Good practice example of institutional capacity and risk analysis
Vietnam: Primary Education Project (1993) SAR # 12203-VN
RISKS
7.4 Primary risks stem from: (A) the transitional economy and Government agencies' unfamiliarity
with multilateral financing practices and procedures; (b) assumptions about the direction and
pace of change to EPH operations; (c) the impact of declining teacher remuneration levels on the
quality of education delivered; (d) the timelines and sufficiency of the counterpart funding, in
particular the local (school or district level) contribution; (e) the capacity of the MOET to
implement the project, optimize procedures; and (f) the ability of local (school and district)
education authorities to adopt different processes (i.e. formalize local financing contributions,
institutionalize school mapping procedures, and develop school plans as a basis for construction
investments). Each of these risks is discussed below, with reference to the specific project input
or corresponding conditionality deigned to address it.
7.5 Transitional Economy and New Borrower Status. Viet Nam is in transition from a command to
a market-based economy. Moreover, for all practical purposes, Viet Nam and the World Bank
Group have yet to forge an operational relationship around fiscal financing for a specific project. It
is likely that there will be macro-economic changes and a period of adjustment as the two entities
become familiar with the other's way of working. Although the Government is firmly committed to
the direction of change as its policies amply demonstrate, implementation of the project may be
adversely affected by the rest of society's need to adjust to the new signals. For example, the
local banking system is still in transition and has yet to establish mechanisms to facilitate flows of
funds from central to local levels. The lack of experience with market mechanisms and
competitive bidding procedures could complicate implementation, as could the lack of familiarity
with Bank Group procedures and requirements (regarding disbursements, financial reporting,
auditing, and project monitoring and evaluation).
7.6 The project has taken these risks into consideration as follows: (a) development of userfriendly local accounting formats in collaboration with local authorities (para. 5.13 and Annex 19);
(b) elaboration of Local Competitive Bidding practices for IDA-financed project items (paras. 5.145.18 and Annex 20); and (c) preparation of Annual Work Programs for the project acceptable to
IDA (para. 5.30-5.32) and Annex 25). In addition, IDA has proposed intensive supervision during
the first two years of the project (para. 5.29 and Annex 24).
7.7 Changes to EPH Production and Business Practices. As noted, EPH will need to introduce
drastic revision in the way it operates, an inherently risky proposition for any organization. The
Government has indicated its support for these changes. Key policy changes will be: (a) phased
reduction to input subsidies; (b) conversion to a system which fosters textbook recycling; (c)
institution of competitive bidding practices; and (d) production of a single set of textbooks
conforming to the 165 week curriculum (para. 3.6 and Annex 3). In addition, EPH would be
required to develop Annual Business Plans which would be reviewed with IDA in the context of
the Annual Work Program (para. 3.3). Finally--as adequate recycling mechanisms will be a crucial
factor in the successful implementation of the new scheme--EPHG will host a national workshop
and develop acceptable textbook recycling mechanisms (para 3.7).
7.8 Teacher Remuneration. There is a risk that the educational impact of inputs provided under
the project would be blunted by a decreasingly motivated teaching force stemming from declining
salaries. This issue is being handled though: (a) the Annual Work Program which obligates the
Government to review primary teacher remuneration issues and discuss them with IDA (para.
5.30); and (b) a project-financed study of primary teacher recruitment and remuneration issues
(para. 3.33). In the meantime, the project would support crucial inputs to primary teaching and
teacher training schools (paras. 3.12-3.16 and Annexes 4 and 5).
7.9 Adequacy of Counterpart Funding and Local Contribution. IDA is financing 90% of total
project costs net of taxes. The Government and local communities would finance the remaining
10%. The bulk of Government counterpart financing is for the textbook component, primarily
attendant upon operating and distribution costs of EPH, which it already subsidizes. Thus, no
significant additional outlays on the part of Government will be required to implement the project.
The local contribution would be exclusively for counterpart funding of school construction, but in
communities too poor to meet the requisite 10% share of local financing, District and Provincial
Education Service would have already provided the required amount as described in paragraphs
5.11-5.12.
7.10 MOET Managerial Capacity. As noted, MOET departments have been actively involved in all
aspects of project preparation; some heads of these departments have been provisionally
identified as Assistant Project Managers for various components. The detailed structure,
functions, and staffing of project management down to school level have been discussed and
agreed with the MOET (para. 5.1-5.7 and Annex 18), and IDA received additional assurance from
the Government during negotiations (para. 5.9). A Matrix for Monitoring and Evaluating Project
Implementation was also developed in concert with the MOET authorities, and responsibilities for
monitoring and evaluation in the project are well defined (Annex 23). The project would provide
significant inputs in study tours, fellowships, and local training opportunities at all levels of the
administration (para. 3.30 and Annex 12). The EMIS system proposed would require technical
assistance has also been provided to this component (para. 3.31, 3.34 and Annex 13).
7.11 New Processes for Planning and Executing School Improvements. In fact, the civil works
component incorporates and depends upon Viet Nam's existing tradition of local initiative in
building schools for which there is ample evidence of precedent (para. 2.10-2.12). The project
would cement and formalize this commitment, however, through active participation of School
Committees and the development of school plans (para. 5.7) and the establishment of schoolbased construction accounts and deposits (paras. 5.11-5.12). The institutionalization of school
mapping procedures (paras 3.21-3.23) would solidify a rational basis for making investment
decisions and establishing priorities among them.