Documentof The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized ReportNo. 12529-ME STArF APPRAISALREPORT MEXICO Public Disclosure Authorized SECOND PRIMARY EDUCATION PROJECT MARCH11, 1994 Public Disclosure Authorized MICROGRAPHICS Report No: 12529 ME Type: SAR Country Department II HL'man Resources Operarions Division Latin America and the Cribbean Regional Office Public Disclosure Authorized This document has a resicted disMtibutionand may be used by recipients only in theperformance of their offlcial duties. Its contentmay no otherwise be disclosed without Wodd Bank authoroizaon CURRENCY EQUIVALENTS Currency Unit = New Peso (N$) USS1.00 = 3.12 New Pesos (Feb. 1993) FISCAL YEAR January 1 - December 31 ACADEMICYEAR September 1 - June 30 ACRONYMSAND ABBREVIATIONS ANAM National Agreement for Basic Education Modernization (Acuerdo Nacional para la Modernizacion de la Educaci6n Bdsica) CAPFCE Federal School Construction Agency (Comite Administradordel Programa Federal de Construcci6n de Escuelas) CAS Country Assistance Strategy CONAFE National Council for Educationai Development (Consejo Nacional de FomentoEducativo) at SEP CONALITEG National Free Textbook Commission (Comisi6n Nacional del Libro de Texto Gratuito) CONAPO National Population Council (Consejo Nacional de Poblaci6n) COPLADE State Planning Council (Consejo de Planificaci6ndel Estado) DGEI General Directorate for Indigenous Education (Direcci6n General de Eaucaci6n Indigena) at SEP DGEIR General Directorate for Evaluation (Direcci6n General de Evaiuaci6n, Incorporaci6n y Revalidaci6n) at SEP DGPPP General Directorate for Planning, Programming and Budgeting (Direcci6n General de Planeaci6n, Programaci6n,y Presupuesto) at SEP LGE General Education Law (Ley General de Educaci6n) MIS Management Information Systew NAFIN National Financing Agency (Nccional Financiera, S.N.C.) PAM Teacher Training Program (Programa de Actualizaci6n del Magisterio) at SEP PARE Bank's first Primary Education Project, Ln. 3407-ME, 1991 (Programapara Abatir el Rezago Educativo) PAREB Second Primary Education Project (Programapara Abatir el Rezago en Educaci6n Bdsica) PCU Project Coordinating Unit at the Federal level in CONAFE PME Education Modernization Program (Programapara la Modernizaci6n Educativa, 1989- 1994) PRODEI Bank's Initial Education Project, Ln. 3518-ME, 1992 (Proyectopara el Desarrollo de la Educaci6n Inicial) SCEP Servicios Coordinados de Educaci6n Pzdblica,former SEP delegation in the states essentially replaced by SEE SEB Undersecretariat of Basic Education (Subsecretaria de Educaci6n Bdsica) at SEP SEE State Education Entity (State Secretariat of Public Education or equivalent organization) SEP Federal Education Secretariat (Secretaria de Educaci6n P7blica) SHCP Federal Finance and Public Credit Secretariat (Secretariade Hacienda y Credito Pablico) SNTE National Teachers Union (Sindicato Nacional de Trabajadoresde la Educaci6n) SOLIDARIDAD National Solidarity Program (Programa Nacional de Solidaridad) SOPE State Secretariat of Public Works (Secretaria de Obras Pfiblicas del Estado) SPCU Project Coordinating Unit at the State level located in SEEs TAC Technical Advisory Committee TWP Teaching Career Program (Programa de la Carrera Magisterial) at SEP UPE Education Publications Unit (Unidad de Publicaci6n Educativa) at SEP FOR OFFICIALUSE ONLY MEXICO SECONDPRPMARY EDUCATION PROJECT STAFFAPPRAISAL REPORr TABLEOF CONTENS LOANAND PROJECTSUMMARY ................................ I. THE ECONOMICAND SOCIALCONTEXT .1 H. THE PRIMARYEDUCATION SYSTEM . ............ 3...............3 A. Overview. 3 R Issues in PrimaiyEducation. 4 Quality..... 4 Efficiency. 9 EquitY.12 C. Goverment Strategyfor the EducationSector .13 D. BankRole and Experiencein the EducationSector .15 E. LessonsLearned from Past Operations.16 m THE PROJECT.20 A. Project Conceptand Objectives.20 B. Project Areasand TargetPopulation .20 C. ProjectComponents .21 D. ProjectDescription .23 ComponentA. HumanResoumces Development .23 ComponentB. EducationalMaterial Resources .25 SubcomponentB 1. TeachingMaterials and Student EducationalPackages .25 SubcomponentR2. ReadingCorners .. ............... 25 SubcomponentB.3. Textbooksand EducationalMaterials for IndigenousEducation .................. : ..... 26 SubcomponentB.4. Improvementof PhysicalInfrastnucture .27 ComponentC. Institutionl Strengthening.29 SubcomponentC. 