Document of The International Development Association acting as Administrator of the Interim Trust Fund FOR OFFICIAL USE ONLY Report No: P-6854-KE MEMORANDUM AND RECOMMENDATION OF THE MANAGING DIRECTOR TO THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION ON A PROPOSED INTERIM FUND CREDIT IN AN AMOUNT OF SDR 19.3 MILLION TO THE REPUBLIC OF KENYA FOR AN EARLY CHILDHOOD DEVELOPMENT PROJECT March 10, 1997 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. CURRENCY EQUIVALENTS Currency Unit = Kenya Shillings (KSh) US$ 1 = KSh 55 KSh 1.00= US$.018 SDR 1.00 = US$ 1.44124 WEIGHTS AND MEASURES Metric System GOVERNMENT FISCAL YEAR July 1-June 30 ACRONYMS AKF Aga Khan Foundation BVLF Bernard Van Leer Foundation CBS Central Bureau of Statistics CCF Christian Children's Fund CHW Community Health Worker DECDIC District Early Childhood Development Implementation Committee DEO District Education Officer DICECE District Center for Early Childhood Education ECD Early Childhood Development GMP Growth Monitoring and Promotion GOK Government of Kenya ICB International Competitive Bidding IDA International Development Association KIE Kenya Institute of Education LCB Local Competitive Bidding MCH Maternal and Child Health MOE Ministry of Education MOF Ministry of Finance MOH Ministry of Health MOU Memorandum of Understanding NACECE National Centre for Early Childhood Education NECDIC National Early Childhood Development Implementation Committee NGO Non-Governmental Organization PIM Project Implementation Manual PMG Pay Master General WMS Welfare Monitoring Survey Vice President: Callisto Madavo Country Director: Harold Wackman Technical Manager: Ruth Kagia Task Team Leader: Marito Garcia FOR OFFICIAL USE ONLY KENYA EARLY CHILDHOOD DEVELOPMENT PROJECT CREDIT AND PROJECT SUMMARY Borrower Republic of Kenya Implementing Agencies: Ministry of Education, National Center for Early Childhood Education, NGOs Beneficiaries: Children ages 0-8 years in low income households Poverty: Program of Targeted Interventions Amount: SDR 19.3 million (US$ 27.8 million equivalent) Terms: Standard IDA Terms with 40 years maturity Financing Plan: IDA US$ 27.8 million Government of Kenya US$ 5.3 million Donors US$ US$ 2.0 million US$ 35.1 million Commitment Fee: Standard (a variable rate between 0-0.5% of the credit balance, set annually by the Executive Directors of IDA) Net Present Value: US$ 94 million Staff Appraisal Report: Report No. 15426-KE Map No.: IBRD 26150 Project ID No.: 34180 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. d T MEMORANDUM AND RECOMMENDATION OF THE MANAGING DIRECTOR TO THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION (THE ASSOCIATION ACTING AS ADMINISTRATOR OF THE INTERIM TRUST FUND) TO THE REPUBLIC OF KENYA FOR AN EARLY CHILDHOOD DEVELOPMENT PROJECT I submit for your approval the following memorandum and recommendation on a proposed interim fund credit to the Republic of Kenya for SDR 19.3 million, the equivalent of US$ 27.8 million on standard IDA terms with a maturity of 40 years to help finance an Early Childhood Development Project. 1. Country and Sector Background. Early childhood development (ECD) is crucial for human capital formation and for enhancing the educability of children. There is an increasing body of scientific literature pointing to the importance of the first few years of life from the point of view of human physical, mental and social development. Appropriate physical and mental development of children in the pre-school years lead to timely school enrollment and improved progress and performance in school. A number of experimental studies on early childhood development have confirmed child vulnerability to adverse environmental circumstances during the pre-school years and more important from an applied perspective, have shown that deficits in intellectual development that accompany poverty and malnutrition can be prevented or compensated through ECD interventions that provide improved diets, learning experiences and health surveillance. 2. Investments in early childhood development programs worldwide have grown since the 1970s for a number of reasons. First, the increasing participation of women in the labor force, and changes in family structures and childrearing practices have created new demands for child care. Secondly, steady improvements in the survival of children have led governments to invest in laying the foundation for human capital formation by improving the health, nutrition and learning potential of those who survive beyond the first year of life. Thirdly, governments have recognized that early childhood interventions are particularly useful as a preventive investment for groups at high risk of educational failure. 