Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 10821-ME

STAFF APPRAISAL REPORT

MEXICO

INITIAL EDUCATION PROJECT

August 10, 1992

.IrER0FUI X 'HE ("Of Y

R:pc rs No (2, t -HFMIF (c -AFZ5i it l e :INIT7AL ED-iC(iATICAN I-'PRJ,JTECT

Author: tEW.Y'RA, &.Ext. 5903'j 9 .- ooD!:I " 155'5 De-t. : LA2HR

Country Department IIHuman Resources Operation DivisionLatin America and the Caribbean Regional Office

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 EOUIVALENTS

Currency Unit Peso (Mex$)US$1.C'= 3,108 Pesos (August 1992)

FISCAL YEAR

January 1 - December 31

ACADEMIC YEAR

September 1 - June 30

UNITS OF WEIGHTS AND MEASURES

Metric US/British Equivalent1 kilogram (kg) 2.20 pounds (lb)1 metric ton (m ton) = 2,250 pounds1 liter (1) 0.26 gallons (gal)1 kilometer (km) 0.625 miles

GLOSSARY OF ACRONYMS

CENDI Child Development Center (Centro de Desarrollo Infantil)CONALEP National Council for Vocational and Technical Education (Colegio

Nacional de Educaci6n Profesional Tecnica)CONAPO National Population Council

DIF National System for Family DevelopmentEMIS Educational Management Information SystemEMP Education Modernization Program (Programa de Modernizaci6n

Educativa)GDPPB General Directorate of Planning, Programming and Budgeting in SEP's

Undersecretariat for Education CoordinationICB International Competitive Bidding

IE Initial EducationIEU Initial Education Unit (at both central and state levels)

IMSS Mexican Social Security Institute (Instituto Mexicano de Seguridad Social)ISSSTE Institute of Security and Social Services for State Workers (Instituto de

Seguridad y Servicios Sociales de los Trabajadores del Estado)LAW LAW - Law on the Institute of Social Security and Services for State

WorkersLCB Local Competitive BiddingNA National Agreement for Basic Education Modernization

NAFIN National Financing Company (Nacional Financiera, S.N.C.)PCC Pro-Childhood Committee (Comite Pro-Nitlez)PCU Project Coordination Unit

SCEP State-level Coordinated Services of Public Education-recently replaced bySPES (see below)

SEP Public Education Secretariat (Secretar(a de Educaci6n Pdiblica)SNTE National Union of Education Workers

SOE Statement of ExpenditureSPES State-level Public Education Secretariats or equivalent institutions

UN United NationsUNDP United Nations Development Programme

UNESCO United Nations Educational, Scientific & Cultural OrganizationUNICEF United Nations Children's Fund

FOR OFFICIAL USE ONLY

INITA EDUCAlION PIROIECTSTAFF APPRAISAL REPORT

TABLE OF CONTENTS

LOAN AND PROJECT SUMMARY ...................................... vBASIC DATA SHEET ............................................... ix

1. INTRODUCTION ............................................... III. SECTORAL CONTEXT .......................................... . 3

A. SECTORAL ORGANIZATION ................... 3B. PRIMARY EDUCATION ..................... 4C. PRESCHOOL EDUCATION ..................... 5D. INMTAL EDUCATION ....... ..................... .5

(a) Formal Initial Education ................................. 5(b) Non-formal Initial Education ............................... 6(c) Issues in Non-Formal Initial Education ........................ 6

E. GOVERNMENT STRATEGY ............... .. .................. 8F. BANK EXPERIENCE AND LESSONS LEARNED ........ .. ............ 10

(a) Education Sector Experience in Mexico ........................ 10(b) Bank-wide Education Sector Experience ........................ 10(c) Review of Research Literature ............................. 11(d) International Context .................................... 13

