Document of The World Bank Report No. 14485-YEl STAFF APPRAISAL REPORT REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT NOVEMBER 10, 1995 Human Resources Division Country Department II Middle East and North Africa Region CURRENCY EQUIVALENTS Currency Unit = Yemeni Rial (YR) Official Exchange Rate: US$1 = YR 50 Market Rate (August 1995): US$1 = YR 120 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS AET Adult Education and Training CPPR Country Portfolio Performance Review GAVTT General Authority for Vocational and Technical Training GIA General Investment Authority GTZ German Agency for Technical Cooperation IBRD International Bank for Reconstruction and Development IDA International Development Association LCVT Local Council for Vocational Training LTPACs Local Training Program Advisory Committees MIS Management Information System MOE Ministry of Education MOH Ministry of Health MOL Ministry of Labor (in the former South) MOPD Ministry of Planning and Development MSSL Ministry of Social Security, Social Services and Labor NCVT National Council for Vocational Training NGO Non-Govermental Organization NIVIT National Institute for Vocational Instructor Training PHRD Population and Human Resource Development PIU Project Implementation Unit PPF Project Preparation Facility SDF Skill Development Fund TA Technical Assistance VT Vocational Training VTC Vocational Training Center VTS Vocational Training System REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT STAFF APPRAISAL REPORT Table of Contents Page CREDIT AND PROJECT SUMMARY I. INTRODUCTION ................................................ 1 A. Country Background ......................................... 1 B. The Education Sector ......................................... 1 C. Demand for Skilled Workers ....................................... 2 II. CURRENT STATUS AND ISSUES IN VOCATIONAL TRAINING . .2 A. Background and Current Status. 2 B. Major Issues. 3 C. Adult Education and Training. 4 D. IDA Strategy and Lending Experience. 4 III. THE PROJECT. 6 A. Objectives. 6 B. Policy Framework. 6 C. Project Components. 7 Management and Financing of VT. 7 Quality Improvement. 7 Adult Education and Training for Females. 9 contd/... This report is based on the findings of an appraisal mission to the Republic of Yemen in March 1995. The mission was composed of Yogendra Saran (Mission Leader and Task Manager, MN2HR), Arun Joshi (Education Specialist, MN2HR), Kei Kawabata (Sr. Economist & Gender Specialist, ESP) and PHRD consultants. Special recognition is extended to the PHRD consultants who participated during all phases of project preparation. Special mention is extended to Shobhana Sosale who assisted the Task Manager in preparing the Implementation Volumes for the project. At headquarters, Iqbal Kaur (Staff Assistant) provided valuable support in processing project documents. Peer reviewers were Lloyd Briggs (Prin. Education Specialist, EC4HR) and Sue Berryman (Sr. Education Specialist, EMTHR). The report was prepared under the overall supervision of Mr. Jacques Baudouy (Chief, MN2HR) and approved by Mr. Inder Sud (Director, MN2) and Mr. Caio Koch-Weser (Vice President, MNA). - ii - REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT STAFF APPRAISAL REPORT Table of Contents (Contd/-) IV. PROJECT COSTS, FINANCING, MANAGEMENT AND IMPLEMENTATION ..... 10 Summary of Project Costs ........................................ 10 Project Financing ............................................. 11 Procurement Arrangements .......................... . 11 Disbursements .12 Accounts and Audits .12 Management and Implementation .13 Status of Project Preparation .13 Project Implementation ....................................... 13 Implementation Schedule .13 Project Supervision and Monitoring .13 M id-term Review ........................................... 13 Impact Assessment .......................................... 14 Project Sustainability ......................................... 14 V. BENEFITS AND RISKS ........................................... 14 VI. ACTIONS AGREED AND RECOMMENDATIONS ........................ 15 ANNEXES 1. Sector Policy Statement 2. Demand for Skilled Labor from New Investment 3. Present Issues in Pre-employment Training 4. Issues in Adult Education and Training 5. Vocational Training Project Framework 6. Governance of the Vocational Training System 7. Operational Procedures for the Skill Development Fund 8. Financing of Vocational Training 9. Sub-project Sunmmary Sheets 10. Contents of Implementation Volumes 11. Present and Proposed Programs and Annual Intake Capacities of Project VTCs 12. Project Cost Tables & Recurrent Cost Table 13. Procurement Arrangements 14. Disbursement Schedule 15. Summary of Technical Assistance Requirements 16. Project Implementation Schedule 17. Supervision Plan 18. Mid-term Review 19. Impact Assessment 20. Risk Analysis for Implementation of Project Components contd/... - iii - REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT STAFF APPRAISAL REPORT Table of Contents (Contd/-) ANNEXES (Contd/-) 21. Background Tables A: Employment in Industry and Commerce, 1993 B: Vocational Training Centers in Yemen, 1992/93 C: Enrollments, Graduates and Teachers in VTCs, 1992/93 D: Typical Curriculum Structures in VTCs, 1992/93 E: Annual Work Permits Issued to Expatriates, 1993 22. Economic Justification of the Project 23. Selected Documents and Data Available in the Project File TABLES Tables in Text Table 1: Vocational Training Centers in Yemen, 1992/93 ........................... 2 Table 2: Financing Plan ............................................... 11 CHARTS Chart 1 a: Number of Projects by Economic Sectors Chart 1 b: Fixed Assets by Economic Sectors Chart 2: Number of Employees for Starting-up Projects by Governorates Chart 3: Vocational Training System Governance Structure Chart 4: Skill Development Fund -- Flow of Funds Chart 5: SDF: Mobilization of Resources Chart 6: SDF: Utilization of Resources MAP IBRD 27084 I - Iv - REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT CREDIT AND PROJECT SUMMARY Borrower: Government of the Republic of Yemen Implementing Ministry of Social Security, Social Services and Labor Agencies: Ministry of Education Beneficiaries: N/A Poverty Category: Not applicable. Although poverty alleviation is not an explicit objective of the project, improving income generating prospects for women by providing them with appropriate skills in line with labor demand are expected to contribute to poverty reduction in Yemen. Credit Amount: SDR 15.7 million (US$24.3 million equivalent) Terms: Standard IDA Commitinent Fee: 0.50 percent on undisbursed credit balance, beginning 60 days after signing, less any waiver. Financing Plan (US$ million): Local Foreign Total IDA 6.5 17.8 24.3 Co-financiers " 1.8 24.2 26.0 Government 9.5 -- 9.5 Total 17.8 42.0 59.8 Cofinancing is expected from OPEC Fund, Dutch Government, Japanese Government, and EU who have expressed interest in the project. Economic Rate of Return: 16% Enviromment Rating: "C" Map No.: IBRD 27084 Staff Appraisal Report: Report No.14485 YEM Project ID No: 5912 I REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT I. INTRODUCTION A. Country Background 1.1 Endowed with limited natural resources, Yemen belongs to the group of least developed countries. Its per capita GNP in 1994 was estimated at $280'. Scant rainfall and desert conditions in many areas severely restrict agriculture while manufacturing is still at an infant stage. The average life expectancy is less than 50 years; fertility and mortality rates are high as is illiteracy among adults, especially females. 1.2 The unification of Yemen in 1990 opened new opportunities for development. The border between North and South disappeared, government controls in the South were replaced by market forces, and liberal economic policies opened the country to foreign investors. This has led to a surge in oil exploration and exports which together with the resumption of limited labor emigration to Arab oil countries will provide resources for economic growth in the second half of the 1990s. The Government is now preparing an economic reform program designed to reduce fiscal deficits, ease price controls, and increase reliance on the private sector. With the possible revival of the economy there will be an increasing demand for skilled labor in a variety of categories. To meet this demand a sustained effort is needed to upgrade the quality of Yemen's labor force. B. The Education Sector 1.3 Education and training in Yemen have grown rapidly over the past two decades. Enrollment in primary education reached 1.8 million in 1992/93, a tenfold increase since the early 1970s. In addition, some 70 thousand adults received literacy training that year, of whom more than 40 thousand were women. Almost 600 thousand students attended secondary schools in 1992/93 (30% enrollment rate) compared to 22 thousand in 1970/71, while more than 100 thousand students were registered in teacher training institutes and the country's two universities. Enrollment in vocational training centers, on the other hand, was only 6,000. 1.4 Virtually all boys and about 40% of girls are now receiving primary education. In urban areas participation of girls is also high, although it still lags somewhat behind that of boys. In rural areas, however, enrollment rates for girls are much lower than those for boys. This is partly the result of traditional attitudes which discourage female education. It also reflects the shortage of female teachers who are more acceptable to parents for girls' education. The under-representation of girls continues in all other streams of education. 1.5 The rapid build-up of education facilities gives testimony to the priority assigned to this sector by the Government. Major support also came from foreign donors who provided teachers and financed school construction and equipment. IDA has been heavily involved in the sector: since 1974 fifteen education projects were approved for Yemen. But the past emphasis on quantitative expansion has led to serious quality deficiencies: inadequate teacher qualifications, overcrowded and poorly maintained school buildings, and insufficient instruction materials causing low achievements among students and graduates. Recent IDA projects therefore have focussed on quality improvements in basic and secondary education as well as increasing female participation.2 1.6 In the current decade, the Government's strategy for education and training is concentrating on meeting the basic education needs of a growing population; strengthening programs for human capital 1/ Yemen: Country Assistance Strategy, 1995, Country Operations Division, Middle East and North Africa Region, Country Department II. 2/ Basic Education Project (1992), Cr.2412-YEM; Education Sector Investment Project (1994), Cr.2570-YEM. 2 formation to generate needed labor skills; improving gender equity in access to education, and training facilities for the handicapped. Emphasis will be placed on institution building and decentralization of management structures. While in the past, education was viewed as the sole responsibility of the public sector, the Government now supports private sector participation in all educational streams, including vocational and technical training. C. Demand for Skilled Workers 1.7 Yemen is still at the early stages of economic development with the bulk of its 3.6 million labor force working in traditional sectors (mainly agriculture) estimated to be 2.5 million. Demand for skilled workers suitable for employment in modern industry and commerce frequently cannot be met due to the inadequate scope and quality of existing training programs. This has led to a sizeable body of immigrant workers (currently estimated at 20,000) with main concentration in larger firms, where they account for about 15-20 percent of the work force. 1.8 The present employment in industrial and commercial firms is close to 50,000; another 100,000 or more workers are employed in small production and service industries (Background Table A, Annex 21). Assuming an annual attrition rate of 3 percent, there would be around 4,500 job openings a year. In addition, new private investment projects licensed during the past two years are expected to generate as many as 28,000 jobs within the next three to five years (Annex 2). 1.9 Private establishments dominate the industrial and commercial sectors. Only about 10 percent of the labor force is in public enterprises (see Background Table A in Annex 21). Industrial firms are mainly engaged in oil production and refining, in food processing, textiles and clothing, chemicals and plastic goods, kitchen utensils and furniture, building materials and metal working. There is also a sizeable construction industry, and a large number of small and medium sized trading companies. Other service industries employing skilled workers include financial institutions, hotels and catering. Most of these firms are located in Sana'a, Hodeidah, Taiz, Aden and Hadramout. II. CURRENT STATUS AND ISSUES IN VOCATIONAL TRAINING A. Background and Current Status 2.1 Formal vocational training (VT) in Yemen began in the early 1970s with the establishment of Vocational Training Centers (VTCs) offering two-year programs for graduates of basic education (9th grade). As the needs for skilled manpower increased in the industrial, commercial, agricultural and health sectors, additional training institutions were established by a variety of public sector agencies with some support from donor agencies. 2.2 Out of a total of 26 VTCs, 15 offer industrial and commercial pre-employment training (Background Table B, Annex 21). Their basic objective is to supply skilled workers for the labor market thus strengthening one of the principal factors for successful industrial and economic development. Close to 5,000 students are enrolled in these centers while the number of graduates has averaged about 2,100 p.a. in recent years. Table 1. Vocational Training Centers in Yemen, 1992/93 Economic Sector No. of VTCs Enrollment Graduates Teachers Industry 13 4,072 1,746 469 Commerce 2 815 382 52 Total 15 4,887 2 128 521 Source: General Authority for Vocational and Technical Training (GAVTT) - 3 - 2.3 Six of the 15 industrial and commercial VTCs were controlled by the Ministry of Social Security, Social Services and Labor (MSSL), eight by the Ministry of Education (MOE), and one by the Ministry of Construction. There are no private VTCs offering pre-employment training. Training for the handicapped is provided at some 19 centers through NGOs, private sector, MOH, MSSL, and through local councils for development. In-service training is provided by several public sector institutions (e.g., Electricity Corporation, Ministry of Information, General Authority for Civil Aviation, National Cigarettes and Matches Company) and enterprise-based training is provided by four large private sector companies (Hayel Saeed Group of Companies, Thabet Brothers, Al-Thawarah Industrial Complex -- a group of twenty small companies, and Yemen Hunt Oil Company) to train their own employees. 2.4 The control of VTCs by different ministries has led to a fragmentation of Yemen's VTS which is marked by uneven course structures and regional distribution as well as the absence of a cohesive national strategy for vocational training. The result has been limited access to training and neglect of female participation, poor quality and relevance of training programs, and weak management structures, all of which have reduced the efficiency and effectiveness of the system. More recently, budgetary constraints have created severe financial problems for the VTCs which still depend exclusively on government support for their operations. B. Maior Issues 2.5 The present VTS is facing four major issues: sector management, financial sustainability of VT operations, quality and relevance, and access and equity. Turning to the first issue of sector management, pre-employment training is the responsibility of the Government while in-service training is organized by private or public enterprises. This is a model that has proven to be viable in many countries, both developing and industrialized ones; the model is especially relevant to Yemen's existing state of development, where private training capacity is weak. Overall policy coordination of pre- employment training was initially a function of the MOE in the northern part of the country and MOL in the south of the country. After the unification of Yemen in 1990, the newly established Ministry of Labor and Vocational Training (later changed to Ministry of Social Security, Social Services and Labor) became responsible for sector policy and management. Within the Ministry, the General Authority for Vocational and Technical Training (GAVTT) serves as executive agency for supervising the VTCs. 2.6 While administrative responsibilities have thus been delineated, actual communication between the MSSL and other public agencies involved in VT remains weak. The Ministry has yet to develop a cohesive strategy and supporting policy framework acceptable to the principal constituents and beneficiaries of the VTS. To improve the present management structure, the Government realizes that stronger linkages are needed with employers and communities at the national and local levels; national training norms will have to be introduced; and individual VTCs will require greater autonomy and active participation of the private sector in managing their affairs and developing programs attuned to the needs of local labor markets. In-service training by employers and private training providers also need strengthening. 2.7 Financing of Vocational Training. VT consumes about one percent of government spending on education. It is very limited and can only support a minimum of operating expenses.3 While students are subsidized through small stipends and support for boarding and meals, there is no cost recovery through student fees. External assistance is provided by foreign donors (especially, a decade-long assistance from Germany, and more recently assistance from the Netherlands and OPEC Fund) who contribute equipment and technical assistance. But this does not meet the investment requirements of the VTS, consequently alternative sources of financing through beneficiary participation (employers and students) would be essential. Even with the anticipated involvement of private sector in VT, a certain amount of government support would be justified over the longer term for the following reasons: (a) most students are poor and 3/ In 1995. total recurrent expenditure for the 15 VTCs included: YR40 million for salaries, YR20 million for student subsidies, and YRIO million for overheads, supplies, maintenance and instructional resources -- Mission estimates. cannot even afford to bear the partial costs of their training; (b) special support is needed to achieve equity-oriented objectives such as training of females, handicapped and marginal population groups; and (c) VT contributes to the competitiveness of the national economy. 2.8 The low level of funding has been a major factor responsible for the limited access to pre- employment training and its quality deficiencies such as shortage of instruction materials, poorly maintained equipment and facilities, and inadequate teacher training. In addition, the small size of the private sector has resulted in limited development of enterprise-based training (only in four companies) and complete absence of apprenticeship training. To overcome the financial constraints and to develop an adequate and sustainable resource base for the training of skilled workers, the financial base of the VTS needs to be broadened and its access to resources diversified. This requires a greater participation of employers who would benefit from the training of the domestic labor force. Such changes in policy would help to strengthen the financial viability of the VTS and gradually ensure that the burden of support for vocational training would be shared by government and the main beneficiaries (employers) of VTCs, and more specifically provide incentives for private sector to provide such training. 