3. All of the above reasons apply in the case of Kenya. The demand for child care has increased as a result of increasing numbers of nuclear families with working/single- parents, most of whom are poor. Results from the Kenya Poverty Assessment (1995) indicate that a third of rural households are female-headed. These households, and those in plantation areas and urban slum settings, are least likely to have access to quality child care. While the Kenyan child's chances of survival have improved dramatically since the 1960s, child quality indicators such as levels of educability, morbidity and nutritional status show that much remains to be done. Improvements in these indicators seem to have stalled and in some cases reversed in the last decade. These indicators are considerably worse for children from poor households, who are less likely to attend school and more likely to be malnourished than the average Kenyan child. Of the 6 million children in Kenya under the age of six, about half are from families below the poverty line. -2- 4. The demand for early childhood development services in Kenya has resulted in the establishment of a large network of child development centers, mostly in rural areas, by parents of children who do not have access to privately owned "nursery schools". About 20,000 centers covering approximately 1 million children (mostly in the age group 3-6) have been set up. The community has been the most important partner in the development of the centers, taking responsibility for the provision of physical facilities, payment of salaries, organization of feeding programs, and provision of learning and playing materials. Some communities receive financial and supervisory support from NGOs and local governments. In the 1970s, GOK stepped in to provide training support and supervision for the centers. In 1984, the National Center for Early Childhood Education (NACECE) was established at the Kenya Institute of Education. NACECE was made responsible for the training of trainers, curriculum development, research and coordination. District Centers (DICECE) were responsible for the training of teachers at the district level, inspection, community mobilization and the evaluation of local programs. 5. Despite some significant gains in enrollment and community initiative there is wide variation in the type and quality of services provided by these centers. The child development centers were recently evaluated by government and the key issues were identified as follows: (1) poor access to services, particularly for the lowest income groups; (2) wide variation in the level of physical facilities, trained personnel, supporting services and activities by center; (3) lack of a policy or services for 0-3 year olds although children in this age group are increasingly using these centers, and much developmental damage occurs during that period; (4) low public awareness regarding the importance of early childhood development; (5) caregiver wages vary widely and payments are irregular; (6) monitoring and supervision are inadequate; (7) there are no linkages between pre-schools and primary schools; and (8) levels of funding are too low to allow efficiency and effectiveness of program implementation. The ability and willingness of communities to finance and manage their pre-schools was identified as the critical factor affecting quality and sustainability. Teacher qualifications, motivation and supervision were other important factors. 6. Up until now, parents and communities have mainly been responsible for developing, operating and managing child development centers, and the government and donors have provided support for teacher training, curriculum and materials development, community mobilization and monitoring. Present GOK policy does not address the issue of financial support to communities or households that cannot afford to pay for child development services. This is significant because households are contributing US$ 10 per child yearly on average for child care. Studies of childcare costs in Kenya estimate that a minimum adequate package of child development services will cost US$ 14 per child per year. GOK expenditure, (based on center enrollment of 1 million children) works out to only US$ 0.50 per child. Corresponding GOK investments at the primary, secondary and university levels are US$ 17, US$ 168 and US$ 418 for households and US$ 38, US$ 107 and US$ 1,400 for GOK (Kenya PER, 1994). The policy does not cover children from 0-3, a crucial phase for early child development. Nor is there a policy for linkages between pre-school and primary education or between pre-school -3- education and other social services such as health and nutrition. A revised policy that covers these issues has been articulated by GOK as part of the development of the project. 