enhancing monitoring system operational in 80% of all community schools

DLR 6.5: Number of teachers to be redeployed reduced by 60% of the baseline

No change

US$, millions 45 22% 9 9 9 9 9 — — —




Page 42 of 101

DLI

Total Financin

g Allocated to DLIa

As % of Total

Financing Amount


Year 1 (Date of


2017)

Year 2 (July 16,

2017–July 15, 2018)

Year 3 (July 16,

2018–July 15, 2019)

Year 4 (July 16,

2019–July 15, 2020)


Year 3 (July 16, 2018–July 15, 2019)

Year 4 (July 16,

2019–July 15, 2020)

Year 5 (July 16,

2020–July 15, 2021)

DLI 7 Reading proficiencies and habits strengthened in early grades

DLR 7.1 National early grade reading program (NEGRP) minimum package implemented in at least 80% of community schools by LGs in at least 20 districts

DLR 7.2 NEGRP minimum package implemented in at least 80% of community schools by LGs in at least 29 districts

DLR 7.3 NEGRP minimum package implemented in at least 80% of community schools by LGs in at least 38 districts

US$, millions 4.958 2% n.a. n.a. n.a. n.a. n.a. 1.0 1.979 1.979


Note: a. Includes the proposed GPE AF (Maximum Country Allocation net of 1 percent GA fees).


Page 43 of 101

Table 3.2. Disbursement-Linked Indicator Matrix (AF-supported DLIs)

DLI Total AF

Allocated to DLI

As % of Total AF Amount

DLI Baseline

New DLRs to be supported by the GPE AF

Year 3 (July 16, 2018–July 15, 2019)

Year 4 (July 16, 2019–July 15, 2020)

Year 5 (July 16, 2020–Closing Date25)

GPE Intermediate indicators (Fixed Part)

DLI 1: Strengthened governance, fiduciary management, data systems, and institutional capacity for results-based program implementation

LGs have not fully integrated SSDP activities in annual work plan and budget. (Baseline year: 2017-2018)

DLR 1.7: SSDP activities have been integrated in annual work plan and budget (AWPB) by at least 75 LGs

DLR 1.9: SSDP activities have been integrated in AWPB by at least 140 LGs

Allocated amount (US$)

14,00,000 60% 7,100,000 7,100,000 —

Disbursement deadline and formula

Roll over: Yes Deadline for achievement: July 15, 2020 Financing Formula: US$3.3 million for 37 LGs integrating SSDP activities in their AWPB and thereafter US$100,000 for each additional LGs integrating the SSDP in their annual work plan, with a maximum up to US$7,100,000.

Roll over: Yes Deadline for achievement: July 15, 2021 Financing Formula: US$3.9 million if 108 LGs (cumulative) integrate SSDP activities in their annual work plan and thereafter US$100,000 for additional LGs integrating the SSDP in their annual work plan, with a maximum up to US$7,100,000.

25 Deadline for achievement is July 15, 2021; activities should be completed by July 15, 2021, which is the closing date of the SSDP. Disbursement will take place after the closing date with 4-month grace period.


Page 44 of 101

DLI Total AF

Allocated to DLI


DLI Baseline New DLRs to be supported by the GPE AF

Year 3 (July 16, 2018–July 15, 2019)

Year 4 (July 16, 2019–July 15, 2020)


GPE Outpu/Outcome-linked indicators (Variable Part)


LGs do not report data on conditional grants released to schools. (Baseline year: 2017-2018)





2,400,000 10% 800,000 800,000 800,000


Roll over: Yes Deadline for achievement: July 15, 2020 Financing formula: US$400,000 if 100 LGs make data on conditional grants released to schools, consistent with the Grant Management Guideline, publish on user-friendly websites (or accessible space) and thereafter US$4,000 for each additional LG, with a maximum up to US$800,000.

Roll over: Yes Deadline for achievement: July 15, 2021 Financing formula: US$400,000 if 200 LGs (cumulative) make data on conditional grants released to schools, consistent with the Grant Management Guideline, public on user-friendly websites (or accessible space) and thereafter US$8,000 for each additional LG, with a maximum up to US$800,000.

Roll over: No Deadline for achievement: July 15, 2021 Financing formula: US$400,000 if 300 LGs (cumulative) make data on conditional grants released to schools, consistent with the Grant Management Guideline, public on user-friendly websites (or accessible space) and thereafter US$8,000 for each additional LG, with a maximum up to US$800,000.

DLI 2: Improved access to

500,000 OOSC of 5-12 age

DLR 2.6: 30% reduction in OOSC in 15 targeted

DLR 2.7: OOSC in basic education age reduced to


Page 45 of 101

DLI Total AF

Allocated to DLI



Year 3 (July 16, 2018–July 15, 2019)

Year 4 (July 16, 2019–July 15, 2020)


basic and retention in secondary schools

(about 12% in relevant age group) in 75 districts (disaggregation by district and VDC available). Equity Index approved and districts selected for interventions. Basic education, range increased to children of 5-14 years (Baseline year: 2015-2016)

districts (based on equity index)

5% in the relevant age group nationwide26


2,400,000 10% 1,200,000 — 1,200,000


Roll over: No Deadline for achievement: July 15, 2019 Financing formula: US$600,000 if 50% of the target is met (30% reduction in OOSC = 100%

Roll over: No Deadline for achievement: July 15, 2021 Financing formula: US$600,000 if the OOSC is reduced to 8%, and thereafter US$200,000 for

26 DLR 2.7 text has been adapted from the GON SSDP DLI framework (DLR 6.5). The original GON SSDP DLR text reads “OOSC in basic education age reduced to 5% in the relevant age group”


Page 46 of 101

DLI Total AF

Allocated to DLI



Year 3 (July 16, 2018–July 15, 2019)

Year 4 (July 16, 2019–July 15, 2020)


of the target), and thereafter US$40,000 for each additional percent of reduction, with a maximum up to US$1,200,000 (total)

each additional percent of reduction with a maximum of up to US$1,200,000 (total)

DLI 7: Proficiencies and habits strengthened in early grades

NEGRP minimum package not implemented by LGs (Baseline year: 2017-2018)

DLR 7.1: National early grade reading program (NEGRP) minimum package implemented in at least 80% of community schools by LGs in at least 20 districts

DLR 7.2: NEGRP minimum package implemented in at least 80% of community schools by LGs in at least 29 districts

DLR 7.3: NEGRP minimum package implemented in at least 80% of community schools by LGs in at least 38 districts


4,958,000 20% 1,000,000 1,979,000 1,979,000


Roll over: Yes Deadline for achievement: July 15, 2020 Financing Formula: US$500,000 if NEGRP minimum package is implemented in 18 districts and thereafter US$250,000 per additional district, with a maximum of US$1,000,000.

Roll over: Yes Deadline for achievement: July 15, 2021 Financing Formula: US$1,099,000 if NEGRP minimum package is implemented in 25 districts (cumulative), and thereafter, US$220,000 for each additional district, with a maximum of US$1,979,000.

Roll over: No Deadline for achievement: July 15, 2021 Financing Formula: US$1,099,000 if NEGRP minimum package is implemented in 34 districts (cumulative), and thereafter, US$220,000 for each additional district, with a maximum of US$1,979,000.

Total Financing Allocated (US$)

23,958,000 — 10,100,000 9,879,000 3,979,000


Page 47 of 101

Table 3.3. DLI Verification Protocola

DLI DLR Definition/Description of Achievement

Scalability of

Disbursements

(Yes/No)

Protocol to Evaluate Achievement of the DLI and Data/Result Verification

Data Source/Agency

Verification Entity

Procedure


Year 3: SSDP activities have been integrated in annual work plan and budget (AWPB) by at least 75 LGs (DLR 1.7) Data on conditional grants released to individual schools, consistent with the Grant Management Guideline, is made public on user-friendly websites (or accessible spaces) by at least 200 LGs (DLR 1.8)

Definition: SSDP activities under DLR 1.7 are defined as the DLI/DLR-related activities explained in the SSDP, which would be implemented by the LGs as explained in the SSDP Transition Plan in federal setup. DLR 1.7: This DLR is considered achieved when at least 75 LGs’ duly approved AWPBs by the respective municipality/ rural municipality council include activities and budget for the implementation and supervision of SSDP DLRs, which are defined to be delivered by the LGs and or schools in the GON SSDP Transition Plan in federal setup. Definition: Grant Management Guideline is a guideline developed by individual LGs which will provide detailed information on how the LGs would release each tranche to the individual schools and how they would receive reporting from individual schools. DLR 1.8: This DLR is considered achieved when at least 200 LGs would make public the amount of fund released to schools of their constituency against different school expenditure heads such as teachers’ salary, textbooks, student

Yes MOEST/CEHRD report endorsed by interministerial SSDP Steering Committee

Independent Verification Agency (IVA) commissioned by the MOEST

World Bank/DPs review IVA’s report and supporting documents which includes interviews with relevant agencies/stakeholders and visits to LGs on random sample basis as necessary


Page 48 of 101


Scalability of

Disbursements

(Yes/No)


Data Source/Agency

Verification Entity

Procedure

scholarship of different categories, school operational expenditures, and other sub-heads for each tranche release according to the Grant Management Guideline.

Year 4: SSDP activities have been integrated in AWPB by at least 140 LGs (DLR 1.9) Data on conditional grants released to individual schools, consistent with the Grant Management Guideline, is made public on user-friendly websites (or accessible spaces) by at least 300 LGs (DLR 1.10)

DLR 1.9: This DLR is considered achieved when at least 140 LGs’ (cumulative) duly approved AWPB by the respective municipality/rural municipality council include activities and budget for the implementation supervision of SSDP DLRs, which are defined to be delivered by the LGs and or schools in the GON SSDP Transition Plan in federal setup. DLR 1.10: This DLR is considered achieved when at least 300 LGs (cumulative) would make public the amount of funds released to schools of their constituency against different school expenditure heads such as teachers’ salary, textbooks, student scholarship of different categories, school operational expenditures, and other subheads for each tranche release.


IVA commissioned by the MOEST

World Bank/DPs review IVA’s report and supporting documents which includes interviews with relevant agencies/stakeholders and visits to LGs on random sample basis as necessary

Year 5: DLR 1.11: This DLR is considered achieved Yes The IVA World Bank/DPs


Page 49 of 101


Scalability of

Disbursements

(Yes/No)


Data Source/Agency

Verification Entity

Procedure

Data on conditional grants released to individual schools, consistent with the Grant Management Guideline, is made public on user-friendly websites (or accessible spaces) by at least 400 LGs (DLR 1.11)

when at least 400 LGs (cumulative) would make public the amount of funds released to schools of their constituency against different school expenditure heads such as teachers’ salary, textbooks, student scholarship of different categories, school operational expenditures, and other subheads for each tranche release.

MOEST/CEHRD report endorsed by interministerial SSDP Steering Committee

commissioned by MOEST

review IVA’s report and supporting documents which includes interviews with relevant agencies/stakeholders and visits to LGs on random sample basis as necessary


Year 3: 30% reduction in OOSC in 15 targeted districts (based on equity index) (DLR 2.6)

OOSC are defined as 7–12-year-old children who are out of school for at least 6 months. This program covers OOSC brought to schools or LCs on or after the 2017 academic session with detail information by each school and LCs. Bringing all children ages 5–6 to schools and retaining them in schools is critical to reducing out of school in the medium/long term; however, this enrolment cannot be counted toward providing second-chance education. This DLI is considered achieved if the



World Bank/DPs review IVA’s report and supporting documents which includes interviews with relevant agencies/stakeholders and visits to schools on random sample basis as necessary


Page 50 of 101


Scalability of

Disbursements

(Yes/No)


Data Source/Agency

Verification Entity

Procedure

aggregate number of OOSC in these 15 targeted districts are reduced by 30%. The DLI achievement report should include

(a) A report summarizing the different interventions and initiatives implemented to bring OOSC into schools and LCs and a summary of total number of OOSC brought into basic schooling in each of the 15 selected intervention districts and

(b) The full dataset listing the names and profiles (gender, age, and ethnicity) of the OOSC enrolled by school/LC.

Year 5: OOSC in basic education age reduced to 5% in the relevant age group nationwide (DLR 2.7)

Percentage of the number of OOSC between the ages of 7 and 12 equals or is less than 5% of the total number of children ages 7–12 within all 77 districts in Nepal. The DLI achievement report should include

(a) A report summarizing the different interventions and initiatives implemented to bring OOSC into schools and LCs and a summary of total number of OOSC brought into basic schooling and

(b) The full dataset listing the names and profiles (gender, age, and



World Bank/DPs review IVA’s report and supporting documents which includes interviews with relevant agencies/stakeholders and visits to schools on random sample basis as necessary


Page 51 of 101


Scalability of

Disbursements

(Yes/No)


Data Source/Agency

Verification Entity

Procedure

ethnicity) of the OOSC enrolled by school/LC.

DLI 7: Reading proficiencies and habits strengthened in early grades

Year 3: National early grade reading program (NEGRP) minimum package implemented in at least 80% of community schools by LGs in at least 20 districts

(DLR 7.1)

LGs in the 20 districts have implemented the full approved early grade reading minimum package in the appropriate grades and frequency in all community schools, supported by the prescribed number and type of teachers and staff. The approved package is understood to be the approved minimum package, which includes the following for each school: (a) teaching materials, (b) teacher training and classroom support, (c) community mobilization, (d) student assessment, and (e) monitoring and evaluation. The DLI achievement report will include



World Bank/DPs review IVA’s report and supporting documents which includes interviews with relevant agencies/stakeholders (teachers, parents, SMC, and so on) and visits to schools on random sample basis as necessary


Page 52 of 101


Scalability of

Disbursements

(Yes/No)


Data Source/Agency

Verification Entity

Procedure

(a) Documentation of the approved NEGRP minimum package;

(b) The full dataset listing the names of schools with grades, LGs, and districts where the NEGRP minimum package is implemented; and

(c) Evidence of implementation of each component of the minimum package.

Year 4: NEGRP minimum package implemented in at least 80% of community schools by LGs in at least 29 districts (DLR 7.2)

LGs in the 29 districts have implemented the full approved early grade reading minimum package in the appropriate grades and frequency in all community schools, supported by the prescribed number and type of teachers and staff. The approved package is understood to be the approved minimum package, which includes the following for each school: (a) teaching materials, (b) teacher training and classroom support, (c) community mobilization, (d) student assessment, and (e) monitoring and evaluation. The DLI achievement report will include

(a) The full dataset listing the names of schools with grades, LGs, and districts where the NEGRP minimum package is implemented and


IVA commissioned by MOEST



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Scalability of

Disbursements

(Yes/No)


Data Source/Agency

Verification Entity

Procedure

(b) Evidence of implementation of each component of the minimum package.

Year 5: NEGRP minimum package implemented in at least 80% of community schools by LGs in at least 38 districts (DLR 7.3)

LGs in the 38 districts have implemented the full approved early grade reading minimum package in the appropriate grades and frequency in all community schools, supported by the prescribed number and type of teachers and staff The approved package is understood to be the approved minimum package, which includes the following for each school: (a) teaching materials, (b) teacher training and classroom support, (c) community mobilization, (d) student assessment, and (e) monitoring and evaluation. The DLI achievement report will include

(a) The full dataset listing the names of schools with grades, LGs, and districts where the NEGRP minimum package is implemented and

(b) Evidence of implementation of each component of the minimum package.




Note: a. No changes have been made to the parent Program DLI and verification protocol. Hence, only the verification protocol for the new DLI/DLRs supported by the AF are reported here.


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ANNEX 4: DETAILED PROGRAM DESCRIPTION

1. The proposed AF will support the GON in ensuring smooth implementation of the SSDP during the federal transition. The proposed GPE AF will be directly tied to activities related to support LGs in quality service delivery with a view to protect and enhance education service delivery during the ongoing federal transition. Moreover, the AF design will be aligned with the SSDP PRF targets and GPE strategic goals of quality, equity, and efficiency. 2. The proposed AF design does not entail changes to the parent IDA program boundary or the PDO. New DLRs and DLIs introduced under the AF fall within the existing parent IDA program as well as the broader GON SSDP Results Framework. In compliance with the GPE financing requirements, the proposed AF grant and associated DLRs will be divided into two parts: (a) intermediate DLRs (in GPE terms -fixed part) accounting for 60 percent of the total grant supporting two DLRs related with the LGs’ capacity building in SSDP planning and implementation (US$14.2 million)—and (b) output/outcome-linked DLRs related to equity, quality and efficiency (in GPE terms- variable part) accounting for 40 percent of the total grant supporting three indicators linked with the GPE’s three pillars of efficiency, equity, and quality (US$9.758 million).27

3. The AF will directly support four areas as summarized below.

(a) LGs’ ownership of SSDP activities. To safeguard the progress made under previous national-level programs and the SSDP thus far under the federal transition, the AF will be used to support LGs in integrating SSDP activities into their annual plans and programs. Specifically, the AF design will introduce two new DLRs under existing DLI 1. In terms of GPE parlance, this area will be supported by the fixed tranche of the grant allocation.