2.9 The issues of quality and relevance of present training programs are reviewed in Annex 3 which highlights weaknesses in curricula, teacher qualification, trainee assessment and supplies of instruction materials and equipment. The annex also reviews present shortcomings in access and gender equity, including training for the handicapped. C. Adult Education and Training 2.10 Adult education and training (AET) is usually associated with literacy training and covers both rural and urban areas. Courses for women focus on income generating skills such as sewing and handicrafts, crop management and animal husbandry, home economics and health education. Adult education programs have had enormous appeal for adolescent girls and women, and are popular in spite of extremely poor conditions at most centers as they provide an important outlet for young girls and women not only in terms of enhancing their ability to enter into income generating activities but more importantly, to become literate. 2.11 Adult education and training centers face similar issues and constraints as the formal VTS (Annex 4). AET centers operate as welfare activities rather than as educational and skills development facilities. No standards are applied, teachers are paid only a "token allowance" and not a salary, and centers run on shoestring budgets. As low priority activities, many centers have received no operational expenses allocations for the last few years. Consequently, the quality of programs has deteriorated considerably. There is a high turnover of teaching staff and retraining is often inadequate. Overcoming the problems requires Government as well as community commitment to provide systematic support to the centers to make them more responsive to local conditions and markets through changes in the organizational structure of adult education and training, more decentralization and community involvement; and diversification of financial resources to achieve long-term sustainability of training programs. D. IDA Strategy and Lending Experience 2.12 IDA's lending strategy in Yemen has supported government plans to establish a modern education and training system, and has been closely associated with the development of appropriate sector policies. Educational objectives and strategies were reviewed in a study on human development4 and the findings were discussed with the Government in February 1992. As a result of this review, IDA's assistance strategy is focussing on helping the Yemeni Government to: (a) improve learning achievements in primary and secondary schools, and increase access for girls; (b) develop more effective VT programs to upgrade the skill profile of the labor force; and (c) make higher education more responsive to labor market needs. 4/ Republic of Yemen, "Human Development: Societal Needs and Human Capital Response," June 23, 1992, Report no: 9765 SR, Population and Human Resources Division, Country Department II, Middle East and North Africa Region. This strategy is consistent with the Country Assistance Strategy which supports human resources development, and recognized the need for skilled manpower development. 2.13 Over the past two decades, IDA has supported 15 education projects in Yemen, including four projects in the former Peoples Democratic Republic of Yemen, with a total financial commitment of about US$183 million. Ten projects have been completed while the others are at various stages of implementation. The earlier projects focussed on primary and secondary teacher training, adult education programs, capacity development in the MOE, and other aspects related to the quantitative expansion experienced throughout the 1970s and 1980s. IDA support contributed to sectoral improvements: adult literacy rose from 27% in 1973 to 39% in 1990, with marked increase in female literacy from about 8% to about 26%; during the period 1970-91, percentage of age cohort enrolled in primary school improved from 22 to 76 with female enrollments increasing from 7 to 37; and the number of expatriate teachers in the school system reduced from 80% in 1980 to some 10% in 1993.5 More recently, attention has been shifted to gender equity, quality enhancement and training of skilled manpower. Nine of the ten completed projects have achieved most of their stated objectives. However, delays in project implementation began in 1989, slowing disbursements. The delays were caused mainly by political tensions following the unification of Yemen in 1990, and by unrealistic exchange rates which made implementation of civil works contracts difficult. New payment procedures for local civil works contracts to offset price escalation during construction have been established. This change is showing improvements in disbursements for ongoing projects. 2.14 Lessons from past projects have been considered in designing the proposed project. In particular, government commitment will be obtained for appropriate levels of technical assistance. Specific lessons from the Technical Training Project (1985) include: (a) the need to develop a sector policy; (b) the need for increased role of private sector in skilled manpower development; and (c) the need for establishing adequate project implementation arrangements for civil works during project preparation. 2.15 Remedial actions set out during the May 1995 Country Portfolio Performance Review (CPPR) are expected to have a positive impact on the implementation of the proposed project. Specifically, (a) civil works contracts will be denominated in US dollars or other stable convertible foreign currencies and the payment of government will be carried out using the parallel exchange rate of 28 days before bid opening (para. 4.11); (b) constraints to project implementation will be eased by the hiring of one or two experts in project management to overcome the limited technical capacity of the responsible Project Implementation Units (para. 4.17); and (c) revision of thresholds for procurement review at various levels -- project directors US$0.2 million, sector ministries US$1.0 million, High Tender Board US$3.0 million. 2.16 In late 1993, the Government requested IDA assistance for a major overhaul of the country's vocational training system. The proposed project responds to this request. It would address major institutional and policy issues at the national and local levels, establishing a governance structure with strong private sector representation which will be able to deliver programs attuned to the demand of local labor market. Emphasis would be given to improving the quality and relevance of training, and to increasing the number of female students. Private employers would share the costs of vocational training thus reducing dependence on government funding. Strong donor collaboration and IDA's leadership are necessary to implement such a comprehensive reform program. In particular, IDA's proposed policy changes have been extensively discussed during donor coordination meetings chaired by the German team leader for VT, and as a result would not be in conflict with activities of other donors who are actively involved in the training sector. Moreover, coordination with German assisted interventions through a complement of specialists would be ensured and is considered to be a factor to mitigate risks in implementing the proposed project (para 5.2). 5/ UNESCO data, 1993. - 6 - III. THE PROJECT A. Objectives 3.1 The proposed project would help strengthen Yemen's capacity to train skilled labor in line with current and emerging demand in the economy. The project has three objectives: (a) strengthening VTS management by providing a major role to the private sector in policy-making, management and financing of the VT system; (b) improving the quality and relevance of VT through the enhancement of programs in existing centers and selective expansion of two pilot centers; and (c) reorientation, through participation of communities, of adult education and training programs for women to improve their relevance. Major characteristics of project strategies are given in Annex 5. B. Policy Framework 3.2 Changing the policy framework under which the VTS operates would be a prerequisite to achieve the above mentioned objectives. This involves a new governance structure and financing system, the basic features of which are spelled out in the attached Sector Policy Statement (Annex 1 and assurances during negotiations para. 6.1(a)). More specifically, the proposed framework provides that overall sector policy and management would become the responsibility of a National Council for Vocational Training (NCVT), with operational support provided by GAVTT. The project would support only those centers willing to implement policies formulated by NCVT and monitored by GAVTT (assurances during negotiations para. 6.1(b)). Individual VTCs would be given more autonomy and flexibility to develop training programs responsive to the needs of local and regional labor markets. The Centers would be supported and managed by Local Councils for Vocational Training (LCVTs), and receive guidance on specific training needs from Local Training Program Advisory Committees (LTPACs). During negotiations the Government provided the decree-laws establishing the NCVT, LCVTs and LTPACs, and for the reorientation of GAVTT. Details of the proposed governance structure are outlined in Annex 6. 3.3 Role of the Private Sector. The new policy framework would give employers, especially the private sector, a leading role in the management and financing of vocational training. Private employers would have majority representation in all institutions dealing with VT i.e., the NCVT, LCVTs, LTPACs and the SDF. This would help ensure that sector policies will be responsive to the needs of employers, and that pre-employment training in VTCs will produce skills that are in demand. Strong private sector involvement and the commitment of private funds should also provide incentives to manage the VTS effectively and efficiently. 3.4 Financing of Vocational Training. Additional resources for both pre-employment and in-service training, would be mobilized through a Skill Development Fund (SDF) financed largely with contributions from participating employers (Annex 7). This would strengthen the long-term viability of the VTS and provide resources for different types of enterprise-based training, including apprenticeship and cooperative programs. During negotiations the Government provided the decree-law establishing the Skill Development Fund (SDF). The SDF would start operations in 1996. It would draw its resources from a work permit fee charged to expatriates, and a training levy amounting to one percent of the payroll paid by participating industrial and commercial firms with more than ten employees. These arrangements would yield an estimated YR150 million per annum at the time of project completion (2003) as against the current government budget of YR70 million for VTCs. The SDF would support pre-employment training in VTCs as well as in-service training by enterprises. As transfers to VTCs would be limited to 30 percent of the salary support received from the government (which in itself would be declining over time), the bulk of the Fund's resources (some 85 to 90 percent in the year 2000) would go to enterprise training and independent private training providers (Annex 7). Since participating firms could draw on the Fund only for training purposes, the existence of such resources would provide a powerful incentive to develop suitable training programs. 3.5 Transfers from the SDF would strengthen the financial base of VTCs. Additional resources would come through retention of income from sudent fees, income generating activities, and voluntary contributions from the private sector (assurances during negotiations para. 6.1(c)). All contributions from the private sector to either VTCs or to SDF would be tax exempt for which assurances have been obtained from the government (see Annex 7). This would allow the Centers to adequately cover expenses for training materials, maintenance of key equipment, or short-term employment of specialized instructors from industry and business thus improving the efficiency of VT programs. Annex 8 illustrates the changing pattern in financing vocational training that could be expected for the years 1996-2003 -- SDF contributions to VTCs would be according to agreed criteria (Annex 7 paras. 6.1 to 6.6) and would be reduced from 50% in 1996 to about 10% by the year 2003 (Annex 8), as the fund expands (assurances during negotiations para. 6.1(d)). C. Proiect Comuonents6 Management and Financing of VT (US$2.7m) 3.6 Governance Structure (US$1.3 m). To establish this structure the project would provide technical assistance (TA) to GAVTT in establishing a system for sector planning, policy-making, and organization development, to streamline GAVTT structure into six divisions according to functions (guidance and training, technical affairs, testing, planning and research, media and services, and finance and administration). Consultants would also be used to develop the management capability of VTC Directors and senior staff through national training programs. The scope of the management information system being established in collaboration with German assistance would be enlarged and VTC-based management information systems would be established; these would also provide input for the GAVTT-based MIS. Necessary computers, software and training materials would be provided through the project for this purpose. The project would also support establishment of a new Project Implementation Unit (PIU) in GAVTT (US$0.5 m). 3.7 Skill Development Fund (US$1.9 m). To support operating expenses for the SDF the project would provide US$1.6 million, to be disbursed against categories as specified in para. 4.11. The project would also support specialist services and training to the staff responsible for operating the Fund, and equipment, furniture, and necessary software to make the Fund operational. In CY96 the Government would contribute YR1O million to jumpstart the SDF. Meanwhile, the Government has appointed a prominent businessman to be Interim Chairman to facilitate establishment of the SDF. Quality Improvement (US$42.3 m) 3.8 To improve the quality and relevance of pre-employment training offered by VTCs, and to ensure sustained in-service training of the existing work force, the project would support: (a) strengthening institutional capacity for curriculum development including trainee assessment and instructional material development; (b) in-service training of trainers; (c) developing a system of continuing education for employees of business and industry; (d) strengthening selected vocational training centers; and (e) strengthening programs for rehabilitating the physically handicapped through vocational training. Sub- project summaries are provided in Annex 9. 3.9 Strengthenine Institutional Capacitv for Curriculum Development Including Trainee Assessment and Instructional Material Development (US$1.7 m). The project would support establishing a system of curriculum development which includes performance standards, preparation of training materials, and skill testing responsive to labor market demands, nationally and locally. This would be supported through TA including foreign and local experts and overseas fellowships to the relevant General Directorates of 6/ Sub-project summaries are provided in Annex 9 and detailed write-ups are given in Implementation Volume 1. Contents of Implementation Volumes are provided in Annex 10. - 8 - GAVTT. With assistance from specialists, capabilities of VTCs would also be developed through in- country training workshops, focussing on training of resource persons. A core group for curriculum development, comprising resource persons developed through the project, would be set up in each VTC. This group would liaise with the LTPACs in developing programs and curricula. About 60 percent of time would be devoted to basic skill development to national standards, and the remaining time to job specific skills in demand, locally. It would therefore be open to the LTPACs to consider options for practical training through apprenticeship and enterprise-based training whenever and wherever feasible. 3.10 Developing a System of In-service Training of Trainers (US$2.2 mi). To complement the efforts of National Institute for Vocational Instructor Training (NIVIT), supported by Germany, the project would support in-service training of all instructors/trainers in the VTCs (already in sufficient numbers; Background Table C, Annex 21). This would include pedagogic training, technical skill development, and industrial training. In addition to pedagogic training which would be provided by NIVIT, trainer development centers (TDCs) would be established in three identified VTCs in Aden, Sana'a and Taiz, in trades not covered at NIVIT. Each TDC would have three master trainers with proficiency in conventional skills as well as skills for new trades developed through overseas fellowships supported by the project. The project would also support the provision of additional classrooms, audiovisual and other training equipment for the TDCs. The TDCs would organize skill training/upgrading programs in new/specialized trades for the trainers of VTCs utilizing its own and VTC facilities. TDCs would collaborate with NIVIT and jointly plan the skill upgrading programs with a view to complement and not duplicate NIVIT-organized programs. GAVTT would coordinate the industrial training of VTC trainers, jointly supervised by TDCs and industry. 3.11 Developing a System of Continuing Education (US$3.5 m). To develop a system of continuing education for the benefit of employees of business and industry, VTC instructors and graduates, the project would support two initiatives. First, the project would establish continuing education programs at VTCs. Technical assistance will be provided for development of managers of continuing education programs in each VTC and the establishment of management information systems in this area. The project would provide equipment, furniture and instructional material support. Continuing education programs would operate on a full cost recovery basis (i.e., training fee); and second, the project would establish a hi-tech center. This Center would meet the needs of industry, other employers and VTCs in modern technologies with a special focus on maintenance of equipment. A feasibility study, to be reviewed by IDA, would determine the location of the Center, which could either be in a VTC or in an industry; specific hi-tech areas; and the professional development of the Director and Deputy Director of the Center. In addition to supporting the provision of physical facilities if needed -- building and equipment -- the project would support TA to develop master trainers and master instructor trainers in hi- tech areas. 3.12 Strengthening Selected Vocational Training Center (US$28.9 m). To improve learning environment, physical facilities and instructional resources, the project would support the strengthening of 12 industrial, two commerce VTCs, and one hotel and tourism institute in locations where demand for trained labor has been verified, and programs to be deleted, revised, expanded or added have been identified accordingly (Annex 11); health sector VTCs have been excluded as they are covered under health sector projects. The support would include TA for the development of each VTC including shop layout planning and provision for rehabilitation of existing physical facilities -- buildings, workshops -- equipment, furniture and educational materials for new programs. This would result in the establishment of new programs for an enrollment of 1000 students and upgrading the facilities for about 4600 students. 