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Document of The World Bank FOR OFFICIAL USE ONLY FILE COPY Report No. P-3008-LSO REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE KINGDOM OF LESOTHO FOR A THIRD EDUCATION PROJECT May 1, 1981 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwisebe disclosed without World Bank authorization. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
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Page 1: FOR OFFICIAL USE ONLY FILE COPY - World Bank...FOR OFFICIAL USE ONLY FILE COPY Report No. P-3008-LSO REPORT AND RECOMMENDATION OF THE ... COSC Cambridge Overseas School Certificate

Document of

The World Bank

FOR OFFICIAL USE ONLY

FILE COPY Report No. P-3008-LSO

REPORT AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED CREDIT

TO THE

KINGDOM OF LESOTHO

FOR A

THIRD EDUCATION PROJECT

May 1, 1981

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

Currency Unit = Maloti (M)1 Maloti = US$1.29081 US$ M M 0.77471 US$ Million = M 774,700

ABBREVIATIONS AND ACRONYMS

APTC Advanced Primary Teacher CertificateCIDA Canadian International Development AgencyCOSC Cambridge Overseas School CertificateCTI Commercial Training InstituteDANIDA Danish International Development AgencyEEC European Economic CommunityFTC Farmer Training CenterTEMS Institute of Extra-Mural StudiesIMRC Instructional Materials Resource CenterJC Junior CertificateLAC Lesotho Agricultural ColLegeLDTC Lesotho Distance Teaching CenterLEC Lesotho Evangelical ChurchLIPA Lesotho Institute of Pub:Lic AdministrationLOIC Lesotho Opportunities Industrialization CenterLTI Lesotholi Technical InstituteLYS Lesotho Youth ServiceMOA Ministry of AgricultureMOE Ministry of Education, Sports and CultureMOH Ministry of HealthMOW Ministry of WorksNCDC National Curriculum Development CenterNDP National Development PlanNMDS National Manpower Development SecretariatNTTC National Teacher Training CollegeNUL National University of LesothoODA Overseas Development Agency (United Kingdom)OICI Opportunity Industrialization Center InternationalPTC Primary Teacher CertificateRSA Republic of South AfricaSTC (Junior) Secondary Teachetr CertificateTRDP Thaba Tseka Regional Development ProgramTSL Technical School in LeribeTSRP Training for Self Reliance Project (Project Implementation Unit)TSU Teacher Service UnitTVTC Thaba Tseka Vocational Training CenterUNDP United Nations Developmen.t ProgramUSAID United States Agency for International Development

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FOR OFFICIAL USE ONLY

LESOTHO

THIRD EDUCATION PROJECT

CREDIT AND PROJECT SUMMARY

Borrower: Kingdom of Lesotho

Amount: SDR 8.2 million (US$10.0 Million Equivalent)

Terms: Standard IDA

Project The Project would help improve the quality, effi-Description: ciency and equity of primary education in Lesotho and

increase the capacity of the Ministry of Education toplan, design and carry out education programs. It wouldalso help to alleviate the critical shortage of skilledand semi-skilled workers, paticularly in rural areas ofthe country. To accomplish these objectives, the Projectprovides for: (a) construction and furnishing of about150 primary school classrooms; (b) provision of about1,900,000 primary school level textbooks and workbooks inthe three core subjects (Sesotho, English and mathematics);(c) provision of permanent facilities for about 110trainees at the Thaba-Tseka Vocational Training Center;(d) provision of permanent facilities for about 125trainees at the Lesotho Opportunities IndustrializationCenter (Maseru); (e) provision of about 13 man-years ofspecialists services consisting of an architect, a con-struction supervisor, a procurement officer and a textbookspecialist; and (f) assistance to the Ministry of Educationto improve and strengthen its Planning Division and Sta-tistics Unit and preinvestment funds for the preparation offuture education projects.

No major risks are envisaged. However, should book usagefees not be collected and transferred to the revolving fundin a timely manner, the fund might not be fully replenished,placing an additional burden on the Government's budget.To minimize this risk the establishment of appropriateadministrative arrangements has been made a condition ofdisbursement against the textbook component.

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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Estimated Project ---------- US$ Million ---- …

Cost: Local Foreign Total

Civil Works 1.34 2.02 3.36Furniture and Equipment 0.09 0.29 0.38Textbooks 0.25 2.38 2.63Technical Assistance 0.22 0.87 1.09Professional Services 0.21 0.14 0.35Evaluation and Pre--

Investment Studies 0.16 0.23 0.39Project Administration 0.94 0.40 1.34

Base Cost 3.21 6.33 9.54Contingencies:Physical 0.18 0.34 0.52Price 0.98 2.06 3.04

Sub-Total 1.16 2.40 3.56Total Project Cost 4.37 8.73 13.10of which Taxes andDuties 0.50 0 0.50

Total Net Project Cost 3.87 8.73 12.60

FinancingPlan: IDA 1.27 8.73 10.00

Government of Lesotho 3.10 0 3.10Total (including Taxesand Duties) 4.37 8.73 13.10

EstimatedDisbursements: --------------US$ Million-----------…

FY 1982 1983 1984 1985 1986 1987

Annual 0.20 4.40 2.50 1.80 1.00 0.10Cumulative 0.20 4.60 7.10 8.90 9.90 10.00

AppraisalReport: Report No. 3347-LSO

Rate ofReturn: Not Applicable

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INTERNATIONAL DEVELOPMENT ASSOCIATION

REPORT AND RECOMMENDATIONS OF THE PRESIDENTTO THE EXECUTIVE DIRECTORS

ON A PROPOSED CREDIT TO THE KINGDOM OF LESOTHOFOR A THIRD EDUCATION PROJECT

1. I submit the following report and recommendation on a proposed

development credit to the Kingdom of Lesotho of SDR 8.2 million (US$10.0million equivalent) on standard terms for a Third Education Project.

Part I - THE ECONOMY

2. The most recent Economic Memorandum on Lesotho (No. 2251-LSO) wasdistributed to the Executive Directors in February 1979 and transport and

education sector memoranda were issued in January and March 1979, respec-tively. An agricultural sector report was circulated in March 1981. Countrydata are presented in Annex I.

3. Lesotho is a small, landlocked nation surrounded by the Republic

of South Africa. It is mountainous, and other than abundant water and smalldiamond deposits, it possesses few natural resources. About 13 percent ofits 30,400 sq. km. is suitable for crop farming, but only 0.4 percent isconsidered as having high potential. Productivity in crop farming is low dueto poor land quality and inappropriate technological packages. Livestockraising is the country's principal agricultural activity, but overstockingand inadequate herd management has led to overgrazing, widespread soilerosion and limited production. Agriculture is still the leading sector ofthe economy, however, providing employment and livelihood for nearly 85 per-cent of the resident population. Development of a modern industrial sectoris limited by the smallness of the domestic market, by the proximity of thehighly industrialized South African economy, which supplies Lesotho with mostof the goods and services it requires, by a shortage of skilled entrepre-neurial, managerial and technical manpower, and by the necessity of importingnearly all raw materials and intermediate goods. Consequently, manufacturingis a small sector of the economy, employing only about 3,000 people in 1979.

4. The most significant characteristic of Lesotho's economy is itsheavy dependence on South Africa where more than 90 percent of its importsoriginate, as does all of its electricity and most of its foreign investmentand tourism. Its only outlets to the sea are via South Africa's transportfacilities and ports. In excess of one-third of the labor force, one-half ofthe male labor force depends upon employment in South Africa, (mainly inmining) and the public sector in Lesotho relies heavily on receipts from theSouthern Africa Customs Union under which South Africa levies, collects andredistributes customs duties and taxes on behalf of the member countries.These receipts have accounted for between 50 percent and 75 percent of Lesotho'srecurrent revenues over the past several years. Lesotho is also part of theRand monetary area, although it established a national currency (the Maloti)in 1979.

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5. Despite the constraints on development, the economy has grownrapidly in the past few years. Real GDP has risen by about 7 percent perannum since the mid-1970s, and as a result of increasing employment and wagesfor Basotho 1/ in South Africa, real GNP has expanded by more than 10 percentper annum. The gains in domestic output were the result primarily of largeincreases in public investment and in the provision of government services.Tourism and mining have also contributed significantly to economic growth,the former owing to an increasing number of visitors from South Africa andthe latter resulting from the opening of a new diamond mine. The industrialand agricultural sectors, on the other hand, have expanded only modestlysince the mid-1970s. Despite this growth GNP per capita had reached onlyUS$340 2/ by 1979 and Lesotho is still classified as one of the "leastdeveloped" nations of the world.

6. The strong growth in public expenditure in recent years wasmade possible by increased external assistance, and by a large rise inreceipts from the customs union. These revenues enabled the authorities tomaintain investment at 25 percent of GDP during the period without relyingexcessively on domestic or foreign borrowing. The receipt of externalgrants, customs union transfers and workers remittances permitted a level ofimports sufficient for the needs of the domestic economy, and Lesotho'sbalance of payments registered a small yearly surplus throughout the late1970s.

7. Lesotho's economic prospects for the early 1980s are at best un-certain. Receipts from the Customs Union are expected to decline whichmay require a cutback in public investment. No significant surge in privateinvestment is forseen, given the resource constraints in agriculture, indus-try and mining. At the same time, the outlook for Basotho employment inSouth Africa is bleak. That country is itself a labor surplus economy andthe pressure to replace expatriates with domestic labor has intensified.Moreover, South Africa's mines have become increasingly mnechanized in thepast few years, lowering the demand for unskilled labor.

8. The Government faces the difficult task in this decade of pro-viding domestic employment and income opportunities for the rapidly growinglabor force. An estimated 18,000 persons will enter the labor force eachyear in the 1980s, most with little in the way of education or skills. Thelimited ability of the domestic economy to absorb these people is illustratedby the fact that probably less than 4,000 modern sector jobs were createdduring the Second Development Plan period (1975-79). Most of these jobsrequired skilled or highly trained wc,rkers and many had to be filled withexpatriates. With the modern sector expected to provide jobs for less thanone-quarter of the new entrants to the labor force during this decade, theagricultural sector will have to absorb the balance.