1. ManagementCapacity .29 SubcomponentC.2. TeacherIncentives .32 SubcomponentC.3. Improvementof the SupervisionSystem 32 SubcomponentC.4. Booksand MaterialsDistnbution System 33 SubcomponentC.S. ProjectAdministration .34 Thisreport is basedon thefindings of the appraisalmission that visitedMexico in November,1993. The ndssion wascomposed of Mmes./Messrs.Antonio Gomes Pereira (mission leader), Eduardo Wlez. Manuel Vra, John Innes,Rosaria Iroza, Robert Etheredge "LA2HR), Silvia Elena Arevalo, CarlosHeymans and MariaElena Anderson (consultangs). Messrs/Mme. ithnNguyen, Rosita V Esnuda, KWinRost (L42HR),and RebeccaCary (consultant)contributed to the reportat headquarters.Peer reviewers are MwchelleRiboud (EC4IIR)and Luis Pisani (LA4HR).Messrs. EdilberroL. Seguraand KyeRbo Lee are theDepartment Director and DivisionChief respectively, for this operation. Ths documenthas a restricteddistnbution and m beused by recdpients only in the perfornwn of icir officialduties. its contnts mawnot othevws be disclosedwithout Word Ba authoizadion. - ii'- IV. PROJECTCOST, PROCUREMENT,DISBURSEMENT, AND AUDITS. .......35 A. Project Costs and Finaning ............................... 35 B. Procurement......................................... 37 C. Disbursements....................................... 40 D. Accountsand Audits .................................... 41 V. PROJECTMANAGEMENT AND SUPERVISION..................... 42 A. Project Implementation............................ ..... 42 Project Preparation .............................. 42 Project Readinessand Implementation........... ............ 42 Project Monitoring.............................. 43 Annual ImplementationReviews ........ ............. 43 Mid-TermReview ................................. 44 B. Project Supervision ...................... 44 C. Project Launch Seminar ...... ........................ 44 VI. PROJECTBENEFITS AND RISKS .. 45 A. Project Benefits . ..................................... 45 B. Impact on Women...................................... 45 C. EnvironmentalInpact ................................... 45 D. Project Risks ......................................... 46 E. Program ObjectiveCategory ......... ...................... 46 VII. AGREEMENTSREACHED AND RECOMMENDATION................ 46 ANNEXES 1. ComparativeEducation Indicators 12. Strengtheningof Planningand Policy 2. Primary EducationEfficiency Analysis Indicators 13. Termsof Referencefor Process 3. EducationalExpenditures Evaluation& InformationSystems 4. GovernmentPolicy Letter 14. Termsof Referencefor Studies 5. Decentralizationof EducationBudget 15. TeacherIncentives by Project State 6. MarginalityRanking and Project 16. Project Managementand Flow of Areas Funds 7. IndigenousPopulations 17. Costs and Financing 8. ParticipatingMunicipalities and 18. Project Disbursements Beneficiariesby Project State 19. MonitoringIndicators 9. FinancialImplications of Extensionof 20. Amnnaland Mid-TermReviews Basic Education 21. SupervisionPlan 10. TeacherTraining 22. Project ImplementationSchedule 11. PhysicalInfrastructure and 23. List of Documentsin Project File DistributionNetwork MAP - IBRD No. 25451 MEXICO SECONDPRIMARY EDUCATION PROJECT LAN AND PROJECTSUMMARY Borrower: NacionalFinanciera, S.N. C (NAFIN) Gumrantor: United MexicanStates Beneficiaries: The Federal EducationSecretariat (SEP) throughthe National Council for EducationalDevelopment at SEP (CONAFE), and State EducationEntities (SEEs) in ten Mexicanstates (Campeche, Durango,Guanajuato, Jalisco, Michoacan,Puebla, San Luis Potosi, Tabasco,Veracruz, and Yucathin).In addition, the four states (Chiapas, Oaxaca,Guerrero, and Hidalgo)assisted under the first Primary EducationProject (Ln. 3407-ME,1991) would also benefit from the managementtraining program under the proposed project's InstitutionalStrengthening component. Amount: US$412.0million equivalent. Terms: Repaymentin 15 years, including5 years of grace at the standard variable interestrate. Project The project would improveprimary school students' academic Objectives: achievementlevels and reduce the high repetitionand dropout rates within ten of the country'spoorest states, contribute to raising the human capital level, redressingsome of the country's social and economic imbalancesas part of the Government'ssocial compensatoryprogram. These objectiveswould be achieved through: (a) trainingteachers and administrators;(b) providing classroom-testededucational materials for both teachers and students, includingspecific materials for indigenouspopulations; and (c) strengtheningthe institutionalcapacity of the education system, particularlyat the state level, to carry out its mandatewithin a decentralizedsystem. The project would further benefitthe four states being assistedunder the first Primary EducationProject by includingtheir senior-levelofficials under the project's management training program. Project The projectconsists of three major components: the Human Description: ResourcesDevelopment Component (17.5 percent of total project costs) wouldprovide in-servicetraining and assistanceto upgrade the skills of primary school teachers, principals, and supervisors, emphasizingthe role of principalsand