(b) Greater transparency. In addition to protecting service delivery, the AF will leverage the opportunity that federalism offers to help improve transparency and strengthen efficiency at the LG and school levels. The AF will introduce three new DLRs on provision of open data on key education fund flows in at least 400 LGs. This is expected to enable platforms to strengthen upward as well as downward accountability at the local level. These DLRs will fall under the efficiency dimension of the GPE grant’s variable tranche.

(c) Targeted improvement in access. The AF will add two new DLRs under current DLI 2 linked to reduction in OOSC28 in targeted districts as well as nationwide. Support to this area is crucial in the context of the federal transition as children from disadvantaged groups may be particularly vulnerable to losing access. The new DLRs under this area will fulfill the equity dimension of the variable tranche.

(d) Improved reading proficiencies and habits. Building on the progress made in conducting EGRAs, the AF will augment the GON’s efforts to strengthen reading proficiencies and habits. Specifically, the AF design will introduce a new DLI linked to adoption of the NEGRP minimum

27 The allocated amounts for the fixed and variable parts reflect a 1 percent GA fee which will be deducted from the total US$24.2 million GPE AF grant. The GA funds for supervision will be managed through a Bank-executed Trust Fund. 28 OOSC are defined as children ages 7 to 12 who have been out of school for at least six months.


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package in all community schools in LG units. This DLI will be supported by the grant’s variable tranche under the quality dimension.

The above interventions will be buttressed with improved communication strategy and citizen engagement using a separate ongoing technical assistance.

4. Table 4.1 summarizes the proposed changes to the parent IDA program’s DLIs and DLRs.

Table 4.1. Summary of Changes to DLIs under the AF

DLIs Status under AF Number of DLRs by

GPE Tranche

GPE Focus Area under Variable

Part


5 new DLRs added

2 process DLRs (fixed)

3 output DLRs (variable)

Efficiency


2 new DLRs addeda

2 outcome DLRs (variable)

Equity

DLI 3: National Curriculum Framework (NCF) revised and implemented

No change

DLI 4: Assessment and examination system reforms undertaken to improve teaching and learning

No change

DLI 5: Improved School Management and Accountability System

No change

DLI 6: Improved Teacher Management and Accountability

No change

DLI 7: Reading proficiencies and habits strengthened in early gradesb

New DLI (3 new DLRs)

3 outcome DLRs (variable)

Learning

Note: a. These DLRs would offer additional incentives to existing DLRs under the broader government program, specifically to the GON’s SSDP DLRs 6.2, 6.3, and 6.5 b. Proposed DLRs under the new DLI 7 would offer additional incentives to existing DLR 1.5b and enriches DLRs (1.3, 1.4, and 1.5a) under the broader government program.

5. Achievements and lessons learned under the 2015 GPE grant: MOEST has made good progress in achieving DLI targets supported by a previous GPE grant of US$59.3 million approved in 2015. Targets for 2 out of 3 DLIs have been achieved by the agreed timeline and verified by an IVA. These include the following – i) implementation of single subject certification policy in Grade 10 examinations (Efficiency); and ii) CB-EGRA assessments with parental observation conducted for grades 2 and 3 in 5,600 community schools (Quality). Other notable achievements under the 2015 GPE grant include development of an equity index to identify the most disadvantaged districts and implementation of household surveys to establish baseline OOSC number in 10 identified districts. Household surveys to establish baseline OOSC for an additional 5 districts is expected to be completed by December 2018. Furthermore, the National Examination Board has approved single subject certification policy for higher secondary examination (Grades 11-12). MOEST’s achievement report for this DLI is expected prior to the joint-review mission in November 2018.

6. While MOEST has reportedly achieved its target of implementing interventions to bring OOSC into schools or learning centers in the 10 most disadvantaged districts by 2017-18, the target of reducing


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aggregate number of OOSC in these districts by 20 percent have not yet been met. Bringing OOSC into schools appears to have been particularly challenging. The target of reducing OOSC in 5 disadvantaged districts by 2016-17 was also not fully achieved – an estimated 18.2 percent reduction against a target of 20 percent was verified. The transition to federalism further calls for additional investment and a need to strengthen local level planning, analysis and integrated data systems to bring and retain OOSC into schools or learning centers. To facilitate local level planning, TA has been mobilized to develop local level equity index and equity strategy. Moreover, the proposed AF design presents an opportunity to support LGs in reducing the number of OOSC under the changed context.

GPE intermediate new DLRs (Fixed Part) (US$14,200,000)

Support Local Governments to Integrate SSDP Activities

7. The AF will introduce the following two DLRs designed to support LGs in integrating SSDP activities into their AWPB.

• DLR 1.7: SSDP activities have been integrated in annual work plan and budget (AWPB) by at least 75 LGs.

• DLR 1.9: SSDP activities have been integrated in AWPB by at least 140 LGs.

8. Rationale. Although the SSDP was designed to improve education quality at the national level, the GON is likely to face challenges in implementing program activities and meeting targets under the new federal structure. The SSDP Results Framework and targets were set during a system of central government management before the federal mandate. However, the Local Government Operations Act of October 2017 transferred basic and secondary education responsibilities to 753 LGUs. These include formulating education plans, teacher redeployment, and conducting examinations at the basic level among other functions. The federal mandate gives LGs the authority to plan and budget for education independently of the MOEST. Therefore, under this changed structure, achievement of national-level SSDP targets within the stipulated time frame and quality education service delivery, in general, will depend to a large extent on the priorities, incentives, and capacity of LGs.

9. There are nontrivial concerns that education plans formulated by LGs may not be aligned with SSDP goals. A recent assessment by SSDP JFPs29 found that LGs and schools have limited knowledge of the GON’s SSDP and its key performance indicators. This suggests that LGs could fail to incorporate activities that are central to meeting SSDP targets into their plans and programs. This points to potential risks of misalignment between LGs’ programs and SSDP goals. Uncertainty about capacity at LG levels to deliver on quality improvements under the SSDP is also cause for concern.

10. Furthermore, political challenges may also hinder adoption of SSDP activities at the local level and risk reversal of progress made thus far. Reports of political infighting across parties at federal and local levels risk undermining LGs’ amenability to adopting the GON’s SSDP. Findings from the World Bank

29 Conducted by the ADB.


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study of head teachers also suggest that priorities during the federal transition may be misaligned away from less visible but critical inputs such as scholarship funds.

11. Description. DLRs 1.7 and 1.9 support LGs’ integration of SSDP activities and goals. LGs are expected to incorporate all local-level SSDP activities in their AWPBs. Key activities to improve quality service delivery include implementing targeted scholarship schemes for poor and marginalized children at the secondary level, expanding school-based early childhood education, tracking teacher TST, conducting social audits, and administering conditional grants to community schools among other indicators.

12. LGs’ implementation of SSDP programs will be supported through provisions in the MOEST’s transitional implementation arrangements. A Program Implementation Manual developed by the MOEST will also serve as a resource for implementation guidance. Necessary technical support will also be provided by the newly established district-level EDCUs during the transition period. Separate capacity building initiatives will also be launched jointly by the DPs mobilizing technical assistance with focus on communication strategy, and citizen engagement to create demands as well as on planning, monitoring and reporting arrangements with additional focus for lagging LGs/ Schools.

13. These DLRs are actionable and pragmatic given the federal transition context. The indicators tie disbursement to LGs’ integration of SSDP activities as reflected in their AWPBs. While systems for fund flow arrangement and reporting local government programs, and their implementation are being finalized during the transition period, AWPBs represent the most concrete and standardized documentation of intended annual plans and programs that will be in place across all LGs. Therefore, the AF design links the fixed part of the GPE grant to SSDP integration as indicated in LGs’ AWPBs. These DLRs are also pragmatic in the transitional context. The current setup lacks adequate and consistent mechanism to ensure effective implementation of all SSDP activities by LGs within a three-year period. For example, there were already delays and capacity concerns in the pre-federal setup in implementing some SSDP activities such as the Teacher Professional Development package and curriculum implementation.30 In light of such deficiencies, these DLRs aim to ensure LGs incorporate SSDP activities as documented in their planning stage. The AF does not include any targeting of LGs for these DLRs. While MOEST is expected to ensure integration of SSDP activities in all of the 753 LGs, the number of LGs indicated in these DLRs are solely for the purpose of disbursement.

14. Theory of change. The DLRs are expected to mitigate challenges in implementing SSDP programs under the federal structure by strengthening ownership and credibility of the SSDP among LGs. In addition to providing direct budget support, these DLRs also incentivize LGs to pursue quality and equity improvements through activities embedded within the SSDP. Incorporating these activities in LGs’ plans is expected to help build ownership and align local education programs with SSDP goals and safeguard progress made in quality education service delivery thus far.

15. Achievement and DLR pricing. While the GON holds responsibility for smooth implementation of SSDP activities in all 753 LGs, the AF will support integration of SSDP activities in up to 140 LGs within a two-year time frame. These targets are realistic given uncertainties about LGs’ capacity to plan and manage activities in the context of rapid decentralization from a central management structure. It is expected that DLR 1.7 involving 75 LGs will be completed during Year 3 of the SSDP (2018–2019) and DLR 1.9 involving

30 ADB. “Federal System and Changes in Risk Assessment for the School Sector Development Plan”. 2018


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140 cumulative LGs will be completed by Year 4 (2019–2020). These DLRs are priced at US$7,100,000 each and are scalable with rollover provision.

16. Verification. Achievement of these DLRs will be verified by an IVA commissioned by the MOEST.

GPE output/outcome-linked new DLRs (Variable Part) (US$9,758,000)

Efficiency: Ensure provision of open data on school grants by local governments to facilitate information for accountability (US$2,400,000)

• DLR 1.8: Data on conditional grants released to individual schools, consistent with the Grant Management Guideline, is made public on user-friendly websites (or accessible spaces) by at least 200 LGs.



17. Rationale. The federal transition presents an opportunity to reshape the education system to be more effective and lay the foundation for greater transparency at the local and community levels. LG transparency during the transition process is key for sustained efficacy and fostering accountability in the education system in the long run. As a foundational step in boosting accountability through information, the AF incentivizes meaningful provision of open data on LG fund flows to individual community schools.

18. The MOEST collects an impressive amount of school-level data used primarily for central-level planning. Since 2004, community schools have been incentivized to report data on school inputs through the Flash questionnaires twice a year as the data determine per capita funding amounts to schools. Data accuracy is monitored through spot checks. In addition, multiple rounds of the NASA in Grades 3, 5, and 8 offer learning achievement data disaggregated by geographic area and school type. Development of the equity index under the SSRP provided information on disparities in access opportunities at the district level. Moreover, the former DOE prepared school profile cards based on data collected through flash questionnaires. Given that in the federal structure, the basic and secondary education has been the responsibility of LGs, the Government is further improving the EMIS to facilitate its use at local-level planning and decision making.

19. However, these data are not utilized beyond central-level planning purposes. For example, information on the per capita funding, and school grants is not shared publicly with schools, teachers and other community members. While the former DOE prepared school profile cards based on the data collected through the Flash questionnaires, they were not effectively disseminated to schools or shared with former DEOs for feedback to schools to improve efficiency or used as accountability measures. Not surprisingly, internal efficiency indicators in the education system have remained low. The cumulative dropout rate to the last grade of primary education dropped from 30 percent in 2014 to 23.1 percent in 2015 but rose to 26.4 percent in 2016. The effective transition rate from primary to lower secondary level


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dropped from 87.3 percent in 2014 to 82.4 percent in 2016.31 In addition, a 2017 baseline study of the status of OOSC in the 5 most disadvantaged districts estimates that students who drop out of school comprise 62 percent of OOSCs in those districts.32

20. Although the parent IDA program supports improved data use for enhancing school accountability, there is further scope for fostering transparent platforms at the LG and community levels. The parent IDA program further supports improving data availability through operationalization of web-based school-level EMIS to capture real-time data and linking the data to school performance grants. Building on lessons learned from the previous education plan, the parent IDA program links school profile cards created by the former DOE to social audits, thus enabling feedback and accountability mechanisms from the school to the community. The federal restructuring generates an opportunity to further leverage data that are already collected at the central level to develop foundational platforms for improved transparency and accountability at the LG level.

21. The new federal setup calls for further measures to build platforms for accountability and enhance the efficacy of the strategies introduced in the original IDA program. While DEOs used to receive resources for conditional school grants that include grants for teacher salaries, textbooks and scholarships from the MOEST in the pre-federal structure, LGs receive them directly from the MOF under the new system. These releases are recorded in the web-based Line Ministry Budget Information System (LMBIS) and will be a reference for LGs to link with their budget head-wise grant release to schools including for upward reporting. More importantly, although there is a legal provision for LGs to submit status reports on conditional grants every trimester33, currently there is no reporting mechanism in place for either MOEST or community members to verify proper usage of these conditional grants by LGs.

22. Description. To strengthen efficiency, the proposed AF design builds on lessons learned from previous measures as well as addresses potential challenges in data reporting under the new federal system. The AF will support three new DLRs on provision of open data on flow of conditional grants released from LGs to schools on accessible websites and/or physical spaces. LGs may also share data on school-level inputs used to determine the grants. These DLRs build on the parent IDA program’s efforts to use data beyond central-level planning and using them for facilitating transparency and feedback mechanisms.

23. The indicators represent challenging yet realistic and implementable measures to strengthen efficiency. While LGs are eligible to receive four types of grants that could be used to support the education sector34, conditional grants include key program costs of the SSDP that are released to all LGs. Thus, reporting on usage of these grants at the LG level is important to ensure proper use of SSDP funds and can help mitigate fiduciary risks. The indicators are also considered ‘stretch’ under GPE requirements. LGs would not only have to report crucial education data but will also have to ensure accessible medium for transparent data. The AF design does not target specific LGs for achievement of these DLRs as the need for better reporting and transparency measures applies to all LGs. At the same time in view of strains on central government capacity to supervise and verify implementation of SSDP activities across 753 LGs as well as

31 UIS Education database. 32 “Baseline Study of the Status of Out of School Children in Districts with the Highest Disparities in Access, Participating and Learning Outcomes”. 2017 33 Appropriations Act 2018 34 Besides conditional grants, LGs can receive fiscal equalization grants, complementary grants and special grants.


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uncertainties around LGs’ own capacity to deliver, the proposed DLRs tie disbursement to data transparency in 400 LGs by the third year of the AF.

24. Theory of change. Provision of open data on fund flows by LGs represents a strategic and timely intervention during the transition process to strengthen the education system. It is expected to lay the foundation for transparency at the local level and support meaningful engagement by schools and the community. Moreover, it does so without disrupting local level accountability mechanisms that are still in their nascent stages and that may vary across LGs. Improved transparency through open data on resource flows can further foster development of accountability mechanisms in future that are suited to the institutional setup of each LGs. Given the absence of such provisions till date, the activities supported by these DLRs are expected to lead to transformative change.

25. Reporting data on release of key conditional grants to schools such as scholarship grants for girls, Dalit students and students from disadvantaged communities can help increase transparency in education management and reduce potential misuse of funds. These measures may ultimately contribute to better efficiency outcomes such as reduction in dropout rates and improvement in transition rates across levels. Moreover, availability of these data is likely to complement existing strategies to strengthen efficiency and improve their effectiveness. For example, interviews conducted with former DEOs and head-teachers as part of the World Bank scoping study point to absence of meaningful participation from community members in conducting social audits. Availability of school finance data could enable parents and community members to engage more effectively in these social audits as well as in formulating School Improvement Plans. These DLRs could also facilitate platforms for developing accountability mechanisms that are suited to the institutional setup of each LG in the medium to long term. Figure 4.1 presents the theory of change via which these indicators are expected to strengthen efficiency.

Figure 4.1. Results Chain- Efficiency

Activities:

LGs make data on release of conditional grants to schools publicly available on accessible websites or physical spaces.