1/ Lesotho nationals are referred to Basotho (singular, Mosotho).

2/ Calculated by the World Bank Atlas method.

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9. The Third National Development Plan (1980-85) emphasizes laborintensive industrial investments; programs to expand and diversify cropproduction both for the domestic and export markets; measures to controllivestock grazing and improve range and herd management; and investments toimprove the quality of the education system at all levels (including vocationaltraining) to overcome the existing manpower constraints to growth. Its majorobjectives are expanded employment and income opportunities, acceleratedeconomic growth and increased levels of well-being for all Basotho. ThePlan's strategy includes decentralization of development efforts to the locallevel to make maximum use of local manpower and material resources. Inaddition to the rural development programs, the well-being of the ruralpopulation is to be enhanced through programs to improve basic health care,expand water supplies and rural sanitation and through the provision of foodaid. The Government is studying various options for using the country'sconsiderable water resources, including the possibility of exporting water toSouth Africa.

10. The Plan proposes a US$617 million (1980 prices) public investmentprogram, more than double the capital expenditures which had been projected inthe Second Plan. It envisages another US$242 million in food aid, expatriatepersonnel and fellowships, bringing the total to about US$859 million.Considerable external resources would have to be mobilized to carry out thisprogram, and for some time to come, Lesotho will continue to rely heavily onexternal capital and technical assistance. Until 1975 the United Kingdom wasthe major aid source, but during the last few years funds have come from agrowing number of bilateral and multilateral sources, most as grants or onhighly concessional terms. Lesotho's total public external debt (outstandingand disbursed) amounted to US$52.7 million at the end of 1979; debt servicepayments of US$2.6 million were 5.6% of exports, but only 2.3% of Governmentcurrent receipts.

PART II - BANK GROUP OPERATIONS

11. The Bank Group began its operations in Lesotho with an IDA creditfor a highway project in 1966 to what was then Basutoland. Since then, therehave been 10 projects financed by IDA for a total of US$60.2 million, and oneIFC investment of US$330,000 in a quarrying operation. The credits havefinanced two projects to improve agricultural productivity; two to expandvocational, technical and commercial education; two further roads projects toupgrade major roads, improve maintenance and establish a Labor IntensiveConstruction Unit; two lines of credit to the Lesotho National DevelopmentCorporation; a project to supply water to seven provincial towns; and an urbansites and services project in Maseru. As of December 1979, IDA disbursementsof US$20.3 million constituted about 39 percent of Lesotho's disbursed andoutstanding external debt; servicing of IDA credits is estimated at about 7.6percent of external debt service in 1979. Annex II includes a summary of IDAcredits and the IFC investment and notes on the execution of ongoing projects.

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12. In addition to its own projects, the Bank Group agreed in 1979 toact as executing agent for a US$1.4 million UNDP technical assistance projectthat focuses on strengthening the Government's planning capability. Also, theBank Group has agreed to act as cooperating institution for a US$6.6 millionInternational Fund for Agricultural Development (IFAD) project to improveagricultural marketing and credit in Lesotho.

13. Despite continuing manpower shortages at all levels and difficultiesin recruiting expatriates to fill these gaps, the Government's project imple-mentation capacity has improved considerably in the past few years. Whiledisbursement has been slower than expected in some cases, most projects havebeen effectively carried out. Future Bank Group Operations will continue tosupport the Government's development objectives (para. 9), and are expectedto include projects in the roads, wood-energy and DFC sectors. Considerationis also being given to a population, health and nutrition project.

Part III - THE EDUCATION SECTOR

Background

14. Prior to independence in 1966, formal education in Lesotho wasprovided almost entirely by church mission societies. While these societiesprovided broad geographical and grade-level coverage, few Basotho completedjunior secondary school and a small percentage went on to senior secondaryschool or university. Curricula emphasize.d literary subjects as opposed tovocational training, thus providing little of immediate practical use to mostschool leavers. The education and skills provided failed to meet the evolvingmanpower needs of the economy, and at independence the country was relyingheavily on expatriate administrative, managerial and technical expertise.

15. Following independence, the Lesctho Government identified educa-tion as a national priority and adopted measures to expand and improveeducation and to extend its control over the system. While the ownership andoperation of the schools has remained largely with the churches (at presentthey operate all but 18 of the country-s 1,080 primary schools and all but 13of its 96 secondary schools), administrative, financial and academic controlof the system resides largely with the Government, through the Ministry ofEducation, Sports and Culture.

Structure and Administration

16. Formal education in Lesotho consists of seven years of primaryschool, five years of secondary and four to six years of higher educationat the National University of Lesotho. Vocational training in industrialarts and home economics is offered in eleven junior secondary level schoolsand technical education in five senior secondary level institutes. Addi-tional vocational and technical training, along with on-the-job experience,work counselling and placement assistance, is provided by the Lesotho Oppor-tunities Industrialization Center (LOIC). Agricultural training is offered

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at six Farmer Training Centers and the Lesotho Agricultural College. TheLesotho Distance Teaching Center provides secondary level correspondencecourses, sponsors educational radio programs, operates a literacy-numeracyprogram for out-of-school youth (in particular for herd boys) and providessupport services and educational materials for training unqualified teachers.Primary and secondary teacher training are provided by the National TeacherTraining College and the National University. A wide variety of non-formaleducation courses are provided by the Government and church and voluntaryorganizations.

17. The National University, once part of the University of Botswana,Lesotho and Swaziland, became independent in 1975. Offering courses ineducation, the humanities, natural and social sciences, agriculture, theologyand law, it enrolled 560 men and 488 women in 1979 and had a teaching staffof 115 (69 Basotho and 46 expatriates). An expansion plan, which has attractedsubstantial external assistance, is underway and should be completed by 1982.

18. At the primary and secondary school levels, the Ministry of Educationtrains and appoints teachers, administers examinations, reviews and authorizescurricula, authorizes the opening and closing of schools, inspects the opera-tion of all schools, and pays teachers salaries. It also provides the bulkof the universities recurrent budget and administers vocational schools, twoof the technical schools, the National Teacher Training College and theDistance Teaching Center. In addition to general policy guidance, control iseffected through periodic school visits by the Inspectorate Division, which isresponsible for monitoring all aspects of school cperations to ensure themaintenance of appropriate standards. Educational planning and policymakingare the responsibility of the Ministry's Planning Division. The achievementsof the Curriculum Development Division, which was created in 1975, have beenlimited thus far to the establishment of subject review panels and to syllabicontent reviews.

19. Lesotho provides universal access to primary education. Totalenrollment was about 235,600 in 1979, with that of females equivalent to 122percent of the age-group cohort 1/ and that of males 82 percent of the cohort.The lower enrollment ratio for males is accounted for primarily by theemployment of boys in herding. About 20 percent of primary school studentsin 1979 were repeaters, and only about 32 percent complete the full-primarycycle. Primary school enrollment rose by five percent per year on averageduring the 1970s, but grew by only two percent per year during the secondhalf of that decade. The percentage of male enrollment is increasing, andbecause there are fewer overaged students remaining to be enrolled, theaverage entry age is dropping rapidly.

20. The primary school teaching force of 4,782 in 1979, all Basotho,provided a pupil-teacher ratio of 49:1. Based on Lesotho Government stan-dards, about 35 percent (1675) of these teachers were regarded as unqualified,of which about 360 (21 percent) were enrolled in teacher upgrading programs.The curriculum in primary school includes Sesotho (the national language),English, mathematics, social studies, health/science and agricultural studies.Only about 30 percent of the students have textbooks, which seriously hinders

1/ The enrollment of females exceeds 100% of the age group cohort (6-12years) due to the large number of overage students.

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teacher effectiveness. Moreover, a mapping exercise, completed in September1980, indicated that only 72 percent of primary classrooms have adequatefacilities. Many classrooms are severely overcrowded, often with well over100 students in rooms designed to hold no more than 50. Many classes have tomeet in the open air or in church halls. The mapping exercise also showedthat fully two-thirds of the primary school students are inadequately seated,and that only 40 percent of Lesotho's primary schools have the facilities tooffer the full seven-year primary cycle.

21. Enrollment in general secondary education (grades 8-12) reached21,400 in 1979, 86 percent in junior secondary courses and 14 percent inupper secondary. About 15 percent of males and 19 percent of females aged13-17 1/ were enrolled in secondary school that year. Although the curriculumis still overly literary, sixteen secondary schools offer pre-vocationalsubjects, twenty-seven schools include bookkeeping and commerce courses and50 teach agriculture courses. In 1979 there were 940 secondary schoolteachers, for a pupil-teacher ratio of 23:1. About 28 percent of theseteachers were expatriates, and of the 675 national teachers, only 372 or 55percent were fully qualified to teach at the secondary level. As in primaryeducation, an in-service program is underway to improve teacher qualificationsand skills.

22. In 1979 enrollments in vocational and technical courses totalledabout 1,650. More than one-third of this enrollment was in home economics,one-quarter in the construction trades and lesser numbers in motor mechanics,engineering and secretarial and administrative skills. About 400 studentswere enrolled in agricultural courses that year, and a substantial, numberwere taking nonformal training.

Education Strategy and Policy

23. In 1978 the Government undertook a thorough review of its educationsystem, with public meetings at the village level followed by a four-daynational seminar in the capital (Maseru). The main recommendations of this"dialogue", which were later incorporated into the Third National DevelopmentPlan, were: (a) to improve the quality and efficiency of primaryeducation; (b) to place greater emphasis on math, science and practicalstudies; (c) to develop vocational, technical and higher education withthe view to meeting national manpower needs; (d) to achieve better coordina-tion among non-formal education programs; and (e) to strengt:hen governmentcontrol over education.

