PROJECT INFORMATION DOCUMENT (PID)



PROJECT INFORMATION DOCUMENT (PID)

CONCEPT STAGE

Report No.: AB5218

|Project Name |Employment Generation and Vocational Training (EGVT ) |

|Region |AFRICA |

|Sector |Vocational training (50%);Other social services (50%) |

|Project ID |P119422 |

|Borrower(s) |GOVERNMENT OF LIBERIA |

| |Government of Liberia, Liberia |

|Implementing Agency |LACE |

|Environment Category |[ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) |

|Date PID Prepared |November 11, 2009 |

|Estimated Date of Appraisal Authorization |January 20, 2010 |

|Estimated Date of Board Approval |April 29, 2010 |

I. Key Development Issues and Rationale for Bank Involvement

1. Despite some remarkable economic progress made after the end of the conflict, Liberia remains amongst the poorest countries in the world. Poor governance and nearly a decade and a half of conflict have left Liberia’s economy, institutions and human capacity completely devastated. The origins of the conflict lay in a spiraling pattern of bad governance, reckless political and economic interest, regional instability, and the exclusion and marginalization of huge sectors of society from economic and social life, the youth and the rural areas in particular. Since 2006, after the election of a new democratic government, the country is at an inflection point, moving from the transitional post-conflict recovery phase to laying the foundations for long-term development. Since the end of the war, Liberia’s economic growth rate has increased annually (5.3 percent in 2005, 7.8 percent in 2006 and an estimated 9.5 percent in 2007); major investments in infrastructures have been made; and new legislation and institutions have been introduced to improve transparency, governance, efficiency, and overall public accountability. Despite these progresses, the situation in Liberia remains fragile. Current per-capita GDP is estimated at US$190, and an estimated 63.8 percent of the 3.5 million Liberian population lives below the poverty line, with 47.9 percent living in extreme poverty. More than two-thirds of rural population lives in poverty, compared to 55 percent for the urban population. Moreover, human development indicators, remain significantly below Sub-Saharan averages. UNICEF estimates that more than 15 percent of children die within the first year of their lives, ranking Liberia’s infant and under-5 mortality rates among the five worst in the world.

2. The Liberia population is overwhelmingly young, has limited education, and is employed in low productivity-low wage jobs. Over half of the Liberian population is under 20 years of age and 30 percent is under 10 years. These figures imply that an average household is likely to have a high number of dependents. Data from the Core Welfare Indicator Questionnaire suggest a strong correlation between number of household members, level of poverty, and unemployment/underemployment. Households with these characteristics are highly vulnerable to both covariate and idiosyncratic shocks. A young population combined with a 2.5 percent per annum population growth also implies that, over the coming years, a large number of youths will join the labor market looking for jobs that can help them out of poverty. Moreover, in Liberia there is a large cohort of people whose education and skills development have been adversely affected by a decade and a half of disruption of the educational and vocational training system and who are likely to be involved in low productivity, low wage jobs. Youth unemployment and underemployment are particularly high in urban areas, due to increased urbanization, lack of economic opportunities, and to the return of refugees after the end of the conflict.

3. Poverty reduction and peace stabilization require new employment opportunities, but these are hampered by the slow pace of change in the structure of the economy and the global economic downturn. Estimates on rate of unemployment, underemployment, and unpaid work vary between 20 and 30 percent of the working age population. This implies that between 70 and 80 percent of Liberians have jobs, the vast majority of which are very low paying thereby keeping families in poverty or extreme poverty. The poor tend to be underemployed, unemployed, or have low quality jobs, to the extent that a key element of the poverty reduction agenda, as endorsed in the PRSP, is the creation of new jobs. However, the current economic structure limits the creation of such jobs, since it is highly dependent on low productivity agriculture and since the formal export oriented sector is small compared to the rest of the economy (circa 20 percent of the total labor force). In addition, this sector has been hit by the global financial crisis, in particular by the fall in international demand for commodities and the slowdown in foreign direct investments that has delayed crucial investments and employment creation. It is widely believed that the creation of employment opportunities, for the youth in particular, will help mitigate the risk of social unrest and criminal activities resulting from frustration over prolonged unemployment, low salaries, and unmet expectations in participating to the peace dividend.