Output:

Data on conditional grants released to individual schools, consistent with the Grant Management Guideline, is made public on user-friendly websites (or accessible spaces) by

- at least 200 LGs in Year 3



Outcome:

Improved transparency in education resource flows at the local level

Reduction in dropout rate

Improvement in transition rate from primary to secondary level


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26. Achievement and DLR pricing. DLR achievement is expected to be completed by Year 5 of the SSDP (2020–closing date). Each of the three DLRs are priced at US$800,000 each and they are scalable with roll-over provision.

27. Verification. Achievement of these DLRs will be verified by the IVA commissioned by the MOEST.

Equity: Targeted interventions to bring OOSC into schools or LCs to improve access to basic education. (US$2,400,000)

• DLR 2.6: 30% reduction in OOSC reduced by 30% in 15 targeted districts (based on equity index).

• DLR 2.7: Rate of OOSC in basic education age group reduced to 5% in the relevant age group nationwide. 35

28. Rationale. Nepal has made remarkable progress in improving access to basic education in the past decade. NER at the primary level increased from 81 percent in 2004 to 95 percent in 2017 while NER at the lower secondary level increased from 48 percent in 2007 to 54 percent in 2017.36 It has also made progress in narrowing equity gaps in access. Nepal has achieved gender parity in access to basic as well as secondary education. The GON has consistently initiated efforts to bring OOSC into schools. The SSRP included strategies such as school mapping exercises to identify OOSC and school-level outreach programs such as the ‘Welcome to School’ campaign.37 With GPE support, the MOEST adopted a targeted approach to identifying OOSC using an equity index. The SSDP uses the equity index to bring OOSC in the most disadvantaged districts to either formal schools or non-formal LCs. The GON has already implemented surveys for baseline data on OOSC in 10 districts.38

29. Despite these improvements, a nontrivial number of children remain out of school. These children, particularly those from disadvantaged backgrounds, are likely to be vulnerable during the federal transition. An estimated 500,000 children—14 percent of children ages 5–12—are out of school. Most of these children are from disadvantaged groups and more than half are clustered around 10 districts in the Terai belt.39 In addition, net enrolment at the secondary level remains low at 54 percent. Children from poor households and certain geographic areas are much less likely to transition to the secondary level. While the transition of education responsibilities to LGs augurs better access to education officials and shortened accountability routes for schools and parents, these benefits may not necessarily hold for children from disadvantaged backgrounds who are at greater risk of being out of school.40 Therefore, there are potential risks of reversal in progress made thus far during the federal transition. Indeed, findings from the World Bank scoping study uncovers concerns regarding LGs’ disinterest towards improving outcomes for disadvantaged groups in at least one district. Furthermore, many LGs currently lack capacity and

35 DLR 2.7 text has been adapted from the GON SSDP DLI framework (DLR 6.5). The original GON SSDP DLR text reads “OOSC in basic education age reduced to 5 percent in the relevant age group” 36 UIS Education Database. 37 SSRP PAD 2009; MOE - Consolidated Equity Strategy 2014. 38 Budget Review Meeting Aide Memoire, May 2018. 39 SSDP PAD. 40 Indeed, participants from one district in the World Bank scoping study expressed concerns of being neglected by LGs because their schools serve children from poor migrant families that are not part of the local officials’ constituencies.


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infrastructure to effectively ensure that all children have access to school and LGs in the most disadvantaged districts are more likely to need support.

30. Description. Through DLRs 2.6 and 2.7, the AF will add support to the GON’s ongoing efforts to reduce the number of OOSC. While these would be new DLRs in the parent IDA program, they offer additional incentives to existing DLIs in the Government SSDP DLI framework.41 OOSC are defined as children ages 7 to 12 who have been out of school for 6 months or longer. Activities to reduce the number of OOSC under the SSDP include targeted scholarships and enrolment campaigns in formal schools, development of diverse non-formal education packages and special packages for children with disabilities, and bridge courses for reentry into formal education.

31. In addressing risks to equitable access, the AF design recognizes that there are uncertainties regarding LG capacity during rapid decentralization. Therefore, the DLRs are tied to a 30 percent reduction in the number of OOSC in LGs that fall in the 15 most disadvantaged districts and a 5 percent reduction in OOSC rate overall. Support to reducing OOSC by 20 percent in 10 of these 15 districts were covered by a previous GPE grant. In the new federal context, additional investment to ensure access in these districts is crucial for two primary reasons. First, the share of children that are out of school remain high in these districts. Estimates suggest that overall 19percent of children in the upper basic education age group are out of school. This figure exceeds 46 percent in Province 2, where 5 of these 15 districts are located.42 Second, as reports suggest improving access in these districts is challenging and is likely to be more so during the federal transition. According to the Year 1 DLI verification report for the parent IDA program, a reduction of 18 percent in the aggregate number of OOSC in the 5 most disadvantaged districts was achieved against the targeted 20 percent reduction. Moreover, the report also points to lack of adequate data in measuring OOSC and issues faced in defining OOSC. The report indicates possibility of duplication in counting OOSC brought to school. These issues are likely to be amplified during the federal transition. For example, LGs may lack an integrated and functional school data system to effectively track OOSC. Given the lack of such monitoring infrastructure in LGs during the transition period, the AF design links disbursement to improvements in enrollment as opposed to other indicators such as attendance or retention.

32. Theory of change. DLRs 2.6 and 2.7 are expected to incentivize continued efforts to reduce the number and rate of OOSC in the most disadvantaged districts through a targeted approach that is suited to the new federal structure. These DLRs will help prevent disruption of education service delivery for all and for the most disadvantaged groups in particular, during the federal transition OOSC data collected under the SSDP are being integrated into the EMIS database to regularly monitor the OOSC rate. Moreover, given the transfer of education responsibilities from the central government to 753 LGs, the GON plans to refine the equity index to a local level index to strengthening analysis and planning at the local level. With the availability of a richer and more targeted index to identify OOSC, added support to GON efforts to reduce OOSC rate can lead to transformative improvements in bridging equity gaps in access. Figure 4.2 presents the theory of change via which these indicators are expected to improve equity.

Figure 4.2. Results chain- equity

41 Specifically, DLI 6.2a and DLI 6.5 of the GON SSDP DLI framework. 42 NCE Nepal. “Status of School Sector Development Plan’s Implementation”. 2018.


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33. Achievement and DLR pricing. These DLRs are achieved when implementation progress report includes the list of schools and LCs covered by the program in the targeted districts and the list of OOSC enrolled by the schools and LCs. Achievement of DLRs 2.6 and 2.7 is expected during Year 3 (2018–2019) and Year 5 (2020–closing date), respectively. The DLRs are priced at US$1,200,000 each and disbursement is scalable with roll-over provision.

34. Verification. Achievement of these DLRs will be verified by the IVA commissioned by the MOEST. The World Bank and DPs will review the IVA’s report and supporting documents which include interviews with parties and visits to random sample of schools as necessary.

Learning (New DLI 7): Strengthening reading proficiencies and habits in early grades (US$4,958,000)

• DLR 7.1: National early grade reading program (NEGRP) minimum package implemented in at least 80% of community schools by LGs in at least 20 districts.

• DLR 7.2: NEGRP minimum package implemented in at least 80% of community schools by LGs in at least 29 districts.

• DLR 7.3: NEGRP minimum package implemented in at least 80% of community schools by LGs in at least 38 districts.

35. Rationale. Low learning levels and inequity in learning outcomes are some of the biggest challenges in Nepal’s education sector. NASA results from 2011 to 2015 indicate low competencies among students across grades at the basic education level. Less than 20 percent of students in Grades 3, 5, and 8 were able to master competencies in problem solving and reasoning. Moreover, gaps in learning outcomes persist by geographical location, socioeconomic status, ethnicity, and languages spoken. Mean achievement score in Nepali (math) among Nepali-speaking 8th graders was 52 (57) percent whereas among non-Nepali speakers, it was 41 (28) percent.43 Available data on learning suggest that performance gaps start early, pointing to the need for ensuring continued and renewed investment in early grade learning. As figure 4.3 demonstrates, an 8 percentage point gap in mean achievement score exists between Nepali- and non-Nepali-speaking 3rd graders. Data from the 2015 NASA tests also show disparity in early grade reading by socioeconomic status. Students in grades 3 and 5 from the lowest socioeconomic status (SES) group scored 39 percent in Nepali on average while those from the highest SES group scored 71 percent in grade 3 and 65 percent in Grade 5.

43 Ministry of Education. 2014. Report on NASA (2013).

Activities:

Targeted scholarships

Enrollment campaigns in formal schools

Develop non-formal education packages and special packages for children with disabilities

Output:

Year 3: 30% reduction in number of OOSC in 15 targeted districts (based on equity index)

Year 5: OOSC in basic education age reduced to 5% in the relevant age group nationwide.

Outcome

Improved equity in access to basic education


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Figure 4.3. Gaps in Learning Start Early Mean achievement score in Nepali by language spoken at home, Grades 3 and 8

Source: NASA (2013 and 2015).

36. Improving education quality forms the cornerstone of the GON’s national education strategy. To measure student learning at the national level, the MOEST has conducted large-scale sample-based assessments in Nepali, math, and science at the basic education level since 2011. Given the importance of improving learning at the foundational stage, the SSDP includes a two-step strategy to strengthen reading proficiencies and habits in early grades. As part of a diagnostic step, the MOEST has conducted standardized classroom-based EGRAs for Grades 2 and 3 with parents’ participation in over 5,600 community schools.44 Building on these assessments, the SSDP supports implementation of a standard NEGRP.

37. Additional investment in improving learning in early grades is particularly critical in the context of the federal transition. Global experience suggests that decentralization often reduces focus on ‘soft’ investments such as improving pedagogy by shifting attention toward hard investments (for example, infrastructure). Thus, strengthening incentives for improving foundational skills will be key for safeguarding SSDP efforts in improving quality.

38. Description. To ensure that any effort to improve learning outcomes during the federal transition is meaningful and actionable, DLRs 7.1 through 7.3 add support to an existing strategy. Specifically, they correspond to existing DLIs in the Government SSDP DLI framework45. Components of the NEGRP minimum package include providing supplementary early grade reading materials and free textbooks, mentoring and classroom support training to headteachers, community mobilization including distributing CB-EGRA results to parents, teacher training in early grade reading and setting book corners.

39. Adopting the existing strategy will enable MOEST to effectively implement the NEGRP that has already been carefully developed and approved in the planned districts under the new federal system. Furthermore, the foundation for implementing the NEGRP has already been laid with the completion of CB-EGRA in over 5,600 community schools. This is a more pragmatic approach than developing and

44 Parents observed the classroom-based assessments. Results were shared and discussed with parents. 45 Specifically, DLIs 1.3, 1.4, and 1.5a in the GON SSDP DLI framework.

5752

48

41

0

10

20

30

40

50

60

70

Grade 3 (2015) Grade 8 (2013)

Mea

n a

chie

vem

ent

sco

re i

n %

(N

epal

i)

Nepali Non-Nepali


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implementing a new program at a time when MOEST is focused on ensuring smooth implementation of current SSDP activities and undisrupted functioning of education systems under the new federal context. In the changed federal context, the NEGRP will be implemented by LGs with oversight from the newly created CEHRD. This means that MOEST will have to work with an estimated number of over 350 LGs in 38 districts as opposed to 38 district offices. Given that LGs have been recently formed with inadequate staff capacity, they may require careful orientation on the NEGRP components and capacity development for implementing the package effectively. This will also be taken care of by the ongoing capacity building initiatives. Education departments in 753 LG offices have been primarily staffed with personnel from 77 former DEOs. Yet, the responsibilities and tasks to be carried out by the LGs are similar to those of the DEOs if not bigger in scope. It is likely that LGs may be understaffed in terms of quality and quantity to undertake activities to meet crucial SSDP goals including improving learning outcomes. Therefore, in terms of GPE parlance, achieving these DLRs remain a ‘stretch’ and warrants additional investment.

40. Theory of change. Implementing the NEGRP is likely to lead to transformational contributions to improve learning outcomes. Components in the NEGRP includes community mobilization including parental participation in classroom-based assessments. This component links the NEGRP with the parental participation element of the CB-EGRA that were already conducted in over 5,600 community schools in the first 2 years of the GON SSDP (supported by a GPE grant). While available review of these assessments report results, the extent of parental engagement in improving reading habits has not received much attention. The roll-out of the NEGRP offers an opportunity to remedy this and further derive lessons for meaningful parent-teacher partnerships.

41. Furthermore, NEGRP components can help enhance existing strategies to improve learning. For example, while the MOEST has introduced Continuous Assessment System (CAS) to be conducted by teachers in basic education reports suggest that most schools do not implement it properly. Training for head-teachers on mentoring and providing classroom support, and bi-monthly reviews among subject teachers included in the NEGRP could help schools in strengthening CAS. Moreover, implementing the NEGRP in some LGs could offer lessons on strengthening these strategies nationwide. While these DLRs do not directly include learning outcomes, the MOEST will continue to track learning through NASA and CB-EGRA that is part of the NEGRP. Learning outcomes in LGs where NEGRP has been implemented can be compared with those in LGs without NEGRP to assess the effectiveness of such strategies for strengthening early learning nationwide. The mechanism through which DLRs 7.1 through 7.3 are expected to improve learning outcomes is illustrated in Figure 4.4.

Figure 4.4. Results Chain - Learning


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42. Achievement and DLR pricing. These DLRs are considered to be achieved when the implementation progress report includes the list of community schools in all LGs covered by the program and the list of community schools where the NEGRP minimum package is implemented. Achievement of DLRs 7.1, 7.2, and 7.3 is expected during Year 3 (2018–2019), Year 4 (2019–2020), and Year 5 (2020–closing date) respectively. The DLRs are priced at US$1,00,000 for Year 3 and at US$1,979,000 each for Years 4 and 5 and disbursement is scalable with roll-over provision.

43. Verification. Achievement of these DLRs will be verified by the IVA commissioned by the MOEST. The World Bank and DPs will review the IVA’s report and supporting documents.

DLI achievement verification protocol 44. The DLIs’ achievement verification protocol to be financed under the GPE AF will be consistent with the verification protocol adopted for the parent IDA program. The DLI verification will be carried out by an IVA. The IVA will be competitively selected in accordance with the terms of the Memorandum of Understanding (MOU)/any other instrument between the MOEST and the IVA as noted in the parent IDA program’s legal covenant.

45. The MOEST/CEHRD will submit DLI achievement report in accordance with the verification protocols as well as the technical details and standards of each DLI for IVA review. The IVA will verify achievement of each DLI/DLR consistent with the verification protocol as explained in their Terms of

Activities:

Implement full approved early grade minimum package which includes the following activities:

-Teaching and instructional materials; student practice book covering six reading components

-Provide 5-day teacher training on early grade reading package (EGRP)

-Mentoring and classroom support training to head-teachers

-Conduct EGRA or Classroom-based EGRA

-Community mobilization including CB-EGRA results distribution with parents

-Bi-monthly review meetings among subject teachers and annual progress review meeting.

Output:

Year 3: NEGRP minimum package implemented in at least 80% of community schools by LGs in at least 20 districts



Outcome

Improved reading proficiencies and habits in early grades


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Reference. The DLI/DLR achievement verification protocols are given in Table 3.3 of Annex 3. While detailed verification steps may be subject to change given the ongoing transition to federalism, procedures of verification and reimbursement of funds are explained below.

Step 1: Reporting by GON to IVA/ World Bank/ DPs 46. MOEST/CEHRD will submit achievement reports to IVA for verification summarizing the progress made in meeting DLI/DLR targets for the given year following endorsement by the inter-ministerial SSDP Steering Committee. Simultaneously, MOEST/ CEHRD will also submit the report to World Bank and other SWAp DPs for review. Supplementary documents to accompany the DLI/DLR achievement reports include the following:

a. For DLRs 1.7 and 1.9 - SSDP activities have been integrated in annual work plan and budget (AWPB) by at least 75-140 LGs in each year during year 3 to year 5

• List of LGs fulfilling this DLR per MOEST/CEHRD report

• AWPBs of LGs in Year 3, Year 4 or Year 5- whichever is applicable for the claimed period

b. For DLRs 1.8, 1.10 and 1.11 - Data on conditional grants released to individual schools, consistent with the Grant Management Guideline, is made public on user-friendly websites (or accessible spaces) by at least 200-400 LGs

• AWPBs of LGs in Year 3, Year 4 or Year 5- whichever is applicable

• LG endorsed GMG

c. For DLR 2.6 - 30% reduction in OOSC in 15 targeted districts (based on equity index)

• Baseline report of the number of OOSC in each of the targeted 15 districts (Year 3)

• Dataset listing names and profiles (age, gender, and ethnicity) of OOSC enrolled by the school/LC in each of the targeted 15 districts (Year 3)

• A report summarizing the different interventions and initiatives implemented to bring OOSC into schools and LCs, and a summary of total number of OOSC brought into basic schooling in each of the targeted 15 districts (Year 3)

d. For DLR 2.7- OOSC in basic education age reduced to 5% in the relevant age group nationwide

• MOEST/ CEHRD publish enrollment data of age group 7-12 students in school/ LC disaggregated by genders in the EMIS report and the estimated population of that age group in Year 5.