24. The Government's objectives in education include: (a) universalprimary education; (b) the development of a curriculum relevant to Lesotho'sneeds and the provision of instructional materials to all primary level

1/ About 38 percent of boys and 53 percent of girls from this age groupwere enrolled in primary school in 1979.

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students; (c) improvements in the teaching of Sesotho; (d) broader offeringsof practical subjects at the secondary and vocational levels; (e) the pro-vision of additional training facilities at technical schools to serveout-of-school youths and adults; (f) an all-Basotho teaching force at thesecondary level by year 2000; (g) increased practical training in agriculture;and (h) improved and expanded basic health and literacy programs.

25. Education policy in the Plan period is expected to focus on extend-ing and improving the quality of primary and vocational education, to provideall Basotho with the basic skills required to participate in the job market.Growth of secondary school and university enrollments are to be accordedlower priority. While Government will increase its investments in thesector, school ownership and operation (including responsibility for mainte-nance and repairs, but excluding the payment of teachers) are to remain in thehands of churches and local communities. The purposes of this policy are tolimit the recurrent cost to Government and to promote community and parentalinvolvement. The existing policy of prescribing syllabi and examinations isbeing extended to include textbooks, and school managers salaries will hence-forth be paid by the Government.

Education Finance

26. Education and training activities in Lesotho are financed from taxrevenues, foreign assistance, the churches and contributions from parentsin the form of "fees" channelled through the church societies. Although dataon expenditures from private sources are not readily available, estimates forFY1979/80 place such expenditures at US$13.9 million or about 2.3 percent ofestimated GNP for that fiscal year. Some US$4.1 million of these expenditures,or 30 percent, were financed from student fees, theremainder from other funds obtained by the churches. A large proportion ofthese funds was spent on maintenance, repairs and operating expenses, althoughthe churches did construct some classrooms and other facilities during theyear. A detailed breakdown of these expenditures is not available.

27. Public sector spending on education and training in FY79/80 amountedto US$24.8 million, about 4.1 percent of GNP. Of this amount, about 77 per-cent constituted recurrent expenditure, mostly teachers' salaries, and thebalance capital expenditures. Over the period 1969/70 to 1979/80, recurrentexpenditures of the MOE grew at an average rate of roughly 9 percent in realterms, remaining at around 4.5 percent of GDP and varying from 17 percent to26 percent of the Government's total recurrent expenditures. Capital expendi-tures of the Ministry of Education, which have depended heavily on foreignassistance, have grown somewhat less rapidly and more erratically. Theirgrowth is estimated at about 3 percent p.a. in real terms since FY75/76.Although the Government's total recurrent expenditures are expected tostagnate in real terms over the next few years due to constraints on theamount of resources available, recurrent spending on education and trainingis expected to rise by about 4 percent p.a. in real terms. These expenditureswould rise to 25 percent of total government recurrent expenditure by 1985/86from about 18 percent in 1979/80. Capital expenditures on education and

/1

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training by the public sector are budgeted to remain virtually unchanged inreal terms during the third plan period. Capital expenditures will, to alarge extent, depend upon the availability of external financial assistance.

Previous Bank Group Lending for Education in Lesotho

28. The Bank Group has assisted in the development of Lesotho's educa-tion and training sector with two credits totalling US$11.5 million.

29. The First IDA Education Project (Credit No. 497-LSO), approved inJuly 1974 for an amount of US$4.0 million, was designed to: (a) expandtechnical and commercial education at the upper secondary level; (b) establishan extension college for adult and non--formal education; and (c) providefacilities and equipment to support the introduction of a more practicallyoriented curriculum in six general secondary schools. Technical assistance andadministrative funds were also provided for in the Credit. The Project wascompleted on schedule. The 1980 OED Audit Report (No. 2999) found that apartfrom lower than expected enrollment in the distance teaching program, theProject's educational objectives and targets were almost fully achieved. TheAudit Report noted, however, that the Project did not address adequately thequestion of access of poorer students to fee-charging secondary schools.

30. The Second IDA Education Project (Credit No. 748-LSO), approved inNovember 1977 for an amount of US$7.5 million, was designed to: (a) expandtwo additional upper-secondary schools; (b) establish a trades testing system;(c) establish a National Curriculum Development Center to encourage and unifycurriculum development efforts; (d) provide facilities at a number of secondaryschools to support introduction of the more-practically oriented curriculum;and (e) encourage a community outreach program and the use of project facili-ties in off-hours by adults and out-of--school youths. Funds were also pro-vided for technical assistance, project: administration and pre-investmentstudies. Although the Project has encountered delays due to weak administra-tion, the appointment of a new management team in January 1980 has improvedthe situation and it is likely that the Project will be completed by theoriginal Closing Date of December 31, 1L981.

31. Lessons learned from the first two projects are being addressedin the proposed Third Education Project. These include giving more carefulattention to improving the quality of primary education; providing trainingfor youths and adults in vocational skills; strengthening the sector'spolicy-planning and policy-implementing capacity; raising the effectivenessof the Project Implementation Unit; and giving consideration in the designof projects to the limits on capacity of the local construction industry.Improved access of students to the primary schools is specifically providedfor in the location of classrooms and in the provision of textbooks, and theevaluation studies will review the difficulties of access of poorer studentsto the fee-charging secondary schools.

Lending Strategy

32. Bank Group strategy for the education and training sectors will beto assist Government efforts to improve the quality, efficiency and equity of

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basic education and to provide the people of Lesotho with skills to enhancetheir employment prospects. In both primary and vocational education thistranslates into the provision of badly needed physical infrastructure andtextbooks, and the strengthening of education sector institutions. In futurelending consideration should be given to continued improvement in primaryeducation and to vocational, technical and managerial education as a means ofproviding skilled manpower to meet the growing needs of the economy. TheBank Group's role in secondary and higher education should be based on theresults of the evaluation planned by the MOE.

Part IV - THE PROJECT

Background

33. This Project was appraised in September/October 1980, and negotia-tions took place in Washington in April 1981. The Lesotho delegation washeaded by Her Excellency, Ambassador M. Tau. A Credit and Project Summaryappears at the beginning of this Report and a Summary Project Data sheet isincluded as Annex III. A Staff Appraisal Report (No. 3347-LSO, datedApril 22, 1981) is being distributed separately.

34. The proposed Third Education Project is designed to assist theGovernment in improving the quality and efficiency of primary and vocationaleducation. It would alleviate overcrowding of classrooms by providingadditional physical facilities, and would supply furniture and textbooks. Itwould provide permanent facilities for the Lesotho Opportunities Industrial-ization Center, thereby substantially increasing the effectiveness of thatinstitution in providing vocational training and would contribute signifi-cantly to the Thaba-Tseka regional development program by providing a sourceof skill training in that region. The Project would improve the capacity ofthe Project Implementation Unit and strengthen the Planning Division andStatistics Unit of the Ministry of Education. It would also provide fundsfor the identification and preparation of future education projects inLesotho.

Project Components

35. Primary-School Classrooms - This component would provide classroomfacilities and furniture in some of the most disadvantaged areas of thecountry. A minimum of 150 classrooms would be built under the Project.Satisfactory sites have been selected on the basis of the school mappingexercise. Priority will be given to areas where students meet in theopen air or where there are more than 100 pupils per classroom. Presentplans call for 600 classrooms to be built during the Third National Develop-ment Plan period. Ongoing classroom construction projects sponsored by theLesotho Evangelical Church, the European Economic Community and the OverseasDevelopment Agency, together with the proposed Project, would provide overone-half of the primary school classrooms the Government hopes to buildduring the Third Plan period.

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36. The classrooms built under the Project would be simple in design,accommodate 50 pupils each and would be furnished modestly with chalk-boards, seats and writing surfaces for the students, lockable cupboards forbook storage and desks and chairs for the teachers. Maximum use would bemade of local materials and labor, and :Low cost construction methods would beapplied. Ancillary facilities would nol: be provided, since the classroomswould be built at existing schools. The classes to be housed in the newclassrooms are already being taught, thus only a limited number of additionalteachers would be required.

37. Maintenance of the classrooms to be constructed under the Projectwould be the responsibility of the church societies that own the schools,although ownership of these particular classrooms would be retained by theGovernment. The existing maintenance system, which permits the churches tocollect a fee from the students for maintaining the schools, iis closelymonitored by the Government and has worked reasonably well in the past.Nevertheless, it needs to be reviewed in order to ensure that it is stillappropriate for Lesotho's needs. The Government would undertake to review theschool maintenance policies and procedures and would make recommendations asappropriate to ensure proper maintenance. Semi-annual reports on the findingsand recommendations of this review would be provided to the Association andwould be the subject of consultation with the Government during the course ofproject supervision. (Sections 4.04 and 3.05(b), draft Development CreditAgreement.)

Textbooks

38. The Project would provide all primary school students with textbooksand workbooks in three core subjects (Sesotho, English and mathematics) andteachers would be provided with Teachers Guides. A Book Supply Unit would beestablished in the Education Ministry to administer this component and anannual per student book usage fee would be charged to provide for replenish-ment when the books wear out. This fee would be modest and affordable by thevast majority of families. Children from families that cannot afford the feewould also be provided with textbooks. Book selection would be made by theCurriculum Development Division of the M1OE. In all, about 1,900,000 bookswould be purchased and distributed. Th:is would include an initial supply,plus one full replenishment, and would meet the country's needs through 1986.By that time, the revolving fund generat:ed by the annual book usage fee shouldbe sufficient to provide for further replenishments. A pilot distributionwould be carried-out in the Thaba-Tseka district in 1982 to test the distribu-tion mechanism, to be followed by country-wide distribution in 1983.

39. The Book Supply Unit would be headed by a textbook specialistfinanced under the Project. (Section 3.02(b), draft Development CreditAgreement.) He would be assisted by a Mosotho counterpart who would betrained to take over the Unit when the Project terminates. A bookkeepingassistant and secretary would also be required. To ensure early implementa-tion of the component, a textbook specialist would be hired for three monthswith funds available from the Second IDA Education Project to assist in theestablishment of the Unit and the pre-selection of textbooks. The booksprocured under the Project would be distributed with the assistance of theexisting local distributors.

