PROJECT INFORMATION DOCUMENT (PID) - World Bank



PROJECT INFORMATION DOCUMENT (PID)

APPRAISAL STAGE

Report No.: AB4966

|Project Name |Technical & Vocational Education Modernization (TVEM) |

|Region |EUROPE AND CENTRAL ASIA |

|Sector |Vocational training (100%) |

|Project ID |P102177 |

|Borrower(s) |Republic of Kazakhstan |

|Implementing Agency | |

| |Ministry of Education and Science of the Republic of Kazakhstan |

| |Dom Ministerstv, entrance 11 |

| |Astana |

| |Kazakhstan |

| |Tel: (7-7172) 741-573 Fax: (7-7172) 742-416 |

| |kuanganov@.kz |

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

|Date PID Prepared |January 21, 2010 |

|Date of Appraisal Authorization |March 1, 2010 |

|Date of Board Approval |May 27, 2010 |

1. Country and Sector Background

Context

From the late 1990s until mid-2008, Kazakhstan experienced strong economic growth fueled by rising oil production and prices. Real gross domestic product (GDP) grew by an average of nearly 10 percent per year between 2000 and 2008. Real income increased at the even faster rate of 16 percent per year over the same period, and poverty declined from 32 percent in 2000 to 13 percent in 2008. However, Kazakhstan has been severely impacted by the global economic crisis, with growth projected by the International Monetary Fund at minus 2.0 percent in 2009, with a slow recovery to a positive 1.5 percent projected in 2010. Registered unemployment, still relatively low at 7.1 percent in February 2009, is expected to increase throughout the downturn.

Recovery from the fallout of the global economic crisis dominates the near term, but medium-to-long-term prospects for economic growth are promising. Growth over the medium term is projected to be in the range of 3 to 8 percent of GDP yearly. These projections are driven largely by the anticipated recovery of commodity prices and higher oil production. However, reliance on commodity exports, mainly oil and metals, makes the country vulnerable to fluctuations in world prices. Kazakhstan has therefore adopted economic diversification and increased competitiveness as priority goals to ensure rapid and sustainable growth. In 2003, Kazakhstan adopted its National Strategy for Industrial Innovation Development (NSIID) for 2003–15, which lays the legislative and institutional foundations for economic diversification.

Kazakhstan is committed to becoming one the world’s 50 most competitive economies as set forth in its national competitiveness strategy. However, the business environment has problems resulting in a lack of competitiveness. Kazakhstan’s ranking in the Global Competitiveness Index has worsened from 50th in 2006 to 61st in 2007 and to 66th in 2008. Doing Business 2009 ranks Kazakhstan 70th of 181 economies, but this ranking does not capture important dimensions of the business climate, namely the practice of business regulation (compared to legislated principles) and severe constraints on competition.

Slow productivity growth relative to labor costs outside the resource sector poses a fundamental obstacle to achieving diversified growth in Kazakhstan, and sluggishness in labor market adjustments hinders productivity growth. The Government recognizes that efforts must be made to increase worker productivity. This requires, among other things, better knowledge and skills in the workforce as produced through quality technical and vocational education (TVE).

The present TVE system, engineered to support a command economy, suffers from a lack of linkages to the market economy. It does not produce sufficient graduates with the competencies required by the market. A shortage of education and skills of available labor impedes business development. According to a 2008 World Bank labor market survey of 500 firms, 64 percent of employers stated that insufficient level of education and lack of skills are among the principal hindrances for business development. The shortage of skilled labor is reported to affect the economy widely. Forty percent of firms in construction and food production, and 46 percent of firms in oil and gas extraction, reported skills shortages to be a “very significant” problem, resulting in chronic vacancies, loss of productivity, and the need to import expensive foreign technicians.

Requirements for skills and competences are continuously increasing: 40 percent of surveyed companies reported increased requirements for skills of workers for the last two years as a result of a demand for higher quality of goods and services, more complicated technological processes, and increased competitiveness. A third of firms expect recruited technicians to have secondary TVE or college education. Fifty-seven percent of firms expect recruited skilled workers to have secondary (lyceum) TVE education and 36 percent expect postsecondary education.

2. Objectives

The Project Development Objective is to raise the relevance, quality, and efficiency of the technical and vocational education through an improved policy framework and institutional capacity. The attainment of the objective will be measured by the following key outcome indicators:

• Improved employer satisfaction with the skills of TVE graduates of improved TVE programs

• Percentage of graduates who obtained the qualification of the improved programs.