• The percentage of OOSC calculated based on the EMIS data of age 7-12 school/ LC enrolled students in comparison with total student population of that age group in that year (Year 5)

e. For DLRs 71, 7.2, and 7.3 - NEGRP minimum package implemented in at least 80% of community

schools by LGs in at least 20-38 districts

• Report on the approved NEGRP minimum package and implementation of each component of the package in Year 3, Year 4, or Year 5- whichever is applicable

• Dataset listing schools with grades, LGs, and districts where the NEGRP minimum package is implemented in Year 3, Year 4, or Year 5- whichever is applicable


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• A random verification by the IVA in 10% of the enlisted schools in each of the enlisted districts and LGs where the NEGRP minimum package is implemented

Step 2: Review and submission of achievement report by IVA to World Bank and DPs 47. The IVA will submit the DLI verification report to MOEST/ CEHRD. The IVA will also identify and document gaps between MOEST report and IVA’s own findings in relation to achievement of a particular DLI and may also recommend the MOEST possible suggestions for future improvement based on the lessons learned. The MOEST/CEHRD will submit the verification report with all substantiating documents for the World Bank team’s review and endorsement. As part of the verification process, the IVA may review MOEST/CEHRD’s claims in randomly selected samples of LGs and schools in each applicable year as follows. In addition, the IVA will also submit a brief report covering all applicable DLRs to substantiate the achievement or shortfalls based on the verification exercise.

• Verification in 25% of randomly sampled LGs reported to have fulfilled DLR requirements by MOEST/CEHRD (for DLRs 1.7,1.8, 1.9, 1.10 and 1.11).

• Verification in representative samples of schools/LC in each targeted district reported to have enrolled OOSC (for DLR 2.6). In addition to the number of OOSC, IVA will also verify disbursement of grants to eligible schools/LCs and scholarships to enrolled students.

• Verification in randomly selected representative samples of schools in each of the enlisted districts reported by MOEST/CEHRD to have implemented the NEGRP minimum package (for DLRs 7.1, 7.2 and 7.3).

Step 3: Review of verification report by World Bank 48. The World Bank team will check whether the achievement report and the IVA report are consistent with the supporting documents. The team may seek further clarifications from the MOEST/CEHRD and request missing information to substantiate reports of DLI/DLR achievement. MOEST/CEHRD may wish to organize a joint meeting among MOEST/CEHRD, IVA, and the World Bank and other DPs for such clarifications.

Step 4: Submission of formal request for reimbursement by MOEST/CEHRD

49. Once an agreement about DLI achievement between the MOEST/ CEHRD and the World Bank Technical Team has been reached, MOEST/ CEHRD will submit a formal letter to the World Bank for reimbursement along with the links to all the achievement reports and IVA report. These documents will undergo further review and clearance by the World Bank at different levels.

Step 5: Certification by World Bank

50. Following the World Bank’s endorsement of the DLI/DLR achievements at different levels (Loan office, Legal, Practice Manager and Country Management Unit), the World Bank will issue a formal letter to MOF with a copy to MOEST/CEHRD and related GON agencies for reimbursement of funds against the achieved DLI/DLRs.


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ULT_YES_TARGET_VALUES ANNEX 5: INTEGRATED RISK ASSESSMENT

. . SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)

Risk Category Latest ISR Rating Current Rating

Political and Governance High High

Macroeconomic Moderate Moderate

Sector Strategies and Policies Moderate Moderate

Technical Design of Project or Program Moderate Substantial

Institutional Capacity for Implementation and Sustainability

High High

Fiduciary Substantial Substantial

Environment and Social Environmental Risk rating from Specialist: Moderate as of 15-Oct-2018 Social Risk rating from Specialist: Moderate as of 15-Oct-2018

Moderate Moderate

Stakeholders Moderate Moderate

Other

Overall Substantial High

.


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ANNEX 6: TECHNICAL ASSESSMENT – ADDENDUM

I. Assessment of Program Strategic Relevance and Technical Soundness

A. Strategic Relevance

1. The Government’s Development Strategy 2030 aspires to have Nepal achieve SDGs and become a middle-income country by 2030. The recently adopted constitution has guaranteed free education up to secondary level. Through the 14th plan (FY2016/17–FY2018/19), the Government aims to elevate access to secondary education, improve quality of education and efficacy of the education system to produce skilled manpower, and create a conducive environment for transformational development by focusing on expansion of infrastructures and power. It is within this framework that the Government has launched a seven-year SSDP, which focuses on enhancing quality.

2. The parent IDA program, Nepal School Sector Development Program (SSDP, P160748, US$185 million), supports a five-year time slice of the Government’s SSDP. It was approved by the Board on March 24, 2017; became effective on September 19, 2017; and is scheduled to close on July 15, 2021. The proposed additional grant is in response to a request from the GON with an indicative GPE allocation for the next round of funding. The World Bank has been selected as the GA for processing the proposed grant and supervising the implementation phase of the grant through a mutual consensus of the GON and the LEG.

3. The proposed additional grant would be for a three-year operation (2018–2021) and comprise two parts: (a) a fixed part (60 percent of the total grant) based on the country’s compliance with the three eligibility requirements—having a credible education sector plan, commitment to financing the sector plan, and availability of critical data for sector monitoring and analysis—and (b) a variable part (40 percent of the total grant) conditional on achieving the targets for three preidentified ‘stretch’ indicators associated with equity, quality, and efficiency in the education sector. The proposed GPE AF grant would maintain the LEG’s support for the Government’s SSDP and be used to (a) help the GON reduce its financing gap; (b) support crucial SSDP activities most aligned with the GPE strategic goals of promoting quality, equity, and efficiency, and (c) maximize the Program’s development impact during the ongoing federal transition.

4. Nepal is going through a demographic transition where there is a youth bulge (more than 50 percent of population under 25) in the country and youth today are, on average, more educated than in the past. This is because Nepal has significantly expanded access to education, leading to a deepening of its human capital. This human capital presents a powerful resource to accelerate economic growth and reduce poverty. However, Nepal’s youth bulge remains a hugely underutilized resource because of low levels of learning outcomes and skills attainment and inadequate domestic labor market opportunities. The SSDP’s focus on quality improvements through strategic interventions (for example, school, teacher, and student-level incentives and accountability schemes) and system strengthening (for example, teacher management, curriculum and examinations reforms) is expected to provide young people with relevant cognitive and noncognitive skills for further education, labor market or other livelihoods. Therefore, investment in quality education is key to successfully unleashing the true potential of Nepal’s young people and the economy.


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5. The GON has developed the follow-on SSDP, (2016–2023) in line with Nepal’s vision to become a middle-income country by 2030. This plan aligns with Nepal’s international commitment toward the SDGs, which were ratified by the United Nations General Assembly in September 2015. It covers all levels of school education and non-formal education (NFE) programs (excluding teacher pension). The program would be supported by a number of DPs including the World Bank through SWAp modality. Building on the lessons learned and the gains made in the sector under the earlier EFA and SSRP programs, the SSDP is designed to enable the school education sector to consolidate the achievement made during the last 12 years, achieve the unfinished agenda items, and introduce new initiatives to address the emerging needs of the country and people’s aspirations. The Constitution of Nepal (2015) demands a thorough reorientation of the education system through structural and functional reforms including the policy and regulatory frameworks. The approval of the Education Act Eighth Amendment (2016) provides the legal framework to carry out reforms envisaged in SSDP.

B. Technical Soundness

6. The parent IDA program and the proposed AF are technically sound as they are underpinned by a robust results chain (see Annex 1). The AF design covers all three results areas of the Program. Different results areas are intended to work in complementary ways to improve student learning and access, and strengthen the education system at all levels. This results chain uses both local and global evidence as well as contextual guidance derived from extensive consultations with education service providers, government stakeholders, and other DPs. Initiatives that logically tackle one problem may be undermined by other problems that are harder to address. It therefore makes sense to tackle various key problems at once and the program design does so. Additionally, the AF design draws from local evidence from a World Bank-funded scoping study that suggests a need for strengthening support in areas of equitable access, improved learning, and greater transparency in the context of the federal transition.

7. A Program Results Framework with measurable, actionable, and realistic targets was developed based on the results chain. The activities in the SSDP are clearly defined and are implementable in the practical sense. The parent IDA program as well as the AF activities were designed in view of the existing implementation structures and decision processes. This is particularly important given the uncertainty around LGs’ capacity to plan and implement crucial education activities in the face of rapid decentralization. (See Annex 4 for detailed explanation of how proposed DLI/DLR targets are actionable) Moreover, the DLRs associated with the AF are a logical and balanced mix of process indicators, outputs, and outcomes across all three results areas.

8. Lessons learned from past operations. Nepal has a good policy (and tradition) of involving communities in the management of schools and higher education institutions. This decentralization policy, revitalized in 2001 in schools and supported by the World Bank, has been a powerful instrument in expanding access in school and higher education. In addition, demand side interventions including per capita financing (PCF) and targeted scholarships have helped un-served children particularly from marginalized communities. However, the same policies have not had any meaningful impact on quality improvements in large part due to the inability of community-elected SMCs to effectively manage centrally recruited teachers and the shortcomings of the PCF design (absence of performance-based component) and scholarships (not sufficiently poverty-targeted). Based on these lessons and analytical work, the World Bank’s support for the SSDP continues to use DLI-based (focus on results rather than inputs) reforms in key areas including teacher management and accountability across all education subsectors, system


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strengthening including enhancement of data reliability and transparency, fiduciary arrangements, and phased implementation of innovative quality enhancing interventions under transition of federalism. It should be noted that focus on accountability and incentives for schools and teachers is based on global evidence on the use of performance-based incentives to promote student outcomes. Given that many of the strategic interventions incentivized through the World Bank’s DLIs are still new to the country, it is critical to keep the design flexible with good monitoring systems and implementation support to maximize the achievement of agreed results or DLIs.

9. Partnerships. Nepal’s school education sector has been based on a strong partnership between the Government and DPs. The World Bank, as in the past, will continue to play a critical role in collaborating with the partners in strengthening and using the country systems. The World Bank will work as the GA for processing the proposed grant and supervising the implementation phase of the grant through a mutual consensus of the GON and the LEG.

II. Assessment of Program Expenditure Framework

10. Funding predictability and program financing. The GON’s continuing commitment to the education sector is reflected in its budget. Annual budget allocations to education has remained around 4 percent of GDP in the past couple of years. Historically, the commitment to education as share of the total federal government budget has been around 12 percent.

11. Under the federal structure, LGs are also entitled to raise their own budgets and determine allocation to the education sector in addition to the federal allocation. The federal government plans to offer four types of grants to provincial and local governments including fiscal equalization grants on the basis of fund requirements and ability to generate revenue. In addition, the MOF is also expected to extend special grants to provide basic services such as education and health in marginalized communities. However, the budget share that LGs allocate to education remains uncertain.

12. External DPs have been providing support to ensure continued priority for education sector investments. Nine JFPs—ADB, EU, Finland, GPE, JICA, Norway, REACH MDTF, UNICEF, and the World Bank—continue to cooperate in a SWAp under a JFA, an overarching document to harmonize support for the SSDP, including during the federal transition. Australia’s departure from SSDP support as a JFP increased the SSDP financing gap, albeit a small amount. The proposed GPE AF of US$24.2 million would compensate the resulting decrease in committed funds as well as help the GON meet its financing gap. DPs’ share in the SSDP financing plan is 7.4 percent (accounting for Australia’s departure) (see table A6.1).

Table 6.1. School Sector Development Program (2016–2021) - Estimated Financing Plan

Source Amount (US$, millions) Share of Total (%)

Government 5,739 88.8

IDA/World Bank 185 2.9

Other JFP/Non-JFP 290 4.5

Financing gap 247 3.8

Total 6,461 100.0 Source: SSDP PAD Note: DPs’ financing is estimated based on commitments indicated so far: ADB (US$120 million), EU (US$72 million), Finland (US$23 million), GPE and REACH MDTF (US$22 million), Norway (US$21 million), UNICEF (US$3 million), JICA (US$15 million), and non-JFPs (US$14 million).


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13. The SSDP’s proposed share in the total education sector budget is 69.09 percent for FY2018/19. The total education sector budget ceiling for FY2018 is NPR 134.50 billion (US$1,281 million)46 of which NPR 93.13 billion (US$887.0 million) is proposed for the SSDP.47 For FY2018/19, 91.6 percent of the proposed SSDP budget will go to LGs while 0.3 percent will be transferred to provincial governments (see table 6.2). Recurrent expenditures are transferred to LGs through conditional grants.

Table 6.2. Proposed SSDP Budget for FY2018–19, by Government level

Level of Government Proposed SSDP budget (NPR, millions) Percent

Federal 7,555.60 8.11

Province 269.15 0.29

Local 85,309.47 91.60

Total 93,134.22 100.00 Source: MOEST.

14. Fiscal affordability and sustainability. The SSDP expenditure framework falls within the estimated school sector resource envelope. Despite changes in the federal budget structure, the MOF has committed to continue funding the SSDP in line with the projected fiscal envelope. The five-year SSDP expenditure framework (2016–2021) is estimated at US$6,461 million and was constructed based on detailed cost estimates by the MOEST for achieving Program results. Given that there is no Program restructuring associated with the proposed AF, the expenditure framework is unlikely to change.

15. The resource envelope for the SSDP48 was estimated by assuming a plausible scenario of future allocations based on current trends of real GDP growth, inflation rate, share of education in GDP, and share of the school sector in the total education budget.49 The school sector resource envelope for 5 years (2016–2021) is estimated at US$7,213 million. For the IDA program, this framework excludes US$715 million (2016–2021) estimated envelope and expenditures because this portion is directly managed by the National Reconstruction Authority and not by the MOEST. Therefore, the school sector resource envelope 5 years (2016–2021) is estimated at US$6,498 million (table 6.3).

Table 6.3. SSDP - Resource Envelope and Expenditure Estimate (Plausible Scenario, Current Prices)

Item SSDP (2016–2021)

(NPR, billions) (US$, billions)

School sector resource envelope projection 682.0 6.5 SSDP expenditure estimatea 678.0 6.5

Recurrent 616.0 5.9

Capital 62.0 0.6

Capital expenditure as percentage of total expenditure 9.1 9.1

Regular expenditureb 471.0 4.5

Development expenditure 208.0 2.0

46 Using exchange rate of NPR 105 to US$1. 47 MOEST. Annual Strategic Implementation Plan draft. September 2018. 48 Resource envelope refers to the fiscal space that can be provided for the school sector as a whole and is estimated based on past trends in resource allocations; the Program cost estimate represents the required costs to implement SSDP activities. 49 The plausible scenario assumes average annual real GDP growth of 4.4 percent, an annual inflation rate of 8 percent, share of education in GDP of 5.2 percent, and share of the SSDP at 80 percent of the total education budget during the 7-year plan period and is used to arrive at the projected resource envelope for the education sector.


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Item SSDP (2016–2021)

(NPR, billions) (US$, billions)

Development expenditure as percentage of total expenditure 30.6 30.6 Source: Ministry of Education estimates. Note: a. Includes all school-related expenditure (government and external DPs) except teacher pensions. Excludes US$735 million (2016–2023) and US$715 million (2016–2021) for estimated disaster risk reduction expenditure for the school sector implemented directly by the National Reconstruction Authority. Although the disaster risk reduction budget to be implemented through the National Reconstruction Authority contributes to program results, it is not included in the resource envelope because the resources are channeled directly through the National Reconstruction Authority and not through the MOEST’s resource envelope. b. Salaries and remuneration plus regular organization and management expenditure.