40. The book-usage fee would be collected with the assistance of theMinistry of Finance sub-accountancy off:ices and deposited in an earmarkedinterest-bearing account which would eventually become a self-sustaining

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revolving fund. The initial usage fees would be M 2.00 per student in gradeone, M 3.00 per student in grades two through five and M 5.00 per student ingrades six and seven. The fees would be adjusted upwards as required toenable the system to remain self-financing. (Section 4.05, draft DevelopmentCredit Agreement.)

41. As conditions of disbursement against the textbook component, theMinistry of Education would, in a manner satisfactory to the Association:(a) establish and staff the Book Supply Unit; (b) establish the revolvingfund; (c) establish the textbook usage fee policy; (d) redefine the responsi-bilities and reorganize accordingly, if necessary, the Instructional MaterialsResource Center (which provides teaching materials to primary school students)and NCDC to ensure their effective coordination; and (e) establish a policyproviding for standardization of textbooks in the three core subjects (Sesotho,English, and mathematics). (Schedule 1, paragraph 4(b), draft DevelopmentCredit Agreement.) Also, the Government would guarantee sufficient funds forbook replenishment should the book usage fees not prove adequate. (Section4.05 (c), draft Development Credit Agreement.)

Vocational Training

42. The proposed Project would provide permanent facilities for theThaba-Tseka Vocational Training Center (TVTC) and the Lesotho OpportunitiesIndustrialization Center (LOIC) with the objective of expanding the capa-cities of these Centers to provide skilled workers to meet the criticalmanpower needs of the economy. At the TTVC, which is located in the moun-tains, the Project would provide academic and communal facilities for about110 trainees, boarding facilities for 70 men and 30 women and six staffhouses. The required land has been designated and the Government wouldemploy the necessary teaching staff by April 1, 1982. The main objective ofthe Center is to train local people who would likely remain in the Thaba-Tsekaarea to assist in the regional development program. Courses would includeconstruction and carpentry, mechanics and maintenance, leather-working,sewing and knitting, and upon completing the courses, trainees would beencouraged to establish small businesses in the area. The Government wouldprovide assurances that it would employ the required staff (Section 4.07,draft Development Credit Agreement) and that the curricula would be submittedto the Association for review not later than January 31, 1982 (Section 4.06,draft Development Credit Agreement).

43. At LOIC, the proposed Project would provide academic and communalfacilities. These facilities would be used for courses in building construc-tion, carpentry, plumbing, sheet-metal working, management and entrepreneurialskills, and other practical subjects. At present, the center is operating inborrowed facilities, with borrowed equipment, and its administrative officesare located about 1.5 kilometers from its training facilities. Consequently,effective communication and coordination between administration and trainingare difficult and the sharing of equipment presents problems in schedulingand administering courses. From 200 to 250 students per year would receivetraining at the new facilities, and detailed curricula and syllabi, which arecurrently being tested, would be reviewed by the Association (Section 4.06,draft Development Credit Agreement). The training programs at LOIC, which are

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open to school dropouts, are supported by c:ounselling, job placement andfollow-up services. To date, all trainees from the Center have found employ-ment and about 80 percent have passed the official tests for certification intheir respective trades.

Evaluation and Pre-Investment Studies

44. The evaluation component is designed to strengthen the EducationMinistry's Planning Division and Statistics Unit, to improve their evaluation,planning and implementing capacities. The studies carried out under thiscomponent would assist in evaluating the cost, quality and equity of theeducation system and in reviewing the difficulties of access of poorerstudents to the fee-charging secondary schools. Pre-investment funds wouldbe included for detailed preparation of future projects. Terms of referencefor evaluation and pre-investment studies Einanced by the Project would besatisfactory to the Association. (Section 3.03, draft Development CreditAgreement).

Technical Assistance

45. Twenty-two man-years of technical assistance would be requiredfor successful project implementation, of which about thirteen would befinanced under the proposed Project. The assistance required would includean architect/coordinator; an architect; a construction supervisor; a procure-ment specialist; and a textbook specialist. The qualificaticins, experienceand terms and conditions of employment of these specialists a,nd consultantswould be satisfactory to the Association. (Section 3.02, draft DevelopmentCredit Agreement.) The Government of Ireland is providing five man-years ofthe services of an architect/coordinator and will provide two man-years of thearchitect's services. The procurement officer is presently being financedunder the Second Education Project. Financing is included in the proposedProject to extend the contracts of the architect and procurement officer andto provide the services of a construction supervisor for five man-years and atextbook specialist for three man-years.

Project Cost and Financing

46. Total project cost is estimated at US$13.1 million equivalent,(US$12.6 million equivalent net of taxes), with a foreign exchange componentof about US$8.7 million, or 69 percent of the total project cost net of taxes.The proposed IDA credit of SDR 8.2 million (US$10.0 million equivalent) wouldfinance the entire foreign component and approximately 34 percent of thelocal costs excluding customs duties and taxes. Financing of local costs isjustified by the constraints on resource mobilization in Lesotho and the highpriority attached to this Project. The Government would finance the balanceof the local costs and meet the added recurrent costs, which are not expectedto exceed two percent of the Ministry of Education's recurrent expenditurewhen the project is in full operation.

47. Cost estimates for the civil works, furniture and equipment werederived from a review by Bank staff of data provided by: (a) the Ministry ofWorks, from its broad experience in the building sector; (b) the ProjectUnit, based on its experience in implementing the First and Second IDA

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Education Projects, including recently awarded contracts; and (c) the privatesector, including firms of architects and quantity surveyors and contractors.The estimated average unit base cost (Sepiember 1981 prices) of constructionfor primary-scyool classro2ms is US$183/m equivalent, with the cost varying(from US$178/m to US$192m ) because of the difference in location. Althoughcross-country comparison of costs is difficult since all classrooms would beextensions to existing schools, the cost per pupil place of US$255 in Lesotho,a mountainous and more isolated country, compares with US$235 in Malawi (1979)and US$256 in Swaziland (1979). The average base cost of academic and com-munal facilities at the TUTC and the LOIC of US$5,069 and US$3,497 respec-tively, compares with a median cost of US$4,571 (1980 prices) for Bank Group-financed projects in FY78 to FY80. The estimated costs of the textbookcomponent were prepared by a consultant textbook specialist in consultationwith the Education Ministry and private publishing firms. Specialist servicesunder the technical assistance component are estimated at an average cost perman-month, including salary, housing, travel and allowances, of US$7,000.Professional architectural/engineering services are estimated at an averagerate of US$7,000 per man-month, including salary, overhead and fees. Theprice and physical contingency allowances are based, respectively, on theBank's projections of inflation rates in Lesotho and on experience in similarprojects. For physical contingencies, 10% has been added to the base costs ofcivil works and professional services and 5% to the base costs of furniture,equipment and textbooks. Price contingencies totalling 30% have been appliedto the base cost.

Project Implementation

48. The Project would be implemented over a period of about five years.The Project Unit, established to implement the First IDA Education Project andcontinued under the Second, would perform the administrative functionsfor the proposed Project. The unit is functioning well, and its key staffhave the necessary experience and capacity. Technical assistance funds areprovided to continue the services of key unit personnel. Operational expensesfor project administration are included in the Project.

49. The architectural team established in the Ministry of Works underthe Second Education Project would administer construction of the physicalfacilities in coordination with the Project Unit. This team is operating welland should have no problem in carrying out the tasks assigned to it. However,to strengthen the team a building-construction supervisor, who would be aqualified architect or engineer, an additional architectural technician and aconstruction supervisor are required, together with additional supportingstaff. These personnel are provided for partly under the Project andpartly by other agencies. Pre-investment funds under the Second EducationProject are being used to determine the most economic and efficient construc-tion methods given the location of the sites and to provide initial achitec-tural services for the vocational schools. The architectural team wouldassist in determining the most appropriate standards and methods for repli-cation of primary school classrooms nationwide. It would also review existingmaintenance policies and procedures.

Reporting

50. Semi-annual reports on implementation progress would be submitted bythe Project Unit to the Association within one month after the close of each

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period (Section 3.05 (b) (iii), draft Development Credit Agreement). Withinfive months after the Credit Closing Date, this Unit with the assistance ofall Ministries involved, would provide the Association with an evaluationreport covering all aspects of Project execution, including lessons learnedduring implementation (Section 3.05 (d), draft Development Credit Agreement).

Sites

51. The primary school classrooms to be built are all additions toexisting schools for which the land has previously been allocated to thecommunities. Satisfactory sites have been designated for the primary class-rooms and vocational training facilities.

Procurement

52. Contracts for civil works, furnit:ure, equipment and textbooks wouldbe awarded on the basis of international competitive bidding (ICB) in accord-ance with the Bank Group's guidelines, except as follows: (a) civil works tocost less than the equivalent of US$200,000 and primary-school classrooms; and(b) furniture, equipment, and textbook contracts, including contracts forlocal distribution of textbooks, costing less than US$50,000 equivalenteach. It is estimated that contracts valued at US$5.8 million equivalentwould be awarded through international competitive bidding. Due to theirsmall sizes and remote and scattered locations, construction of the primary-school facilities would be awarded on the basis of: (i) competitive biddingadvertised locally and in accordance with local procedures satisfactory to theAssociation (estimated at US$1.2 million equivalent); or (ii) negotiationswith the individual mission schools (estimated at US$1.0 million equivalent).It is expected that the construction of a few classrooms would not attractinterested local bidders nor would the missions be able to build the facili-

ties, in which case the Project Unit would arrange to carry out the workthrough use of departmental force account. It is estimated that about 20percent (US$0.5 million equivalent) of the classrooms would be constructedutilizing this method. Civil works under (a) above and furniture equipmentand textbook contracts under (b) above would be awarded by competitive biddingadvertised locally and in accordance with local procedures satisfactory to theAssociation. (Schedule 4 draft Development Credit Agreement.)