4. New jobs for large number of youth require that these youth have appropriate level of basic, technical and non-cognitive skills. This need goes beyond the setting up vocational skill training programs. It requires basic literacy, numeracy and non-cognitive skills, a labor market structure that rewards skill acquisition because employers also benefit through productivity gains, increased capacities and incentives for the providers as well as the employers, quality assurance and qualification system to classify various skill levels and training services as well as adequate coordination between demand and supply. In other words, an effective TVET system needs to be developed in Liberia as part of its effort to boost private sector development based growth.

5. Most youth Liberians lack basic skills and workforce readiness as they have missed out on formal schooling during the civil war. Those who acquired some literacy could not build work-related skills on top of it in absence of formal skills development. Those who did acquire some skills dominantly did so through informal apprenticeship. Although informal apprenticeship is largely private and, consequently aligned, by definition, with demand, it lacks clear and reliable standards and also rarely results in new employment or improved productivity for MSE-s. The Government may address these challenges through a certification system that integrates apprenticeship with formal TVET, through publicly coordinated services to improve the quality of apprenticeship training and through incentives and capacity building provided to the employers.

6. The formal TVET system is facing formidable challenges. The present system lacks standards, scope, sustainable financing and effective demand. The majority of public institutions are under-funded, inefficient, and unable to meet the demand of the labor market in terms of skills and curricula. Overall, the TVET structure is highly fragmented among several ministries, has no accreditation or certification system in place, and is cost-prohibitive. Very few of the medium to large enterprises take on graduates of formal TVET institutions and when they do, they often start by retraining them on the job. In the meantime, most TVET institutions have neither the resources nor the plans to renew training programs, retrain staff and rehabilitate their infrastructure in absence of proper links with industries or effective donor support.

7. The President and the Government of Liberia have asked development partners to provide support in employment generation and skills developments as well as for rehabilitation of the TVET sector. The President’s Office, the Government and development partners have undertaken some steps to generate immediate employment and to develop skills. This includes the preparation of the Government National Employment Policy and a number of emergency employment programs including the Cash for Work Temporary Employment project financed by the Food Price Crisis Response initiative. The Bank and other partners such as ILO, UNDP, and WFP are supporting analytical work and technical assistance in areas of skills developments, employment generation, and secondary and vocational education. Bilateral donors such as USAID also provide significant support in developing skills training and employment pilots, most often implemented by national or international NGOs. Although promising, these activities remain limited, and the Government has requested donor partners and Liberian agencies to work under a more coordinated and cohesive approach in view of improving Technical and Vocational Education and Training (TVET), job creation, and overall youth employability.

II. Proposed Project Development Objective(s)

8. The proposed Project Development Objective (PDO) is to support the Government’s efforts to provide Liberians with 1) additional temporary jobs opportunity through a public works program and 2) improved skills through establishing and piloting a new institutional and financial framework for technical and vocational education and training.

9. The outcome and intermediate outcomes of the projects will have to balance between several competing expectations. While the operation is no longer in emergency mode, it should also respond to short-term needs of employment and employability for a sizable beneficiary population even if this population represents a small segment of the present demand. Moreover, the operation need present sustainable financing arrangements, realistic unit costs for skill training and cost-effective solutions for employment generation, making this operation attractive for future external, governmental or private financing. Finally, the project and the ACGF framework require relatively fast implementation and realistic objectives. A comprehensive results matrix needs to reflect these issues and be developed during project preparation. In the meantime we propose below a set of possible indicators.

10. The indicators will likely include:

- Number of participants to the employment generation program;

- Work-days created;

- Share of youth participants, defined as persons with less than 35 years of age;

- Average cost of each job created;

- Number of youth trained directly as apprentices by the project;

- Average cost of each training; and

- Share of youth employed relative to the share of youth trained after a year from end of the training.

11. Other indicators, both outcome and monitoring, will include:

- Number and type of basic infrastructures properly built or rehabilitated;

- Percentage of participants in employment generation programs reporting increased income by at least 20 percent;

- Establishment of a skills development and training authority;

- Establishment of a sustainable training fund by leveraging additional resources from government and donors; and

- Development of an effective M&E system.