7. Project Rationale. The Government of Kenya has recently adopted a sub-sector policy reform to strengthen the present early childhood development centers, improve their quality and expand access to those segments of society currently unable to have early child development services. Human resources development is the cornerstone of IDA' s social sector strategy and ECD provides the foundation for human resources development. Available evidence suggests that such investments yield substantial benefits particularly for children in deprived environments. Current levels of investment in ECD by poor families in Kenya and by GOK are inadequate to provide the required minimum package of ECD services. The project will increase the effectiveness and efficiency of existing ECD services in Kenya and will extend access to such services for targeted areas and poor households. Without the project, the expansion of ECD services in Kenya would be slower, many of those needing ECD services would not have access to them and the impact of such services would be less than that with the quality improvements that will result from the project. 8. Project Objectives. The development objective of the project is to improve the quality and educability of children in poor Kenyan households. The project seeks to achieve the following impact: * Improved child cognitive and psycho-social development. * Improved child health and nutrition. * Increased school entry/enrollment at the appropriate age. * Reduced repetition and dropout rates in lower primary school. Process objectives are: * Improved quality of ECD services. * Increased access and participation of the poor. * Improved family capacity for child care. * Increased community capacity to organize, manage and finance ECD activities. 9. Monitorable indicators will include: a) child profile at entry to primary school including cognitive skills, average age at entry, heights, weights and immunization status; b) child development services access rates for poor households; and c) primary school dropout rates in the early grades and repetition rates. These and other indicators will be tracked as part of a monitoring and evaluation component. 10. Project Description. The project's core features include a program for improved teacher performance combined with community capacity building and institutional strengthening of the Ministry of Education in the area of early childhood development. The project will also pilot a number of intervention packages intended to improve the quality and sustainability of ECD. Pilot packages include: (a) increasing participation in ECD by poor children and communities through financial support including grants; (b) -4- improving the health and nutrition status of pre-school children including those under 3 years of age; and (c) smoothing the transition from pre-school to primary school. 11. The project would comprise the following core components: (a) Improved Teacher Performance Component (US$ 5.0 million) which would provide initial, orientation and refresher training for teachers and mechanisms for their support; and (b) The Community Capacity Building and Mobilization Component (US$ 3.5 million) which would improve parenting skills, strengthen the management of ECD services and develop the communities' capacity to mobilize and manage local resources as well as monitor their utilization. The pilot components would include: (a) Community Grants (US$ 5.0 million) to assist community managed ECD centers that are constrained by low levels of funding to meet the costs of pre-school teacher salaries, school materials, health and nutrition services, to subsidize fees for the poorest children and improve school facilities; (b) Health and Nutrition Services (US$ 4.5 million) which would develop a replicable model emphasizing prevention and promotion to optimize the health and nutrition status of pre-school children at the community level; (c) Pre-school to Primary School Transition Pilot (US$ 0.8 million) in those primary schools which have pre-schools attached which would seek to provide continuity in the curriculum and teaching methodologies between pre-school and primary schools; and (d) Institutional strengthening (US$ 9.7 million) to improve management capacity at central and district levels. A regular monitoring system as well as a mid-term and final evaluation will be set up to evaluate the impact of ECD services and to assess the differential effects of diverse ECD packages and delivery systems on child outcomes. 12. Project Implementation. A Project Implementation Manual (PIM) had been prepared to guide the project execution. The project will receive overall policy and strategic direction from an intersectoral ECD Project Implementation Committee chaired by the Permanent Secretary, Ministry of Education (MOE). The Committee will meet at least once a quarter to discuss and approve work plans and budgets, review project progress and impact and discuss policy issues arising from the implementation of the project. The pre-school section in the MOE will be strengthened, and the head who will be named project coordinator, will: (a) be the Secretary of the ECD Committee; (b) facilitate project coordination and implementation and monitor project progress; and (c) handle IDA's administrative requirements. 