53. Architectural sketch designs, draft tender documents, and masterlists of furniture, equipment, vehicles, and textbooks indicating proposedgroupings would be reviewed by the Association. Items would be grouped to theextent practicable to permit bulk procurement. Review of tender-evaluationdocuments by the Association prior to award would not be required for civil-works contracts estimated to cost the equivalent of less than US$200,000 andfor furniture, equipment, and textbook contracts, each costing less thanUS$50,000 equivalent. Where international competitive bidding procedures areused: (a) domestic manufacturers would be given a preference of 15 percent orthe existing applicable rate of import duties, whichever is lower, over thec.i.f. price of competing foreign suppliers; and (b) qualified domesticcivil-works contractors would be allowed a preferential margin of 7-1/2percent over the bid prices of competing foreign contractors.

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Disbursements

54. Disbursements would be on the basis of: (a) 80 percent of expendi-tures for civil works, locally procured furniture, equipment, and textbooks,professional services, and local expenditures for equipment and vehicles forproject administration; (b) 100 percent of foreign expenditures for directlyimported construction materials, furniture, equipment, textbooks, technicalassistance, evaluation, and pre-investment studies; (c) 50 percent of localexpenditures for technical assistance and operating costs, including salariesfor project administration (Schedule 1, draft Development Credit Agreement.Disbursements for project administration and any construction work utilizingforce-account methods would be made against certificates of expenditures,documentation for which would not be submitted for review but which would beretained by the Borrower and would be available for inspection by the Associa-tion during the course of project supervision. (Section 4.01, draft Develop-ment Credit Agreement.) Based upon experience in previous education projects,the Project Unit has satisfactory institutional capacity to use the certificate-of-expenditures procedure.

Auditing

55. Annual auditing would be required for all expenditures financedunder the Project, by auditors acceptable to the Association. Audit reportswould be submitted to the Association within six months following theend of the Borrower's fiscal year. (Section 4.02, draft Development CreditAgreement.)

Benefits and Risks

56. Benefits. The project would assist the Government improve thequality and efficiency of primary and vocational education in Lesotho. Itwould improve equity in educational opportunities by providing classroomfacilities and furniture at schools where the need is greatest, and by pro-viding training opportunities to disadvantaged groups in rural and urbanareas. The benefits of the project's primary-classroom component wouldinclude the provision of about 7,500 student places and the strengtheningof institutions in the education sector. The TTVC component would contributesignificantly to regional development. The construction program is highlylabor-intensive, and is expected to generate considerable employment. Thelocal furniture industry is expected to share in the manufacture and supplyof school furniture. In addition, the Project would establish a permanenttextbook-supply infrastructure which would ensure the provision of textbooksfor the foreseeable future and provide the funds needed to replenish thesupply.

57. Women would particularly benefit from the proposed Project. Sincethey predominate in school enrollments, they would gain substantially fromthe primary school component of the Project and a significant proportion ofthe vocational training would be directed towards activities in which theyparticipate heavily, e.g., agriculture, home economics, sewing, etc.

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58. Risks. No major risks are foreseen. Close coordination of thevarious agencies involved in the textbook component will be necessary toensure that the system functions well. Should the contributions to therevolving fund not be expeditiously collected, the fund might not be fullyreplenished, thus an additional burden would be placed on the MOE's budget.To minimize this risk, the establishment of appropriate administrative arrange-ments has been made a condition of disbursement against the textbook component.

PART V - LEGAL INSTRUMENTS AND AUTHORITY

59. The draft Development Credit Agreement between the Kingdom ofLesotho and the Association and the recommendations of the committee providedfor in Article V, Section l(d) of the Art:icles of Agreement of the Associationare being distributed separately to the Executive Directors.

60. Special conditions of the credilt are listed in Section III ofAnnex III of the report.

61. I am satisfied that the proposed credit will comply with the Articlesof Agreement of the Association.

PART VI - RECOIMENDATIONS

62. I recommend that the Executive Directors approve the proposedcredit.

Robert S. McNamaraPresident

AttachmentsWashington, D.C.May 1, 1981

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TABLE 3ALESOTHO - SOCIAL INDICATORS DATA SHEET

LESOTHO REFERENCE GROUPS (WEIGHTED AVE%ACESLAND AREA (THOUSAND SQ. KM.) - MOST RECENT ESTIMATE)-

TOTAL 30.4AGRICULTURAL 28. 6 MOST RECENT LOW INCOME MIDDLE INCOMF

1960 /b 1970 lb ESTIMATE lb AFRICA SOUTH OF SAHARA AFRICA SOUT" OF SAHARA

GNP PER CAPITA (US$) 50.0 90.0 340.0 260.0 868. 0

ENERGY CONSUMPTION PER CAPITA(KILOGRAMS OF COAL EQUIVALENT) .. .. .. 80.0 699.4

POPULATION AND VITAL STATISTICSPOPULATION, MID-YEAR (MILLIONS) 0.9 1. 1 1.3URBAN POPULATION (PERCENT OF TOTAL) 1.5 2.6 4. 1 17.3 28.9

POPULATION PROJECTIONSPOPULATION IN YEAR 2000 (MILLIONS) 2.0STATIONARY POPULATION (MILLIONS) 5.0YEAR STATIONARY POPULATION IS REACHED 2155

ff FPPULATION DENSITYPER SQ. EM. 30.0 36.0 43.0 27.4 61. 7PER SQ. EM. AGRICULTURAL LAND 32.0 38.0 45.0 82.6 126.0

POPULATION AGE STRUCTURE (PERCENT)0-14 YRS. 38.6 37.6 40.7 44.9 45.5

15-64 YRS. 57.0 57.3 55.1 52.2 51.665 YRS. AND ABOVE 4.4 5.1 4.2 2.8 2. 8

POPULATION GROWTH RATE (PERCENT)TOTAL 1.5 2.0 2.3 2. 7 2.7URBAN 6.0 7.5 8.4 6.8 4.9

CRUDE BIRTH RATE (PER THOUSAND) 40.0 40. 0 40. 0 47. 4 46.8CRRUDE DEATH RATE (PER THOUSAND) 23.0 19.0 16.0 19.6 16.4GROSS REPRODUCTION RATE .. 2.5 2.7 3.2 3. 2FAMILY PLANNING

ACCEPTORS, ANNUAL (THOUSANDS) ..USERS (PERCENT OF MARRIED WOMEN) .. ..

POOD AND NUTRITIONINDEX OF FOOD PRODUCTION

PER CAPITA (1969-71-100) 104.0 95.0 99.0 91.8 94.0

PER CAPITA SUPPLY OFCALORIES (PERCENT OF

REQUIREMENTS) 91.0 91.0 99.0 90.2 92.7PROTEINS (GRAMS PER DAY) 63.0 63.0 66.0 53.0 53.0

OF WHICH ANIMAL AND PULSE 15.0 13.0 15.0 18.4 15.6

CHILD (AGES 1-4) MORTALITY RATE 34.0 27.0 21.0 27.7 21.3

HEALTHLIFE EXPECTANCY AT BIRTH (YEARS) 42.0 47.0 50.0 45. 3 50. 1INFANT MORTALITY RATE (PERTHOUSAND) .. 133.0

ACCESS TO SAFE WATER (PERCENT OPPOPULATION)

TOTAL .. 3.0 17.0 23.2 31.0URBAN .. 100.0 65.0 58.0 66.8RURAL .. 1.0 14.0 16.8

ACCESS TO EXCRETA DISPOSAL (PERCENTOF POPULATION)

TOTAL .. 11.0 13.0 28.9URBAN .. 44.0 51.0 67.0RURAL .. 10.0 12.0

POPULATION PER PHYSICIAN 22525.0 28579.0 18642.0 30910.4 14508.2POPULATION PER NURSING PERSON .. 3732.0 4335.0 5793.2 3279.5POPULATION PER HOSPITAL BED

TOTAL .. 566.0 487.0 1198.9 1141.5URBAN .. 60.0

RURAL .. 732.0

ADMISSIONS PER HOSPITAL BED .. ..

HOUSINGAVERAGE SIZE OP HOUSEHOLD

TOTAL .. .. 3.9

URBAN .. .. 4.2

RURAL .. .. 3.9

AVERAGE NLMBER OP PERSONS PER ROCOTOTAL .. ..

URBAN .. .. ..

RURAL .. .. ..

ACCESS TO ELECTRICITY (PERCENTOF DWELLINGS)

TOTAL .. .. ..

URBAN .. .. ..

RURAL .. .. ..

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TABLE 3A Page 2 of 5LESOTHO - SOCIAL INDICATORS DATA SHEET

LESOTHO REFERENCE GROUPS (WEIGHTED AVERAGES- MOST RECENT ESTIMATE)-

MOST RECEN T LOW INCOME MIDDLE INCOME1960 /b 1970 /b ESTIMATE /b AFRICA SOUTH OF SAHARA AFRICA SOUTH OF SAHARA

EDUCATIONADJUSTED ENROLLMENT RATIOS

PRIMARY: TOTAL 83.0 95.0 103.0/c 57.7 61.7MALE 63.0 77.0 85. 0/c 74.2 69.2FEMALE 102.0 113.0 122.0/c 54.1 51.4

SECONDARY: TOTAL 3.0 7.0 17.0/c 10.0 20.6MALE 3. 0 7.0 13. 0/c 13. 7 29.2FEMALE 4.0 8.0 20.0/c 7. 1 14.7

VOCATIONAL ENROL. (1 OF SECONDARY) 23.0 8.0 5.4 6. 8 7. 0

PUPIL-TEACHER RATIOPRIMARY 54.0 46.0 49. 0/c 45.0 36.6SECONDARY 20.0 22.0 23.0/c 25.2 24.3

ADULT LITERACY RATE (PERCENT) .. .. 55. 0/c 25.5

CONSUMPTIONPASSENGER CARS PER THOUSAND

POPULATION 3. 0/d 2.0 3.9 3.6 38.8RADIO RECEIVERS PER THOUSAND

POPULATION 5.0 5.0 20.0 31.5 83.5TV RECEIVERS PER THOUSAND

POPULATION .. .. .. 1.8NEWSPAPER ("DAILY GENERALINTEREST") CIRCULATION PERTHOUSAND POPULATION .. .. 1. 2 4.6 24.2CINEMA ANNUAL ATTENDANCE PER CAPITA .. .. .. .. 0. 7

LABOR FORCETOTAL LABOR FORCE (THOUSANDS) 487.6 569.9 663. 8/l

FIMALE (PERCENT) 33. 7 44.6 44.0 33.5 38.1AGRICULTURE (PERCENT) 93.4 89.7 87.0 80.7 54.3INDUSTRY (PERCENT) 2.2 3.2 4.0 8.1 17.8

PARTICIPATION RATE (PERCENT)TOTAL 56.5 55.8 54.3 42.2 38.8MALE 62.4 62.7 61.2 55.1 48.4FEMALE 50.9 49. 1 47.6 29.5 29.4

ECONOMIC DEPENDENCY RATIO 0.8 0.8 0. 9 1.2 1.3

INCOME DISTRIBUTIONPERCENT OF PRIVATE INCOMERECEIVED BY

HIGHEST 5 PERCENT OF HOUSEHOLDS ..