3.13 The annual output of graduates from industrial and commercial VTCs would rise from some 2,100 in 1995 to about 2,800 in 2003. This would be less than two percent of present employment in these sectors, and about 1.5 percent of employment expected in industry and commerce by the year 2003. 3.14 Rehabilitation of the Physically Handicapped through Vocational TraininR (US$1.3 m). To integrate the handicapped with mainstream work force and to improve and expand their training, the project would support rehabilitation of the physically handicapped through appropriate vocational training in the existing centers. The project would earmark US$1 million for this purpose. Existing VTCs or community supported centers would apply for funds which would be scrutinized by a management committee consisting of professionals established by the MSSL and supported through technical assistance provided by the project. The criteria for selection of centers to be supported would include past experience in training physically handicapped, availability of trainers, nature of programs being offered, type of physically handicapped covered and community participation. The project would provide support through necessary technical assistance and resources. All proposals above US$50,000 would be sent to IDA for review (assurances during negotiations para. 6. 1(e)). 3.15 Selective Expansion (US$4.7 m). To meet skilled manpower demand in underserved regions the project would support establishment of two pilot vocational training centers (capacity of 200 graduates at each center) reflecting emerging trends in vocational training, e.g., cooperative programs, apprenticeship, dual system, enterprise-based training. These centers would be selected, according to agreed criteria, from the six already appraised by IDA (Annex 9). The support would include civil works, equipment, furniture and educational materials, and instructor training (assurances during negotiations para. 6. 1(f)). Adult Education and Training for Females (US$6.0 m) 3.16 To improve community ownership of adult education and training (AET) programs the project would support: (i) development of institutional capacity of AET centers to design programs based on participatory approaches; (ii) establishment of an AET project funding facility to support programs which meet agreed criteria; and (iii) refinement of existing practices in marketing and access to credit alternatives. 3.17 Institutional Development (US$1.1 m) would be supported through: (a) development of new curriculum based on life skills literacy programs (such as functional literacy, numeracy including simple bookeeping, health, nutrition, family planning, community hygiene, and legal rights and duties), and training of instructors in literacy programs; (b) workshops and training of facilitators in participatory approaches; (c) training of instructors in community identified income generating skills; (d) enhancing management training through technical assistance to provide Directors of selected centers with the opportunity to visit successful centers in other countries; and (e) organizing seminars and workshops for further skills upgradation and exchange of experience among centers. 3.18 An AET Project Funding Facility (US$4.8 m) will support participating adult training centers to implement reoriented programs by financing rehabilitation of buildings, equipment, instructional materials, and vehicles based on agreed criteria. Proposals invited from AET centers would be required to specify details of how centers plan to finance recurrent costs for facilities and equipment maintenance; specify how they propose to obtain contributions from communities; how they would retain income generated from training activities; and how they propose to utilize the contributions and earnings. The project would review existing best practices and make suggestions for potential mechanisms that could be linked with women graduating from the AET centers to launch into income generating activities. Proposals above US$20,000 would be subject to IDA review (assurances during negotiations para. 6. 1 (g)). 3.19 The project would provide technical assistance to introduce AET centers and rural banks to marketing and credit alternatives (US$0.2 m) to promote, in an organized manner, the production and sale of marketable products of AET centers. - 10 - IV. PROJECT COSTS, FINANCING, MANAGEMENT AND IMPLEMENTATION A. Cost of the Proiect. 4.1 Summary of Project Costs. Project costs are estimated at YR5,978 million or US$59.8 million equivalent (base costs estimated at YR5,162 million or US$51.6 million) and include construction, site development and professional services for rehabilitation and expansion of existing buildings; provision of furniture, equipment and vehicles; educational material; technical assistance consisting of specialist services and fellowships; and operating expenses support to the Skill Development Fund (SDF). Recurrent costs include additional staff as well as the maintenance of buildings and equipment. Foreign exchange represents YR4,198 million (US$42.0 million) or 70 percent of total project cost. Local currency costs are estimated at YRl,779 million (US$17.8 million). The summary of project cost by project item and the summary of project costs by category of expenditure is given in Tables 1 and 2 in Annex 12. 4.2 Basis of Cost Estimates. Cost of rehabilitating existing facilities including additions as necessary is based on reviews of recently awarded contracts for similar facilities. These costs average US$300 per sq. m. Architecture and Engineering fees for the design of the facilities are calculated at 10% of the amount of construction. Cost estimates for equipment are based on unit prices for equipment recently procured and on standard price lists provided by GAVTT. Furniture costs are based on current furniture price lists and amount to 15 percent of construction. Technical assistance costs per staff month of specialist services and fellowship training costs have been estimated on the basis of recent prices for comparable technical assistance to Yemen. Base cost estimates reflect prices as projected at the time of negotiations. 4.2.1 Cost and Areas per student. Area allocation for automotive shops was calculated at 45 sq. m. per student; all other trades (electronics, carpentry, metal shop, etc.) were calculated at 18 sq. m. per student; provision for equipment varies depending on the trade of the different shops/programs, from US$1,000 to US$15,000, averaging US$2,000 per student place. This provision includes the rehabilitation of existing/restructured programs and new programs. 4.3 Custom Duties and Taxes. Project costs include an estimated US$2.9 million in indirect taxes on locally procured civil works and goods. Equipment and goods imported directly for use by government agencies are exempt from duties and taxes. 4.4 Contingency Allowances. Project costs include a contingency allowance of 9 percent of the estimated cost of all project items for unforeseen physical additions (approximately US$4.8 million). Price contingencies are estimated at US$3.4 million equivalent or 7 percent of the base cost plus physical contingencies. Total contingencies represent 16 percent of the base cost. 4.5 Foreign Exchange component. The foreign exchange component will include: (a) rehabilitation of existing facilities -- 52 percent; (b) furniture and educational material -- 80 percent; (c) equipment and vehicles -- 90 percent; (d) specialist services -- 80 percent; (e) fellowships and study tours -- 100 percent and (f) local training -- 30 percent. The resulting foreign exchange component including contingencies, is estimated at US$42.0 or 70 percent of total project costs. 4.6 Recurrent Costs. The annual incremental recurrent costs of the project include personnel costs estimated at YR2.2 million and for maintenance of buildings and equipment estimated at YR14.2 million and YR29 million respectively. The project when completed will add a total of YR45.4 million annually (base costs at December 1994 market prices) to the recurrent budget of the Government (See Table 3, Annex 12). When this increase is compared with the additional resources for VT (YR40 million) allocated from the SDF and other sources, the net increase in recurrent costs would only be YR5.4 million -- a negligible percentage of total budget (YR7.0 billion) of Yemen on education and training (Table 2, Annex 8). Recurrent costs for salaries and maintenance would be provided annually and information made available to IDA upon request (assurances during negotiations para. 6.1(h)). - 11 - B. Financing 4.7 Project Financing. The proposed IDA credit of US$24.3 million in addition to OPEC Fund contribution of US$10 million, as well as the Dutch Government, Japanese Government and European Union co-financing of US$16.0 million would finance 100 percent of the foreign exchange component (US$42.0 million) of the project and 47 percent of local costs (US$8.3 million). The government of Yemen would finance 53 percent of local costs which amount to US$9.5 million, which includes indirect taxes of US$2.9 million. The financing plan is shown below. FINANCING PLAN US$ million Local Foreign Total IDA 6.5 17.8 24.3 Co-financiers 1.8 24.2 26.0 Government 9.5 -- 9.5 Total 17.8 42.0 59.8 C. Procurement Arrangements 4.8 International Competitive Bidding (ICB). Civil works contracts costing more than US$2.0 million and goods contracts costing more than US$ 200,000 would be procured through International Competitive Bidding in accordance with the "Guidelines for Procurement Under IBRD Loans and IDA credits" (January 1995). In the evaluation and comparison of bids for goods, domestic manufacturers would be granted a margin of preference of 15 %, or the relevant duty, whichever is lower and for civil works contracts, a margin of preference of 7.5 percent would be granted to domestic contractors who qualify, in accordance with Appendix 2 of the Guidelines. All contracts would be subject to IDA's prior review. The amounts and methods of procurement are shown in Annex 13. 4.9 Exceptions to ICB (a) National Competitive Bidding (NCB). Civil works contracts estimated to cost the equivalent of US$2.0 million or less per contract up to US$6.1 million in aggregate would be awarded on the basis of NCB procedures, since the contracts are small, widely scattered geographically and unlikely to attract foreign firms. Standard bidding documents agreed with IDA would be used. NCB procedures would (a) incorporate explicit statements to bidders of qualification, bid evaluation and award procedures; (b) be advertised widely in local papers, with bid openings in public; and (c) not exclude the participation of interested bidders from other IDA member countries. (b) International Shopping (IS). Bid packages for goods estimated to cost less than US$200,000 up to an aggregate amount of US$4.3 million may be awarded under IS procedures based on comparing price quotations from at least three suppliers from at least two countries eligible under the Guidelines in accordance with procedures acceptable to IDA. (c) National Shopping (NS). Bid packages for goods estimated to cost less than US$50,000 up to an aggregate amount of US$0.3 million and containing small quantities of a great variety of items, may be awarded under NS procedures based on comparing prices from at least three suppliers eligible under the Guidelines in accordance with procedures acceptable to IDA. (d) Technical Assistance. Contracts for technical assistance would be awarded following the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency." Consulting and training services in the amount of US$2.8 million and US$4.0 million respectively, would be obtained mostly through consulting organizations. During negotiations the Govermnent provided a short list of three agencies/institutions for IDA review for procurement of TA for the VT components. The TA for the AET component would be managed by an NGO well established in - 12 - Yemen and having similar international experience (assurances during negotiations para. 6.1(i)). Consultant appointments above US$100,000 for firms and US$50,000 for individuals would be subject to prior IDA view, as would the terms of reference, single source contracts and critical assignments regardless of value. 4.10 During project supervision, IDA financed contracts for civil works above a threshold of US$600,000 would be subject to the Bank's prior review procedures. The review process would cover about 80 percent of the total value of civil works contracts. Contracts or packages for goods above US$75,000 would also be subject to prior review, covering about 70 percent of the total value of Bank financed goods. Contracts or packages for services above US$100,000 for firms and US$50,000 for individuals would also be subject to prior review. Selective ex-post review of awarded contracts below the threshold levels would be carried out on about 1 in 4 contracts for civil works and 1 in 8 contracts for goods. D. Disbursements 4.11 The proposed project would be disbursed over a period of about 8 years in accordance with the disbursement profile of eight and a half years for the education sector for Yemen as stated in the Standard Disbursement Profiles of August 1993. All contracts financed by IDA would be denominated in foreign currency (para. 2.15) (assurances during negotiations para 6.1(0)). Disbursements would be made against: a) 80% of total expenditures for civil works contracts. b) 100% of foreign expenditures, 100% of local expenditures (ex-factory costs) and 90% of local expenditures for other items procured locally. c) 100% of foreign expenditures and 80% of local expenditures for specialist services and fellowships. 4.12 Disbursements from the proposed credit are expected to take place on average about 4 months after expenditures are incurred. A disbursement schedule reflecting this and providing a comparison with the above mentioned profile is shown in Annex 14. The closing date of the project is June 2003, and disbursements are expected to be completed within four months of the closing date. 4.13 Disbursements against contracts for works less than US$600,000 equivalent, for goods less than US$75,000, and for services less than US$100,000 (for firms) and US$50,000 (for individuals) would be made on the basis of Statements of Expenditures (SOEs), available for examination by IDA missions. The Government would establish, maintain and operate a special account in the borrower's Central Bank and IDA would make an initial deposit equivalent to 50% of the amount of the authorized allocation (US$1.0 million) until about US$1.5 million of the credit has been disbursed. The special account will be replenished on a monthly basis. Withdrawal applications would be supported by appropriate documentation. E. Accounts and Audits 4.14 The GAVTT implementation unit would maintain accounts for the vocational training components of the project and would prepare all the documentation required by IDA: the MOE's PIU would do the same for the adult education component. Project accounts, including the special account, would be audited in accordance with the March 1982, "Guidelines for Financial Reporting and Auditing of Projects Financed by the World Bank". IDA would be provided within six months of the end of each fiscal year with an audit report of such scope and detail as IDA may reasonably request, including a separate opinion by the auditor of disbursements against certified statements of expenditures. At the same time, IDA would also be provided with an audit report on the scope and detail of the SDF as IDA may reasonably request (assurances during negotiations para 6.1(k)). - 13 - F. Management and Implementation 4.15 Status of Project Preparation. The proposed project has been prepared by the Government with the assistance of PHRD grants, and in close cooperation with representatives of relevant government agencies and the private sector, coordinated by GAVTT. Major policy issues were extensively reviewed with the Ministers of Labor, Education and Planning. In October 1994, the Federal Chamber of Commerce and Industry, with IDA assistance arranged a seminar on VT management and financing, chaired by the Prime Minister and bringing together government officials, vocational educators, private sector representatives, NGOs and donor representatives. The seminar arrived at a series of policy recommendations endorsed by both, the Government and private sector which form the basis for the proposed project. 4.16 The working groups prepared relevant proposals for each sub-component which were reviewed at appraisal. These documents include: (a) detailed write-ups for each component; (b) technical assistance, with detailed terms of reference, divided into four packages. A summary of the technical assistance, local and foreign as well as training and fellowships provided under the project is given in Annex 15; (c) equipment lists including instructional resources; (d) furniture and rehabilitation requirements for each center; and (e) monitoring and impact indicators. For details see Implementation Volumes (Contents of Implementation Volumes are provided in Annex 10). 4.17 Proiect Implementation. Under the supervision of the Minister of Social Services and Labor, the Chairman of the General Authority for Vocational and Technical Training (GAVTT) would be responsible for the overall coordination and day to day operations of the project's vocational training components. A core project implementation unit (PIU) has been established within GAVTT for the duration of the project. During negotiations the Government provided the Ministerial and GAVTT's decisions to this effect. The PIU will be staffed with a nucleus of permanent personnel consisting of: a project coordinator, an accountant, a project architect/engineer, a procurement specialist, a technical assistance specialist and the necessary support staff (para. 2.15) (assurances during negotiations para 6.1(1)). All the key staff for this new implementation unit would be trained through the Project Preparation Facility (PPF) before the project becomes effective. The proposed project would adhere to implementation arrangements agreed upon during the May 1995 CPPR (para. 2.15). 4.18 The Community-based Adult Education and Training component would be coordinated, managed and implemented by the experienced PIU of the Ministry of Education. A female AET coordinator would be appointed to manage this component under the supervision of the Vice-Minister of Education (assurances during negotiations para. 6.1(m)). In addition, a technical committee with representation from all the ministries involved in AET as well as NGOs would be established to review proposals and monitor their implementation. 4.19 Implementation Schedule. The project is expected to be implemented over a period of 8 years, starting April 1996. The project implementation schedule is provided in Annex 16. 4.20 Proiect Supervision and Monitoring. The project would be supervised according to an agreed plan (Annex 17). Project implementation would be monitored by GAVTT for VT components and by the PIU of MOE for the AET component. Components would be monitored according to input and output performance indicators, and evaluated according to quantitative and qualitative adequacy (see Implementation Volume No.1). A tracer study would be undertaken in 1999 when two batches from rehabilitated VTCs have graduated. Overall project monitoring would be undertaken annually and reports discussed with IDA supervision missions. 