13. NACECE will be responsible for implementing the core components of Improved Teacher Performance and Community Mobilization and Capacity Building. NGOs will assist in the implementation of the Community Grants and Health and Nutrition Pilots. Two implementation models will be tested under the pilot components. In the first model, NGOs will be selected at the national level to implement the pilots in selected districts subject to the approval of the ECD Project Implementation Committee. The selected NGOs will support other community based organizations in grassroots project implementation. In the second model, GOK will implement the pilot components with collaborating agencies including NGOs at the district level through the District ECD Implementation Committees and DICECEs. The transition pilot will be implemented by the MOE Inspectorate with KIE. -5- 14. Communities themselves would continue to have principal responsibility for managing ECD centers. The management capacity of pre-school committees would be strengthened, parenting education would be provided and communities mobilized for greater participation and involvement in ECD services. 15. Project Sustainability. Capacity building at the community level for the development and management of ECD centers is expected to enhance the sustainability of the project. Sustainability will be influenced also by the development of an appropriate model, affordable in the long term. Households which are already meeting the bulk of the financing requirements, can be expected to continue and increase investment as a result of the project's mobilization and education effort. If the project is successful in meeting its objectives, then the savings accruing to households and the primary school system should be a strong incentive for increasing both private and public funding for ECD. From the point of view of Government funding, GOK draft letter of policy intent makes a commitment to increasing resources for ECD programs. In GOK budgetary terms this would imply increasing the share of funding for this sector from less than 1% to about 2% of the education budget. Given MOE recognition that the foundation of the education system is being under-funded, this is a realistic option. By the end of the project period, initial investment costs funded by IDA, such as training the backlog of untrained teachers, will no longer be required. The bulk of on-going recurrent costs (US$ 10-12 million per year) will continue to be met by communities and households. GOK's annual contribution will increase to about US$ 1.5 million to meet increased cost of monitoring and expanding successful pilots. 16. Lessons Learned from Previous Bank/IDA Involvement. IDA has supported a number of child development projects in Latin America and Asia, although this is the first IDA supported ECD project in Africa. Experience has demonstrated that the ability and will of communities to manage and finance their pre-schools are perhaps the most critical factors affecting the quality and sustainability of community owned pre-schools. Communities need to be made aware of the importance and benefits of ECD services and be willing and able to finance them. Other lessons learned include the importance of: (a) worker selection, workload, training and supervision; (b) community and family involvement; (c) integrated inputs meeting a child's health, nutrition and education needs; and (d) flexible, non-formal and culturally appropriate approaches. These lessons have influenced the selection of project components, and are incorporated in the design of curriculum and the project implementation manual. 17. Rationale for Bank/IDA Involvement. IDA can fill the resource gap to increase GOK investment in this crucial sub-sector and use its vast experience in ECD in Latin America and Asia to help maximize the returns to the investment. In the last decade, donors such as the Bernard van Leer and Aga Khan Foundations have helped GOK develop an innovative and effective model for delivering community based ECD services in Kenya. The development of such a large network of fully community owned pre- schools is unique. IDA involvement can help improve the quality and sustainability of these pre-schools. It can help replicate and expand successful approaches and to pilot innovations. IDA's involvement also provided significant impact in the sub-sector policy to strengthen ECD programs' management in the Ministry of Education. The project will -6- help implement one of the recommendations of the Kenya Poverty Assessment by developing human resources in poor households. The project is consistent with the Kenya Country Assistance Strategy (discussed by the Executive Directors on January 30, 1996) that recommends investment in human resources development and targeted interventions for vulnerable groups. 