HIGHEST 20 PERCENT OF HOUSEHOLDS .. ..

LOWEST 20 PERCENT OF HOUSEHOLDS .. ..LOWEST 40 PERCENT OF HOUSEHOLDS .. ..

POVERTY TARGET GROUPSESTIMATED ABSOLUTE POVERTY INCOMELEVEL (USC PER CAPITA)

URBAN .. .. 262.0 138.2RURAL .. .. 220.0 86. 1

ESTIMATED RELATIVE POVERTY INCOMELEVEL (US$ PER CAPITA)

URBAN .. .. 93.0 107.0RURAL .. .. 93.0 65.0 ..

ESTIMATED POPULATION BELOW ABSOLUTEPOVERTY INCOME LEVEL (PERCENT)

URBAN .. .. 50.0RURAL .. .. 55.0 66.9

Not availableNot applicable.

NOTES

/a The group averages for each indicator are population-weighted arithmetic means. Coverage of countriesamong the indicators depends on availability of data and is not uniform.

/b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, betwen 1969and 1971; and for Most Recent Estimate, between 1974 and 1978.

/c 1979; /d 1965; /e Including migrant labor in South Africa.

Most recent estimate of GNP per capita is for 1979, all other data are as of April, 1980.

October, 1980

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ttPlSINITOtS OFt -SCIAL INDICATORS

Ntlete: Although the data are deco fro souce generalIly judged the motathoritative end reliable, it should also he otad that they say net be inter-natioaly.:1..... comparale becaus Ithe I,lako standardizel,d detililoos,1 anloolsur y dlilo ...an conrIsis etn the data. The dAtast.ee

thls, afltc d _orbe c-es fmantue tticr tras and chrnleearel maorditffna besnestic

The toeenctrouIpe Yer (I). the sane .cutry grPouuf the -ub)- en ..c.uey and (2) A nteutr greup elb loeahat higb.. averge tun., lbse tha auntry greapof tha ujarontyfoy for 'Capita su-plue Oillhytes gros.. eher 'Middle moNs etb Afia an.d Middle tact' te oh-se b-ce atstane

aoi-ulua fflities). C h eeet rn aateseaa ara".11 o,puletius aegad rtetl en fee eeh isdi-a- sad ebea emly eb- arleas bul I th coortes Iagnup as ataferthis oiosor Si.ce the I netege of coetie aea the iediestete depsde or the aslability e

data and is e usfo',cuiueet ha a Incee torltn vrg of uo Indi-st- to anether. Theme -reegee ae only sata1 Ja thpais abs e.aof O-ttidicator- attn ans tha conryad raer -o gops.

LAND1 AREA )thouaas,d a-a)Po1iingtPieam Ppdro dirida by mamnat prorti.tag phy-

-osa _ Tota sufara -nPtlaleg land -rra ed inland eaes lie sliffed tre. a .a.Ia shea at ui-sesitylaadricoltu..aI - Etetnae ot agriul-Intl ara aecnp-tily ur pe-nsetl1y Perulaias -oar.tistn Paee- eplaie divided by .. tst if pratiin.g

for cops,pat, P market and kitoh.. gardoe or to lie fallen;1977 dana. mal -d feasl gadnase P are..pratina mras sa - tisAnt sarses

Pa Naia a E Wia Bed- ssa. sba, ad eIs - P tplat (rar).,GM? PER CAPItA (lip) t 1 e aptaecmnaa -o-rtot anoht plins ... al - see,ad dso l)iided by thtarapriv tat ofepita.1 bedsonlated by sae .anrio mthod Ie World Sank Atlas (1917-79 baein): 1960, -vedlbi is d poblic end private geoetl1 and ap-1einsd baspical 1911,-nd tO7S data. bahilisatancetes Da-pitsle a- aetaliat-sta peeeetly staffed

A I ~~~~~~~~~~~~by at lae en phycietan Detshlislsen pr-idtssg prioaipally esrddafERAGY CONlSUMPTION PtE CAPITA -. as.c.upso fccnris ers ca Ire are met iladed. Rntel haspintls, besave, i-ads health -d ada

andigie petr-leu, uz-ur1 gas and hyro. nuclear andgetherml ec centers met P.e mnly staffed by A phsysfina (hst by a nedita ne9etet,trInity) in hilogram of loos equvalar pt na p.ita ; lqht 197, IAed 1918 more d idfte ete.) whle etfer is-petient -redata end preide adea. baittd rasga of tedira fagihitien Yet etatietlel pnepaa tsban hepi-

ptptLnlIog dIll P11.01. tEAtISTICt tale isolade 5196 primipal g-na.1 sd panisliasd batyitals,' venalTocelPopsatius Midtear(ailliene). Ac of Jtly 1; 1960. 1970, ned 1970 fsertl ea rrre optl n eia d matern.Ity dtse..

d "7MV111:1~~~~~~~~~~~~~rn a I divde by the stbec of bes

diP aren dainitrnaof ob a arsaey effect tnpar-bility of det. BDUStIGanen comirza;196, 1970, od 1978 dana. Sveaai.. of H-acheld (erss b amead -ttl.shs se-d l

* Porulentan in~~~~1 rear 2000 - Current ypulnp-ojactiesc ar ha...d en l98t and thtr mete nest. A beds- er ledger any er sy et ha innlistd Intotalp1 ultinby age aod eon aed nhcir mnraliny md fertility rates. nthe heosehn f i attiatical pr-possProjection parunne. for.. actulity -ae oprius ef three lottie aaeo- Ovrae se ofrers...se rt eae- unatal. tse .td rsea - Average ttog life reernya tlicesa tb oor' e aiaicm e of pesa-e oe aal ra,edraa nrapied omsrsa-- ra, mod femal lcfe toenea .ibilia iuu - 77.1 feere . Th. para- drallig., re-peatir-ly. Dwelling. maclade a-srast etr e and

senoos for fertility -tsa ala have three Is...ls eeeeisg dantie iaueopidprefe ,lnyondi- toI or tndad pas fanily plaaing yarforac. A.ae.. to tlet'ict, (anecet of deelisa) - cara nbsa. an aa.1 -thnatyIs ha unigedIn c thame nina nombinatinse aS -eteity Covnieldalnswt erra in iugqnnte-pretg

nd fertIlity treeda Eon ra tea pupee or totu1, arba' and rsem1 d-lisg rnpa-iv-ly.tnaniuoar renalanie - is a Itairy :lPeplna there isde gruseth is.e

the birth ruta is equal ta the death rate, and also she age esotsre r- - mopAIrONmatee.. tossatr Thio is achieve.d uly after fertility ratas dacllse t0 AdSted Es-oImnet gangthe roplac.-n lero of -imt let rprdo-tioa rate. when each generation Pmeysral-rnl aeadtesl rs oe aead9slof a-e repl_ree itself ..euctly. ThIetaey uoainsiesaerllmnto al~l age atth erer leve.e traesases et. esapf er

oTtleatd on the basset. the Projentad ouatrtIcof the pepa1atior presay sobeol-aS ,popolatiee; mortally inalada hLsdlde aged 6-i1Is the year 20thadsers f dClise,o frility rate to repbage years bst adjaate Per diff.eret langthe ef priary edmotieg fat

m tcio= lend. lM-d-I. - h .t.. .plt. conttee withaierl edeatiet -. 1slmat emy ened 100 parsem

fpuruLsela Isn dore euie tlatPs pa fa approved primacy -ttnsscism;P.. so. he. - Mid-year .poplation par aq-r hiloete (100 hronares) of pre-tdee g-mrL,vcatenal, or tenehe treinteg lasnt tiem fne psgs

t.'.1 Z... ..- I~~~~~~~~~~~~~aeely of 12 to 17 year of ege; -ovspond-au esr-nae g 1ealPer so. ha. earlaultarl.lad - Caspasd an shov tar 1giuna -ad orlded,

Vacaninsa eaollmn (eteaat .enavl-VsnimldaitntgnmPoeslsti.. Ag -nntau (remant - Childlos (0-14 years). working-age (10- imlde nerheleal , dsare tabrper ed seaaidpn

hA yer,),mad etird (65 ysae and ove)f uttgeo end-year 5t5P- dearly o as deateens at esndaey sntmittion-lances; 1900, 1970, and 1978 data. Psel-sMo erama-eae.an omae - Tatel etdetem enrld in

Poonlanios Oreeth Dae (rercest) - natal - e _growt retee of teas). mi- ptMyadsreeylvl diie ym.asa eeasO hyear papalaniona fee 1900"60, 1960-pt, sd 1970-7g. en-epeadei lves