3. Rationale for Bank Involvement

In 2007, at the request of the Government of Kazakhstan, the World Bank helped develop a State Program for modernizing the TVET system to be financed with the Government’s national budget. In support of the implementation of the State Program, the Government subsequently requested a project to be prepared with an International Bank for Reconstruction and Development (IBRD) loan that provides financing and technical assistance in selected areas that best complement the State Program. It is against the background of the Government’s planned investment in modernizing the TVET system that the involvement of the Bank adds value: Bank involvement would fill an important gap by introducing international experience and innovation for improving the quality, relevance, and efficiency of the system to further inform government policies and investment.

The World Bank has a long record of investing in TVET reforms. The knowledge and lessons drawn from this experience provide a rationale for involvement in this sector. The Bank’s comparative advantage includes its ability to leverage international experience with specific expertise in key policy and technical areas and in monitoring and evaluation to help build a learning culture for supporting reforms in TVE.

The Bank’s engagement under the Project would support innovations in helping develop skill standards for key industries, realign qualifications and assessment to new standards, improve governance and financing, upgrade curriculum and training methodology, and foster closer partnership with businesses and employers in quality assurance and service delivery. The Bank brings international experience to the Project and contributes to the design of a impact evaluation for extracting lessons to be shared and replicated nationally, strengthening reforms and policy development for TVET.

4. Description

The Project consists of three components:

Component 1. Develop Standards and Quality Assurance for TVE (US$1.25 million). This component would finance goods and services to introduce a national qualifications framework, occupational standards, qualification assessment, and institutional accreditation for establishing a foundation for a national qualification system that enables flexible pathways for learning and employment. This includes:

a) Development of a National Qualifications System (NQS). This sub-component supports the initial steps toward development of an NQS.

b) Occupational Standards and Assessment of Qualifications. This sub-component would contribute to the NQS by developing national occupational standards and upgrading the assessment of qualifications.

c) Institutional Accreditation. This sub-component would finance technical assistance to develop and implement methods and procedures for independent, voluntary institutional accreditation.

Component 2. Strengthen Governance, Management, and Financing for TVE (US$1 million). This component seeks to establish a basis for increasing the efficiency and effectiveness of the TVE sector by studying and providing policy options on governance, management, and financing of Technical and Vocational Education and Training (TVET).

a) Modernization of TVE Structure, Management, and Governance, and Management. This sub-component would support (i) technical assistance for the new national, regional, sectoral, and institutional councils in terms of advice on structures, functions, and training of members. It would also finance (ii) an in-depth review of the current TVE structure, its governance and management, and elaborate policy options based on international experience.

b) Formula-based Financing. This sub-component seeks to improve the efficiency of the use of TVE funds by designing, testing, evaluating, and revising per capita approaches for financing TVE institutions.

c) Monitoring and Evaluation (M&E) System. This sub-component would finance consultant services to design and implement an effective mechanism for M&E of TVE.

d) Implementation Support (Project Management Unit [PMU]). This sub-component would finance goods, services, and operating costs to operate and maintain a PMU to administer the project.

Component 3. Strengthen Skills Delivery Capacity of TVE Institutions (US$30.9 million). This component seeks to strengthen service delivery by stimulating grassroots innovation, raising the quality of instruction, and linking training institutions better with businesses. More specifically, the component is designed to begin a process of gradual consolidation and integration of the programs currently offered in the professional lyceums and colleges toward an integrated, broad, competency-based curriculum.

a) Institutional Development Plans. This component would finance goods and services and staff development through subprojects to be awarded on a competitive basis to public and private provider institutions for implementing their IDPs.

b) TVE Teacher-training Program. This component would finance goods and services in support of development of in-service teacher-training programs for introducing the competency-based and modularized curriculum in select regional teacher-training centers to be selected on a competitive basis by the MES.

5. Financing

|Source: |($m.) |

|Borrower |0.0 |

|International Bank for Reconstruction and Development |33.2 |

| Total |33.2 |

6. Implementation

The project will be implemented by Ministry of Education and Science of the Republic of Kazakhstan.

7. Sustainability

Sustainability of the key project investments rests with (a) the TVE policy framework and regulations, (b) appropriate budget allocations, and (c) institutional sustainability. In terms of policy, the Government of Kazakhstan has clearly enunciated its commitment to modernizing the TVE system through both the State Program on TVE Development, with its budget of KZT55 billion, and the project to supplement core elements of the State Program. The Project and the Program will produce lessons learned to inform TVE policy. Financially, the Government confirmed its commitment to increase financial support to the TVE sector to sustain the State Program and project achievements. New per capita financing mechanisms would ensure that initial investments in equipment and staff development are sustained, and regular allocations to infrastructure maintenance would be secured in the budget allocations for TVE. The Project would also provide incentives for greater participation of the private sector through raising overall relevance of the TVE to employer demands and through increased transparency in resource allocation and monitoring of its use. No new institutions would be established under the Project. The Project would strengthen the capacity of existing institutions for skills delivery. Moreover, institutional mechanisms would be established with support from the Project to ensure sustainability of the reforms, that is, mechanisms to update occupational standards, incentives for institutional accreditation, and recognition of the qualifications.