18. Agreed Actions. (1) During project preparation, an on-going policy dialogue was initiated with GOK on issues such as shifting resources into early child development, reaching out to children before their entry into formal schools or pre-schools, funding community owned pre-schools directly and enlisting the help of NGOs for community capacity building and supervisory support. The Letter of Sector Policy and the project document prepared by GOK demonstrate commitment to the implementation of these changes. (2) During negotiations, assurances were obtained that: (a) the project would be implemented in accordance with the Project Implementation Manual; (b) selected NGOs would be used for the implementation of the pilots and NGOs would be contracted as necessary for the implementation of district level plans; (c) annually a joint review of project implementation would be completed by IDA and GOK and an Annual Work Plan and Budget would be prepared and sent to IDA for approval; (d) GOK and IDA will conduct a mid-term review of project implementation and impact. (3) Before Board Presentation it will be ensured that: (a) a final Project Implementation Manual, satisfactory to IDA, has been submitted; (b) key vacant positions in NACECE and the Pre-school Unit of the MOE have been filled; (c) the National ECD Project Implementation Committee has been constituted; and (d) overdue audits for the Universities Investment Project (Cr. 2309-KE) have been received. (4) Conditions for Credit Effectiveness are that: (a) appropriate budget provisions have been made for the project; (b) an adequate financial management and accounting system for the project has been established; and (c) at least two NGOs have been selected at the national level and memorandum of understanding signed. 19. Poverty Category. Several studies have shown that children from low-income families have developmental scores that are significantly lower than those for children from middle or high income households and that such deficits can be prevented or compensated through ECD interventions. The project would increase access and improve the quality of ECD services available to children from poor families. The most backward districts, based on a composite index of income, child health and nutrition and school enrollment, have been selected for implementation of the pilots. 20. Environmental Aspects. The environmental category is C. The project will have no adverse environmental impact. The health and nutrition component will improve the health conditions of the children in the pre-school centers. 21. Program Objective Categories. The project is targeted to poor communities and poor households and will help build the foundation for the development of the human resources of the poor. 22. Participatory Approach. Local participation in project design and capacity to implement the project were ensured by the following: (1) a client consultation study -7- prepared as part of the preparation process covering about 550 small group interviews in four different types of settings (pastoralist, settled agricultural, plantation and urban slum) with parents, grandparents, siblings, pre-school teachers, leaders and caregivers; (2) a nationwide sample survey of ECD centers; (3) the project preparation group constituted by GOK; (4) interaction with the Aga Khan and van Leer Foundations, the two most important donors to ECD in Kenya, including their participation in missions. The IDA project preparation team met extensively with NGOs involved in ECD in Kenya, collectively and individually. A workshop was held in July 1995 to discuss the findings of a number of project preparation studies prepared with the assistance of a Japanese PHRD grant with the stakeholders - the Government, NGOs, representatives of communities and donors. During implementation the project will use participatory methods in community capacity building to sensitize parents to ECD. 23. Project Benefits. The project will bring about quality improvements in existing ECD services via teacher training, community mobilization and pilot interventions in about 20,000 centers benefiting 1 million children. Community support grants will empower communities to plan and implement ECD activities. An additional 5,000 new centers will be opened, covering 200,000 children. The project is expected to (a) reduce grade repetition and improve completion rates in primary school; (b) improve lifetime earnings of beneficiaries; (c) improve child health and nutrition; (d) release mothers' time for economic activities; (d) release girls' time from child care; and (e) increase earnings of teachers trained under the project. In 1993, the financial loss to Kenyans on account of grade repetition by 700,000 primary school repeaters alone was about US$ 35 million based on estimates of average primary school expenditure by government and households together of