Peenloton Areeh gets rernean -tanha - A--Ie grh oare-f- uba peI - dlit-hsre asCaaaI-Lrem dle(bet edn Omlat.too foI9I6. 907,sd 907.a a peroentege of tese adlt poplartam agd 15 year as mte

Cs-dIeDit D a(r t thusn - 4-tsn line binhm per thosamod of mid-yeaC,populati; 19g 1 , sad lO78 date., OS(T

C_ds Death Date leer thosead) - hAoeaI deathe Pee abussd of mi-er Pasegr- r feet tisesad asecslats - PameSege -ma.Vwiss matepePslatan; 190. 197, sad 1978 data, nesIa= gls hneih eem;aaaenaaas ere a

bar mars) rap-de-ive prind if she amperlan- presest ng-apettfl fer- Ddis assver fertesmdeaeltir llspe tromvttnednlltryr.tsa;aesally ftv-ysao avergas ending to 1960, 1970, and 1975. breedesan to ge-ra pebllt Pee theesd ot papn.a-tiam; macldma .l-

Pamlr paneie -. tacruoe, gsan fehradde A- -Iaaa esthe of saelt.r. -eed -saire.. in entois end in ysae thee ragiseati- of wedge seaof hethnearal evior rderaneios oP anioalPa"iy__a" i prf ren we in afeo; data tar teete year may eat he aIarble ee mat

seeneat nlld-bargn age(15-0 yeas) ab assbiet-nontot dvuce to TV RD.esivr. (ear thesan Oeeliti- - TVreess tee breaost taall maried -es in aeAge gtOtp. ge-re peblir per rtemead pepeatino; eneete saltoeted TV te-iva

1111 ADM NMTITt.ON is -omtlies ad in sa- mhe eag ..iarasa of TV -nn -e Da aftn.Indn o Pad redrtis et apis 19h-71lgg -Inde of pot aapit. a--Ie Neerese Cietleti"mCs thsen mesatint - fleetmba avraeetget

mien ef mdaily geass) inerantpap.e, deiWat - p.s'LIeds pakl-

grudetir ofallfoodcemdinie. todntie en 4ne sand sad f.ad -A licatin devtad pelmeily te t-re 1ge ge-ea am.It i. e tatitteie on cAload- year basis. C-ndiccee covn -esar gends (eg. caes ob diyt tegama es eete mkstead ofanger) abioh ar edible an gensaia soniorte (e.g.affe .I:!. Ciem 'dsacs if itedae eso ieta wet Tea ti- Jde h tra

te _rWenned) . Aggegate Pr-dntior, of -ah eoantr ie bened emnrhn sA-Id Atdatngth yer Onlet. ong- D e&i,is C deiv-i sofeatiom_ averge prodnoe price seighte; 1961-65. 1970, esd 1978 data.t I -~t.y-,t ti i 1

Percenre urey o osutne (etratof smeremnte - uepeadtra sd mebile nite..

po,t.day. Aalable snpiaoeniadmsi peedeotien, putd le Tate Labor F-ra (thesend) - loemie1.1y sating p.t-t, Da.dnltgonpers, an nbeass issnoc. Metsapples salede tagme fed-eds ed Daes sa-d ansplsed bum enlein bmewtt, endeng..eo

qeanitte med for prnoesng,sad oen is istibure.Dsar" Definitiem dn -eioa re Amen net euahlg1960, i97D -dinon wreemmtsd by PAR beend on physielagical nada to -eea set- 1978 dn..

riry ae heslth Iconsidering -antesenr1 tempa-ane, bdodywighte, gt. sl ntr)-Pel ao snsn ecneen aa aa'Oemned.se distributio of poplanien, sad al1eelg 10 percet for nate At Fa (lt asistr -nrt 7-1 Labor ferre in tpsmng,fermofy ttst1 sbat

bu Iaud level; 1961-ho, 1970, ead 1977 data. tnis as1It pecemetg ef L ota labor taaf ;1960, f 197Dy ant pg -da.Par o pis nerly t potei turs re day - eotes aotensof pr cpita. stse (asreent - inbor feor in minig, aetaetinn, .sentwnlegnot mpplysf Pnd po day lin suppy oftsodin doine. ma ben5. e' sad7 elriety, watat med S.ga .. enpaetag of lote ab-t tara; 196,

qui=-mrefur all1 ne-tior eanabliehd bY 0000 provide tet dni- tat "'alloanc of S0 ga of natal peeaPer day sad 20 gr-m of esa 1970 end 197 daapua proei, of ahiah 10 gren h-Iad he Aon-s protein. Thee ea- Ptltioimntien gen (ftam a.ml.sa ae-Pehielme

=tmae lee than thoee of 75 gras of total protein and 23 gonef pr-j.. ofniviry tarn ar nageads renal, mat,an ta lbo levee annednal poena neeaefrte rl,peae yP0i h Thrd pteentegesy ea.sl a fetlepaelttee- -at leseeap l;-nrl Pond ha,rvy; 96-ho, 19- and 1977 data... dbFAJ.t Tj 1960, 197De An 1975 data. Theseer fOe -p iaon ti-aee Ise et saa

a Pet narita oroein eneoly free niMal and ealee -tPenin sepply of feed de- ag-e trese at the papelatie, sad etg ite te-. A ten stn-tired free saele aed pulses in eos Pet dey; 1961-65, 1970 sad 1977 dar,m. eeaetemmnaalsrts

Chid ese -A Mrtliy at Coe hoezd)- esaldeth pr aonndin geaeioDt=eavgain -RDtin of popaltien ad- 15 and 65 end o.

crime date derived free lite tabise; 1960. 1970 mad 1977 data.. INCOME DISTRIBUtTION

_____ Ieaaaae iastae(ah in mah and h1nd) - ga-nl"e by etchetS snn,eet' 2T pao . otn D aat, sad psatet 4D petmemlife toeonasv at Brth (rars) -Average saber ot yeat of life reniniag et0hspabetde

oft an Pornlln Dane(oa trhcsd - Annualdentha of infmots under one R T0ppn AMI.IPofl age pt S h. Wau live irths Dattiad Aelete P tvena ines L,naI (UDO ta esibt: -eba and esea -

Haber of PeoPle )tcrsl, arbm. and ruted) winh -e -bsle e tec as f sgsaicnayadsqmte diet pleaaeern mi-ftain -eqaileents L.acesraPply(itde rr.eted erfaoo vetre -t untreted b.t oreotsn-te d aftedabla.

saner anh as tan toemproatefl borehole,, epe,ng, sad esatery wells) .. MMine g laiva PevtrnygsaLvl(O n aia en . ".

pe-ntocage of the in r-pe-ti-r P pouaions.t en urban area a blio rrrlrltvepreyieatlvli nstide vtasprcpt

reasnabl It es nonld. 1.Ipty cha- tsh 20e0feo emeao ttl f-Ahe hetbl sslws dctsty fdto gs as tlmn i ensDanfah .P..ltin l t Abela Povert l-e .Level. fast thna - .aba

-Octal.-tbro peopl (tonl, urban asd rural)f sered byate h...e hol

oflae esrea1ndeanewaerbyeaerboneefnes r heas o

hetoher 1980

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- 20 -

ANNEX IPage 4 of 5

ECONOMIC INDICATOIS

GROSS NATIONAL PRODUCT IN 1978/791/ ANNUAL RATE OF GROWTH (Z, CONSTANT PRICES)

US$ Million % 1974/75-1977/78 1978/79

GNP at Market Prices 449.3 100.0 11.3 5.1Gross Domestic Investment 69.0 15.4 27.0 -17.0Gross National Savings 46.9 10.4 65.0 -21.0Current Account Balance -22.1 4.9 29.0Exports of Goods, NFS 41.5 9.2 18.2 7.6Imports of Goods, NFS 240.5 55.3 13.6 0.5

OUTPUT, LABOR FORCE ANDPRODUCTIVITY IN 1976/77

2/Value Added Labor Force- V.A. Per Worker

US$ Million % Mln. % US$ %

Agriculture 59.6 36.4 .343 85.6 174 43.0Industry 23.8 14.6 .008 2.0 2975 729.0Services 80.2 49.0 .049 12.3 1637 401.0Unallocated __08_ _____

Total/Average 163.6 100.0 .400 100.0 4081 100.0

GOVERNMENT FINANCE

Central GovernmentMillion) % of GDP (Maloti Million) % of GDP197 197 196 -7 1979/80 1978-79 1975/76-78/79

Current Receipts 115.5 46.8Current Expenditure 68.8 27.9Current Surplus 46.7 18.9Capital Expenditure 61.5 24.9External Assistance (net) 11.5 4.6

MONEY, CREDIT and PRICES

1972 1973 1974 1975 1976 1977 1978 1979(Million Maloti outstanding end period)

Money and Quasi Money .. .. .. .. .. ..Bank Credit to Public Sector 4.6 3.2 2.6 -0.8 1.5 6.3 6.8 6.0Bank Credit to Private Sector 4.8 5.7 8.6 9.8 13.9 17.9 21.0 27.9

(Percentage or Index Numbers)

Money and Quasi Money as % of GDP .. .. .. .. .. ..General Price Index (1972-100) 3/ 100.0 112.8 122.8 140.8 155.6 1L83.2 207.0 237.3Annual Percentage Changes in:

General Price Index .. 12.8 8.5 15.0 10.5 17.7 13.0Bank Credit to Public Sector 100.0 23.0 -18.7 420.0 7.9 -11.8Bank Credit to Private Sector 11.6 18.8 50.9 13.9 41.8 28.8 17.3 32.9

NOTE: All conversions to dollars in this table are at the average exchange rate prevailing during theperiod covered.

1/ Provisional.2/ Domestic labor force.3/ Retail price index for low and middle income urban households.

Not available.Not applicable.