4.21 Mid-term Review. A mid-term review would be conducted jointly by IDA and the Government no later than June 30, 1999 and would be based on an initial review conducted by GAVTT (NCVT Council) and SDF Council, and by the MOE for the AET component.. A key focus of this review would be the extent of private sector participation in the SDF, its operating procedures and the levels of support needed by VTCs and private sector supported training (para. 3.5). The objectives and expected outcomes - 14 - of the review are given in Annex 18 (assurances during negotiations para 6. 1(n)). 4.22 Impact Assessment. In order to assess the project's impact, baseline data and data obtained during the life of the project would be compared with post project data. Measures would be taken to obtain baseline data within the first year of project implementation and IDA would be provided with the data (assurances during negotiations para. 6. 1(o)). GAVTT (and MOE for the AET component) would establish baseline data and trends by gathering relevant information from VTCs and the SDF Council, with regard to each indicator, and analyze and interpret data relevant to identified impact indicators (Annex 19). 4.23 Proiect Sustainabilitv. Various project features would contribute to sustainability of the project. They include: (a) institutional development of GAVTT and more autonomy to VTCs (para. 3.2); (b) greater responsibility to private sector for VT and to communities for AET planning and management; (c) additional resources for VT financing from the private sector which would reduce public financing of VT from 100 percent at present to 66 percent by the year 2000 (Annex 8); (d) negligible increase (YR5.4 million) in recurrent budget of the government (para. 4.6); and (e) careful preparation of the project which takes into account implementation risks for each component (Annex 20). V. BENEFITS AND RISKS A. Benefits 5.1 The proposed project would make a significant contribution to the development of Yemen's human resources. Major changes in policy and governance structure, already agreed with the Government and private sector representatives, would result in shared responsibility between Government and employers. The establishment of the SDF and mobilization of additional resources would lead to a diversification of financial resources based on contributions from the main beneficiaries of vocational training, i.e., students, employers and communities. Greater employer participation sought under the project would enhance the relevance of training and strengthen the financial viability of the system. In addition, the project would support the qualitative upgrading of VT system through comprehensive quality improvement measures. By establishing a closer linkage between labor supply and demand, the project would facilitate the employment of Yemenis in better paid jobs and thus increase family incomes and reduce poverty. The project would also enhance employment and income generating opportunities for women by teaching them marketable skills. In the longer term, these changes would provide a strong basis for possible future expansion of VT through private sector initiatives, both for pre-employment and in-service training, in line with emerging labor demand. 5.2 Overtime, the project would generate significant economic benefits on a sustained basis, generating an internal rate of return (IRR) of about 16 percent. A sensitivity analysis has shown this estimate to be robust (see Annex 22). Additional benefits not quantified in these calculations would accrue from the training of handicapped persons, and from literacy and health education of women. B. Risks 5.3 Given the persistence of implementation delays in the last five years, the project implementation strategy takes into account risk analysis (Annex 20) which has been carefully prepared with the Yemeni preparation team. The proposed project entails the following potential risks: (a) the capacity of MSSL and the newly established GAVTT to adequately plan and implement a major reform program for VT in the face of significant administrative and financial constraints. This risk has been minimized by the institutional development of GAVTT through active involvement of the entire GAVTT staff during project preparation, training of GAVTT staff through a PPF, carefully prepared TA package and by prior agreement on specific policy actions, and would be further minimized through the presence of the German technical assistance team; (b) the need for close coordination among several government agencies involved in VT. This risk would be mitigated through project benefits made available to the ministries who follow - 15 - policy guidelines approved by GAVTT; (c) slow implementation and disbursement. This risk would be minimized through the preparation of civil works bidding documents before project effectiveness through a PPF, early procurement of TA and through other measures detailed in Annex 20; in addition, remedial actions set out during the May 1995 CPPR are expected to have a positive impact on the implementation of the proposed project; (d) lack of experience within the MOE to plan and implement community-based AET initiatives. This risk would be minimized through training of trainers and Directors of AET centers in participatory approaches, and through technical assistance contract being awarded to a well established NGO in Yemen; and (e) cofinancing may not materialize. The project would be appropiately downsized by reducing support to fewer than 15 VTCs. VI. ACTIONS AGREED AND RECOMMENDATIONS 6.1 During negotiations, assurances were obtained from the Government that: (a) The policies articulated in the policy statement will be carried out during the implementation period (para. 3.2). (b) The project would support only those centers willing to implement policies formulated by NCVT and monitored by GAVTT (para. 3.2). (c) The income generated by centers offering VT and AET would be retained by the respective centers within the policy guidelines formulated by the Government (para. 3.5). (d) SDF contributions to VTCs would be according to agreed criteria (paras. 3.5 and 4.21). (e) Support to training centers for the physically handicapped would be according to agreed criteria and that all proposals above US$50,000 would be sent to IDA for review (para. 3.14). (f) Support to two pilot VTCs would be according to agreed criteria and that proposals would be sent to IDA for review (para. 3.15). (g) Support to AET centers for females would be according to agreed criteria, and would also include centers operated by NGOs, and that all proposals above US$20,000 would be sent to IDA for review (para. 3.17). (h) Recurrent budget to cover salaries and maintenance of buildings and equipment would be provided for VTCs and AET centers, and that the information would be made available to IDA (para. 4.6). (i) TA for the AET component would be managed by one of the NGOs well established in Yemen and having similar international experience (para. 4.9(d)). (j) All contracts financed by IDA will be denominated in foreign currency (para. 4.11). (k) IDA will be provided within six months of the end of the each fiscal year, as part of audit requirements, an audit report on the scope and detail of the SDF as IDA may reasonably request (para. 4.14). (I) The core staff of the new project implementation unit established at GAVTT will be maintained for the duration of the project with the required personnel, functions and authority agreed upon with the Bank (para. 4.17). (m) A female coordinator for AET would be appointed by June 1, 1996, and a technical committee with representation from concerned ministries and NGOs would be established (para. 4.18). (n) A joint mid-term review would be conducted before December, 1999 (para 4.21). (o) Measures would be taken to obtain baseline data within the first year of project implementation and IDA would be provided with the data (para. 4.22). 6.2 Subject to the above conditions, the project would provide a suitable basis for an IDA Credit of US$24.3 million equivalent to the Government of Yemen. ANNEX i Page 1 of 2 .~ ~'.L.--,t2J X,)3Ja . .. .,. ., ,,,:_ . . . . . . . . . .% ~~~~....... , : : C, , .1 March 22, 1995 Mr. Caio Koch-Weser Vice President Middle East & North Africa Region The World Bank Washington D.C. Subject: Sector Policy Statement Dear Sir, Vocational training in the past has essentially been a responsibility of the Govemment with virtually no private sector involvement. The results have not been satisfactory: training programs are of inferior quality, management structures are weak, and training centers are operating under severe financial constraints. To overcome these problems and to ensure that the services delivered are of appropriate quality as well as responsive to actual skill needs, the Government has accepted a new strategy for vocational training based on an expanding involvement of the private sector in the governance and financing of the system while reducing the role of the public sector in providing these services. More emphasis will also be given to the training of undprprivileged groups, especially, women, to enhance their productivity and income generating skills. To strengthen the capability for sector policy formulation, a National Council for Vocational Training is being established with majority representation provided by the private sector. The Council will receive operational support from the General Authority for Vocational- Training. Management rraa ~~~ a$ ro r Wl(sv..J1-- Y: ) 0, ANNEX 1 Page 2 of 2 @s ..>.@.*.bS.@.@.> J....... . .. .... ... . .......................... ....:j g ~~~~LJI -~~~~~~~~~~~~ ~~~~~~~~~~.......................... ..... 9 -2- responsibility for individual training centers will be decentralized and will be transferred to Local Councils for Vocational Training whose members would represent employers, labor and local communities. This will give the training centers more autonomy and flexibility to design programs responsive to market demand. New sources of finance will be developed to reduce dependence on govemment funding. The resources would come from the principal beneficiaries of vocational training, i.e., employers, students and communities. The main instrument will be a Skill Development Fund to be financed by a training levy raised from industrial and commercial firms. The Fund will be managed by a council in which private sector representatives have a clear majority. Other resources will be raised through voluntary contributions by the private sector and local communities, and through income generated by training centers from selling goods and services in local markets. Student subsidies will be phased out in two years, and tution fees will be introduced with scholarships provisions for needy students. Private sector initiatives to provide pre- and in-service training will be actively encouraged by the Govemmert Abdulkader Bajamal Deputy Prime Minister and Minister of Planning and Development rran ~ ~~~__S -L Yoo. L;-to. : )AL- jj) H ANNEX 2 Page 1 of 3 REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT DEMAND FOR SKILLED LABOR FROM NEW INVESTMENT 1. Soon after unification, in May 1992, the Govermnent established an independent (outside of any ministry) General Investment Authority (GIA), chaired by the Prime Minister, to promote private investment in the country. The GIA has four branches across the country (serving all governorates), of which the Sana'a and Aden branches have already started to license and monitor specific investment projects. 2. According to officials of the Sana'a branch, non-government investments have been growing rapidly since 1992. The change is attributable to GIA's active role in informing potential foreign and local investors about business opportunities in Yemen. Moreover, the open, regulation-free context within the country has also been instrumental in attracting investments. The attached charts (Charts L.a and b) show the number of projects licensed by the GIA, the projects that are starting up and project assets by economic sector (between March 1992 and December 9, 1994). 3. The Head Office in Sana'a has licensed 543 projects during that period. Of these, 232 projects are already starting up. In addition, the Aden branch has licensed another 670 projects. The projects licensed by the Sana'a branch alone are expected to generate as many as 28,000 new jobs within the next few years. No job estimates were available for projects licensed by the Aden branch. 4. With regard to investment by governorates, Chart 2 shows that most of the projects will be starting up in Sana'a, followed by Taiz and Aden. Overall, these initial figures suggest a rapidly growing labor demand in specific sectors and regions of the country. ANNEX 2 Page 2 of 3 Chart 1 a: Number of Projects by Economic Sectors on c SectoLicensed Ch/rt 1 b: Fixed AssetscStarting-up 350 250 /1 5 , /ba 5 . _ A A.....0 JWds Arclu FsSrceurm ^en Source GeneraInvesment Athorit Research and Planning Hw-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. ...... .... .........~~~~~~~~~~ ~ ~ ~ ~~~ .f ...... ~~~~~_............. ........_|' .i.'' 100 _ _.i'.':_ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.__...... ......................,.i-..,i .. e.^. ._ !: ...~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~........... ......_ WV ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.,3i..'.j. -. -.i.:-jE ......... ..... .. .-..... Industry Agriculture Fhsheries Services Tourism (Economic Sector) Chart 1 b: Fixed Assets by Economic Sectors (IV4arch, 1992 - Decem^ber, 1994) / - e S~~~~~~~~~~~~~tartfn"up / . O~~~~~~~~~~E Ucensed / . ... ..... i~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. ............. 50 --.--. , 0..::-.i. Sore G eneral vest:ent'uhor-t U~ ~ Rsac an .Pla-nningT- ANNEX 2 Page 3 of 3 Chart 2: Number of Employees for Starting-up Projects by Governorates Total All Govemorate - Saada - .D Ablyan- Marib- Hadramot - Hajah - Hodeeda - Lahej - bb- Aden Sana'a- / 7 f f f 0 2000 4000 6000 8000 10000 12000 14000 (Number of Employees) Source: General Investment Authority Research and Planning I ANNEX 3 Page I of 2 REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT PRESENT ISSUES IN PRE-EMPLOYMENT TRAINING Oualitv and Relevance 1. There are major deficiencies in the quality and relevance of VT programs. Curricula are outdated and renewals that were undertaken in some cases during the late eighties by supervisors and instructors, with little involvement of the end users of graduates, have resulted in only marginal modifications. Curricula therefore lack relevance to skill demands of industry and other user systems. There are no professional units either in GAVTT or in the VTCs, with competence to systematically evaluate and develop VT curricula, nor is there an information system to gather periodic feedback from employers and past graduates. 2. Curriculum details vary widely between VTCs, even for the same trades and such variations have no relevance to local demands. In most cases the time allocated for practical work is limited, not providing for adequate hands-on experience. Moreover, trainees do not get the opportunity for practical training in enterprises and, therefore, lack exposure to real work situations. This further contributes to the lack of relevance of practical work provided within the VTCs. 3. Practices with regard to trainee assessment vary considerably among institutions. They are usually limited to end of year examinations with no continuous evaluation of the performance of trainees. The criteria for passing also vary among VTCs, and there are no properly defined skills testing standards at the national level. 4. While the average teacher-student ratios are adequate in most VTCs (9 for industrial and 16 for commercial), the qualifications of instructors vary considerably among institutions. There are trainers with engineering degrees, highly knowledgeable in theoretical subjects but lacking in practical skills, and there are also instructors who are recent VTC graduates with limited industrial/work experience. The National Institute for Vocational Instructor Training (NIVIT) in Aden offers limited short-term courses to upgrade and develop the skills of teaching staff. Courses are proposed to be strengthened with assistance from Germany. 5. VTC buildings, in general, require extensive renovation. The extent of renovation required varies between VTCs. Available equipment are either outdated or are in need of major repairs. Consistently low maintenance budgets have aggravated the situation. In a few VTCs, the recent civil war has rendered the centers dysfunctional. 6. These weaknesses in the VTS have contributed to low achievement levels of trainees. The skills they acquire in the VTCs often do not match market demand with the result that most graduates cannot compete with expatriates for employment in industry and commerce. A tracer study conducted by the Germany Advisory Team in 1990 has found that most graduates have turned to the public sector for jobs. Even there, almost half of the graduates were employed in positions for which they were not trained. Very few of the graduates have found employment in the private sector or established their own workshops. To change this situation and to make graduates more competitive in the labor market, training programs will have to be substantially strengthened and their relevance for changing market conditions enhanced. This requires close cooperation with potential employers and the communities that VTCs are expected to serve. ANNEX 3 Page 2 of 2 7. With the exception of four large private sector companies (Hayel Saeed Group of Companies, Thabet Brothers, Al-Thawarah Industrial Comples: a group of 20 small companies, and Yemen Hunt Oil Company), business and industry do not have their own facilities for skill upgradation. Moreover, the VT system does not offer such opportunities through continuing education programs. In order to respond to changes in technology, foreign workers with new skills in modern and high technologies are recruited. There are neither facilities nor training competence within the country to meet the demand. The lack of opportunities in continuing education and in hi-tech areas is contributing to stagnation of Yemeni workers and obsolescence of VTC programs. Access and Eguitv 8. Coverage of vocational training is seriously handicapped by the small size of the system. Of the 15 industrial and commercial VTCs, 11 are located in 4 of the country's 18 governorates (Sana'a, Aden, Abyan, and Hadramout). Another four governorates have one VTC each (Hodeidah, Dhamar, Taiz and Lahej) while the remaining 10 governorates have no training facilities at all (see Background Table B in Annex 21). While the geographic distribution of VTCs reflects to some extent differences in economic activity, it is also clear that the complete absence of training facilities in large parts of the country restricts investments in these areas, and deprives many potential students from acquiring skills and competing for higher paid jobs in other parts of the country. 9. In Yemen, there are no formal estimates of physically handicapped population and their grouping on the basis of type of disability. According to MSSL there are about 200,000 physically handicapped who could be rehabilitated through appropriate vocational training. Available facilities in the country for rehabilitating the handicapped through vocational training are very limited. At present, there are some 20 centers managed by NGOs, private sector, MSSL and MOH. Training in these centers faces similar issues of quality, relevance and financial constraints as described above. 