16. Because the GON is committed to implementing the constitutional provision of free and compulsory education up to Grade 8 and free education up to Grade 12, it is anticipated that the education sector would receive adequate budget allocations to meet the cost required to achieve the program objectives. Long-term sustainability considerations are built into the SSDP design by (a) using country systems for budgeting, accounting, reporting, and auditing; (b) strengthening institutions in school education to sustain the school sector improvements; (c) using DLIs to trigger results; and (d) strengthening governance and management. GON has developed a web-based budgeting, accounting and reporting system for LGs (SuTRA). However, only around 250 LGs are using this system thus far. Unless all LGs implement the system, it will be challenging for the federal government to obtain timely accounting information. To continue efficient accounting systems under the new federal structure, further efforts for full implementation of the system by other LGs are needed. DPs have also mobilized technical assistance for capacity building of LGs to expedite the implementation.

17. Tracking budget execution. A key risk in ensuring budget execution could arise from lack of proper reporting mechanisms from LGs to the federal government. While the federal budget framework includes provisions for activity-based classification, procedures for LGs’ reporting on the conditions and activities implemented under the specific conditional grants are not yet established. Most of the SSDP activities will be implemented at the local level and majority of the SSDP budget is being transferred to LGs through conditional grants from the MOF unlike in the pre-federal system when the MOEST had direct control over budget transfer and reporting. These conditional grants include key program costs such as salaries, textbooks, and scholarship grants. While the Appropriation Bill for FY2018–19 includes provisions for LGs to report back on detailed incurred expenditures for conditional grants, the GON is yet to establish such reporting procedure.

18. Adherence of program expenditure to the GON priorities. The SSDP expenditure framework is in line with the GON priorities in education. The SSDP attempts to enhance effectiveness through (a) costing of prioritized quality-improving interventions; (b) plans to introduce a more robust medium-term expenditure framework (MTEF) in line with the SSDP expenditure framework, to ensure appropriate annual budget allocations; (c) revision of the school grant system to support performance-based financing, and improvements to the EMIS to make it more reliable and to boost the effectiveness of PCF grants; (d) a proposal to create additional teacher positions in secondary education, and rationalization of teacher management; and (e) allocation of about 25 percent of SSDP expenditure to secondary education. Teacher pensions, which constitute 10 percent of the school sector budget, are excluded from the SSDP expenditure framework, and the exclusion of pensions is expected to increase the share of SSDP resources for quality-enhancing activities.


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19. Over 80 percent of program expenditures will be for basic education (ECED/PPE to Grade 8) and secondary education (Grades 9−12), as shown in table 6.4. The share of secondary education in the SSDP has increased to 25.4 percent, compared to 15.0 percent under the SSRP, due to new interventions such as separate head teacher positions; trained subject teachers for math, science, and English; promotion of science education; model school program; and ICT. The share of the SSDP capital budget is 9.1 percent (higher than the SSRP’s 2.3 percent) and includes ICT and infrastructure support other than the disaster risk reduction activities implemented by the National Reconstruction Authority.

Table 6.4. SSDP - Expenditure Framework, 2016–2021 by Component (Current Prices)

Component Amount

(NPR, millions)

Amount

(US$, millions)

Share of

Total (%)

1. ECED/preprimary education 25,800 246 3.8

2. Basic education (Grades 1−8) 371,289 3,536 54.7

3. Secondary education (Grades 9−12) 172,314 1,641 25.4

4. Technical education under DOE 9,071 86 1.3

5. NFE and lifelong learning 8,011 76 1.2

6. Teacher management and professional development 13,219 126 1.9

7. Disaster risk reductiona 31,364 299 4.6

8. Governance and management (district) 5,216 50 0.8

9. Monitoring and evaluation 3,508 33 0.5

10. Capacity development 7,249 69 1.1

11. Organization and managementb 31,321 298 4.6

Total 678,361 6,461 100.0

Source: MOEST estimates. Note: a. Excludes disaster risk reduction allocation to National Reconstruction Authority.

b. Regular expenditure of MOEST institutions (central line agencies, district education offices, and REDs) including staff salaries

and utilities.

III. Assessment of Results Framework and M&E arrangements

A. Updated DLRs

20. The AF does not entail changes in the PRF. It follows the parent IDA program’s approach in tying disbursement to SMART (specific, measurable, actionable, realistic, and time-bound) targets. The parent IDA program and the proposed AF subscribe to a PRF that is fully aligned with the objectives of MOEST’s seven-year education sector plan with respect to equity, efficiency, governance, and management.

21. Moreover, the DLRs associated with the AF include a mix of process, outputs, and outcomes covering all three results areas of the Program. The AF design is also with the World Bank policy on PforR financing which recommends a balance in disbursement conditions across achievement of key results and strengthening capacity necessary for achieving PDO targets. Out of the 10 proposed DLRs, 3 DLRs representing 10 percent of the AF support foundational activities designed to strengthen institutional capacity to achieve outcomes during the federal transition. Two DLRs, representing 10 percent of the AF, directly reward improvements in key desired Program outcomes of improving equitable access. The


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remaining DLRs, comprising 80 percent of the AF, incentivize implementation of Program activities that are critical to achieving targeted outcomes in the results areas during the federal transition (see table 6.5).

Table 6.5. AF DLRs by Funding and Category

DLR AF funding (US$) Type

DLR 1.7: SSDP activities have been integrated in annual work plan and budget (AWPB) by at least 75 LGs

14,200,000

Program activity

DLR 1.9: SSDP activities have been integrated in AWPB by at least 140 LGs

Program activity


2,400,000

System-level reform


System-level reform


System-level reform

DLR 2.6: 30% reduction in OOSC in 15 targeted districts (based on equity index)

2,400,000

Outcome

DLR 2.7: OOSC in basic education age reduced to 5% in the relevant age group nationwide

Outcome

DLR 7.1: National early grade reading program (NEGRP) minimum package implemented in at least 80% of community schools by LGs in at least 20 districts

4,958,000

Program activity

DLR 7.2: NEGRP minimum package implemented in at least 80% of community schools by LGs in at least 29 districts.

Program activity

DLR 7.3: NEGRP minimum package implemented in at least 80% of community schools by LGs in at least 38 districts.

Program activity

Total AF 23,958,000

B. Institutional Arrangements

22. The MOEST has revised implementation arrangements to accommodate the new governance structure under the federal transition process. Under federalism, the education governance structure has changed from a centrally managed deconcentrated system to a three-tier governance structure at the federal, provincial, and local levels. The MOEST will continue to lead the SSDP implementation as the executing agency. Following the dissolution of the DOE, the newly established CEHRD will serve as the main implementing agency. In addition to preparing ASIPs and AWPBs, the CEHRD will provide oversight and technical support to LGs in carrying out program activities. School education sections at the provincial level under the Ministry of Social Development will take over the SSDP responsibilities previously assigned to REDs.

23. SSDP implementation responsibilities at the LG level will be divided between education officials in the LG office and newly established district level EDCUs. Functions that were previously executed by the DEOs have been transferred to the LG offices. In addition, EDCUs have been established within the


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District Administration Offices in all 77 districts to facilitate program implementation during the transition process and provide any technical reinforcement at the local level. According to the GON’s directive,50 all the previous DEOs’ responsibilities, barring those under the LGs’ mandate per the Local Government Operations Act 2017, will be assumed by EDCUs. The MOEST has placed responsibility for 21 education functions on EDCUs, including compiling school-level EMIS data. In addition, the roles and responsibilities of the EDCU will include liaising between the federal and local governments and providing technical support to LGs and schools in implementing the SSDP activities.

24. Implementation arrangements for activities at the school level will remain unchanged. SMCs and head teachers will be tasked with managing all school-level activities while PTAs are tasked with monitoring them.

25. The SSDP SC chaired by the MOEST Secretary will oversee the coordination, monitoring and verification of implementation progress of SSDP activities. The SSDP PIC established under CEHRD will take over the main functions of supporting program implementation previously assumed by the SSDP Implementing Committee. Roles and responsibilities finalized for the PIC are (a) program implementation support, and (b) support aligned and efficient utilization of technical assistance to the SC. The PIC will be headed by the Director General of the CEHRD. The Financial and Budget Management Committee (FBMSC), under the MOF, will be responsible for monitoring program results, including the DLRs, and ensuring that adequate resources are made available to achieve those result. Financial management, budgeting, audit reports and reporting on DLI achievement will be handled by the MOEST’s DACS previously known as the Foreign Coordination Section (FCS).

26. There are several implementation risks during the federal transition period arising largely from the fact that federalism entails a reduced central role and a greater role for LGs in managing school education. Key transitional risks and corresponding mitigating measures are summarized as follows:

(a) LG capacity in implementing SSDP. The SSDP was designed during a system of centrally managed governance structure. Under federalism, majority of SSDP activities are to be implemented by decentralized LGs. However, most LGs lack capacity as well as basic tools for education sector planning and budgeting.51 Furthermore, several LGs lack sufficient human resources to implement program activities. Local level education units in most LGs, other than metropolitan and sub-metropolitan LGs52, will be headed by section officers pulled from the education cadre of civil service. Several staff from the previous DEOs, including resource persons, have been transferred to LG offices. Yet, shortfalls remain in about 350 LGs.

(b) To mitigate risks from insufficient and varying levels of LG capacity, a dedicated SSDP TSU housed within the MOEST’s Planning Division will continue to manage technical assistance requirements as well as provide M&E support. At the local level, the EDCUs will provide technical backstopping. For example, EDCUs are expected to support LGs in consolidating household surveys to determine OOSC. Their role also includes assisting LGs in adequate resource allocation to implement the NEGRP minimum package and monitor use of the

50 MOEST, Letter no. 2.1.16/074/075. 51 Claussen and others. 2018. Federal System and Changes in Risk Assessment for the School Sector Development Plan. 52 In the 17 metropolitan and sub-metropolitan LGs, the education units will be headed by under-secretaries deputed from MOEST.


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package in community schools. The MOEST is developing a Program Implementation Manual that provides implementation guidance to LG offices. The MOEST has also conducted a series of SSDP induction workshops for LGs. The MOEST should ensure that technical assistance effectively covers all LGs and should develop plans to fill human resource needs in all LGs.

(c) Risks of accountability and coordination issues due to lack of clear responsibilities. While LGs and EDCUs share SSDP responsibilities at the local level, a clear demarcation of responsibilities have not yet been provided. A risk assessment by JFPs documents varied interpretations of roles of LGs and EDCUs among local education officials. Lack of clarity on responsibilities could lead to duplicated activities as well as poor accountability. Uncertainties around teacher deployment and management responsibilities could also affect implementation of key teacher-related activities under the SSDP. The JFP assessment also found that several LGs and EDCUs had conflicting interpretations regarding their roles in teacher transfers, appointment, and promotion. Finalizing detailed responsibilities and effectively communicating them would be crucial for efficient SSDP implementation.

27. While the GON SSDP is partly supported by a pool of DPs through a DLI framework, some DP funds support selected DLIs. This could potentially carry some risk of fragmentation in terms of DP focus across different DLIs and results areas. However, this risk is unlikely to be substantial because the SSDP is being implemented using a SWAp modality in close coordination with all DPs. DP coordination and external partnerships will be handled by the DACS53 MOEST’s Planning Division.

C. Assessment of Monitoring and Evaluation System

28. At the central level, monitoring functions are shared by the MOEST and CEHRD. The Development Action Committee chaired by the Minister of Education will meet every four months to review SSDP progress. The TSU, housed under the MOEST’s Planning Division along with the M&E divisions, is responsible for monitoring achievement of SSDP indicators and results, including DLI verification. The MOEST’s Planning Division will share M&E reports with JFPs. In addition, the MOEST has established technical working groups for different SSDP thematic areas to review protocols and arrangements relevant to their result area. Furthermore, the CEHRD will prepare progress reports against DLI targets. According to the arrangements in the parent operation, DLI achievement will be verified by an independent verification agency.

29. At the provincial and local levels, monitoring will largely be supported by dedicated M&E units at provincial governments and M&E officials within LGs. The M&E units within provincial governments will be tasked with SSDP reporting requirements including financial reporting per SSDP requirements. Newly established EDCUs will also provide monitoring support to LGs. EDCUs will be responsible for compiling EMIS data used for monitoring. The restructured Education Training Centers (ETCs) and resource centers (RCs)54 at the field level will provide training, management, and monitoring support to schools. Seven ETCs have been elevated to provincial level55 and are responsible for periodic professional

53 Formerly called the Foreign Coordination Section. 54 RCs used to be under the now defunct DEO in the pre-federal setup. They have been placed under LGs. 55 In the pre-federal setup, ETCs were distributed across 29 districts. The roles for ETCs that have not been upgraded to provincial level ETCs are yet to be determined.


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development training and supporting teacher capacity on continuous assessment of students and in implementing the NEGRP minimum package.56

30. EMIS data collected at the beginning and end of each academic year will continue to be the main database system for school-level information. However, EMIS will be strengthened to be adapted and fully aligned with the new federal structure. The MOEST is also in the process of upgrading the EMIS to a web-based system with provisions for offline data entry for schools without internet access. These schools would upload the data by visiting their resource center. Contingent upon coordination between LGs and EDCUs, the quality of school-level data compiled is likely to be higher under the new structure because LGs are responsible for a smaller number of schools. M&E activities will be conducted through site visits, trimester, and annual reviews as well as baseline, midterm, and end-line evaluations to assess program implementation. To track learning, the ERO will continue to conduct NASA and EGRA assessments. Monitoring at the local level will also be strengthened through improved education data transparency (new DLRs 1.8, 1.10, and 1.11).

IV. Economic Justification of the Program

31. The SSDP would remain economically viable with the proposed AF. The costs and benefits assumptions in the original economic analysis hold under the AF. The cost-benefit analysis presents an assessment of benefits and costs associated with the program using a ‘counterfactual’ identification approach in the absence of SSDP whereby the program ‘investment’ is the estimated additional cost over and above the current spending.

32. Benefits. The benefits are taken to be those changes in the quantity, quality, and reduction in internal inefficiency of education that the SSDP will produce over the program period. Benefits come from three sources: (a) more basic education completers who earn higher wages (relative to non-completers), (b) greater quality of education resulting in higher wage premiums for all basic education completers, and (c) less wastage of public and private resources as a result of fewer dropouts and repetitions. The SSDP will enhance internal efficiency and will result in low ‘wastage’, that is, fewer school dropouts and repeaters, and lower unit costs.

33. Costs. SSDP costs include additional program costs (from the Government and DPs sources) and private costs that comprise direct household outlays as well as opportunity costs. Additional program investment is derived from the difference between the ongoing program spending and the proposed SSDP estimates. The SSDP cost estimates remain unchanged since the parent IDA program because the Program has not been restructured under the AF.

34. Based on a discount rate of 12 percent for the benefit and cost streams described above, the net present value of SSDP benefits is estimated to be US$383 million and the estimated IRR is 15.9 percent. Since our cost and benefit assumptions hold under the proposed AF, the IRR suggests that the SSDP continues to be economically justified. Indeed, these estimates are likely to be conservative. The AF would help mitigate risk of disruptions in service delivery during the federal transition and hence help maintain

56 Government of Nepal, Ministry of Education, Science, and Technology. October 2018. Transitional Plan and Roadmap for Implementation of SSDP in Federal Setup.


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the program’s efficiency gains from reduced dropouts relative to the counterfactual scenario without the AF.


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ANNEX 7: FIDUCIARY SYSTEMS ASSESSMENT – ADDENDUM

I. Introduction 1. The integrated Fiduciary Systems Assessment (FSA) of the Nepal SSDP was carried out by the World Bank, as part of AF Program preparation, based on the requirements of the World Bank policy and procedures for the PforR AF. Based on the analysis of available documents and working sessions with the key stakeholders, the FSA considers whether the Program’s fiduciary systems provide reasonable assurance that the financing proceeds will be used for intended purposes, with due attention to the principles of economy, efficiency, effectiveness, transparency, and accountability. It covers the Program’s institutional arrangements, FM and procurement systems, and governance systems. 2. The FSA was conducted based on knowledge of Nepal’s public procurement and FM systems in the current context of federalism. The World Bank fiduciary team met with the concerned federal government agencies including the OAG and the FCGO. The World Bank team also conducted fiduciary assessment of the select LGs (both municipality and rural municipality) as most of the SSDP activities are now implemented by the LGs. Given the capacity and system constraints at the LGs, the FSA concludes that only upon implementation of the agreed fiduciary mitigation measures, the Program’s fiduciary systems will provide reasonable assurance that the financing proceeds will be used for intended purposes. The proposed AF focusses on system strengthening at LGs through effectiveness conditions and DLRs.