3/16/81

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- 21 -

ANNEX IPage 5 of 5

TRADE PAYMENTS AND CAPITAL FLOWS

BALANCE OF PAYMENTS MERCHANDISE EXPORTS (AVERAGE 1977-79)

1976 1977 1978 1979 US$ Millions

Exports of Goods, NFS 22.2 17.8 40.6 46.3 Diamonds 16.2 54.9Imports of Goods, NFS 204.1 207.2 240.9 344.0 Cattle & Food 0.8 2.7Resource Gap (deficit = -) -182.0 189.4 200.3 -297.7 Wool 3.1 10.5

Mohair 4.3 14.6Workers' Remittances 130.1 167.0 166.8 182.9 Other 5.1 17.3Other Factor Payments (net) 0.7 -1.5 -1.5 -1.4Net Transfers 14.6 18.2 26.1 36.4Balance on Current Account -36.6 -5.7 -9.0 -79.8 Total 29.5 100.0

EXTERNAL DEBT, DECEMBER 31, 1979Direct Foreign Investmenti/ 25.6 3.1 3.3 16.6Net MLT Borrowing US$ Million

Disbursements 2.6 8.0 9.0 19.3Amortization 0.3 0.2 0.6 0.8 Public Debt, incl. guaranteed 52.7

Non-Guaranteed Private DebtSubtotal 2.3 7.8 8.4 18.5 Total Outstanding & Disbursed

Capital Grants 14.1 15.8 28.1 57.9 DEBT SERVICE RATIO for 1979 2/Other Capital (net) -1.6 -16.5 -11.8 -13.0Other Items (n.e.i.) .. .. .. Public Debt, incl. guaranteed 5.6Change in Reserves (increase) -3.8 -4.5 -5.4 -0.2 Non-Guaranteed Private Debt

Total Outstanding & DisbursedGross Reserves (end year)

Net Reserves (end year) .. .. .. IBRD/IDA Lending as of Jan. 31, 1981 (Million US$)

Fuel and Related Materials .. .. .. .. IBRD IDAImports

of which: Petroleum 16.9 22.6 .. .. Outstanding and Disbursed . 24.0Exports Undisbursed .- 36.2

of which: Petroleum Outstanding incl. Undisbursed . 60.2

RATE OF EXCHANGE

1974 1975 1976 1977 1978 1979

US$1.00 = $ 0.679 0.732 0.870 0.870 0.870 0.842M1.00 = US$ 1.472 1.367 1.150 1.150 1.150 1.187

1/ Includes net errors and omissions2/ Ratio of Debt Service to Exports of Goods and Non-Factor Services.

Not availableNot applicable

3/16/81

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- 22 -ANNEX IIPage 1 of 4

STATUS OF BANK GROUP OPERATIONS IN LESOTHO

A. STATEMENT OF IDA CREDITS(as at March 31, 1981)

Amount (less cancella-tions, reimbursed,

terminations)(US$ Million

Credit Year Borrower Purpose IDA Undisbursed

Three credits are fully disbursed 13.7 -

619-LSO 1976 Lesotho Second Highway 5.5 1.1

702-LS0 1977 Lesotho DFC 2.5 0.9

748-LSO 1977 Lesotho Second Education 7.5 4.0

795-LSO 1978 Lesotho Basic AgriculturalServices Project 6.0 3.8

884-LSO 1979 Lesotho Third Highway 9.0 9.0

887-LSO 1979 Lesotho Second Water Supply 6.0 6.0

985-LSO 1980 Lesotho Second LNDC 4.0 4.0

1036-LSO 1980 Lesotho Urban Development _6.0 6.0

Total 60.2 34.8

of which has been repaid 0.2

Total now held by IDA 1/ 60.0

Total undisbursed 34.8

Note: Lesotho has received no Bank Loans.

1/ Prior to exchange adjustments

3/16/81

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- 23 -ANNEX IIPage 2 of 4

B. STATEMENT OF IFC INVESTMENTS (as of March 31, 1981)

Investment (US$ Million)No. Year Type of Business Loan Equity Total

405-LSO 1978 Lesotho QualityAggregate (PTY) Ltd. 299,000 31,000 330,000

Total Gross Commitments 299,000 31,000 330,000

Less: Cancellations,terminations,repayments andsales -

Total now held by IFCA 299,000 31,000 330,000

Total Undisbursed

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- 24 -ANNEX IIPage 3 of 4

C. BANK PROJECTS IN EXECUTION

Credit No. 619-LSO Second Highway Project; US$4.0 Million Credit ofJuly 25, 1975; Effectiveness Date: January 25, 1975;Closing Date: December 1981

The project has been successfully completed with the construction ofthe St. Michaels-Mantsonyane-Thaba Tseka Road. The Labor Intensive Construc-tion Unit (LCU) has successfully completed improvement of a 31 km long gravelroad and improvement of airstrips at costs comparable to equipment-intensiveoperations; it is also constructing a 34 km long gravel road with financing bySIDA. The project closing date has been extended to allow disbursements to becompleted. 4

Credit No. 702-LSO Development Finance Company Project (DFC); US$2.5Million Credit of May 20, 1977; Effectiveness Date:August 23, 1977; Closing Date: December 31, 1981

The Lesotho National Development Corporation has submitted applica-tions which will fully commit its portion of this line of credit; the BasothoEnterprises Development Corporation portion is already fully disbursed.

Credit No. 748-LSO Second Education Project; US$7.5 Million Creditof November 30. 1977; Effectiveness Date: February28, 1978; Closing Date: December 31, 1981

The project encountered initial delays in implementation due to weakadministration, an incomplete architectural team, and the loss of the procure-ment specialist. However, with the appointment in January :1980 of a newProject Director, the employment of a new architect and procurement officer,the implementation has greatly improved, and it is likely that the projectwill be completed by the original closing date of December :31, 1981.

Credit No. 795-LSO Basic Agricultural Services Project; US$6.0 MillionCredit of May 25, 1978; Effectiveness Date:August 3, 1978; Closing Date: March 31, 1985

This is a follow-up project to the Thaba Bosiu Project designed toincrease manpower and institutional capability of the Ministry of Agricultureand to provide basic agricultural services for increasing production of fivemajor crops. The Project covers about 75 percent of the country's arable landcontaining 66 percent of the country-s population. The $26 million project isalso being assisted by the European Development Fund, the Federal Republic ofGermany, the United Kingdom, and the United Nations Development Program.Early problems in meeting staffing requirements have been overcome by raisingextension salaries, but farmer participation is still low. Assistance for theProduce Marketing Board and cooperatives is being provided by IFAD. TheDonors have scheduled a mid-term review for late April.

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- 25 -ANNEX IIPage 4 of 4

Credit No. 884-LSO Third Highway Project; US$9.0 Million (plus $2.2Million EEC Special Action Credit) Credit ofDecember 21, 1978; Effectiveness Date: December 11,1979; Closing Date: March 31, 1983

The Project is designed to improve Lesotho's road network andmaintenance capability. It involves the paving of 24 km of the St. Michaels-Molimo Nthuse road, a feasibility study of the 120 km Oxbow-Mokhotlong road,technical assistance and consultant services for improving road maintenanceand supervising construction, and fellowships for ex-country training in civiland mechanical engineering and highway maintenance and equipment repair.

r Although credit effectivenss was delayed, Project implementation is nowproceeding satisfactorily.

Credit No. 887-LSO Water Supply Project; US$6.0 Million Credit ofMarch 20, 1979; Effectiveness Date: January 7, 1980;Closing Date: September 30, 1983

The Project provides for the extension of water supply systems inprovincial towns and technical assistance and engineering consulting servicesto improve the reliability and quality of service. The Water and SewerageBranch of the Ministry of Works would also be strengthened under the projectand through a comprehensive training program financed by German bilateral aid.Slowness in recruiting personnel and consultants delayed effectiveness for 19months, and the Project faces serious cost overruns that are being discussedwith Government.

Credit No. 985-LSO Second Lesotho National Development CorporationProject: US$4.0 Million Credit of February 26, 1980;Effectiveness Date:. November 7, 1980; Closing Date:December 31, 1984

The Project continues the support given LNDC under the 1977 FirstLNDC Project and provides $300,000 for training LNDC staff and skilled andsemi-skilled workers in new projects assisted by the Corporation.

Credit No. 1036-LSO Lesotho Urban Development Project; US$6 MillionCredit of June 3, 1980; Effectiveness Date:November 7, 1980; Closing Date: June 6, 1985

The Project is designed to establish a framework for managing urbangrowth in Lesotho and expand institutional capacity to plan and execute urbanprojects while providing affordable shelter for low income families in theMaseru area. Physical and design work on the sites and services and upgradingcomponents has begun and is proceeding well. While the Project is adequatelystaffed, a shortage of local technical staff has slowed the hiring of counter-parts.

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- 26 -ANNEX III

LESOTHO

THIRD EDUCATION PROJECT

SUPPLEMENTARY PROJECT DATA SHEET

IN Timetable of Key Events

(a) Time taken to prepare: 18 months(b) Prepared by: Government and Bank Staff(c) Initial discussions and

identification mission: April 1979/January 1980(d) Appraisal mission departure: September 1980(e) Negotiations: April 1981(f) Planned date of effectiveness: September 1981

IIs Special Association Implementation Ac:tions

None

III. Special Conditions

(a) The Gov-rrnment will assure that terms of reference forevaluation programs and other studies to be financed underevaluation/pre-investment studies are satisfactory to theAssociation (paragraph 44).

(b) The Government will submit semi-annual reports onprogress in monitoring, evaluating and the development ofdesigns, etc., for the primary classroom facilities,including furniture, and this progress will be subject toconsultation between the Association and the Government inthe course of Project supervision (paragraph 50).

(c) The following are conditions of disbursement for the textbookcomponent of the project, namely that the Government will, ina manner satisfactory to the Association: (i) establish andstaff a Book Supply Unit in the Ministry of Education.; (ii)establish an interest-bearing revolving fund; (iii) establisha textbook fee policy; (iv) redefine the responsibilities andreorganize accordingly the Instructional Materials ResourceCenter and the National Curriculum Development Center; and(v) establish a policy on the standardization of textbooksin these core subjects (Sesotho, English and mathematics)(paragraph 41).

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