10. In spite of increasing enrollments at all levels of education', overall female participation in vocational training is low and limited to the commerce and health sectors only. Changes in socioeconomic values are giving rise to a more positive outlook toward employment of females. Parental support for female education is on the increase and is more pronounced in females only centers. Females are therefore increasingly entering modern sectors in which appropriate training opportunities exist. There is demand for female vocational training in specializations which are considered culturally appropriate (e.g., food processing, garment making, etc). Female Participation in Vocational Trainina (1992/93) Tvpe of VTC Total Enrollment Male Female Industry 4,072 4,066 6 Commerce 815 330 485 Agriculrure 26 23 3 Health 944 484 460 Total 5,857 4,903 954 1/ In 1990, illiteracy rates were 74% for women and 47% for men; primary gross enrollment ratio for girls was 37% and 112% for boys in the former Yemen Arab Republic and 67% for girls and 109% for boys in the former Democratic Yemen. (World Education Report, UNESCO, 1993) Although the Government is making serious efforts to increase girls education, universal primary education will not be attained for sometime. In addition, there remains a whole generation of adolescent girls and women which has been excluded from the formal education system. ANNEX 4 Page 1 of I REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT ISSUES IN ADULT EDUCATION AND TRAINING 1. In Yemen, adult education and training (AET) programs are intended for adults who have not been able to take advantage of the formal education and training system. The programs are popular among women, who attend them in high numbers'. There are over 40 non-formal AET centers run by various ministries and NGOs. The Ministries of Education (MOE), Social Security, Social Services and Labor (MSSL), Agriculture and Water Resources (MAWR) and NGOs are active in providing literacy, numeracy, and basic income generating skills for adults. AET programs are intended to increase welfare, productivity and incomes of rural and urban populations, not reached by formal eduation or training programs. 2. There are two fundamental drawbacks of AET in Yemen: (i) limited range of programs being offered; and (ii) poor quality and relevance of training. Related issues include the following: (a) Ministries responsible for AET centers are unable to meet recurrent costs of the institutions due to severe financial constraints. Consequently, buildings and equipment have deteriorated, supplies are limited, and centers are operated on shoestring budgets. Centralized control of finances and staffing of training centers has resulted in loss of initiative at the institutional level. Government policy does not permit centers to retain income from training activities. Due to the above reasons, viable income generating activities have not been implemented. Financial problems have further been aggravated as trainees are exempt from paying tuition fees. Trainees, however, out of necessity do pay the cost of supplies for their training programs. (b) Programs are organized in line with the academic school year. This has resulted in months of inactivity in the centers. Training sessions are often held during inconvenient hours, such as when women are required to complete household chores. Moreover, facilities for trainees such as daycare centers, where they do exist, are open only for a limited number of hours during the day, making it inconvenient for trainees to take advantage of the facility at other times. Access to training equipment such as typewriters, sewing machines is limited and in poor condition. Consequently, trainees get limited hands-on experience. (c) Trainers lack adequate training in their field of specialty, particularly in adult pedagogy and up-to-date craftsmanship. This is reflected in the poor quality of goods produced by trainees during training. AET centers at both the central ministerial and local levels are operated as welfare activities rather than as educational and skills development facilities. No standards are applied, and teachers are paid only a "token allowance", not a salary. (d) Community participation in identifying local needs, in providing inputs into program design and in contributing to the upkeep of the centers is absent. As a result of inadequate analysis, training centers tend to offer courses which are often irrelevant to local needs. (e) Women's ability to generate income either through self-employment or through cooperative arrangements are hampered by absence of skills training in managing productive activities and by lack of access to capital. Financial institutions offer limited facilities for credit to small entrepreneurs. Appropriate training for women such as in fundamentals of collective bargaining and joint liability mechanisms to promote access to capital markets is absent. 3. The main institutional structures required to upgrade AET centers are already in place. Efforts must be made to reorient programs to elicit greater community participation, to ensure that AET programs are demand driven, and they provide life skills literacy and relevant and marketable income generation programs. 1/ In a survey of 24 centers, total enrollment was estimated to be 5,000. Of this number around 90% were females. Source: Mission estimates. ANNEX 5 Page 1 of I REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT VOCATIONAL TRAINING PROJECT FRAMEWORK Status Si. # Major Project Strategies Sub- Characteristics of Pre-project Post-project project VTS Ref. Planning Adhoc Responsive - Establishing NCVT and LCVTs A. 1 Supply-driven Decentralized - LTPACs for VTCs for program Market-driven development and monitoring A.2 - Core groups in vTCs for curriculum development and continuing education B.1 - Management training to VTC heads and senior staff A.2 - MIS at GAVTT and VTC levels A.3 - Monitoring by GAVTT A.l 2 Institutional Capacity Low High - Developing capabilities and structures B. I for curriculum development, trainee assessment, instructional material development, continuing education and instructor development at national (GAVTT) and VTC levels, through technical assistance 3 Private Sector - Majority participation in NCVT and - participation Negligible High LCVTs A. 1 - training capacity Low, weak Moderate - Control and operation of SDF A.4 - LTPACs of VTCs A.2 - Motivation for Employee Training through SDF A.4 4 Target Groups for Mosdy school passouts - School passouts - Continuing education programs of B.3 VT - Working personnel VTCs - Informal Sector - Private sector operated programs using A.4 - Females SDF C - Adult education and training B.4 - Area hi-tech center 5 Efficiency Low Moderate/High - Counseling and guidance, placement services at each VTC A.2 - Management training at all levels A.2 - MIS at GAVIT and VTCs A.3 - Enhanced provision for maintenance and materials A.4 - Motivation through SDF A.4 - Continuous development of instructors B.2 - Demand-based programs and curricula B. 1, B.2 - In-service training (continuing education) programs - institution and B.2 enterprise-based - apprenticeship & B.3 cooperative programs 6 Finance Government Diversified resources: - SDF A.4 - Government - Autonomy to conduct continuing - Skill Dev. Fund education programs and offer services A.1 - VTC generated income - Interaction/participation of private - Community sector/community A.1, A.4 ANNEX 6 Page 1 of 3 REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT GOVERNANCE OF VOCATIONAL TRAINING SYSTEM' 1. Currently, management of the Vocational Training System (VTS) in Yemen is characterized as: o having weak linkages with the private sector. o lacking adequate procedures for formulating policy and for planning or monitoring programs. o having training programs that are not relevant to private sector demands. O being highly fragmented because coordination among the various ministries responsible for Vocational Training Centers (VTCs) is difficult. 2. To strengthen the VTS, a management structure should be adopted that will: o Ensure involvement of the private sector in the planning and management process. o Provide for development of policies, plans and procedures for management. O Provide for more flexibility, autonomy and accountability at the local level. O Unify the VTS through formulation of appropriate policies and procedures applicable to all VTCs. 3. Structure of VTS: Figure 1 shows the structure of VTS and the interrelationships between components. The following is a brief description of each component: 3.1 The National Council for Vocational Training (NCVT) provides the overall policy framework for all VTCs in the Vocational Training System. It also advises the Minister on issues of concern. Membership of NCVT would comprise: six members representing relevant ministries; Chairman of GAVTT; eight employer representatives (contributing members of the SDF) nominated by regional Chambers of Conunerce; one member of the National Labor Association; one member of the Agriculture Federation; one representative of Yemeni Women's Union; VT expert nominated by SDF Council; Chairman SDF Council; one director of VTC nominated by GAVTT. Out of 21 members, 13 would belong to private sector and non-government organizations. 3.2 GAVTT, through its Chairman would provide operational support to the NCVT for carrying out its mandate. It would prepare national plans for vocational training and monitor policy implementation in a number of major functional areas which would include: o Curriculum development and implementation o Institutional and staff development in cooperation with National Institute for Vocational Instructors Training (NIVIT) o Accreditation of programs o Job classification and skill assessment o Financial and organizational management o Planning and research 3.3 The Local Councils for Vocational Training (LCVT) are the local governing boards which would be responsible for the organizational, administrative, staffing and instructional program needs of the respective VTCs. Council memberships would be comprised of representatives from both the public and private sectors I For details of operational procedures for governance of VTS refer Implementation Volume 1. ANNEX 6 Page 2 of 3 with private sector membership being the majority.2 The Chairpersons would be elected from the membership and the VTC Director(s) would serve as ex-officio member(s). In cities where there are multiple VTCs there would be only one LCVT governing the VTCs in the area. LCVTs responsibilities include: o Establishing, systematically reviewing and monitoring the VTCs' decision- making process including instructional and administrative policies. o Approving and monitoring VTCs' organizational staffing including administrative, support and teaching staff appointments, terminations and salaries. o Ensuring VTCs' effectiveness and viability by reviewing and approving annual operational plans, objectives and budgets. o Representing the VTCs externally to the communities served by the VTCs. 3.4 Local Training Program Advisory Committees (LTPACs): The VTCs would establish external program advisory committees for each program specialization area. These committees would provide leadership and, because of their diverse membership, a holistic approach to the issue of programs and program standards. o Committee membership would include local participants from business, industry, labor, public services and other relevant constituencies. o Individuals to be appointed to membership would be nominated by the respective program representative and formally appointed by the Director of the Center. The LCVT would only need to be informed. o The LTPACs would be responsible for conducting program needs assessments; assessing program relevance; analyzing the curriculum content; identifying related training areas which need to be developed; assessing suitability of training facilities and equipment; and providing an external linkage by informing the community about programs, services and the quality of its graduates. 3.5 Vocational Training Centers (VTCs) would operate within the policy framework approved by the NCVT. They would be responsible for, but not restricted to the following tasks: o Enrollment and management of students o Management of curricula and instructional materials o Delivery of instruction o Management of equipment and facilities o Routine administrative details 4. Advantages of the Structure - It will provide for greater program flexibility, institutional autonomy and institutional accountability because the VTCs' governance will be at the local level, in accordance with established national standards and policies. - Formal linkages will be established with the private sector, giving the private sector opportunities to participate in the management of the training system. - Courses and Programs offered by the VTCs will be based on market demand. - GAVTT can focus on policy formulation, institutional support, organizational management and monitoring of national standards rather than on routine administration of institutions. 2 LCVT membership would comprise (i) six representatives from contributing employers to the SDF -- 2 from private sector, 2 from public sector, one nominated by the labor union and one nominated by the Govemor; (ii) one nominee of GAVTT; (iii) one professional, a specialist in VT, nominated by SDF Council; and (iv) the Director of the VTC. ANNEX 6 Page 3 of 3 Figure 1: Vocatonal Training System Governance Structure of Scisu S.'ziwy, S Swia .ss &Labor . ~~~~~~~(?MSSL) Yocoiond ZSwug Polscy Policy lpie_utvon NWiaW Comm1 Gamrmm A12tbxiy for _wadcow TVs. vosaim & TSo xcal ANNEX 7 Page 1 of 9 REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT OPERATIONAL PROCEDURES FOR THE SKILL DEVELOPMENT FUND This document sets forth procedures for management of the Skill Development Fund (SDF), as well as operation of the SDF Council. It also outlines the conditions under which Vocational Training Centers (VTCs) and employers may qualify for financial support for training. I. The Skill Development Fund (SDF) 1. Overview 1.1 The Skill Development Fund (SDF) is aimed at (a) mobilizing significantly more resources for both pre-employment and employee training; and (b) reorienting financing from government to private sources. It is administered by an SDF Council comprised of major representation from contributing employers. A financing scheme is given in Figure 1. 1.2 Because the Skill Development Fund is a new concept to vocational training in Yemen, a joint review of progress by the SDF Council, General Authority for Vocational and Technical Training (GAVTT) and the International Development Association (IDA) will be conducted two years after implementation with biennial reviews thereafter. 2. Source of Funds 2.1 Resources required to finance the Skill Development Fund include the following: (a) Work Permit Fee of YR5,000 p.a. per non-Yemeni worker. (b) Training Levy amounting to one percent of the total wage bill of registered enterprises. 2.2 Additional financial resources will be required during the initial stages of development of the SDF to successfully launch the program. It is proposed that the Government and IDA contribute an amount, to be negotiated, as start-up funds. The Government may want to pay its share in a lumpsum or stagger the payment over a period of three years. 3. Coverage 3.1 Registered enterprises with 10 or more employees are to be covered by the Fund. As defined by the SDF Council from time to time, an employee is any citizen of Yemen who is employed for wages with an employer, irrespective of whether it is permanent, temporary, or contract employment. 3.2 The types of enterprises to be covered by the Skill Development Fund include: a. Industry b. Commerce c. Other enterprises and services such as hotel and tourism not readily classified as industry or commerce ANNEX 7 Page 2 of 9 4. Training levy and work permit assessments 4.1 The training levy, equal to one percent of the total monthly wages, allowances, and bonuses paid to employees, will be assessed on employers registered under the SDF. Payments should be made on a monthly basis. The SDF Council Secretariat will be responsible for receiving the fees and monitoring their collection according to standard auditing and accounting practices. 4.2 The annual work permit fee of YR5,000 will be assessed for each worker who is not a citizen of Yemen. This fee will be collected by the Ministry of Social Service and Labor (MSSL) at the time of registration for a work permit. These fees collected by the MSSL will be remitted directly to the SDF Council Secretariat. 4.3 All contributions to the SDF will be tax exempt. 4.4 Any employer who fails to pay any levy due within such period as may be prescribed is subject to the following penalties: a. One month late: Written notice b. Six months late: Additional 25% of the levy c. One year late: Additional 50% of the levy d. Late more than one year: Referred to court for action 5. Identification and registration of employers 5.1 The sources for identification of qualified employers are: a. Listings of employer organizations such as the Chamber of Commerce and Industry. b. Government agency records. 5.2 Once all qualified employers are identified they will be registered and assigned a code number to be used for all SDF correspondence, payment of training levy, approval of training grants and eventual disbursement of funds. 6. Allocation of Funds 6.1 The SDF would be fully operational in about two years. As more firms join, its revenue would expand. In the initial stage half of the funds collected under the SDF shall be used to help finance the VTCs. As the revenue in the SDF increases, the share designated for VTCs will be gradually reduced. The funds are to be used to improve the quality of training by complementing government financing according to the following priorities: a. Maintenance of equipment and workshop facilities; b. Purchase of consumable training materials; c. Curriculum development; d. Retraining and skills upgrading of trainers/instructors/teachers; e. Short-term employment of expert teachers from industry. ANNEX 7 Page 3 of 9 6.2 Funds will be distributed to VTCs on the basis of actual expenditures. Each VTC will submit an annual budget to the SDF Council, and would be entitled to 10 percent of the approved SDF budget, as an advance to the revolving fund for VTCs. Reimbursement for maintenance of equipment (for key equipment requiring maintenance contract), and purchase of consumable training materials - YR 10 million maximum; for curriculum development - actual costs; for retraining and skills upgrading of trainers/instructors/teachers - actual costs for 15 percent of instructional personnel per VTC; and, for short-term employment of expert teachers - actual costs. Annual reimbursement for each VTC shall normally not exceed 30 percent of the salary budget. 6.3 The quality of training will be considered for continued support of VTCs through the SDF. Quality indicators including test results, student enrollments, attrition, graduation and placement rates will be monitored carefully by the SDF Council using relevant reports available through the GAVTT. Also, faculty development, curriculum development, instructional improvement and quality of training facilities will be considered. 6.4 Any VTC not performing satisfactorily will be so advised. The SDF Council and GAVTT will develop a plan of action to be implemented by that VTC. One year will be given for correction and improvement. The grant from the SDF may be reduced until reasonable progress is shown. 6.5 By the end of the third year of the SDF, the Council should develop and adopt a formula for distribution of funds that is based on unit costs per student and considers pertinent quality indicators to streamline administrative procedures. 6.6 The remaining 50 percent of the SDF, or more as the fund expands, shall be available to employers for in-service training. These funds can be accessed by applying to the SDF Council in accordance with established procedures (see paras. 7, 8 and 9). 