III. Preliminary Project Description

12. The proposed project will create additional jobs, will improve employability, and will create a stronger and demand-driven institutional framework for TVET. This project will be catalytic to the larger PRS program objectives in three important ways. First, the project will create additional income opportunities through temporary jobs to help mitigate the impact of the current financial and economic global crisis and its repercussions on the poorest segments of society in Liberia. It also will help mitigate the risk of social unrest resulting from frustration over prolonged unemployment. In this regard, the project will help to extend the window of stability that is required for other elements of the broader program to succeed in demonstrating expected peace dividends. Second, the project will provide many poor Liberians with second chance opportunity to get trained, acquire some basic and non-cognitive skills. In the medium term this will contribute to increase Liberia’s total factor productivity, which remains an extremely weak aspect of the labor market in Liberia, especially when compared with other countries in the region. Finally, the project will establish a new institutional and financial framework for technical and vocational education and training which among other things will facilitate the development of partnerships among the government, the private sector, and civil society focused on employment. These partnerships will help to ensure that training is demand driven, well regulated in quality and accessibility, and responsive to the employment aspirations of the youth.

13. To accomplish these objectives, the initial project proposal is structured around two components:

• Component 1: Temporary Employment Generation – will focus on bridging the temporary unemployment gap created by the global crisis. This phase will build on the ongoing successful Cash for Work Temporary Employment Program (CfWTEP), financed by the Bank and implemented by LACE (Liberia Agency for Community Empowerment) ; and

• Component 2: Skills Development – will focus on improving medium- and long-term employability and employment through financing skills development and through reforming the TVET sector.

Component 1

14. The proposed Component 1 builds on an on-going project and on policy dialogue carried out with the Government and with development partners. On Component 1, the project will scale-up the on-going Cash for Work Temporary Employment Program (CfWTEP) – implemented by LACE the Liberia Agency for Community Empowerment - which provides direct short term employment via public works projects. The CfWTEP has been supported by a US$3.0m grant from the Food Price Crisis Response Trust Fund. Under the on-going program, some 17,000 temporary jobs are being created in both urban and rural areas, paid at the market salary level (3US$ a day) for a period of 40 days max. The program is now entering in its final stages and as of October 2009, it has benefitted more than 11,000 Liberians. For project implementation, the LACE is relying on local NGOs to support the teams of workers, control attendance, verify work execution, decide type of works, distribute tools, and liaise with a commercial bank (EcoBank) in charge of payments. LACE was established in 2004 by the Government of Liberia, with support of the Bank, has a remarkable record in community development (completed more than 150 community subprojects) and has build its own capacity, that of communities and of local authorities. LACE has become a major player in local development in Liberia, thanks to its full Liberian status, the strong support of the Government, its governance structure (which includes donors, civil society and the Government), and having now a portfolio of completed and on-going projects of more than US$25.0m, of which 14 from the World Bank and more than 11 from the European Union. The LACE has a staff of more than 30 people, including financial specialists, procurement specialists, and M&E officers. The implementation and monitoring arrangements of the ongoing CfWTEP are detailed in a Cash for Work Temporary Employment Operational manual, in LACE Manual of Administrative, Accounting and Financial Procedures (MAAFP), and in other manuals including the Environmental and Social Mitigation Framework.

15. A team co-lead by the Human Development Network (Development Dialogue on Values and Ethics and Social Protection team), the Sustainable Development VP (Social Development department), and the AFR Social protection unit is carrying out a quantitative and a qualitative assessment of the CfWTEP. The two assessments are complementary in design, and are carried out in parallel. Preliminary results will be available by early 2010 and will support project preparation. Project preparation will also benefit from a review of other temporary employment projects including the ILO, UNMIL, and LEEP projects.

Component 2

16. On Component 2, the project will work closely with ILO, to further develop the UN Joint Program for Employment and Empowerment of Young Women and Men in Liberia, and to establish key institutions that help make aligned with the economic demand, competitive for both the private and public sectors and valid both for the formal and informal sectors. It will run a newly created TVET fund, as a competitive grant financing system for skills development. And it will also finance pilot activities that generate employment or employability in the private sector; activities that may be scaled up once the TVET Fund is finalized and formally endorsed as the single Governmental financing arrangement. This component will start by contracting the first and third sub-components while disbursement against the TVET Fund will start as soon as all institutional arrangements are in place, in particular the TVET commission, the training fund and its governance structure, and the overall implementation arrangements are satisfactory by the GoL and by the Bank.