II. Program Description, Institutional Arrangements, and Expenditure Framework

A. Program Description

3. The PDO of the parent IDA program is to improve the quality, equitable access, and efficiency of basic and secondary education in Nepal by supporting the Government’s SSDP Plan. The proposed AF will not include a change in the original PDO or the three results areas. The program boundary and the results area will remain unchanged. The proposed AF would help the GON reduce its financing gap in supporting SSDP activities and help complement capacity and system strengthening activities. The AF, however, would entail adding selected new DLRs and introducing a new DLI within the existing program boundary. The proposed AF will be for a three-year operation (2018–2021) and the design will be aligned with SSDP PRF targets. It would be directly tied to activities related to support LGs in quality service delivery with a view to protect and enhance education service delivery with strengthened controls during the ongoing federal transition.

4. The AF comprises two parts: (a) a fixed part (60 percent of the total grant) based on the country’s compliance with the three eligibility requirements—having a credible education sector plan, commitment to financing the sector plan, and availability of critical data for sector monitoring and analysis—and (b) a variable part (40 percent of the total grant) conditional on achieving the targets for three pre-identified ‘stretch’ indicators associated with equity, quality, and efficiency in the education sector.


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B. Institutional Arrangements

5. The SSDP will use the government system (federal and local) for program implementation, oversight, FM, procurement, environmental and social systems, M&E, and reporting arrangements. The MOEST will serve as the executing agency and will have overall responsibility for policy guidance and oversight for program implementation. The newly established CEHRD will serve as the main implementing agency. In addition to preparing ASIPs and AWPBs, the CEHRD will provide oversight and technical support to LGs in carrying out program activities.

C. Expenditure Framework

6. The Program’s Expenditure Framework (PEF)57 will be entirely funded through the GON’s National Budget and will be implemented through the use of the GON’s systems, both federal and local, with regard to budget preparation and execution, cash management, accounting, financial reporting, internal controls, and external audits. The federal government budget is considered a credible predictor of actual expenditures because the difference between actual and original budgeted expenditure is generally below 5 percent. The activity-based budgeting has commenced with LMBIS from FY2018/19, including for the fiscal transfers in the form of conditional grants transferred to the LGs, which constitutes significant amount of the SSDP activities, which are implemented by MOEST/CEHRD. However, the procedures for LGs reporting on the conditions met/activities implemented under the conditional grants are not yet established. While the activity-based classification in the budget framework of the federal government is in place, lack of systems and procedures in the federal context do not yet allow for execution monitoring of the budget proceeds.

7. The World Bank proceeds will be transferred to the GON’s consolidated fund (the General Fund) at the Nepal Rastra Bank (NRB) and fund the execution of the GON’s budget. The IMF safeguards assessment mission of 2017, while making important recommendations to improve the internal control framework of the NRB, has not indicated that specific safeguards measures would be required.

8. At the end of the SSDP, any amount exceeded by the total DLI disbursed amount by the World Bank compared to the total expenditures incurred under the defined Program minus other donors’ contributions will need to be refunded to the World Bank. According to the FY2018/19 approved budget, a total of NPR 7,555.6 million has been provided under the SSDP source against 350140 SSDP - central level. Under the same, 26412 Conditional Recurrent Grant NPR 882.7 million and 26422 Conditional Capital Grant NPR 793.6 million have been provided. Out of this, NPR 5,452.6 million is from the Government, NPR 1,038.8 million and NPR 1,064.2 million is from Donor Grant and Credit source, respectively. A large share of SSDP budget is released to LGs through the Ministry of Federal Affairs and General Administration (MOFAGA). Information about provincial- and local-level allocations through MOFAGA were collected from the CEHRD planning sections and is recorded in table 7.1. The detailed breakdown of each head released to MOFAGA will be further confirmed and made consistent with table 6.2 once the AWPB under finalization is shared.

Table 7.1. SSDP Budget Allocation for FY2018/19, NPR

57 A complete description of the PEF is found in annex 4 and is not repeated here.


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Budget Headings

New Budget

Headings

Name of the Activity

Local Level Allocation

Province Level

Allocation

Center Level Allocation

TOTAL

350016-3

350016

Basic and secondary level teacher salary grant

59,915,919,000

59,915,919,000

350017-3

350023-4

350140-3 350140 SSDP Center 7,555,600,000 7,555,600,000

350140-4

350023-3 350806 SSDP District 25,202,239,000 267,150,000 25,469,389,000

350806-3

350806-4

TOTAL School Sector Budget 92,940,908,000

TOTAL SSDP Budget excluding teachers' salary 33,024,989,000

III. Program’s Fiduciary Performance and Significant Fiduciary Risks

A. Financial Management Systems

9. The Program’s FM implementation arrangements have been assessed to evaluate the capacity of the implementing agency to record, control, and manage all Program resources and produce timely, understandable, relevant, and reliable financial information for stakeholders.

Program Planning, Budgeting, and Transparency

10. Nepal’s education budget is based on an item-based administrative classification complemented with an economic classification. With the introduction of LMBIS from FY2016/17 for budget preparation, efforts for function/activity-based budgeting have been initiated. This better links budget allocations to policy targets and is thus expected to improve monitoring of expenditures in relation to budget/cost effectiveness and efficiency. However, as the activity-based budgeting is not yet extended to accounting, reporting, and monitoring, the advantage of such a budget framework is yet to be realized.

11. In the federal context, the SSDP budget spread among 761 government entities including MOEST and CEHRD, and approximately 28,000 community schools is a significant challenge during the planning and budget preparation phase. The budget for fiscal transfers to LGs, that is, conditional grants for the SSDP specifying each activity to be spent on, was prepared at the ministry level with no inputs from the LGs as LGs were in the process of being operationalized at the time of budget preparation. Upon development of systems and capacity at LGs, it is expected that fiscal transfers for the SSDP may flow in the form of an unconditional grant, that is, equalization grant. The effective budget planning and preparation based on MTEF at LGs’ level may take significant time to be realized given the capacity constraints. Even at the federal level, the annual budget continues to be prepared on an incremental basis without sufficient consideration for sector strategies and results reflected in the MTEF. These issues will be addressed to some extent during the SSDP implementation in the annual budget preparation of the MOEST with revised estimates based on program results/policy targets. Also, data available for teachers and students in the EMIS, which is fed at the school level, will greatly enhance quality of budgeting and


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planning. This will be encouraged in SSDP implementation along with institutionalizing the web-based EMIS data.

12. The SSRP financial and physical projections were made using Excel sheets and no standardized model was used. The SSDP intends to strengthen the MTEF process and make physical and financial projection more credible. The MOEST/CEHRD capacity will be developed for this.

13. Most expenditure under the SSDP will go toward salaries and remuneration (estimated 65.3 percent), followed by Program costs (27.2 percent) and management and administrative cost (7.4 percent). Under Program costs, the main costs include civil works (5.3 percent), textbooks and learning materials (6.7 percent), and scholarship and incentives (6.0 percent), accounting for an estimated 18 percent of total SSDP costs. The budget estimated for training and capacity development of staff, managers, and teachers amounts to only 2.7 percent of the total. In addition to fiscal transfers, LGs also allocate additional budget to school development from internally generated resources. The SMC is involved in planning, management, and raising additional resources (not reflected in government budget and execution report) from the community as the GON resources are not sufficient for school development. While the OAG audit covers all the ministry-level and LG-level expenditures under the GON funds to individual schools, provision of school-level social and financial audits cover the audit of all funds/expenses at schools. Given the changed context, a grant management system that incorporates required controls including monitoring and reporting requirements will be developed for LGs. The important control measures such as social and financial audits, as required by law, will be strengthened further. The proposed AF includes DLRs on public disclosure by LGs of the tranche released to schools and expenditures incurred (by LGs/schools related to the SSDP) as per the Grant Management Guidelines.

Program Accounting and Financial Reporting

14. The FSA identifies major weakness in recording and reporting of SSDP expenditures given the changed context of significant expenditures being incurred at the LGs level. The MOEST has access to the Treasury Single Account (TSA) data, but the activity-based budget approved in LMBIS is not yet linked to or configured in the TSA. Thus, the disbursement to LGs from the federal government is only captured as conditional grant for the SSDP - central level. Consequently, the LGs are also reporting back the total conditional grant amount without disaggregating. The recently enacted Appropriation Bill for FY2018/19 does include provision for LGs to report back on the details on implementation period, status, and incurred expenditures for conditional grants. Apart from the one-fourth amount to be disbursed to LGs at the beginning of the year, subsequent disbursements are to be based on the details provided by the LGs to the DTCO on a trimester basis. However, the GON is yet to develop procedures for implementing this legal requirement. The development and implementation of such procedures by the federal government ensuring reporting by LGs of intended purpose usage of the Program funds is proposed as an effectiveness condition of the AF.

15. For the federal-level expenditures, the TSA can track expenditures incurred as per the economic classification. However, the challenges of reconciliation between the FCGO (TSA data) and MOEST/CEHRD accounts continues mostly due to the manual accounting and reporting system of the MOEST/CEHRD. It has been agreed to implement the FCGO-developed Computerized Government Accounting System for the Central Government in the MOEST/CEHRD from the current FY2018/19. The development of the plan for


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implementing the Computerized Government Accounting System was one of the DLRs in the Parent IDA program, which is already met.

16. The FCGO has developed a web-based budgeting, accounting, and reporting system for LGs, named SuTRA. Around 250 LGs out of 753 have implemented SuTRA. As SuTRA is based on the revised Chart of Accounts and produces reports as per FCGO requirements, it was noted that unless the remaining LGs also implement SuTRA, it will take time for the federal government to obtain timely required information from LGs given their manual accounting or accounting system that does not produce reports as per FCGO requirements.

17. At the school level, most school accounts are prepared manually with a simple consolidated income and expenditure statement produced end of the year. From FY2018/19, LGs are expected to obtain periodic information from schools to enable reporting to DTCOs on trimester basis in the required format. In institutionalizing this, in addition to the procedures to be developed by the MOF, it is important to include such provision in the Grant Management Guidelines of LGs.

18. The FCGO manages the consolidated fund of the Government at NRB (central bank of Nepal) through a network of DTCOs. The DTCOs make the payments based on the government entities’ payment instructions and maintain accounts thereof in the TSA system computerized throughout the country. The accounting information is centralized at the FCGO, which produces consolidated annual financial statements of the State. These annual financial statements are published on the FCGO website. Although activity-based expenditure information is not yet produced by TSA, budget and accounting information has become more transparent after the implementation of Government Finance Statistics (GFS) classification and the TSA. Progress has also been made in piloting the Nepal Public Sector Accounting Standards in some of the ministries, which are compliant with international financial reporting standard (cash-based IPSAS). The rollout of the Nepal Public Sector Accounting Standards in the MOEST will be supported under the SSDP.

19. At the end of the Program, timely reconciliation of accounts/records will be ensured, supported by the TSU at the CEHRD, including for settlement of accounts and refund to the World Bank if required.

Treasury Management and Funds Flow

20. Line ministries are provided reliable information on commitment ceilings in advance, at least quarterly. Rule 32 of the Financial Procedures Regulations, 2007 states that after the enactment of the Appropriation Act, the Finance Secretary will send the budget statements and authorization letter to the secretaries of ministries, and the secretaries of ministries will send to departments and offices similar authorization letters, approved programs, sources of expenditure, and detailed line items within 15 days of receipt of the MOF authorization. Priority 1 projects (80 plus of total budget) are assured one-third of funds from the approved budget on the very first day of the fiscal year and expenditure funds are replenished on the day the statement of expenditure is submitted to the DTCOs. Likewise, for Priority 2 and Priority 3 projects budget lines are assured one-sixth or an amount equal to two months of the approved budget value.

21. Upon enactment of the Appropriation Act by the parliament, a statement of programs and projects with the ceiling of the budgeted amounts (the Red Book) is issued simultaneously. The Red Book provides


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ministries with reliable indication of actual resources available for commitment more than one and half months in advance.

22. There are transparent legal provisions for adjustment and virement from one budget heading to another and one source of financing to another. Nevertheless, the amount and number of in-year budget transfers is significant, as evidenced by the 2015 PEFA assessment.

23. Substantial progress has been achieved in the last few years with regard to treasury management and funds flow in Nepal with the implementation of the TSA system. This system has reduced the number of bank accounts controlled by the Government (from 14,000 accounts for 4,500 cost centers to around 400, controlled by DTCOs) and integrated them into a TSA. This allows for real-time monitoring of budget expenditures and the monthly publication of budget execution reports on www.fcgo.gov.np/publications. All budgeted public expenditures are captured across all the districts. The TSA comprises a revenue collection module (RMIS) now covering more than 90 percent of government budgeted revenues. This system is IT based and has strengthened ex ante budget controls, the credibility of budget execution data, and the knowledge of Treasury cash position and forecast. The introduction of commitment recording will further strengthen cash forecasting, planning, and budgeting.

24. Fiscal reports are publicly available; however, the fiscal reports are not comprehensive and many autonomous government agencies and donor projects operate outside the government budget and accounting framework. This is also the case for the education sector where some portion of donor funding for government projects are not captured by the government budget and disbursed outside the government Treasury system, that is, disbursements made directly to project accounts operated by the government agencies directly without passing through the TSA revenue accounts.

25. For budget execution, the flow of funds is entirely under the control of the FCGO. Line ministries, such as the MOEST, send payment orders to the DTCO, which processes payments through its network. In case of SSDP activities to be implemented by LGs, starting from FY2017/18, DTCOs make conditional grant payments to the LGs based on approved budget on trimester basis, hitherto without any utilization report from LGs except for the total conditional grant expenditure amount. The LGs disburse the same to the concerned schools based on their payment request, which is also without any utilization report from the schools. LGs maintain a record of teachers and students in the form of EMIS, based on which payments are made to schools’ bank accounts. The school then makes transfers from the school bank account to teachers’ bank accounts or withdraws cash for direct payments to teachers/students who do not have bank accounts.58 The payments to vendors are usually done through checks by schools.

26. It is noted from the OAG audits that schools in some cases do not follow the rules or purpose for which they received the grant. Unspent balances of a grant from one year to another appear to be treated as unconditional for purposes of expenditure. GON has agreed to work with LGs to establish grant management unit (GMU) within each LG. MOEST will request LGs to assign responsible agent to monitor and report on grants. CEHRD is developing guidelines for grant management.59 In addition, the FM Unit within the CEHRD will be strengthened for overall financial monitoring of SSDP and ensuring timely

58 During the time of this assessment it was estimated that more than 80 percent of teachers have bank accounts and the target is to have all teachers receiving their salaries through bank transfers. 59 MOEST. Presentation- Transitional Roadmap for the Implementation of the SSDP in the Federal Setup. October 2018.

http://www.fcgo.gov.np/publications


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implementation of recommendations from the OAG and other agreed actions. Potential of establishing decentralized monitoring units in District Coordination Committees is being explored by the federal government, which will be clarified in the MOEST’s transition plan.

Program’s Internal Controls, Including Internal and External Audit

27. While there is no national framework especially for internal controls in the public sector in Nepal, there is comprehensive set of financial regulations guiding budget execution that includes elements of internal controls. However, weaknesses in enforcement of these rules, largely due to lack of accountability as well as capacity constraints at the CEHRD have created challenges in maintaining fiscal discipline and compliance with these regulations. The capacity and systems constraints at the LGs’ level have now exacerbated the challenges. The expenditure management does not provide for sufficient ex ante controls to prevent expenses from being incurred in contradiction with the legal and regulatory framework. The DTCO internal audit function for the federal level is an ex post sample testing of the existence of supporting documentation (invoices and so on) available at cost centers in support of the payment requests processed by the DTCO. This ‘inspection’ takes place infrequently due to capacity constraints of the DTCO. In addition to frequency and quality of internal controls, the institutional arrangement with limited segregation of duties for internal audit under DTCO which also functions as payment processor presents challenges on integrity of control function of the internal audit. For LGs, internal controls and internal audit functions are yet to be developed. LGs are in the process of adopting the model financial procedures issued by the MOFAGA. However, they are generic and not sector specific. To address this, it is specified in Provision 1.2 of the model ‘Local level Budget Preparation, Implementation, Financial Management and Asset Transfer Directives, 2074’ that for conditional grants, the local level will coordinate with relevant units under them (schools in this case) and the district office to spend for the specified purpose, the details of which will be provided by MOFAGA in coordination with the relevant ministry. Therefore, this detailed sector-specific guideline is required to be issued in coordination of MOFAGA, MOEST, and FCGO. It has been agreed that these guidelines will be issued by December 31, 2018. To ensure implementation of these by LGs, the federal government will include these requirements in the Guidelines of the Conditional Grants to LGs.