7. Employee Categories 7.1 Categories of employees and level of financial support from the Fund will be as follows: a. Workers not less than 60% of SDF allocation b. Supervisors and managers not more than 30% of SDF allocation 7.2 All training and retraining must be viewed as cost sharing between employers and the SDF. Eighty percent of the costs of approved training programs or activities will be reimbursed by the Council. Employers may be reimbursed up to the amount of training levy paid for the current year. 8. Eligibility for funding 8.1 Employers, registered with the SDF Council, having paid the training levy for a continuous period of six months are eligible to apply for training grants to support training/retraining within their organization in accordance with policies regarding the award of grants. All trainees participating in programs supported by the SDF must be employees of members of the SDF and citizens of Yemen. ANNEX 7 Page 4 of 9 9. Allowable Reimbursements 9.1 The following is a list of inservice training costs that qualify for support by the SDF: a. Course fees for courses approved by the SDF Council; b. Remuneration of employers' trainer(s)/instructor(s) prorated for the duration of approved in-house training program(s), for example, 4 days or 3 1/2 days. Claims for overtime will not be allowed; c. Fees paid to external trainer(s)/instructor(s) for the duration of the training program; d. Fees paid to foreign trainer(s)/instructors(s) for the duration of the training program; e. Daily allowances which include allowances for food, lodging and internal transport expenses which are payable to the trainee(s) for the duration of the training program pursuant to the following exceptions or conditions: i. There will be no allowances for in-house training programs; ii. External program - where training is conducted within a radius of 50 kilometers of the work site of the trainee, a maximum daily allowance of YR per day or the actual rate paid by employers, whichever is the lesser. No daily allowances will be paid if refreshments and food are provided by the training providers. iii. External program - where training is conducted beyond 50 kilometers from the work site of the trainee, a maximum daily allowance of YR_ per day or the actual rate paid by employers, whichever is the lesser. The amount includes the cost of accommodations which must be supported by receipts; iv. Where overseas trainers are engaged, the daily allowance payable shall not exceed a maximum of YR per day or the actual rate paid by employers, whichever is the lesser. The amount includes allowances for food, lodging and internal transport expenses which are pay to the trainer(s) for the duration of the training program(s). f. Economy rates for travel by air; g. Consumable training materials; h. Hotel rental for training seminars; i. Meal allowances for in-house programs; j. Corporate trainers conducting training in company's branches and subsidiaries. II. The Skill Development Fund (SDF) Council 10. Overview 10.1 The SDF Council shall be responsible for developing and implementing policy for management of the SDF. It shall have the authority to determine and vary from time to time, priorities in the level of financial support from the Fund both for the VTCs and for workers' retraining. ANNEX 7 Page 5 of 9 11. Membership 11.1 The SDF Council is composed of fifteen members with the majority representing employers. The membership should be broadly representative of the nation as a whole, to the extent possible, including the various geographic and demographic characteristics of the country. Regional Chambers of Commerce will nominate employer representatives. The national labor union will nominate its representative. The Minister of Social Services and Labor will appoint and announce the members to the SDF Council. 11.2 Employer and labor union representatives shall be appointed for fixed three-year terms, renewable once, with the terms staggered such that after the initial appointments, approximately one- third of the employer/private sector members shall be eligible for reappointment or replacement each year. Representatives of the Government agencies and the SDF Secretariat are ex-officio appointments. Specifically, the composition of the Council shall be as follows: a. Nine employers registered with the SDF, each from a different sector, including two employers from emerging or under-represented sectors; b. Three Deputy Ministers, as ex-officio appointments, representing the Ministries of Planning; Social Services and Labor, and Finance. While these representatives are voting members of the Council, their primary role shall be to assist and monitor the conduct of business of the Council in accordance with governmental polices; c. One member representing the national labor union; d. The Chairman of GAVTT; e. The general director of the Secretariat. 12. Council Procedures 12.1 The Chairman shall be elected from among the employers and the Deputy Chairman from the general membership of the Council for terms of three years each. Additionally: a. The first members selected to the SDF Council shall take office upon their appointment and thereafter members of the Council shall take office on the first day of August in the year of their appointment; b. The Council shall meet formally each quarter of each year, and more frequently if needed, with no more than three months between meetings. c. A quorum of the Council shall consist of eight members; d. A quorum of each standing committee of the Council shall consist of a majority of the committee members; e. A member of the Council who has not been present for three consecutive meetings of the Council, without reasonable cause or permission in writing of the Chairman, may be replaced; f. The Minister may appoint a person to fill a vacancy which occurs for any reason among the members of the Council for the remainder of the term of the member. ANNEX 7 Page 6 of 9 13. Secretariat 13.1 The purpose of the Secretariat is to provide operational support for carrying out the mandate of the SDF Council. a. Staffing' i. Chief executive officer---a qualified , knowledgeable and experienced professional in vocational training, labor market analysis and administration ii. Accountant iii. Secretary iv. Other supporting staff b. Equipment i. Office furniture ii. Computer hardware to maintain databases, financial records, etc. iii. Appropriate computer software c. Cost of Operation It is estimated that the cost of operation for the SDF Secretariat will be YR250,000-300,000 per month or YR 3-3.6 million annually. The initial investment required to establish the Secretariat and the operating costs should be covered by the money contributed by the Government and IDA. The cost of operation should not exceed five percent of the SDF once the fund is established. III. Accountability 14. The SDF account will be managed according to standard accounting practices. The General Director of the Secretariat will prepare and submit bi-annual financial reports and annual budgets to the Chairman for the Council's approval. IV. Training Schemes 15. Overview 15.1 Various training schemes are available to enable employers registered with the SDF Council to access the SDF. The main funding scheme, the Employer-Proposed Scheme in this document, is described in detail. Brief summaries of two additional schemes, which can be implemented later, are also presented. I/ The suggested is the minimum staffmg required and as the SDF expands, more staff would become necessary, particularly the numbers of accountants and professional staff to assist the Chief Executive Officer. The annual cost of operations takes this expansion into account. ANNEX 7 Page 7 of 9 16. The Employer-Proposed Scheme 16.1 This is the SDF's principal funding scheme. Financial assistance in the form of training grants can be considered for various types of programs for the retraining and skills upgrading of employees relevant to the needs of employers under this scheme. Employers are free to submit their training proposals for the approval by the SDF Secretariat. a. Principles of Operation i. Training grants are offered to employers as incentives for retraining and skills upgrading. The grants are not given as subsidies for training; ii. Training grants are awarded only for training programs based on identified employer needs to ensure workplace accountability; iii. Prior approval of the SDF Council Secretariat is necessary. Training costs are reimbursed on a claimed basis. b. Eligibility Criteria for Emplovers i. Registered with the SDF Council for at least six months; ii. Training programs must be of direct benefit to their business operations; iii. Training programs must be structured and have the following: - specific training objectives, i.e. the skills to be upgraded and the knowledge to be enhanced must be specified; - specific training activities and/or lesson plans; - specific duration of training; - qualified instructor(s); - formal performance assessment of trainees. iv. All training expenses incurred on the training program(s) must be borne by the employer and not the trainee(s); V. Trainee(s) must complete the full program/course with a minimum attendance of 75% and sit for all examinations where training leads to certification. 17. Modes of Training 17.1 As the Employer-proposed Scheme is a comprehensive training scheme, the following modes of training are allowed: a. EnterMrise-based Training. Employers develop their own in-house training programs to improve employee skills and enhance productivity. Enterprise-based training can be provided on-the-job under the guidance of a trained supervisor or it can be provided off-the-job in employer-owned training centers. b. Institution-based Training. Training offered by providers such as public/private training institutions, consultancy firms, industry-managed training centers, Chambers of Commerce and industry associations. ANNEX 7 Page 8 of 9 c. Cooperative-type Training. Large enterprises with excess training capacities can offer training places to employees of small enterprises. d. Other forms of training e.g., apprenticeship, contract training, etc. 18. Other Training Schemes 18.1 Various training schemes should be developed to enable employers to participate in support from the SDF. Brief descriptions of the two most common schemes used by skill development funds in other countries are presented for consideration. a. The Approved Training Program (ATP) Scheme. Training offered through the Approved Training Program (ATP) Scheme are usually offered by training providers from the public or private sector. Providers must be registered with the SDF Council. Employers may select training programs from a list of approved training courses/programs, are not required to seek prior approval of the SDF Council and may receive allowable costs on a reimbursement basis. b. The Annual Scheme. Employers may develop and use an annual training plan which is approved by the SDF Council for support from the Fund. The Annual Scheme is based on the following conditions: - An annual plan of significant training activities is required; - The training plan must cover at least 10% of the company's workforce; - The plan must be systematic; - The plan must consist of programs relevant to the company's corporate needs; - The plan must provide for monitoring and evaluating training effectiveness. 19. Application Procedures 19.1 To qualify for support from the SDF prior approval of the SDF Secretariat is required. Applications must be submitted in accordance with the following guidelines: a. Applications must be submitted three months before the program is scheduled to begin; b. Applications must be complete; c. Applications must be signed by appropriate company officials; d. Companies needing guidance in submitting a training proposal may contact the SDF Secretariat for assistance. 20. Claims for Training Grants 20.1 Training grants are reimbursed upon completion of approved training programs. Companies should submit claims for reimbursement on the appropriate forms not later than two months after the completion of the program. ANNEX 7 Page 9 of 9 Figure 1: Skill Development Fund - Flow of Funds Cua* Lr luezyke tmhdag e, TramnztgLevy & 3 4 Table. Present and Proposed Annual Intake Capacities of Proiect Vocational Training Centers LEGEND El General Electric Trades 01 Lab Assistants (Chemical) E2 Electrical Installation 02 Offset Printing E3 Electronics E4 Radio & TV Ml General Mechanical Trades E5 Refrigeration & Air Conditioning M2 Fitting and Welding E6 Electrical Machinary Maintenance M3 Metal Construction and Welding M4 Agro Mechanics B 1 Building Trades M5 Heavy Construction Equipment Maintenance B2 Plumbing and Pipefitting M6 Auto Mechanics B3 Carpentry -- Cabinet making, joints. M7 Marine Engines Maintenance B4 Interior Decoration M8 Hydraulic Equipment Maintenance M9 Industrial Machinery Maintenance C1 Accounts MIO Fine Mechanics C2 Secretarial Services Hi Hotel & Tourism Courses N) O X4 ANNEX 12 Page 1 of 4 REPUBLIC OF YEMEN VOCATIONAL TRAINIG PROJECT Table 1: Project Cost Summary by Project Item (YEMENI RIALS Millions) (US$ Millions) X % Foreign Total Local Foreign Total Local Foreign Total Exch. Base Costs A. VOC. TRG. SYSTEM MANAGEMENT Institutional Strengthening of GAVTT 11.9 21.5 33.4 0.1 0.2 0.3 64 1 Management of Voc. Trg. Centers 1.1 3.3 4.4 0.0 0.0 0.0 75 - Management Information System for VT 7.7 37.8 45.4 0.1 0.4 0.5 83 1 Skill Development Fund 79.9 108.5 188.4 0.8 1.1 1.9 58 4 Subtotal Vocational Trg. System Management 100.7 171.1 271.7 1.0 1.7 2.7 63 5 B. QUALITY IMPROVEMENT OF VOC. TRG. Curriculum Development 74.4 96.4 170.8 0.7 1.0 1.7 56 3 In-Service Training 112.2 108.5 220.7 1.1 1.1 2.2 49 4 Continuing Education System 9.7 43.4 53.2 0.1 0.4 0.5 82 1 Area High Tech Training Center 87.8 214.6 302.4 0.9 2.1 3.0 71 6 Strengthen Selected Exist. VTCs 853.1 2,035.2 2,888.3 8.5 20.4 28.9 70 56 Training for the Handicapped 33.9 91.2 125.1 0.3 0.9 1.3 73 2 Selective Expansion (2 new VTCs) 148.0 325.8 473.8 1.5 3.3 4.7 69 9 Subtotal Quality Improvement of Voc. Trg. 1,319.0 2,915.2 4,234.2 13.2 29.2 42.3 69 82 C. COMMUNITY BASED ADULT ED. Institutional Dev. of AET Centers 49.0 59.0 108.0 0.5 0.6 1.1 55 2 Dev. of Selected AET Centers (24) 136.1 342.9 479.0 1.4 3.4 4.8 72 9 Intro. to Marketing & Credit Alternatives 4.3 12.1 16.3 0.0 0.1 0.2 74 - Subtotal Comml. Based Adult Education 189.3 414.0 603.3 1.9 4.1 6.0 69 12 D. IMPLEMENTATION UNIT Establish of Implementation Unit @ GAVTT 14.6 38.4 53.0 0.1 0.4 0.5 72 1 TOTAL BASELINE COSTS 1,623.6 3,538.6 5,162.2 16.2 35.4 51.6 69 100 Physical Contingencies 143.5 333.7 477.2 1.4 3.3 4.8 70 9 l Price Contingencies 12.0 326.2 338.2 0.1 3.3 3.4 96 7 jTOTAL PROJECT COSTS 1,779.1 4,198.5 5,977.6 17.8 42.0 59.8 70 116 ANNEX 12 Page 2 of 4 REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT Table 2: Project Cost Summnary by Category of Expenditure (YEMENI RIALS Million) (US$ Million) % % Foreign Total Local Foreign Total Local Foreign Total Exch. Base Costs I. Investment Costs A. CIVIL WORKS Building Construction 797.4 863.8 1,661.2 8.0 8.6 16.6 52 32 Arch/Eng Design Fees 31.5 126.2 157.7 0.3 1.3 1.6 80 3 Subtotal Civil Works 828.9 990.0 1,818.9 8.3 9.9 18.2 54 35 |B. EQUIPMENT 166.0 1,493.8 1,659.8 1.7 14.9 16.6 90 32 C. FURNITURE 42.9 171.8 214.7 0.4 1.7 2.1 80 4 |D. EDUCATIONAL MAT. 75.1 300.3 375.4 0.8 3.0 3.8 80 7 SE. VEHICLES 20.2 181.8 202.0 0.2 1.8 2.0 90 4 |F. TECHNICAL ASSISTANCE Foreign Consultants 29.1 116.5 145.6 0.3 1.2 1.5 80 3 Local Consultants 107.8 - 107.8 1.1 - 1.1 - 2 Subtotal Technical Assistance 137.0 116.5 253.4 1.4 1.2 2.5 46 5 |G. TRAININGl Seminar 8c Workshops 209.2 89.7 298.9 2.1 0.9 3.0 30 6 | Study Tours - 9.8 9.8 - 0.1 0.1 100 - | Fellowships - 61.0 61.0 - 0.6 0.6 100 I Subtotal Training 209.2 160.5 369.7 2.1 1.6 3.7 43 7 | TOTAL INVESTMENT COSTS 1,479.3 3,414.6 4,893.9 14.8 34.1 48.9 70 95 II. Recurrent Costs A. ADDITIONAL STAFF 16.1 - 16.1 0.2 - 0.2 - - B. BUILDING MAINTENANCE 63.8 27.4 91.2 0.6 0.3 0.9 30 2 C. EQUIPMENT 64.4 96.6 161.0 0.6 1.0 1.6 60 3 TOTAL RECURRENT COSTS 144.3 124.0 268.3 1.4 1.2 2.7 46 5 TOTAL BASELINE COSTS 1,623.6 3,538.6 5,162.2 16.2 35.4 51.6 69 100 Physical Contingencies 143.5 333.7 477.2 1.4 3.3 4.8 70 9 Price Contingencies 12.0 326.2 338.2 0.1 3.3 3.4 96 7 TOTAL PROJECT COSTS 1,779.1 4,198.5 5,977.6 17.8 42.0 59.8 70 116 ANNEX 12 Page 3 of 4 REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT Table 3: Incremental Recurrent Cost Summary (Government 1) (YR millions) Project Components Category Governance Quality AET Total Improvement Salaries 1.1 2.2 Building Maintenance 13.4 0.8 14.2 Equipment Maintenance 0.9 26.1 2.0 29.0 Totals 2.0 39.5 3.9 45.4 1/ Expenditure for quality improvement (consumables, part-time instructors from industry, and instructional resources) will be met through allocations from the SDF. ANNEX 12 Page 4 of 4 REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT Table 4: Financing Plan by Disbursement Category US$ Million IDA OPEC Other Government Total Co-Financing Co-Financiers Financing Category of Expenditure Amount % Amount % Amount % Amount % Amount % Arch/Eng Design Fees 8.2 40 10.0 48 2.5 12 20.8 35 Equipment, Vehicles, 14.5 50 10.8 37 3.8 13 29.0 49 Furniture & Ed. Material Technical Assistance 1.6 24 - 5.2 76 - 6.8 11 Operating Costs 3.2 100 3.2 5 Total Financing 24.3 41 10.0 17 16.0 26 9.5 16 59.8 100 Note: Figures may not add up due to rounding ANNEX 13 Page 1 of 1 REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT Procurement Arrangements' (US$ Millions) | Category J Procurement Method | NIF ICB NCB Other TOTAL Civil Works Construction/Rehabilitation 3.0 6.1 10.0 19.1 (2.4) (5.0) (7.4) Arch/Engineering Fee' 1.0 0.7 1.7 (0.8) (0.8) Goods Equipment & Vehicles2 12.1 3.0 7.0 22.1 (10.6) (1.2) (11.8) Educational Material' 2.3 2.1 4.4 ____________________________ ~~~~~~ ~~ ~~(1.8) __ _ _ _ _ _ _ (1.8) Furniture4 0.8 0.3 1.4 2.5 (0.6) (0.2) (0.8) Technical Assistance Specialist Services' 1.6 1.2 2.8 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _(1 .6 ) _ _ _ _ _ _ _ _ _ _ _ _ Training5 4.0 4.0 Operation Recurrent Costs 3.2 3.2 Total 15.9 6.1 8.2 29.6 59.8 (13.6) (5.0) (5.7) 24.3) Note 1: Figures may not add up due to rounding Note 2: NIF: Non-IDA financed 1/Figures in parenthesis are the respective amounts financed by IDA 2/lnternational Shopping for specialized equipment (US$ 3.0 million) 3/Direct Contracting with copyright owners (US$ 1.0 million). Intemational Shopping (US$ 1.3 million). 4/National Shopping (US$ 0.3 million) 5/Procurement of consultants' services for technical assistance and training will be in accordance to Bank guidelines. ANNEX 14 Page I of 1 REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT Table: Estimated Disbursement Schedule (US $ million) IDA Fiscal Year and During Semester Cumulative Percentage of Semester Ending Disbursement Disbursement Total Credit 1996 December 31, 1995 0.0 0.0 0 June 30, 1996 0.5 0.5 2 1997 December 31, 1996 1.2 1.7 7 June 30, 1997 1.9 3.6 15 1998 December 31, 1997 1.7 5.3 22 June 30, 1998 2.0 7.3 30 1999 December 31, 1998 3.9 11.2 46 June 30, 1999 4.6 15.8 65 2000 December 31, 1999 1.7 17.5 72 June 30, 2000 1.9 19.4 80 2001 December 31, 2000 1.0 20.4 84 June 30, 2001 1.5 21.9 90 2002 December 31, 2001 0.2 22.1 92 June 30, 2002 1.0 23.1 95 2003 December 31, 2002 0.4 23.5 97 June 30, 2003 0.3 23.8 98 2004 December 31, 2003 0.5 24.3 100 Disbursement Summary Fiscal Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 Annual 0.5 3.1 3.7 8.5 3.6 2.5 1.2 0.7 0.5 Cumulative 0.5 3.6 7.3 15.8 19.4 21.9 23.1 23.8 24.3 Percentage 0 15 30 65 80 90 95 98 100 ANNEX 15 Page 1 of 1 REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT SUMMARY OF TECHNICAL ASSISTANCE REQUIREMENTS Foreign Local Study Tours Foreign Local Experts Fellowships Fellowships (Foreign) COMPONENT/SUB-PROJECTS Experts (seminars/ workshops) p PM P PM P PM P PW P PM 1.0 Management & Financing of VTS rl == = = = A. Institutional strengthening of GAVT 1 3 2 4 20 20 6 6 B. Improving management of VTCs 1 3 1 3 5 20 20 . C. Developing MIS for VTCs 1 2 l 3 30 100 D. Establishing SDF 1 5 2 5 2 1 12 12 2 2.0 Quality Improvement A. Strengthening Institutional Capacity for . . . . 