US$ 55 per child year (Kenya PER, 1994). The project is expected to generate a combined fiscal cost savings to the Government and financial savings to households of about US$ 7.5 million per year by the fifth year of the project based on improved performance in primary school alone. Improving the management capacity of communities, enhancing women's earning capacity and enabling elder siblings (usually girls) to attend school are additional benefits that are difficult to quantify. A benefit-cost analysis quantifying only benefits (a) and (b) above gave an economic rate of return of 33%. The rate of return with only (a) quantified was 26%. The pilot interventions are intended to test the relative cost-effectiveness of different interventions such as health and nutrition services and community grants. 24. Project Risks. As an innovative pilot project testing the feasibility of mechanisms such as the transfer of grants directly to communities, the project has substantial risks. Poor community oversight resulting in community elite capturing project benefits or the misappropriation of funds is a risk. IDA involvement could result in the bureaucratization of a flexible system for the provision of child development services. The tendency to see child care centers as pre-primary schools and parental pressure to teach the 3 R's could result in an extension downward of a rote learning system that does not serve the holistic developmental interests of young children. Further, the tendency to prescribe teacher certification and pay scales that ignore the realities of the market could hurt the normal expansion of pre-school services. The project is intended to increase the total investment in young children in Kenya. There is a -8- risk that the project will replace or reduce other current sources of investment. To reduce these risks, the project will involve reputable NGOs with community development experience in Kenya to assist in the implementation of the pilot components. It will promote a non-formal approach to early child development and apply market principles in respect of teacher certification and pay. Grants will be transferred to communities on a matching basis to encourage continued community contribution and there will be considerable investment in capacity building for the major stakeholders - viz. parents of pre-school children. 25. Recommendation. I am satisfied that the proposed Interim Fund Credit would comply with Resolution No. 184, adopted by the Board of Governors of the Association on June 26, 1996, establishing the Interim Trust Fund and I recommend that the President approve it. Gautam Kaji Managing Director Washington, D.C. March 10, 1997 Schedule A Page 1 of I ESTIMATED PROJECT COSTS AND FINANCING Table 1 Project Cost Summary (US$ thousands) Local Foreign Total % Foreign % Total Exchange Base Cost A. Core Service Delivery Support 1. Improved Teacher Training 2. Community Capacity Building 4,812 120 4,932 2% 17% and Mobilization 2,976 602 3,578 17% 12% B. Pilot Components 1. Health and Nutrition 2,999 1,483 4,482 33% 16% 2. Community Grants 5,000 0 5,000 0% 18% 3. Transition to Primary Schools 809 0 809 0% 3% C. Project Management 1. Institutional Strengthening 6,809 1,928 8,737 22% 30% 2. Monitoring and Evaluation 838 178 1,016 18% 4% Total Baseline Cost 24,243 4,311 28,555 15% 100% Physical Contingencies 1,212 216 1,428 5% Price Contingencies 4,364 776 5,140 18% Total Project Cost 29,819 5,303 35,122 123% Table 2 Financing Plan (US$ millions) Foreign Costs Local Costs Total % IDA 4.8 23.0 27.8 79 Government of Kenya 5.3 5.3 15 Donors 0.5 1.5 2.0 6 Total 5.3 29.8 35.1 d Schedule B Page 1 of2 PROJECT COSTS AND BENEFITS (1996 US$ millions) Present Value of Flows Fiscal Impact Economic Analysis Taxes Subsidies Benefits Total Benefits from: . Fiscal Savings from Lower Primary School Repetition, Household Savings from Lower Primary School Repetition . Govt. Fiscal Savings from Lower Drop- Outs in Grades 1 and 2 . Incremental Income Costs Total Project cost: (Including: Teachers' Training, Community Capacity Building, Health and Nutrition, Community Financing, and M&E) Net Present Value 94.37 Internal Rate of Return 32.8% Overall Risk: Probability that NPV KAK .GA\- L ,/ To Gla,ma e ~ K R NYrA(A K'SJU ,-A LRU YERI jpARISSA - N F GARS, RlF? TABB- SN !F To Ton- FNA RIVE 1-1. VA4LEY C 0 A S T > MAJOR TOWNS C* NATIONAL CAPITAL T, Ars Ocaan MAIN ROADS LIND TA, FÅ 4 NATIONAL AIRPORTS vo ToA usha - INTERNATIONAL AIRPORTS ILDAN OP DISTRICT BOUNDARIES OMBAA KWA MOMBASA- INTERNATIONAL BOUNDARIES 0 50 100 150 200omeers ~ KENYA RW4ANDA ,ý 0 50 100M sLR The boundaes, colors, denoomtions and any other ,nformation Der Ts a oarO Ocean ohown cn ths m,rp do cot ~mply, on the port of The Worid Ba,k Group, any udgmenr t o the legal statos of any ter,tory, or ony endorsement or acceptance of scch borndones ZAMBIA AJGUST 1994 T  IMAGING Report No.: P 6854 KE Type: MOMD