8. Lessons Learned from Past Operations in the Country/Sector

Project design has benefited from a variety of lessons summarized below.

Critical involvement of the private sector. TVE systems need to respond to the demands of the labor market, and global experience demonstrates that this requires the active engagement of the private sector in the development of the curriculum, definition of professional standards, and so forth. Under the TVEMP, the private sector would be engaged directly in all these activities. Through ATAMEKEN (the Union of Employers Association), the private sector would have an active oversight role in the State Program of TVE Development of Technical and Vocational Education Modernization (TVEM). Component 3 ensures that only TVE programs with a clear labor market linkage with signed protocols with the private sector would be eligible for support.

Focus on reform (modernization). The experience of other World Bank projects in TVE demonstrates the need to focus on system reform, dealing with strategic policy issues, rather than financing equipment and buildings, which may lead to very poor tangible results. The TVEM is supporting important reforms in curriculum content, a financing mechanism for the system as a whole, and ensuring that program support (Component 3) goes only to TVE programs that have a proven labor market demand.

Improving TVE system governance. Kazakhstan faces many challenging governance issues, including in the TVE system. Kazakhstan’s experience demonstrates that these issues stem from structural issues from the unfinished transition to a market-based economy and misalignment of accountabilities with the incentives in a centralized environment. Lessons learned from other World Bank financed projects point to the importance of strengthening accountability, incentives and institutional capacity in support of the transition from a centralized system to a decentralized structure.

Competitive funding mechanism for program implementation. The most effective TVE projects supported by the World Bank have introduced competitive funding mechanisms for the institutions receiving direct support. This removes a culture of entitlement among schools and provides real incentives for them to improve their performance to benefit from support. Component 3 introduces such a competitive funding mechanism. If proven effective, the MES may adopt this mechanism more generally for its own budget allocations.

Strong local ownership. World Bank global experience demonstrates the vital importance of strong local ownership for any project, particularly if the project supports reforms. The TVEM has been developed over two years with close collaboration with the MES, and ownership of and support from other stakeholders, especially the Ministry of Labor and Social Protection of the Population (MLSP) and ATAMEKEN. In addition, the process of developing IDPs will involve close consultation with stakeholders at the institutional level.

9. Safeguard Policies (including public consultation)

|Safeguard Policies Triggered by the Project |Yes |No |

|Environmental Assessment (OP/BP 4.01) |[X] |[ ] |

|Natural Habitats (OP/BP 4.04) |[ ] |[X] |

|Pest Management (OP 4.09) |[ ] |[X] |

|Physical Cultural Resources (OP/BP 4.11) |[ ] |[X] |

|Involuntary Resettlement (OP/BP 4.12) |[ ] |[X] |

|Indigenous Peoples (OP/BP 4.10) |[ ] |[X] |

|Forests (OP/BP 4.36) |[ ] |[X] |

|Safety of Dams (OP/BP 4.37) |[ ] |[X] |

|Projects in Disputed Areas (OP/BP 7.60)* |[ ] |[X] |

|Projects on International Waterways (OP/BP 7.50) |[ ] |[X] |

10. List of Factual Technical Documents

• Law on Education, 2007. Astana, Republic of Kazakhstan

• State Program on Technical and Vocational Education Development, MES, 2008, Astana

• National Pact on TVE between MES, MLSPP and Atameken, Astana 2008

• Review of Vocational Education and Training and Employment in Kazakhstan, European Training Foundation, 2003.

• Situational Analysis on Employment, 2007, ILO, Almaty

• Views of Kazakhstan Youth on TVE, 2006

• Analysis of TVE system, 2007

• Labor Market in the Republic of Kazakhstan, BISAM Central Asia, 2008

• Report and proposal for Action Plan to develop per-student and performance funding for technical and vocational education in the Republic of Kazakhstan

• Feasibility study for the TVEM Project, 2009

• Institutional mapping of TVE system, 2009

11. Contact point

Contact: Dingyong Hou

Title: Senior Education Specialist

Tel: (202) 458-2775

Fax: (202) 477-0574

Email: dhou1@

12. For more information contact:

The InfoShop

The World Bank

1818 H Street, NW

Washington, D.C. 20433

Telephone: (202) 458-4500

Fax: (202) 522-1500

Email: pic@

Web:

* By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas

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