17. Sub-component 1: Building effective institutional capacities for TVET. The capacity building sub-component will support the establishment of the Commission, the Secretariat and provide technical assistance to develop the governance and implementation structure required under Component 2. ILO could implement this sub-component

1. TVET Commission: The TVET Commission will be developed as an effective governance framework with a remit to improve links between efficient and sustainable skills development and market demand. The Commission will work as an oversight body comprising employers, government, representatives of workers and civil society will provide broad orientations for training based on labor market analysis. This should be a light and manageable structure including a secretariat that manages programs for the Commission.

2. TVET Fund: The TVET Fund is planned to be established under the TVET Commission as a demand-based grant funding arrangements for which public and private, formal and informal training providers plus employers will be equally eligible. The Fund will have to have transparent and detailed prioritization, targeting, application, approval and reporting mechanism.

3. Certification system: A key element of the Government’s TVET program is to start establishing a certification system that is more in line with economic needs and allows the recognition of apprenticeship programs that are dominating skills training and are, at the moment, fragmented and lack transparency and standards.

18. Sub-component 2: TVET Fund. The TVET Fund will disburse as soon as the mechanism is endorsed and all institutional arrangements are in place, in particular the TVET commission, the training fund and its governance structure, and the overall implementation arrangements are satisfactory by the GoL and by the Bank. A management committee/structure will be set up to manage the training fund. The managers of the training fund will evaluate the needs and priorities of the labor market as a whole, largely unfettered by political influence and more closely aligned with stakeholder interests. The governance structure of the training fund will be truly representative, free of self-serving domination by government or private groups, and autonomous in managing and carrying out decisions on their operations and budget. The management committee/structure reports to the TVET Commission. The program and utilization of funds are subject to permanent evaluations. Funding windows could include: Funding to training institutions for pre-employment skills development in the formal and informal sectors; Funding to private SME enterprises including craftsmanship to provide apprenticeship training to youth; Funding to training institutions/NGOs to provide functional literacy.

19. Sub-component 3: Pilot Training Activities. The project will run pilot training activities towards employability in limited scale and focus while the institutional capacities and the Fund are being established for a medium- and long-term skills development agenda. The purpose of these activities is to provide relevant basic non-cognitive and technical skills to youth to make them employable and provide business skills to MSEs to be able to expand employment. These training activities will be contracted to support training for employability either through the informal or through the formal sectors. The contracting will be done through ILO or through NGOs that have experience in skills development. The team establishing the Commission will set up monitoring for these pilots to assess the extent these pilots can be scaled up through the Fund.

20. The project will be processed as a US$10.0 million Specific Investment Loan (SIL) financed by the Africa Catalytic Growth Fund (AFGC). The total value of the proposed project is US$10.0 million, US$5.0 million for each component, and implemented over a period of three years. Resources will be made available through the Africa Catalytic Growth Fund (AFGC) on the base of a preliminary proposal, endorsed by the AFGC Steering committee on October 2, 2009. The Africa Catalytic Growth Fund (ACGF) is central to the Bank's strategy for scaling up the existing Cash for Work Temporary Employment Project and to crowd in additional development finance from within the Bank, from the public sector, and from other donors to support both components. A two-tier implementation/disbursing approach is proposed with Component 1 and the institutional capacity building of Component 2 kicking off at project effectiveness. Relevant expenditure categories financing training activities under Component 2 will start to disburse as soon as all implementation arrangements approved by the Bank are in place.

IV. Potential Risks and Mitigation

21. At the macro level, the security situation in Liberia remains fragile not only because of the ever-present risk of reversing some of the achievements made in the peace and democracy building but also because of organized and semi-organized crime that is spreading in the absence of decent employment opportunities, strong domestic governance, and efficient social services. The activities being supported by this project will contribute to mitigating the security risk factors.

22. Implementation capacity is generally weak in Liberia reflecting in part the low level of skills within the public sector. An additional project increases the implementation and supervision burdens on a limited number of agencies. This risk is mitigated by the fact that one component of this operation relies on implementation mechanisms that have already been tested (Component 1) and on the support and technical assistance that an experienced institution such as ILO will be providing (Component 2).