600 600 4 4 o Curriculum development 2 11 4 31 4 16 120 240 o Trainee assessment 3 14 6 25 4 16 120 432 o Instructional material development 3 26 3 52 4 16 312 2352 B. Inservice Training of Trainers o Training of master trainers for TDCs . 9 36 o Development of skill proficiency of - 576 2304 trainers in respecdve trades I o Industrial training of trainers 1 4 1 4 - - 432 5184 C. Developing a system for Continuing _ 7 2 12 18 54 60 120 Education D. Establishing a hi-tech training center 1 6 - 6 12 48 E. Strengthening Selected VTCs 3 l l 3 1 1 4 36 68 156 3 3 F. Rehabilitation of physically handicapped 1 5 12 6 500 through vocational training 3.0 Adult Education & Training for females o Insttutional Development of AETS 4 58 9 28 647 2544 8 5 o Development of Selected AETCs 3 9 6 144 1920 4 o Introduction to marketing & Credit 2 10 2 8 5 50 0s 4 Altematives 4.0 Project Implementation Unit at 4 8 5 20 5 10 35 50 GAVT GRAND TOTAL 32 182 47 368 62 244 3,102 16,604 21 2I P Number of persons; PM Person Months; PW Person Weeks REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT IMPLEMENTATION SCHEDULE 1995 | 1996 1 1997 1 1998 1 1999 | 2000 2001 2002 2 ID Task Name Dur. Start Finish 2 3141 31213144i 2 111213141 121314111213141112 33141121314 12 I Vocational Training Proije 2005d 1013195 611103 . -.i- I .III.Ei 111.! i .--Ilil 11Ii1 2 A. VTS Management 525d 1013/95 10/1197 I-iqJ ,J I i 3 A.2 Management of VrCs 263d 10/3/95 10/1/96 1 4 A.3 MIS for TCs 370d 114/96 6/1197 J I I 5 A.4 Skill Development Fund 263d 10/1/96 1011/97 | - 6 A.1 Institutional Strengthening of GAVT 262d 10/2/96 10/1/97 i ! 7 B. Quality Improvement 1753d 4/2/96 12/12/02 i I I_;.___ _:__ 8 B.7 Selective Expansion: Two Pilot VTCs 708d 4/2/96 12/12/98 . _ _ _ I 9 B.1 InstitutionalStrengtheningofVT 1112d 6/4/96 9/1/00 m i i i_i 10 B.3 Developing a System of CE 915d 9/2196 3/1/00 1 i - i 11_111_1| I 11 B.4 Establishing an Area Hi-tech Trg. Center 415d 10/1/96 5/1/98- I ti 12 8~~~.5 Strengthening Selected VTCs 50d1//6 919 iI 13 B.2 In-service Training of Trainers 1618d 10/4/96 12/12/02 . I . .. - i i. . 14 B.6 Rehabilitation of Physically Disabled 1544d 1/3/97 12/1/02 lit I + i -. . --I -I 15 C. Adult Educ-ation & Training 1/1/03 k%VTPRJSCHANX REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT Management and Financing of the Vocational Training System 11995 1996 19-97 J 1998 1 1999 1 200 1 2001 2002 2003 ID Task Name 41121314 11121314111231411121311112131411213141 121314 12131 I Management and Financing of VTS99 2 1.1 Institutional Strengthening of GAVTrt1,103 3 Estabtlaisment of NcvT 'I 4 ~~~~~Gov. pots. & procedrs mnl rvwd & finalized -l i I~ 5 ~~~~~~~~~Gov. pois. and procedra adopted 6 tnterim Chairperson for NCVT appointed 7 Membersappointed to NCVT I 8 GAVT reoganized F I i II 9 ~~~~~~~~~Firstimeetingof NCVr 5/5I Ii 10 Study VsMotdtoof senmw edineisifators I. . 11 FEto train GAVrT& NCVTSstaffton org. dev.011/5 1011 121'31 ~~ ~.. .- '12 LE to train GAVrT & NCVT staff on org. dav. I . 14 ~~~~~~GAVriTProc. of Fwn., Et, anld Vehicle I'1I 1 1 ___ I10I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~2 3J31iI 15 tCVTa implemented in six Vits I I~~~~~~~~~~~~~~~~~~~~~~~ ii F It1 F FI 16 ~~~LTPACs inplemerted in six VTCasJWTV 1 6~~~~~~~~~~~~~~~~~~~~~~~ 17 ~~~LCVTs <PACs implemented inramnainkiV VCs I I 18 1.2: Improving Managemnent of VTCs 20 VIC Diroctora - oneo-weak wrkshp on kscat gav. i i I ~ 21 ~~~6 VTCs seleclod far pitoft LCVra & LTPACs IIII F A:YINSTRG.GVr REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT Management and Financing of the Vocational Training System 1995 1996 1997 1998 1999 20020 01 2002 2003 ID Task Name 41 2341- 2 34 4 1 34 2 1 3 1 4 1 2V T 4 II 1 2 3 44 22 LCVTars gganhed 30 6 P"oVrCs jj I i 23 LTPACaorgaildsi.ttd at he--p--- -i - - _rC ._. -- 24 Local gov. pilt effort evakd & prcss refinied f ~ I - 25 LCVTs & LTPACs asfbd remaVTCs I I 26 1.3:MISforVTCS 2 3113 27 C omphAa r ocLtor wdtad - . ._ .... H I 28 FE£LEisatioomnpAwes eV nVrCs| I I 29 Comm. software pkgs adaptedforuaa - -;1ti| Im [ 1 30 Oirwadorsri naedoto pm posapfthe MIS I | . i _ If I i~~' .11 IlK 31 VTCpwsonnil tramedinusoda I -10 |1 i 1i u I o ofi 32 MIS operation and development - Year 1 | _| | | 33 Fui.datitycdths MISis rvwtdrwndrht-Yr2 - ---5t_-| 1 11311 | | r j 34 1.4: Estabttshing the StilIl Developmwnt Fund - - I I 1i | 1i j- - 35 htCanCtiarman for SDF Councdpid pp31 P t [ t 1- toe SOP s~~~~~~ned ~3131 F 36 t3ovornmwDwecrrlor SDF aid -- g-4-n I :.i I V !| 1!1 g I 1 37 Opertot Proceres afor SFfnzd f 31 - z 1!I - -. I - !I .! 39 SDFCotci memberstipac md£rrcd d 11 1 I i i i j i i-i| ||: FC °~~~~DCOIKGdOVIeCIO rIWCjiX1 -Lr - [ 1- 1 I0 ll SILI; 41 SD Comdnwmi ncktrappointed1 1 1_ L AW'NSTRG.GVT @ REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT Management and Financing of the Vocational Training System _ 199 1996 1997 1998 1999 2000 2001 2002 2003 ID TaskName 4 1 12 13 4 212|3| 4 1121314 1 2 3 1 4 1 2 3 4 1|2|3 41 4 21 23| 4 43 SDF Cral Gen Dir. a Acnt-2 wk sdy tr I . 1E2 . r : q j - - 44 Reg. iks of qualted arnpoyars developed 1a u3I 1 -i- . | ii l 45 3 I s rl3 r of c totm.VFC directr r SDFC detai -411 46 VWksh,ftor 12 SDF CounciaGAVITa SOFrr _-- -- - -G-|-- staff an - po c---|is 47 By-lwa & Regulations for SDF: Study tour by LE - | 48 SF re.hsta frmaed, trg a work parm tfe coll. b5gfh . | 49 SDF Coudltmri.h r--:: : :it fu:::::k -i :4ar 50 Johtr bb lt progresraview -SDFCANSSL/IDA § . i1 II-i- ~~~~~~~71 o x A:UNSTRG.GVT ANNEX 17 Page I of I REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT SUPERVISION PLAN1 IDA FY & ACTIVITY & FOCUS SKILL STAFF Approx. Dates REQUIREMENTS WEEKS Year 1 Preparation for implementation through a project launch -Education Specialist/Task Manager FY96 workshop. This activity will deliniate clearly the respective -Procurement/Disbursement Specialist December 1995 functions of all project entities vis-a-vis the NCVT and the -Vocational Training Specialist 8 SDF; the interrelationships of subproject activities; TA -Curriculum & Evaluation Specialist procurement; and civil works for new VTCs. -Adult Ed. & Training Specialist FY96 Supervision Mission: The mission will focus on TA start up -Education Specialist/Task Manager May 1996 activities, in particular study tours, and implementation of the -Curriculum & Evaluation Specialist 6 TA package. -Procurement Specialist -Operations Officer Year 2 Supervision Mission: Focus on Subproject implementation; -Education Specialist/Task Manager FY97 civil works for rehabilitation -Operations Officer 5 November 1996 -Architect FY97 First Joint Annual Review: The supervision mission will -Education Specialist/Task Manager May 1997 conduct a comprehensive review of project inputs, operations -Operations Officer 6 and outcomes with concemed authorities, and assess the -Curriculum & Evaluation Specialist progress made by NCVT and SDF Council. -Adult Ed. & Training Specialist Year 3 Supervision Mission: Focus on project implementaton -Education Specialist/Task Manager PVWU activities. -Operations Officer 6 October 1997 -Vocational Training Specialist -Adult Ed. & Training Specialist FY98 Supervision Mission: Focus on sub-project implementation, -Education Specialist/Task Manager April 1998 civil works for rehabilitation. -Operations Officer 5 -Architect -Vocational Training Specialist Year 4 Second Joint Annual Review: Assess progress made by (I) -Education Specialist/Task Manager FY9 NCVT toward quality improvement of VT; and (2) SDF -Curriculum & Evaluation Specialist 6 October 1998 Council in SDF allocations based on monitoring indicators; -Operations Officer focus on sub-project implementation. -Adult Ed. & Training Specialist FY99 Supervision Mission: Focus on implementation. -Education Specialist/Task Manager February 1999 Arrangements for a tracer study will be made for two batches -Operations Officer 5 of graduates from rehabilitated VTCs. -Vocational Training Specialist -Adult Ed. & Training Specialist Year 5 MID-TERM REVIEW: A joint mid-term review with a view -Education Specialist/Task Manager PY200 to carry out a comprehensive review of the project's actual -Operations Officer June 1999 versus planned program. NCVT and SDF Council will be -Vocational Training Specialist requested to prepare mid-term evaluation reports before the -Curriculum & Evaluation Specialist 8 supervision mission arrives. Upon completing the mission, -Adult Ed. & Training Specialist the TM will prepare the Memorandum of Understanding which will include recommendations for project restructuring, if necessary. The pilot phase of the AET component and the tWO pilot VT centers will be reviewed to deternmine progress. FY2000 Supervision Mission: Focus on implementation: civil works, -Education Specialist/Task Manager 3 November 1999 equipment maintenance, pro ress made by SDF. -Operations Officer Year 6 Supervision Mission: Focus on implementation: project -Education Specialist/Task Manager FY2001 accounts, SDF biannual report. -Operations Officer 3 April 2000 -Achitect FY2001 ** Annual Review: Assess progress made by NCVT toward Staffing same as annual review 8 September 2001 quality improvement of VT, and SDF Council's progress in missions SDF allocations for pre-service and in-service training. (1) Supervision missions will be scheduled approximately 5-6 months apart with some 11 staff weeks allocated per staff year. 18 staff weeks are envisaged during the first year of project implementation. (2) Project supervision will be carried out in conjunction with other ongoing education projects in Yemen portfolio (3 in number); the total time spent on the project, therefore, will not be calculated as full time for the missions. NOTE: ** Supervision during year 7 will be similar to the last three years shown in the table. An Implementation Completion Report (ICR) will be produced in Year 2002 (FY2003). ANNEX 18 Page I of 2 REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT MID-TERM REVIEW Objectives The objectives of the mid-term evaluation will be to (i) review, with the executing institutions, the progress made on project implementation and efficiency of governance and financing of vocational training; (ii) review the government's strategies and action plans and how they are being implemented; (iii) review the progress made in enhancing private sector participation in management and financing of vocational training; and (iv) discuss the impact of the government's reform program on the training sector as a whole, especially its capability to respond to labor market demands. Timing and Procedures No later than June 30,1999, IDA and the government will jointly evaluate the progress of the project. The review will be based on preliminary reports prepared by the National Council for Vocational Training (NCVT) and the Skill Development Fund (SDF) Council, covering the issues described below. Individual sub-project progress reports and financial statements, information based on monitoring indicators (for details refer Implementation Volume 1), IDA supervision mission aide- memoires and other NCVT documents will be used to prepare the preliminary report. The NCVT and SDF Council will submit the reports to IDA and the government no less than 3 months prior to the mid-term review. Focus of Preliminary Reports The NCVT preliminary report will cover the following issues and questions: (1) Extent to which overall commitments, disbursements and counterpart funding are in accordance with forecasts made at the time of negotiations, discussions of any shortfall, and proposals for remedying inadequacies in procedures leading to shortfalls. (2) Review of commitments, disbursements, and counterpart funding on an individual sub-project basis. (3) Review of NCVT's procedures, i.e., the extent to which guidelines are being followed and continue to be appropriate, noting examples of best practice adoptions, achievements, and successes as a consequence. Review of governance procedures, management and feedback mechanism. Review of adequacy of coordination among the sub-projects. (4) Review of efforts at cost recovery and cost sharing in the maintenance and consumables within vocational training centers. (5) Review of extent to which policy framework has facilitated a demand driven VTS and increased provision of private training. (6) Review of skilled manpower demand in different regions and evaluation of the performance of the two pilot centers. ANNEX 18 Page 2 of 2 The SDF Council preliminary report will cover the following issues and questions: (1) Evaluation of SDF's operation -- review of SDF procedures, i.e., the extent to which guidelines are being followed and continue to be appropriate, successes or setbacks as a consequence. Review of contributions to VTCs and private sector training initiatives and making adjustments for future levels of contributions, if required. Review of SDF administration -- audited statements of accounts. (2) Review of commitments and disbursements from SDF for pre-employment training and in-service training since the establishment of the Fund. In this regard, review of extent to which government subsidies to the VTS has diminished in absolute terms. (3) Review of extent to which private sector participation in management and financing of vocational training has increased since the establishment of the Fund i.e., progress to date, and recommendations for new initiatives. Recommendations on future courses of action to ensure employers' participation in the provision of pre-employment and in-service training. (4) Assessment of extent to which the Fund has contributed to the objectives for which it was created and its contribution to quality improvement of the VTS. In addition to the two preliminary reports to be prepared by the NCVT and the SDF Council, the Project Development and Monitoring Agency (PDMA) of the Intermediary established under the Education Sector Investment Project will submit a preliminary report on the progress made during the pilot phase of the Adult Education and Training (AET) component. Results of the Review On the basis of the review, the government shall: (a) adopt improved operational guidelines for the NCVT and SDF Council respectively, as appropriate; (b) revise sub-project objectives and strategies as appropriate; and (c) reallocate funds across sub-projects as appropriate to enhance the impact of sub- projects. During the mid-term review, IDA and the government will focus on identifying existing problems in the overall governance of the vocational training system and of the effects of government policies on the training sector in Yemen. A discussion of the results of policies and programs to be implemented on the basis of the review will be furnished and a joint work program for the remaining implementation years of the project will be finalized with the NCVT and SDF Council. The project would then be modified on the basis of the findings and recommendations of the mid-term review. The need for further expansion of the system will be considered based on demand for skilled manpower, and appropriate financing options will be explored. ANNEX 19 Page 1 of 2 REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT IMPACT ASSESSMENT Impact assessment aims at determining the extent to which a project would continue to produce an acceptable flow of net benefits beyond project completion date. The assessment involves categorizing a number of sustainability indicators based on the flow of project benefits after project completion, to measure over tine the post-completion levels of inputs, outputs, efficiency, quality and spin-off effects. (Refer OED Report No.9225, Pages iii, 49 & 50) In order to assess the extent of flow of project benefits beyond project completion, baseline data at the start of the project or from a later date (as may be applicable and practicable) and the progress in the flow of benefits after the baseline date would be required. The post-project trends in flow of project benefits would be compared with trends during the project. Sustained flow of benefits at levels commensurate with the socio-economic context of the country would indicate positive impact. Impact assessment of the Vocational Training Project would be conducted in the context of the three major objectives of the project: (i) strengthening vocational training system (VTS) management by providing a major role to employers in policy-making, management and financing of the VT system; (ii) improving the quality and relevance of VT programs; and (iii) reorientation through participation of communities, of adult education and training programs for women to improve their relevance. The General Authority for Vocational and Technical Training (GAVTT) would undertake the responsibility of gathering data from the vocational training centers (VTCs), the Skill Development Fund (SDF), the Local Councils for Vocational Training (LCVTs) and Local Training Program Advisory Councils (LTPACs) with regard to each impact indicator. Data gathering would commence from 1996, the year of project commencement or likely date from which the benefits with regard to the indicator could be anticipated and would continue to be gathered annually. Data processing and analysis would be undertaken by GAVTT with assistance from the management information system (MIS), from the time the latter becomes operational. A list of indicators giving the expected breakdown for data collection with regard to each indicator is given on the following page. Baseline data would be established during the first year of the project and tracer studies would be initiated as soon as new curricula have been implemented. ANNEX 19 Page 2 of 2 Table. IMPACT ASSESSMENT FOCUS OF PROJECT IMPACT ASSESSMENT - Percentage of graduates employed - Average wage of employed graduate - Gestation period between graduation and first employment - Training relevance to employment (in percentage) - Percentage of AET participants engaged in income generating activities - Percentage of trained handicapped persons gainfuly employed - Increased private sector partidpation in management & financing of VT o No. of employers registered with Skill Development Fund o Skill Development Fund revenue o SDF contribution to VTC budgets (as percentage of VTC budgets) o SkiD Development Fund reimbursement of in-service training costs Other Relevant Indicators for Impact Assessment NL PG RIU M/F INPUTS: No. of Government (Public) VTCs * * No. of two year (full-time) programs * No. of AET Centers * * * No. of AET programs * * * No. of Enterprises (employers) providing in-service training * No. of private training centers * * No. of centers providing training to handicapped OUTPUTS: Enrollment in Public VTCs ' full-time programs * * S * Enrollment in Public VTCs' Continuing Education programs * * * Enrollment in AET Centers * * * Employee enrollment in in-service training programs * * * No. graduating from public VTCs' full-time programs * * * * No. completing AET programs EFFICIENCY: Completion rate 1/ * * * * Drop out rate 1/ * * * * Repetition rate 1/ * * * * Trainer-trainee ratio 1/ * * * Average Trainer contact hours for week 1/ * Average Instructional hours per week 1/ * Average Instructional days per year 1/ * Average Equipment Utilization (H, M, L) * * OUALITY: Improvements in curricula (DR). 1/ * * Improvements/additions to training materials (DR). 1/ * * Improvements in Trainee Assessment system (DR). 1/ * * Instructor development (in-service training) person months. 