28. Given the various challenges in the sector and the nature of program interventions that disburses funds and resources to a large number of beneficiaries, some of the SSDP expenditures are reported as questionable by the OAG in its annual audit reports. The recurring observations from the past OAG audit reports include the following:

(a) Excess salary payment to teachers—for teachers who have already retired and in excess of entitlements

(b) Significantly delayed work completion certification for construction and repairs/maintenance of schools

(c) Noncompliance of procedures for distribution and monitoring of scholarships

(d) Excess disbursement for free textbooks

(e) Conditional or earmarked grants to schools not used for the intended purpose


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(f) Expenses incurred without adequate supporting documentation often related to travel, workshops and training as well as stationery and other inputs at school level.

29. On the positive side, the latest audit reports since FY2014/15 show significant progress. For example, the audit opinion is not qualified unlike in the previous years, the number and nature of audit observations have decreased from the previous years (for example, there are no audit observations on nonexistent ‘ghost’ schools and per capita funding), and a large portion of the audit observations raised in the previous fiscal years has now been settled (these include settlement of excess salary payment to teachers, textbooks and other per-capita grants). The audit report of FY2016/17 was also received within the due date of nine months from the FY end and there is no audit report overdue. While this reflects efforts made toward improving fiduciary systems, much remains to be done to address identified risks reflected in the recurring audit observations on excess salary payments, excess payment for textbooks, scholarships, and non-availability of work completion reports. These risks have become more pronounced in the federal context while the parent IDA program has reduction of audit observations has one of the DLIs. Capacity constraints at the central level, particularly for monitoring and supervision, are also a major weak area given the increase in number of implementing agencies. The capacity building at the central level is also one of the DLRs in the SSDP.

30. The proposed AF has made special arrangement to address the above challenges on fiduciary management at the LGs by having the LGs incorporate the required controls in their Grant Management Guidelines, which is one of the DLRs. LGs will only make tranche payments to schools based on verification of compliance with the provisions of the Grant Management Guidelines, which should include the following:

(a) Verification of eligible schools, teachers, and students’ data in EMIS.

(b) Reconciliation of EMIS and Teacher Record Office (TRO) data. The federal government will share TRO data with each LG for reconciliation purpose.

(c) Verification of teachers’ salaries paid into bank accounts to the extent possible (in consideration of remote location of schools). The field created in the EMIS for entering ‘Teacher’s Bank Account No.’ should be duly used for this purpose.

(d) Review of expenditures incurred by schools (for previous tranche releases) based on expenditure statements obtained from schools. A dedicated focal person will also be assigned by the SMC to coordinate the school reporting.

(e) Review of social audits and financial audits of the schools. The Grant Management Guideline should specify the periodicity and timeline of obtaining such reports.

(f) Verification should be based on physical inspection or supporting documents as appropriate.

31. Each tranche release to schools from LGs and expenditures incurred (by both LGs and schools for the SSDP) will be publicly disclosed by each LG. In addition, supporting document evidencing verification conducted by LGs before each tranche release will also be publicly disclosed by LGs. This requirement is included in the proposed AF’s DLR. To ensure implementation of these by LGs, the federal government will


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include these requirements in the Guidelines of the conditional grants to LGs. In addition to this, financial management capacity building in federal setup including of LGs and schools is one of the key areas of the DP mobilized joint TA support.

Program Audit

32. The OAG conducts financial audit of all federal and local government expenditures. It also conducts random performance audits. These performance audits are reported in the annual report of the OAG. As per the JFA and parent IDA program, the audit report for the SSDP is to be submitted within nine months from the end of the fiscal year. The same will apply for the AF. This timeline was met in the last fiscal year audit of 2016/17. However, given the present context of the SSDP being implemented by LGs and audit of LGs to be completed for a consolidated SSDP audit report, it is noted that the completion of audit may take time. The World Bank will closely monitor and follow up with the OAG for timely audits. The OAG capacity-building initiatives on risk-based audits financed by the PFM Multi-donor Trust Fund (MDTF) are also expected to reduce audit time in the long term. The OAG has agreed to provide audit opinion on the consolidated SSDP audit report incorporating findings of all SSDP-related expenditures incurred by LGs. The audit will also report on the intended purpose utilization of the funds and the eligibility of expenditures incurred as defined in the Program.

B. Procurement Systems

Arrangements for Procurement under the Program

Legal Framework

33. The CEHRD is responsible for overall procurement management under the SSDP, including procurement planning, implementation, supervision, reporting, and database management. The CEHRD’s procurement is governed by Nepal’s Public Procurement Act (PPA0, 2007), Amendment-1 and Public Procurement Regulations (PPR0, 2007) made thereunder. The Public Procurement Monitoring Office (PPMO) is responsible for procurement policies and oversight of all procurement agencies including the CEHRD/MOEST. Under the present legal framework, open tender is mandatory for procurement of goods, works, non-consulting, and consulting services above NPR 2 million (for medical equipment, above NPR 5 million), whereas sealed quotations are permitted for procurement up to NPR 2 million (for medical equipment, up to NPR 5 million). The CEHRD has to follow these regulations as well as any other directions of the PPMO.

Procurement Planning

34. Because of the federal structure and devolution of expenditure authority to the lower-level governments (provincial and local-level governments), volume of procurement will be substantially reduced at the center (CEHRD). Under the Program, the CEHRD will prepare a Consolidated Annual Procurement Plan (CAPP). The Procurement Unit at the CEHRD coordinates the preparation of the CAPP, based on procurement needs of the CEHRD and other central line agencies). The Program and Budget Section and Financial Management Section of the CEHRD and respective CLAs play a key role in preparing the program’s AWPB and once the AWPB is finalized, necessary changes are made in the CAPP. The final


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CAPP is then submitted to the PPMO, which publishes it on its website. The CEHRD also publishes the CAPP on its website.

35. IDA PforR exclusions. The Program (PforR-supported activities) will exclude activities that involve procurement of (a) works, estimated to cost US$10 million equivalent or more per contract; (b) goods, estimated to cost US$5 million equivalent or more per contract; (c) non-consulting services, estimated to cost US$5 million equivalent or more per contract; or (d) consultant services, estimated to cost US$3 million equivalent or more per contract. In addition, the Program will exclude activities that are likely to have significant adverse impacts that are sensitive, diverse, or unprecedented on the environment and/or affected people, and that involve reconstruction of schools in 31 earthquake-affected districts by the National Reconstruction Authority.

Major Observations on the CEHRD’s Procurement Management

36. Based on the experience of the parent IDA program implementation at the CEHRDC, formerly the DOE, the following main issues have been identified.

Structural Weakness

37. The Procurement Unit within the CEHRD is led by a Deputy Director of the General Administration Section, who is an administration professional. Director General and Deputy Director Generals are education professionals. All other officers working for the Procurement Unit are also administration professionals. Over the period of implementation of the SSDP parent project, it has been observed that all these professionals working for the Procurement Unit did not have adequate procurement knowledge, experience, and skills. Though the parent IDA program and the proposed AF do not have procurement intensive operations, timely preparation of CAPP has always been an issue. Considering the role of the CEHRD in managing entire procurement for the program, there is a need for an experienced procurement professional. Civil servants, by nature, are not considered to mandatorily have procurement knowledge and experience. Also, they are being transferred regularly and in some cases, very frequently, and by the time they gain some procurement knowledge and experience they get transferred. To manage this situation and mitigate the risks, outsourcing of a procurement expert with intermittent input is a must to provide continuous procurement support to CEHRD/Procurement Unit.

Delays in Procurement Decisions

38. Finalization of the CAPP itself takes considerable time. Similarly, procurement decisions at every level are delayed for various reasons. There is no procurement monitoring system to see whether timely decisions are taken or not. It has been observed that a number of procurement items are bunched in the last quarter of the year.

Management of School Physical Facilities Implemented by the CEHRD

39. Selection of schools and allocation of SPFs. Based on EMIS data, the CEHRD prepares the AWPB and allocates budget for construction of SPFs, which includes construction of classrooms and toilets, supply of classroom furniture, and repair and maintenance of these facilities. Budget is allocated for LGs and each LG releases budget to schools, which are selected based on the approved criteria and procedure mentioned


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in the centrally prepared Program Implementation Manual. From the implementation of the SSDP and previous projects, it has been observed that there is no adequate and ready-to-refer information on the status of school-wise allocation of physical facilities and their completion status. For various reasons, including mainly delay in budget release and finalization of school selection, SMCs are facing difficulties in completing construction works within the same fiscal year. Therefore, cases of audit observations in construction works are substantial. Respective SMCs are responsible for construction and repair and maintenance of SPF based on community procurement modality at schools. Construction materials such as bricks/stones, cement, steel, wood, and others are procured locally comparing the prices in the local market within the framework of PPA/PPR. Labor required for the construction works is either managed through labor contracts or through force account method. The school has to maintain proper documentation of procured items with invoices. These invoices are checked by LG engineers/sub-engineers to verify the reasonableness of the prices at the time of certifying for payment or release of next installment.

40. Technical supervision support for SPF. LG-based engineers and sub-engineers are providing engineering support in selecting schools and supervising construction and repair/maintenance works. It has been observed that such engineering manpower is not adequate to provide timely and quality support to schools. The CEHRD has to prepare a plan for arranging engineering support to every LG based on need assessment, considering the number of SPFs in the LGs, remoteness, and geographical location. A rationalized manpower requirement should be developed for Terai, hill, and mountain regions, and manpower and budget should be arranged accordingly.

41. EMIS for capturing status of SPF. The current EMIS is still Excel based, though it was agreed to make it web based. The process should be expedited to upgrade it to an online web-based system, which can be easily done given the current level of readiness of the EMIS software. As described above, LG/district-wise list of schools with the number of allocated facilities per school should be uploaded in the MOEST/CEHRD/LGs soon after the first tranche of the budget is released. Completion status of these facilities should also be uploaded in the same manner for each completed facility. The information should subsequently be linked with the EMIS. Considering the difficulty in completing the construction work in the same fiscal year due to delays in selection of schools and allocation of SPF, it is reasonable to provide two fiscal years of time for completing SPF. Except for some special cases of multiyear construction, if any SPF is not completed within the two consecutive fiscal years, they would not be considered as completed facilities under the IDA PforR Program.

Management of SPF Implemented by National Reconstruction Authority (NRA) in 31 Earthquake-affected Districts (Outside the IDA PforR Program)

42. All SPF, except repair and maintenance as described above under CEHRD implementation, will be planned, implemented, and reported according to the procedure agreed with the NRA for the ADB and JICA-financed components. The MOEST/central level project implementation unit (CLPIU) is responsible for overall coordination and implementation management to ensuring timeliness and quality of the implementation. Repair and maintenance of SPF in schools of these districts will however be carried out by the CEHRD as mentioned above under CEHRD implementation.


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Construction of Office Buildings

43. Construction of office buildings will follow standard procurement procedures under the PPA and PPR including adequate arrangement for design and construction supervision. Procurement of construction works at province and local levels is done by respective governments using the PPMO’s eGP portal, as provided by PPMO. The CEHRD, in coordination with the MOEST, is responsible for providing procurement support and training for LGs’ engineering manpower for construction works. As an additional due diligence on quality of the construction works, it is recommended that the CEHRD or LGs carry out technical audit of such buildings in a sample basis.

Value of Procurement Done by the DOE

44. The value of procurement administered by the DOE during FY2015/16 and FY2016/17 is as indicated in table 7.2 (NPR in millions):

Table 7.2. Budget Allocation for Procurement Activities

Sl. No.

Description of Procurement Activities FY2015/16 FY2016/17

1

Procurement of goods (furniture and fixture, office equipment computers, printers, photocopiers, software and vehicles, and so on) done at the DOE level

111 149

2 Procurement of works for RED, DEO, and resource center building construction done at respective level

31 51

3 Procurement under consulting services 12 25 Total value of procurement 154 225

Source: DOE now CEHRD Note: Value of procurement done by other CLAs is small.

Table 7.3. Value of Grants for School Physical Facilities and Textbooks (NPR, millions)

Sl. No.

Description of Procurement Activities Budget Allocated

FY2015/16 FY2016/17

1 School building and infrastructure support grants (grants for SPF)

10,729 7,414

2 Grants for textbooks 1,860 1,860

3 Total grants 12,589 9,274

45. From tables 7.2 and 7.3, it is evident that the volume of procurement is far below (less than 3 percent) of the total budget in grants for SPF and textbooks.

46. Arrangement of textbook supply to schools. There is a unique arrangement for supply of textbooks to public schools. Textbooks are not procured through competitive bidding procedure. However, a government-owned printing house—Janak Education Material Center (JEMC)—and some selected private printers-distributers (PPDs) are allowed to print and distribute textbooks on the prices fixed by the


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Government. While the JEMC is free to print and distribute textbooks for all grades and in all regions, PPDs have been allowed to print and distribute Grades 1–5 textbooks across the country. This arrangement, as a recent development, has created a competitive environment among the Government and private sectors to quickly print and distribute textbooks to secure their part of the job. Though there were several issues in the past, textbook outreach to students has considerably increased in recent years (more than 85 percent of students receiving textbooks within two weeks of the start of the academic session compared to around 50 percent during EFA). To forecast the need for textbooks every year, there is a special mechanism at the CEHRD-CDC which prepares a plan for printing textbooks and a list of qualified private sector printing houses for this job. Then the CDC enters into an agreement with each of the selected PPDs, while the JEMC’s responsibilities (as a government agency) are defined in a separate document. The CEHRD, in coordination with the CDC, carries out regular monitoring of printing and distribution progress of textbooks. A 12-member monitoring team has been constituted for monitoring. The list of PPDs is updated every year depending upon their performance. Similarly, there is a mechanism under the MOEST which is responsible for fixing the retail price of each textbook for each grade.

47. Public schools obtain grants for textbooks from respective LGs based on the number of students and the schools purchase textbooks from nearby authorized book stores.

C. Fraud, Corruption, and Debarment of Contractors

48. The main objective of the integrity review, as part of the integrated fiduciary assessment, was to confirm whether the legal framework and institutional mechanisms in place would enable MOEST to abide by the ‘Guidelines on Preventing and Combating Fraud and Corruption in Program-for-Results Financing.’

49. While there are weaknesses in accountability, the review of the status of integrity systems in the sector found that there is increasing recognition within the GON of challenges posed by fraud and corruption to development outcomes. This is seen in particular in the fact that the budget for the financial year 2016–2017, presented by the Finance Minister in late May 2016, had several paragraphs devoted to anti-corruption.60 This notes that “…intensive monitoring will be made to end the improper and corrupted activities between beneficiaries and service providers…Middlemen will be under surveillance…Social awareness against corruption, recognition of zero tolerance against corruption and integrity will be promoted.” Moreover, resources will be assigned to this work, that is, “…The capacity of constitutional bodies related to investigation and prosecution will be developed. Necessary law, resource and manpower will be arranged.” This may indicate a renewed focus on these issues and suggests that resources may be assigned to this area, and to efforts to redress the weaknesses as described below.

50. The integrity review conducted during the fiduciary assessment found that there have been cases of investigation by the country’s anticorruption authority (Commission for the Investigation of Abuse of Authority [CIAA], a constitutional body) in the last few years. Receipt of grants by ‘ghost schools’ was under primary attention as it was flagged by the OAG in their annual audit reports earlier.

60 The GON, Finance Minister Budget Speech, 2016, pp 54–55, para 363–366.


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51. Local authorities. The CIAA is a constitutional body also under the new Constitution 2015. Complaints are reported in a variety of ways, including, but not limited to, in person at the CIAA main office or district offices, by mail, phone, e-mail, or through the web link to the CIAA website (http://ciaa.gov.np).