G. RATIONALE FOR BANK INVOLVEMENT .......... .. .............. 14

Im. THE PROJECT ................................................ 14A. OBJECTIVES AND CONCEPT .............. .. ................. 14B. SCOPE AND TARGET POPULATION ............................. 15C. COMPONENTS ............... .............. 16D. DESCRIPTION ................ ................ 16

(a) Human Resources Development Component ...... ............... 16Training of Parents .......... ...................... 17Training of Community Educators ...... ................. 18Training of Module Supervisors and Zone Coordinators .... ...... 19Training of Training Leaders and Technical Staff .... .......... 20Training of High-level Professionals ...... ................ 20

(b) Educational Materials Development Component .. ................. 21Parents"Guidebook ... 21Handbooks .............. 21Other Printed Materials ............ 22

This report is based on inputs from the findings of the appraisal mission that visited Mexico in May1992. The mission was composed of Messrs/Mmes. Antonio Pereira (rask Manager), Louise Cord(LA2HR); Fduardo Velez (LATHR); Manuel Vera, Robert Myers, Gian Calvi, Silvia Elena Ar6valo,Martha Llanos, and Roberto Iunes (Consultants). Mme. Maria Anderson and Messrs. Viah Nguyenand Darren Dorkin contributed to the report at headquarters. Peer reviewers for the project wereMmes. Eleanor Schreiber (LA3HR) and CeeDIia Valdivieso (LAIHR). The managing SOD Chief isMr. Kye Woo Lee (LA2HR). The managing CD Director is Mr. Rainer B. Stsckhan (LA2DR).

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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Non-print Educational Materials ........................ 22Radio Educational Programs ..... 22

(c) Institutional Strengthening Component ..... 23Central Initial Education Unit ..... 23State Initial Education Units ..... 24Educational Management Information System (EMIS) ... .. 24Improvement of Supervision Practices ..... 26Pro-Childhood Committees (PCCs) ..... 26Inter-Institutional Linkages ..... 27

IV. PROJECT COSTS AND FINANCING .. 27A. PROJECT COSTS .27B. RECURRENT COSTS .28C. FINANCING PLAN .30D. PROJECT SUSTAINABILITY .31E. PROCUREMENT .31F. DISBURSEMENTS .33G. ACCOUNTS AND AUDITS .33

V. PROJECT IMPLEMENTATION AND SUPERVISION .. 34A. PROJECT READINESS FOR IMPLEMENTATION .34B. PROJECT MANAGEMENT STRUCTURE .34C. PROJECT COORDINATION UNIT .35D. IMPLEMENTATION SCHEDULE .36E. PROJECT LAUNCH SEMINAR .37F. PROJECT SUPERVISION .37.

VI. PROJECT BENEFITS AND RISKS .. 38A. EXPECTED BENEFITS .38B. RISKS .. 40

VII. AGREEMENTS REACHED AND RECOUMMENDATIONS .40

...

ANNEXES

1. National Agreement for Basic Education Modernization2. Government Policy on Initial Education3. Enrollmenit Trends4. Formal Initial Education kCENDI) Indicators5. Non-formal Initial Education Indicators6. Local Structure of Non-formal Initial Education7. Evolution of SEP Spending8. SEP 1991 Initial Education Budget9. Rationale for Initial Education10. Non-formal Initial Education in Latin America11. Project Scope and Population Targeting12. Terms of Reference: External Trainers13. Terms of Reference: Educational Materials Analysis14. Terms of Reference: Visual Program and Communication15. Terms of Reference: Radio Programs16. Terms of Reference: Educational Management Information System (EMIS)17. Terms of Reference: Educational Impact Evaluation18. Terms of Reference: Process Evaluation19. Terms of Reference: Special Studies20. Project Costs and Financing21. Estimated Disbursements22. Organizational Charts: SEP, Central Initial Education Unit at SEP, Project Coordination Unit,

and State-Level Initial Education Units23. Project Indicators and Targets24. Project Monitoring Matrix25. Documents in Project File