1/ * * Local needs/demands assessment studies (DR) 1/ * * Government policy implementation on management & financing of VT (DR) SPIN-OFF: Innovations in government policy, curriculum development, trainee assessment, * * VTC-employer participation (DR) 1/ 1/ Data to be gathered separatelv for: VTCs, AETs, Hi-tech Training Center, Enterprises providing in-service training, Centers providing training to the handicapped, Private Training Centers (if any). NL National RU Rural - Urban DR Descriptive Report PG Program MF Male - Female H, M, L High, Medium, Low ANNEX 20 Page I of 3 REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT RISK ANALYSIS FOR IMPLEMENTATION OF PROJECT COMPONENTS 1. Recent IDA projects in Yemen have experienced substantial implementation problems, some of them project specific, others of a more generic nature. The relevance of generic issues is shown in the attached Table 2; they include administrative inefficiency of borrower agencies, unrealistic exchange rates affecting procurement of civil works, and difficulties in site acquisition. To minimize these implementation risks, including the project specific ones relating to sector policy reforms, special provisions have been made in the design and implementation plan of the proposed project. These provisions include: (a) The participatory design which reinforces the borrower's ownership of the project. (b) A firm government commitment to policy reforms reflected in the Sector Development Policy Statement (Annex 1). (c) Legal action already taken to implement policy reforms: decrees were reviewed during appraisal and have been issued before negotiations by the Minister of MSSL on (i) setting up a new governance structure for vocational training (Annex 6); and (ii) establishing a Skill Development Fund (Annex 7). (d) Carefully prepared technical assistance packages designed to strengthen the Project Implementation Unit (PIU), support the reorganization of GAVTT, and train local VTC managers (Annex 15). (e) Agreement with the borrower to pay local contractors in US dollars which can be exchanged in the open market at realistic rates. (f) The fact that few new sites would have to be acquired. (g) A detailed supervision plan (Annex 17). 2 Support for project implementation will also be given by the newly established resident mission in Sana'a. 3. With the closing of four projects in the last three years, at present, the education portfolio consists of three projects only -- 1-3 years old. The total credit amount for these projects is US$72 million out of which some US$28 million have already been committed for disbursements in about two years. Inspite of the persistence of generic implementation problems, the education portfolio would show marked improvements in the coming years. One 'U' rated credit has already closed and the other should now move to 'S' because of improvement in its implementation. 4. Civil works could be singled out as the most important factor for poor performance of the education portfolio during the last five years and key reasons were: (i) change in sites requiring redesign of buildings (Crs. 1470, 1645 ): Remedy there would be no new sites in the proposed project; (ii) delays in contract award even after IDA reviews (Crs. 1645, 1773): Remedy - this is a key focus of FY95 CPPR and some solutions are expected; and lastly, the most important reason (iii) severe slide in US$- YR market exchange rates made it difficult for the civil works contractors to complete YR - denominated contracts (Crs. 1340, 1470, 1645, & 1773): Remedy - all contracts would be denominated in US dollars, all new US$ contracts are doing well. ANNEX 20 Page 2 of 3 Proiect ComDonents. Risks & Measures Component/sub-component Risks Measures to Minimize the Risks 1. Institutional Development: (I) Strengthening the capacity of i) Capacity of GAVTT and MSSL to plan * Committment of Government and employers during all GAVTT to facilitate policy- and implement reform program due to stages of preparation through participatory project design making, set national standards for bureaucratic practices and financial * Sector development policy statement signed by the Dy. Prime VT, and monitor implementation constraints; Minister reflects a firm government commitlment; and compliance. ii) The need for close coordination between * Agreement on action plan with government and employers; govermnent and employers legal actions completed e.g., decrees; iii) Complexity of the new management * Management structure developed on the existing institutions -- structure -- too many institutions; only two institutions at local levels have been added; * Carefully prepared TA package and presence of German consultants with GAVTT1; (2) Broadening the basis for VT i) Management of the SDF according to its * SDF managed by employers with representation from financing through a Skill mandate; Government; Development Fund. * TA from countries who are managing SDFs; II. Qualit, Improvement: (I) Strengthening institutional i) Capacity of GAVTT to plan and * Carefully planned TA to develop Yemeni staff; capacity for curriculum implement curriculum and other software * Specialists TORs include training of counterpart staff as a key development including trainee inputs; activity; assessment and instructional ii) Sustainability of reforms after specialists * Academic advisory boards with participation of employers material development. leave; would ensure sustainability of activities; (2) In-service training of trainers. i) In-service training to the large numbers of * In-service training would be done through modular training at instructors may slow down the pace of six centers; large numbers could be trained to synchronize with quality improvement; the pace of reforms; ii) The cost of this training may not be * The training would be financed through the SDF and would affordable from Government budgets; not depend upon Government budgets; (3) Developing a system of i) Capacity to plan and implement CE * Carefully designed TA for capacity development; continuing education (CE). programs ; * CE programs could be provided anywhere -- by industry, ii) Industry's confidence in the centers VTCs or jointly and would be supported by the SDF; providing CE programs; (4) Strengthening and i) Implementation delays, especially civil * Bidding documents for civil works and equipment would be rehabilitating 15 VTCs offering works, as experienced under ongoing ready before project effectiveness; programs in industrial and projects; * No land acquisition would be necessary; commercial specializations; Rehabilitating Sana'a Dhar-AI i) Shortage of Yemeni instructors; * Hotels in the geographic areas have assured participation in Hamd hotel and converting it into teaching and they would be represented in the governig a hotel and tourism institute councils; (5) Establishing a hi-tech training i) Sustainability of the center; * Center would be managed by employers from hi-tech centers center catering to training of and courses would be run on a full cost recovery basis; personnel in the use of hi-tech equipment and machinery. (6) Strengthening programs for i) Most of the centers for the handicapped * The component supports NGOs in VT for the handicapped, rehabilitating the physically are run by NGOs and may pose and has been included in the project on the specific request of handicapped through vocational implementation problems; Minister MSSL; training. * All proposals above US$20,000 would be reviewed by IDA; III. Adult Education and i) Community support for female AET * Community support would be a precondition for IDA support; Training requires specialized skills which AET * This component has been designed with the active involvement centers may not possess of women's associations and community leaders; ii) Instructors for AET programs may be * Support would depend upon availability of instructors who difficult to find; would be provided further training and adequate instructional resources. ANNEX 20 Page 3 of 3 Relevance of Generic Issues to Education Sector Projects Influence of Issues on recently completed and ongoing projects Issue Cr.1340 Cr.1470 Cr.1645 Cr.1773 Cr.2222 Cr.2412 (C) (C)IQ ( (O) (O) (O) Exchange Rate Discrepancy H H H H M L (Issues relating tofinancing of local contracts and support for foreign currency expenditures) Credit Effectiveness NA NA H H H H (Period between IDA Board approval to Parliament's sanction: expressed in months) Lack of Counterpart Funding NA NA NA NA NA NA (Issues of timeliness and adequacy offunding) ___ _ Cumbersome Administration H H H H H H (Number of ministries involved in clearing/authorizing project expenditure & subsequent payment from Special Account or application for direct payment from IDA in Washington) Procurement Policy (A) CIVIL WORKS (Issue of price escalation formulae in civil work contracts, pre- & post- H H H H H H qualification issues, negotiating before and during competitive bidding, avoiding awards if bids are deemed too high and seeking rebidding, awarding bids to other than the lowest evaluated bidder) (B) TA (C) EQUIPMENT NP NP NP NP NP NP NP NP NP NP NP NP Customs Clearance Procedures M M M M M M (Lengthy procedures a major obstacle to timely project implementation) Project Implementation Unit (PIU) Performance NA NA NA NA IP NA (Dearth of trained planners and managers; public sector remuneration insufficient to attract qualified financial & technical staff on full-time basis; reluctance of PIU to hire suitably experienced foreign technical assistance personnel) Compliance with Audit Covenants NA NA NA NA NA NA (Audit reports are submitted to IDA considerably behind schedule (i.e., 9 months after end of financial year ends)) Sectoral & Proiect-specific Implementation Issues Civil works procurement and construction Change in sites NA NA H M Award of Tenders H M M M Incomplete civil works M H M H C - closed; 0 - ongoing; H - high; M - medium; L - low; NA - not applicable; IP - Initial problems due to new PIU; NP - no problems with marginal approval delays; ANNEX 21 Page 1 of 5 REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT Background Table A: Emplovment in Industry and Commerce, 1993 in '0OOs I. Re istered Firms, total 48.5 Industry, total ' 32.3 of which Food Processing 12.4 Oil and Chemicals 9.2 Textiles / Footwear 4.0 Building Materials 2.6 Metal Working 1.8 Paper / Printing 1.3 Wood Working 1.0 Commerce total b/ 16.2 II. Small-scale Production and Services c" 100.0 III. Total Employment in Industry & Commerce 148.5 of which: Private Sector 133.8 Public Sector 14.7at ^' Statistical Yearbook, 1993 bl Survey undertaken by GAVTT Cl Mission estimate ANNEX 21 Page 2 of 5 REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT Background Table B: Vocational Training Centers in Yemen 1992/93 Number Governorate Ministry/Agency Remarks A. Industrial 1 Sana'a MOE Baghdad 2 Sana'a GAVTT Dahban 3 Hodeidah MOE 4 Dhamar MOE 5 Taiz MOE 6 Aden GAVTT Mansoora 7 Aden MConstruction Khormaksar 8 Abyan MOE Alkoud 9 Abyan GAVTT 10 Abyan GAVTT Agri. Machinery 11 Lahaj GAVTT 12 Hadramout GAVTT Mukalla 13 Hadramout MOE Agri. Machinery B. Commerce 14 Aden MOE 15 Hadramout MOE Mukalla C. Agriculture 16 Lahaj MOE D. Health 17 Aden MOH 18 Abyan MOH 19 Lahaj MOH 20 Hadramout MOH 21 Shabwa MOH 22 Al-Mahra MOH E. In-service Training " 23 Sana'a Elec. Corp. 24 Sana'a Mlnformation Radio & TV 25 Taiz MConstruction 26 Aden Elec. Corp. Source: GAVTT 1/ In addition to the four public sector in-service training institutions, four large private sector companies offer enterprise-based training -- Hayel Saeed Group of Companies, Thabet Brothers, Al-Thawarah Industrial Complex (a group of twenty small companies), and Yemen Hunt Oil Company. ANNEX 21 Page 3 of 5 REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT Background Table C: Enrollments, Graduates and Teachers in VTCs. 1992/93 Enrollment Number Graduates Teachers Student/Teacher Ratio Total Females 1 319 - 101 53 6 2 269 - 60 48 6 3 290 - 120 40 7 4 161 - 67 34 5 5 88 - 24 12 7 6 1,106 6 480 74 15 7 637 - 338 52 12 8 153 - 55 28 5 9 230 - 105 35 7 10** 230 - 116 16 14 11 177 - 105 23 8 12 296 - 136 36 8 13 116 - 39 18 6 Sub-Total 4,072 6 1,746 469 9 14 335 255 172 27 12 15 480 230 210 25 19 Sub-Total 815 485 382 52 16 16 26 3 10 9 3 17 204 100 90 8 26 18 120 46 50 11 11 19 144 54 71 11 13 20 220 220 100 12 18 21 102 - 34 17 6 22 154 40 65 15 10 Sub-Total 944 460 410 74 13 23 93 - 45 17 5 24 N.A. 25 101 50 19 5 26 36 15 9 4 Sub-Total 230 110 45 5 Total 6,087 954 2,658 649 9 Source: GA' Note: ** Abyan Industrial School (MOE) is closed since 1994. ANNEX 21 Page 4 of 5 REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT Background Table D: Typical Curriculum Structures in VTCs, 1992/93 A. NORTHERN GOVERNORATES Number of Hours per week Subject Yearl Percentage Year2 Percentage Islamic Religion 3 3 Arabic 3 25.6 3 25 English 2 2 Sociology 2 2 Mathematics 2 5.1 2 5 Industrial Drawing 3 3 Material Science 1 10.3 - 12.5 Basics 1 (Electrical/Mechanical) Technology I Practical Work 23 59 23 57.5 TOTAL 39 100 40 100 B. SOUTHERN GOVERNORATES Arabic 2 2 English 2 13.9 1 11.1 Sociology 1 1 Mathematics 2 2 11.1 8.3 Science 2 1 Technology 6 25 8 30.6 Technical Drawing 3 3 Practical Work 18 50 18 50 TOTAL 36 100 36 100 iource: GAVTT ANNEX 21 Page 5 of 5 REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT Background Table E: Annual Work Permits Issued to Expatriates Country of Origin No. of Permits Asian Countries 10,800 Arab Countries 6,328 European Countries 1,741 African Countries 928 Others 739 Total 20,536 Employed in Governorates Sana'a 6,183 Aden 2,941 Taiz 934 Hadramout 762 Al-Hodeidah 733 Other Governorates 2,673 Not Specified 6,310 ANNEX 22 Page 1 of 2 ECONOMIC JUSTIFICATION OF PROJECT 1. The project would generate significant economic benefits on a sustained basis. The US$ value of such benefits has been estimated in constant 1995 prices, using the average market rate of $1 =YR120. Deducting from these benefits the estimated costs of the project (capital expenditures, incremental recurrent cost and opportunity cost of trainees) a stream of net benefits was projected for a period of 20 years. The estimated net benefits formed the basis for calculating internal rates of return (IRR) for the two main project components: (a) vocational training in VTCs and enterprises; and (b) adult education and training for women. A. VOCATIONAL TRAINING a. The following assumptions have been used to estimate the IRR: (i) The capital expenditures are US$52.9 million, i.e. the total investment cost of this component, to be disbursed over 8 years. (ii) Incremental recurrent costs are derived from Annex 8, tables 1 and 2. They would rise gradually as the project is implemented, leveling off a US$1.6 million after 2003. (iii) The graduate output has been assumed at the eventual planned capacity of 3200 p.a. in the public sector VTCs and at 1000 graduates through enterprise-based training programs. (iv) Opportunity costs of trainees reflect average annual earnings of US$560 and unemployment rate of 30%. (v) Gross benefits, the estimated earnings of trainees after graduation, are assumed as US$840 and would increase by 3.5% over time reflecting productivity gains supported by continuing education sub-component of the project. As the project would be demand driven, graduates would have no difficulties finding employment in modern manufacturing and service industries. Some graduates would also start small businesses, mainly in service sectors. An employment rate of 90 percent for VTC graduates and 95 percent for enterprise based training graduates has been assumed. b. Additional benefits not included in these estimates would be generated from training of the handicapped and literacy and health education of women. B. AET FOR FEMALES Capital expenditures for this component would be US$6.9 million. Incremental annual recurrent cost would be relatively low -- US$0. 17million. The opportunity cost have been estimated at US$50 p.a. while gross benefits after training would be US$200 p.a. 2. Based on these assumptions, the IRR would be about 16%. SENSITIVITY ANALYSIS 3. To account for possible risks in generating benefits, two variables (employment rate and wages of graduates) were found to have a major effect on the IRR; the sensitivity analysis done for these variables (without changing other assumptions) for the range described below is shown in the attached graphs: a. The employment rate of VTC graduates may go down below 90% ; its effect on IRR is shown in the Graph 1 for an employment rate between 60-90%; an employment rate of 60% is, however, highly unlikely as the project is demand driven. ANNEX 22 Page 2 of 2 b. The salary of VTC graduates may fall short of the assuined value of US$840; its effect on the IRR is reflected in Graph 2 for a salary range Of US$640 - 940. GRAPH I Relationship between IRR and em-pioyrnent rate of VrC graduates' 1 6. . . . . .;t l0 iillt; iit;-tiitlt$0i0-0t 000 ;tt-000-i 4- -X 00-- |; ig;-; t;~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~~.......... so .,.. ...... . .'- X ''"t "''' .. ......... ....''' t "'........."''' '"'"''" IR...... . .. . .. ...... . .... .. ............-. .. .. ..... . .:;0 T;:t$t i t; - ; ; t ;:i0 t; t$| $ .- 2 - ...... ... . - .-... ; . .. . ... ... ... .. .:: .:; : . :E . . . . . IR 8 S ~~~~~.. . . . . .. . .. . . . . . . . . . . . . . . . . .... ... |IR ~~~~~~~~~~~~~.. .. .. .. -- .. ... .... ........ ; ;-:taiH , -- --- t--a--- : ...... ... ...... -,:.. . .... ..... -. :-- - E- : - - - : . :: ii : : E E E E i ,--: 2 - t - i-X-- 0 - - t -00-0X-i ;; 0 ;- i;-;t 0- i.. ..... ................t O~~~~~~~~~~~~~~. .. .. .. .....g 640 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ . ... .4 . ...... .... Irial~~~~~~~~~~~~~~.. .al.......gr....(USS ANNEX 23 Page 1 of 2 REPUBLIC OF YEMEN VOCATIONAL TRAINING PROJECT SELECTED DOCUMENTS AND DATA AVAILABLE IN THE PROJECT FILE Anthony Edwards, Labor Market Study for Community Colleges, Study commissioned by IDA for the Yemen Education Sector Investment Project, June 1993. Central Statistical Organization, Ministry of Planning and Development, Republic of Yemen, Statistical Yearbook 1993. General Investment Authority, Progress in Implementing Projects Licensed by the General Investment Authority Head Office in Sana'a since establishment from March 1992 - December 1994, March 1995, Republic of Yemen. Gordon Hunting, Manuel Zymelman, Martin Godfrey, Evaluating Vocational Training Programs: A Practical Guide, World Bank Publication, Washington, D.C. 1986. Human Resources Development Fund (HRDF) in Malaysia, Documents and Acts. Liaqat Ali, Republic of Yemen -- Labor Market Study, May 1994, IDA sponsored study. Mun Tsang, Willingness to Pay, A Survey on Private Sector's Willingness to Pay for Vocational Training. Republic of Yemen, Rural and City Vocational Training Problems, A Needs Assessment Study -- August 1994. Republic of Yemen, Expansion Prospects in Vocational Training, A Working Paper -- August 1994. Republic of Yemen, An Assessment Report on Skills Development and Improvement, A Needs Assessment Study -- August 1994. Republic of Yemen, Human Resources: Development, Issues and Prospects, Population and Human Resources Division, Country Department II, Middle East and North Africa Region, June 1990, Report No.9096-ROY. Republic of Yemen, Human Development: Societal Needs and Human Capital Response, Population and Human Resources Division, Country Department II, Middle East and North Africa Region, June 1992, Report No.9765-YEM. Sana'a Chamber of Commerce, Alphabetical Itemwise List of Sana'a Industries, Sana'a, 1988-1989, Yemen Arab Republic. Sana'a Chamber of Commerce, Merchants and Manufacturers Alphabetical List, Yemen Arab Republic, 1988. ANNEX 23 Page 2 of 2 Shobhana Sosale, Issues in Financing Vocational Education and Training, A Background Report, February 1994, Population and Human Resources Division, Country Department II, Middle East and North Africa Region. Subramanya Balu, Survey of Vocational Training Centers, Data collected by Working Groups. 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