52. The fiduciary review also found that the MOEST/CEHRD does not have specific preventive mechanisms in place to identify and prevent the types of misconduct defined in the Anti-Corruption Guidelines (ACGs). Improvements in this area are envisioned over the course of implementation of the IDA PforR, given its emphasis on improving internal and fiduciary systems. The review also noted that the MOEST/CEHRD system of internal control, including provision of collecting complaints especially with respect to procurement and use of SPF grants and addressing them systematically, is not effective in preventing recurrence of identified fraud and corruption issues.

53. Ethics and code of conduct. The review did not find a system that continuously supports and monitors a code of conduct in the MOEST/CEHRD. Monitoring of complaints is however done by the General Administration Section within the MOEST/CEHRD. This needs to be further strengthened and made effective.

54. Whistleblower. There are no organized avenues for civil servants to report fraud and corruption complaints anonymously, although they can use the various channels the public uses to report complaints to the CIAA.

55. In conclusion, it would be important to agree with the Government on a modality to share with the World Bank, complaints received under the Program regarding fraud and corruption, given the weaknesses or lack of systems in this area, and the level of fraud and corruption risks at the sector level.

Summary of Significant Fiduciary Risks

56. Based on the assessment of fiduciary systems conducted in the above section, the following significant fiduciary risks have been identified for the Program:

(a) There is a weak link between policy intent reflected in activity-wise budgeting in LMBIS and reporting from LGs, which only reflects the total amount of sector-wise conditional grants spent by LGs. This results in lack of evidence for intended purpose utilization of the Program Funds.

(b) The capacity at the federal and local levels to assess the performance of the Program and manage results indicators is weak.

(c) Weakness in the internal control framework within the federal level, with non-existent internal controls at LGs, poses a risk that World Bank proceeds might be expensed in contradiction with the legal and regulatory framework.

(d) In particular, the complexity of the SSDP expenditure framework, with 761 cost centers and approximately 28,000 community schools and the lack of sufficient accountability mechanisms, is a risk. Federal parliamentary oversight and the capacity of the PAC remains fragile while the local parliamentary oversight is yet to be established.

http://ciaa.gov.np/


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(e) Low capacity of the unit in charge of the MOEST/CEHRD procurement.

(f) Inadequate and in some cases no capacity of LGs in providing engineering support to schools.

(g) Some provisions of the country’s public procurement law and legal framework have posed risks due to the requirement for increased performance security, contract termination, and recovery amount from the contractor, works procurement without qualification criteria up to the specified threshold, and so on.

57. Fiduciary systems also present elements of strengths that will constitute a sound basis for the program, which will be complemented by capacity building measures:

(a) A sound government budget process with regard to timeliness, classification, and execution control by Treasury

(b) Transparency of the budget process with monthly budget execution reports published on the FCGO’s website and timely production and publication of budget documents and annual financial statements

(c) A systematic external audit of federal and local government expenditures, including in the school sector, by an independent OAG and an increasing capacity of the OAG to conduct performance audit

(d) Functional e-GP system of the Government which provides single portal for all public entities and accessible to all national and international bidders contributing to enhanced transparency, fairness, and competitiveness in bidding

IV. Mitigation Measures and Monitoring of Fiduciary Performance

58. The federal fiduciary systems are generally in line with international standards with regard to budget process and transparency. The challenges are mainly at the LGs’ level with significant SSDP activities to be implemented by the LGs. DLRs 1.8, 1.10, and 1.11 under the AF aim to address fiduciary risks described above and serve as robust mitigation measures to institutionalize fiduciary systems and capacity. The implementation of this will provide reasonable assurance that the financing under the Program will be used for the intended purposes as follows:

(a) Development and implementation of the procedures by the federal government as effectiveness conditions in the AF for ensuring reporting by LGs on the intended purpose utilization of Program funds.

(b) Incorporation of required controls for LGs in the Guidelines of the Conditional Grants issued by the federal government.

(c) Incorporation of required controls in management of tranches to schools by LGs will be ensured by incorporating in the Grant Management Guidelines, implementation of which by LGs is proposed as a DLR in the AF.


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(d) All types of procurement of works are carried out using the model bidding documents acceptable to the Association.

59. Nevertheless, considering the existing weaknesses in Program fiduciary systems and the time and effort required to implement the above mitigation measures, the residual fiduciary risk rating for the Program is rated Substantial.

Mitigation Principles

60. The assessment suggests the following mitigation principles for Program implementation.

• The procedures developed and implemented by the federal government for LGs reporting back on the conditions met/activities implemented will ensure intended purpose utilization of the Program funds. This, being a prerequisite of AF and the parent IDA program, has been proposed as an effectiveness condition. Also, the OAG’s financial and performance audits will provide assurance of intended purpose usage and eligibility of expenditures incurred.

• Fiduciary capacity building at all levels (including for monitoring and supervision) - federal, local, and school: TSU for supporting the MOEST and CEHRD; GMU at each LG and dedicated focal person for each school assigned by SMC to coordinate the school reporting.

• The required controls in LGs will be ensured by the Guidelines of the Conditional Grants issued by the federal government. As the grants to LGs are based on conditions, the conditions/activities will be added to ensure establishment of required internal controls in LGs.

• For tranche releases from LGs to schools, Grant Management Guidelines with required controls developed and operationalized by the GMU at each LG will ensure eligibility and timely reporting of all expenditures (salary and non-salary by schools).

• Establishment of a Fiduciary Management Committee chaired by the MOF, including key stakeholders of the MOEST as well as the FCGO and IECCD in the MOF and representatives from the OAG as required. The PEFA Secretariat will have a key role in ensuring coherence between the fiduciary strengthening program of the MOEST and PFM reforms led by the MOF. This committee will meet once in 4 months in a year. It will provide strategic guidance and monitor progress including that of the agreed mitigation measures (DLRs).

• A system to share with the World Bank the complaints received under the Program regarding fraud and corruption agreed with the Government.

• Preparation of a plan for arranging engineering support to every LG by the CEHRD based on need assessment considering number of SPFs in the district, remoteness, and geographical location. A rationalized manpower requirement should be developed for Terai, hill, and mountain regions. The plan should be approved by the CEHRD and manpower and budget should be arranged accordingly (MOEST/CEHRD and MOF).


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• Outsourcing procurement expert with intermittent input (CEHRD).

• Upgradation of the current Excel-based EMIS to online web-based EMIS. The list of schools with the number of allocated facilities per school is uploaded in the LGs’ MOEST/CEHRD websites soon after the first tranche of the budget is released by the LGs and DTCOs, respectively. Completion status of these facilities should also be uploaded in the same manner for each completed facility. This information is made public through appropriate arrangements so that people can access the information and make their comments and complaints.

61. The above risk mitigating measures will be included in Grant Management Guidelines, implementation of which by LGs is proposed as a DLR in the AF. The implementation of these requirements by LGs will be ensured by including such provisions in the Guidelines of the Federal Government for Conditional Grants to LGs.


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ANNEX 8: ENVIRONMENT AND SOCIAL SYSTEMS ASSESSMENT – Addendum

1. The AF builds on past engagement and is in line with the parent IDA program. The original PDO would remain unchanged. The AF will include adding selected new DLRs and introducing a new DLI on efficiency, equity, and learning within the existing DLI framework and program boundary. Considering the unchanged objective, scope, and activities of the AF, the environmental and social impact will remain the same.

2. According to the World Bank’s policy, an ESSA was conducted for the parent program. The ESSA assessed the authority and organization capacity of the key implementing agency, that is, the then DOE, now CEHRD, and identified gaps and opportunities to strengthen the system. Although the environmental and social impacts are low, the ESSA identified systemic gaps with regard to establishing institutional mechanisms and arrangements for implementation; allocating budgets, coordination, and monitoring; and enhancing institutional capacity through training and better guidelines. The ESSA identified action plans for improving environmental and social management of the program, which are updating of existing EMF and SMF implemented for World Bank-funded project SSRP, establishment of environmental and social due diligence procedure; establishment of safeguard desk at the CEHRD; Grievance Redressal Mechanism monitoring, evaluation, and audit arrangements; provision of environment and social budget; capacity building/training; and so on.

3. The change in the institutional arrangement in federal setup has created new challenges in the already weak capacity of the Program for the implementation of environmental and social safeguard activities. The assessment also builds on field visits and interactions with the local stakeholders including urban and rural municipalities. Although there is lack of clarity in functions and functionality of the sector, the review team noted that the newly formed CEHRD will have a monitoring unit at the federal level which will monitor the safeguard activities of the SSDP. At the provincial level, the Education Unit of the Ministry of Social Development will be responsible for technical backstopping and development of standards and tools, and roster, including safeguard compliance. At the district level, the EDCU will provide on-demand technical backstopping support to LGs and facilitate implementation of federal-level policies at the local level. However, it was revealed that there is a lack of clarity on the roles and responsibilities with regard to the implementation and compliance monitoring of environment and social safeguard procedures within the institutional arrangement recently formed in the federal setup.

4. Although some aspects of environmental and disaster requirements interlinked with civil constructions are included in the preparation of the SIP, it was noted that subnational governments generally are not aware of the environmental and social safeguards requirements of the SSDP. The capacity of the LGs appears to be inadequate both in terms of human resource and knowledge to address the safeguard issues. An effective communication strategy and capacity building of the subnational government staffs with adequate budget for monitoring are critical for the effective implementation of safeguard provisions in the AF.

5. The existing EMF and SMF needs revision to reflect the changed federal context. The executive summary of the EMF/SMF needs to be translated into Nepali and publicly disclosed. Other tasks to be completed are (a) preparation of environment and social safeguards monitoring tools, (b) preparation of training programs/schedules for relevant stakeholders at national and subnational levels, and (c) inclusion


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of EMF and SMF requirements in the Program Implementation Manual. To expedite the preparation of the AF, the MOEST/CEHRD will complete these tasks before the Decision Review Meeting followed by appraisal.

Lesson learned from previous programs 6. The bank’s longstanding partnership in the education sector through SWAp program such as EFA (2004-2009) and School Sector Reform Plan (SSRP) (2009-20016) shows that Ministry of Education (MOE) has provision of institutional arrangement for implementation of project activities including environmental and social safeguard management which include: i) monitoring of infrastructure construction activity in school by engineers and sub-engineers including the use of more than 20 typical school designs; ii) the Planning and Monitoring Section of DOE is responsible for overall SSD Plan implementation, supervision and monitoring including Environment and Social Management requirements. The information obtained through the physical monitoring were documented in the status report produced every year.

7. As a continuation of the earlier programs and implementation, in SSDP there was provision for monitoring and verification of self-reported data of school construction including environmental and social aspect, and documents were in place. Considering the school infrastructure needs after the April/May 2015 earthquake, an alternative arrangement for school construction was adopted by the MOEST/CEHRD in close coordination with the NRA in the 31 highly earthquake affected districts. Central and district level Project Implementation Units were established. While this arrangement had reduced the construction related burden of CEHRD in the 31 districts, regular and small construction and refurshiments are being taken care of by CEHRD directly. However, implementation has been weak due to the effect of other overlapping external situations that emerged at the same time due to federal transition and the new constitutional arrangement. This led to lack of clarity in roles and responsibilities of the government counterparts for reporting and monitoring despite the DOE/ CEHRD systems being in place. Also, the delays in reappointment and deputation of trained officials to LGs further negatively affected the capacity to implement the agreed provisions. Nevertheless, with the improving clarity in the institutional arrangements, and roles and responsibilities of the officials in the federal setup, it is expected that the agreed plan of action will now be put into implementation. The AF also has a strong component for capacity building, growing coordination and facilitation procedures, and commitment for implementation of environmental and social instruments. This will help to sustain school infrastructure development program in future.

8. Climate and disaster risk. Nepal is exposed to a wide range of hazards, including earthquakes, floods, landslides, droughts, and glacial lake outburst floods. The Disaster Risk Resilience (DRR) sub-results area under the parent IDA program aims to enhance schools’ physical infrastructure and provide children a safe, secure, and conducive learning space. The SSDP builds on the existing school safety framework and strengthens soft components of school safety (for example, curriculum integration, teacher training, communication, school drills, and DRR in SIPs) and the need-based maintenance and retrofitting of school buildings. Hence, the overall risk to the intended Program outcome continues to be low to moderate.

9. Gender. Nepal has made impressive gains in education with gender parity in NER achieved at both basic (Grades 1–8) and secondary (Grades 9–12) levels. The survival rate to basic education (Grade 8) for girls is 77.4 percent which is higher than that for boys at 75.9 percent. The percentage increase in survival rate of both boys and girls in basic education can be attributed to a series of enabling strategies adopted


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by the national-level programs such as the SSRP, SSDP scholarships and incentives, girls scholarship, girls toilets, and water, sanitation, and hygiene (WASH) facilities. At the secondary level (Grades 9–12), the data show that the enrolment of girls is higher than of boys, which can be attributed to various socioeconomic factors, including high tendency of boys seeking overseas employment, whereas girls continue in schools in community schools at local levels. Unlike the basic level, the survival rate of all students in secondary education (Grade 12) is low at 11.5 percent (baseline: 2015–2016), with more girls dropping out early than boys. Lower survival of girls than boys in secondary and higher-secondary levels can be attributed to early marriage and discontinuation of schooling post marriage and parent’s preference over boys to girls in continuing higher education as per their financial position. However, due to the lack of gender-disaggregated data of the survival rate to Grade 12, the exact gender gap is not available.

10. The AF will continue to support the interventions of the parent program related to access, equity, and learning outcomes at both the basic and secondary levels. The AF will continue to provide girls scholarships at the basic level to maintain the current percentage increase in the retention rate of girls, to be able to achieve the target at the end of the program. The pro-poor scholarship at the secondary level will help increase the retention rate of both boys and girls in secondary education and with allocation specifically for girls in addressing the gender gap in retention rate. The pro-poor scholarship is considered more efficient in supporting need-based students, often girls from poor and marginalized households, to continue secondary education and their retention. The AF will continue to support the parent program in increasing the survival rate to Grade 12 from 11.5 percent to 25 percent by the end of the program with equal increments both for girls and boys. Additionally, the parent program also supports pro-science scholarships for girls to encourage more girls to pursue secondary-level education in science. This will allow the girls to be more competitive for employment in the high demand science, technology, engineering, and mathematics (STEM) sector. The AF will also support improving NER in basic and secondary education in 15 most disadvantaged districts, disaggregated by gender. The AF will further support in enhancing the current EMIS to collect and report gender-disaggregated data for more efficient targeting to reduce inequity and improve the education outcomes for girls. Key gender-related activities/interventions are (a) girls scholarship at basic level and pro-poor scholarship at secondary level with preferential treatment for girls; (b) measurement of PDO Indicator 3: Survival rate to Grade 8 and Grade 12 (disaggregated by gender), and PDO Indicator 4: measurement of NER in basic and secondary education in 15 most disadvantaged districts as ranked in the equity index disaggregated by gender); and (c) strengthening of the EMIS.

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.

ANNEX 5: MODIFIED PROGRAM ACTION PLAN

Action Description DLI# Responsibility

Timing Completion Measurement

Action

Capacity building of LGs for planning, monitoring and reporting including for SSDP as per reporting requirement of the Appropriation Act, for preparation and implementation of Grant Management Guideline, and the implementation of EMF/SMF

MOEST/CEHRD

Recurrent YEARLY Annual reporting indicating number of capacity building events carried out.

New

CEHRD to submit SSDP federal level audited account incorporating audit findings of the local level implementation of SSDP

CEHRD Recurrent YEARLY Annual audited financial statement of SSDP and Annual Report

New

Implementation and monitoring of Grant Management System at LGs consistent with the Grant Management Guidelines

CEHRD Recurrent YEARLY Quarterly/ Trimester/ Annual Reports

New

LGs’ upwards reporting about utilization of Program funds on intended purpose

CEHRD Recurrent YEARLY Quarterly/ Trimester/ Annual Reports

New

Revision of the EMF and SMF/VDCF to reflect the changed implementation arrangement in federal set up

CEHRD Due Date 30-Nov-2018

Revised EMF and SMF

New

Inclusion of EMF and SMF in the CEHRD SSDP Program Implementation Manual for regular follow ups at Province and Local levels for implementation of EMF/SMF

CEHRD Recurrent YEARLY SSDP Program Implementation manual with environmental and social screening checklist

New

Progress Reporting of the implementation of EMF/ SMF

CEHRD Recurrent YEARLY Annual Report New

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Documents

FOR OFFICIAL USE ONLY - Global Partnership for …...IDA 185.00 30.00 161.96 16 % Grants % The World Bank Nepal: Additional Financing for School Sector Development Program (P167047)