MAP

IBRD No. 23995

AR3coIMNlAL EDUCATION POERCT

STAFF APPRNAISL )REIT

LOAN AND PROJECT SUMMARY

Borrower: Nacional Financiera, S.N.C. (NAFIN)

urniH tor: United Mexican States

Beneficiaries: Public Education Secretariat (SEP) and state-level Public EducationSecretariats (SPES) in ten selected states

Amount US$80 million equivalent

Trsms: Repayment in 15 years including 3 years of grace at the standard variableinterest rate

Project Objectives: In support of Government policies for human capital accumulation andpoverty alleviation, the project would aim to improve quality and efficiencyof the non-formal initi; wducation (JE) program and expand access of poorparents to EE programs in the ten poorest Mexican states by: (i) preparingyoung children of low-income families for timely school entry and theirimproved primary school attendance and performance; (ii) educatingparents, especially mothers, in home-based child-rearing practices; and (iii)strengthening the Government's institutional capacity to formulate sectoralpolicies and plan, expand, monitor, and evaluate EE programs.

Project 'Msetiption The project would have three main components: (i) Human-ResourcesDevelogment (79.2% of total project costs including contingencies) wouldupgrade the knowledge and skills of all personnel involved in the IEprogram, SEP's and SPES' technical staff, coordinators, supervisors, andcommunity educators), and specifically the child development skills ofparents; (ii) Educational Materials Development (12.9%) would upgradeinstructional materials to cover new areas (health, nutrition, environment,etc.), present materials more effectively, and develop new supportingaudiovisual components; and (iii) Institutional Strengthening (7.8%) wouldstrengthen management capacity at both SEP and SPES levels-includingtheir planning, management, supervision, and evaluation capacity-whilefostering and supporting community participation.

The project would center on the training of parents through periodic groupmeetings and home visits, with the help of comprehensive illustratedguidebooks and other educational materials, to teach them skills for caringand stimulating chi:dren for cognitive, psychological, and socialdevelopment. Basic health and nutrition education and guidance would alsobe provided including cooperation with the health system. Parents wouldbe trained by community educators, each of whom would work with 20families to form a project nucleus. Ten nuclei would make up a module,technically assisted by a module supervisor; and up to ten modules wouldbe monitored by a zone coordinator. Zone coordinators and module

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supervisors would be public education sector personnel, while communityeducators would be locally selected volunteers who receive a modeststipend. Over 90% of community educators are women. Local Pro-Childhood Committees (PCCs) would be reorganized under the project andwould operate as community umbrella organizations for project support,inter-agency coordination, and general child-related advocacy.

project Benefita: Project benefits would be reflected primarily in an enhanced quality of lifefor participating children and parents, who would acquire better childdevelopment skills. About 1.2 million children would be better prepared tobenefit from primary and further education and for a more productive laborforce participation. Consequently, their earnings potential would beincreased and economic growth would be promoted. In addition, sincemost parents and children are from poor families, economic and socialbenefits (health, education, family planning, and earnings potential) wouldbe more equally distributed, and a more conesive society would bedeveloped. The project would provide training opportunities to about 760zone coordinators, 4,500 module supervisors, 45,000 community educators(mostly women) and 900,000 parents (especially mothers) in poor rural andurban marginal areas. Since the project model would eventually be adoptedby other states, the project iw-p_t wouid be nationwide. Furthermore, theproject would contribute to the improvement of the quality and efficiencyof public inv 3tments in education, especially in basic education, byreducing repetition and dropout rates and increasing primary educationcompletion rates.