23. Component 1 has inherent high fiduciary risks since it involves frequent cash payments. This risk is mitigated by well-established financial management arrangements under CfWTEP whereby a commercial bank acceptable to IDA (EcoBank) is managing the payments to workers. Under Component 2, fiduciary risks are mainly associated with the management of the training fund and the transfer of resources to service providers. To mitigate this risk, the project will establish a Secretariat of the Commission to hire professional staff to manage the training fund. With support from ILO, the new staff will ensure that activities are carried out in compliance with Bank fiduciary guidelines and with Component 2 operation manual.

24. Component 2 involves the partnership between the public sector, private sector, and service providers. This is a new approach for Liberia, one that is constrained by a context of limited institutional and social capital. The project will aim to mitigate this risk by drawing on the experiences and lessons learned from similar arrangements in other countries, as well as the review of the experience in Liberia albeit limited.

25. The environmental risks foreseen under the project are limited. There are, however, some safety and health concerns which may include the need for workers in certain sites to be provided with ear protection, protective headgear and gloves, masks, and safety shoes. These and other environmental risks and mitigation measures will be developed in the new version of Component 1 operation manual.

26. Project preparation will ensure a high level of consultation with youth through different mechanisms. These will include meetings with youth groups, the current participants to the CfWTEP, services providers, and the private sector. Project design also will ensure a consultative process is followed for the identification of the social and economic activities supported by the project. During preparation, work will be done to identify whether project activities will take place in any of Liberia’s areas where some indigenous groups live and, if so, what measures will be taken to avoid any possible negative cultural or social impacts on these groups. The new version of Component 1 operation manual will discuss this.

V. Proposed Preparation Schedule and Resource Estimate

27. The project will be prepared on a fast track basis given the urgency and the fact that the Government of Liberia has requested Bank support repeatedly and at the highest levels.

28. The following are the proposed time line for the main steps in project preparation:

. PID-ISDS November 23, 2009

. Concept Note Review November 23, 2009

. Pre-Appraisal Mission January 20 - February 6 2010

. QER February 18, 2010

. Decision Meeting March 2, 2010

. Appraisal/ Negotiations March 10-19, 2010

. AFRVP Approval April 13, 2010

29. It is estimated that the team will need a budget of US135k (variable costs only). The AFTSP team and the HD Network are jointly carrying out two assessments Cash for Work Temporary Employment project. One is a qualitative assessment financed by a grant from the EFTSSD and jointly carried out by the HDNSP and AFTSP. The other one is a quantitative assessment of the CfWTEP financed by the Luxemburg Trust Fund and carried out jointly by the HDNDE and the AFTSP unit.

30. The peer reviewers are Wendy Cunningham (Lead Specialist, HDNCY), Eileen Murray (Lead Operations Officer, MNSSP), and Venkatesh Sundararaman (Senior Economist, SASED).

31. The team composition is as follows:

|Name |UPI |Title |Unit |

|Giuseppe Zampaglione |111841 |Senior Operations Officer |AFTSP |

|Peter Darvas |78030 |Senior Education Economist |AFTED |

|Cecile Ramsay |13976 |Operations Adviser |AFTQK |

|Victoria Gyllerup |265277 |Senior Operations Officer |AFTRL |

|Maikel Lieuw-Kie-Song | |Public Works Consultant | |

|John Nyaga |98772 |Senior Financial Management Specialist |AFTFM |

|Allan Rotman |96319 |Lead Procurement Specialist |AFTPC |

|Baba Imoru Abdulai |330392 |Procurement Specialist |AFTPC |

|Jonathan Pavluk |22992 |Senior Counsel |LEGAF |

|Rajiv Sondhi |231534 |Senior Finance Officer |CTRFC |

|Nyaneba Nkrumah |190613 |Senior Natural Resources Management Specialist |AFTEN |

|Beatrix Allah-Mensa |266580 |Social Development Specialist |AFTCS |

|Bappaditya Chakravarty |294783 |Consultant |SASDT |

|Emily Weedon |353039 |Consultant |AFTSP |

|Josiane Luchmun |13870 |Program Assistant |AFTSP |

Tentative financing

|Source: |($m.) |

|Borrower |0 |

|Africa Catalytic Growth Fund (ACGF) |10 |

| Total |10 |

Contact point:

Giuseppe Zampaglione

Senior Operations Officer

Tel: (202) 473-0955

Fax: (202) 473 8107

Email: Gzampaglione@

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