Pr.1ectRilk>: The main risks associated with the project are: (f) the institutionalweaknesses of SEP and SPES, and in particular their weak planning andmanagerial capacity to operate an expanded and upgraded program; (ii) theauaterity program of the Government, which may make it difficult toprovide suffic;ent funds for program operation; and (iii) difficulties inreaching and motivating parents in remote rural communities. The projectwould attempt to reduce these risks by: (i) strengthening the institutionalcapacity of the IE units of SEP and SPES, particularly in their planning,monitoring, and evaluation functions; (ii) improving incentives and workingconditions for community educators, and implementing improved in-servicetraining and closer supervision progranis; (iii) providing loan resources tocover incremental operating costs on a declining basis and monitoringprogram budgets through annual and mid-term review meetings; and (iv)mobilizing local community support through PCCs, improved workingconditions of community educators, supervisors, and coordinators, andmulti-media promotional support.

MCOINrTAL EDCTINPROJECT

TA-FF APPRAISAL REPORT

Estimated Project Costs1'Local Foreign Total

--- US$ million-----PROJECT COMPONENT

Human Resources Development 81.5 0.5 82.0Educational Materials 7.0 5.8 12.8Institutional Strengthening 7.3 0.7 8.0

BASE COST 95.8 20 102.8

Physical Cont!ngencies 0.6 0.2 0.8Price Contingencies 10.8 G.6 11.4

TOTAL PROJECT COST 107.2 78 115.0

Financing PlanLocal Foreign Total

---US$ millionUnited Mexican States 34.0 - 34.0IBRD 72.2 7.8 80.0UNDP/UNICEF 1.0 0.0 1.0

TOTAL FINANCING 107.2 7.8 115.0

Estimated Disbursements

F I IBRD Fiscal Year_ 1993 1994 1995 1996 1 1997 1998

Annual 1I.0O- 9.0 16.0 16.0 18.0 10.0[ Cumulative 11.0 20.0 36.0 52.0 70.0 80.0

' Includes Special Account deposit of US$8.0 million. Retroactive financing of US$5.0 millionequivalent would be available for eligible expenditures incurred starting from May 1, 1992.

Economic Rate of Return: Not Applicable

1' Excluding taxes, esfimaWt at US$5.0 million.

BASIC DANA SHEET

Unit YearGeneral Country DataGNP per capita 2,490 US$ 1990GDP 235.5 US$ Millions 1990Area 1,958 Thousand Km2 1989Population 85 Millions 1989Urban Population (% of Total) 72.0 Percent 1989Projected Population Year 2000 103.0 Millions

Social IndicatorsCrude Death Rate 5.0 Deaths 1990Population Growth Rate 2.1 Percent 1989Total Fertility Rate 3.3 Births 1990Infant Mortality Rate (per 1,000 live births) 39 Deaths 1990Life Expectancy at Birth 70.0 Years 1990Children under-5 malnourished 14.0 Percent 1988Adult Illiteracy Rate 11.0 Percent 1990

Basic Education IndicatorsEnroilment Numbers

Initial 347 Thousands 1991Preschool 2,734 Thousands 1991Primary 14,402 Thousands 1991

Enrollment RatesInitial (ages: 0-3)

Formal < 5.0 Percent 1991Non-formal 2.3 Percent 1991

Preschool (ages: 4-5) 65.8 Percent 1991Primary, Gross (including overage students) 114.0 Percent 1989Primary, Net (excluding overage students) 98.0 Percent 1991

Basic Education EfficiencyPrimary Education

Repetition Rate 10.3 Percent 1991Dropout Rate 5.3 Percent 1991Completion Rate 57.1 Percent 1991

Lower Secondary Education (Grades 7-9)Repetition Rate 27.7 Percent 1991Dropout Rate 9.5 Percent 1991Completion Rate 73.0 Percent 1991

Education Expenditures DataTotal Education Expenditures as % of GDP 4.2 Percent 1990Federal Educ. Expenditures as % of Total Public Expend. 10.0 Percent 1990

Initial Education as % of Federal Educ. Expend. 0.4 Percent 1991Preschool Education as % of Federal Educ. Expend. 4.9 Percent 1990Primary Education as % of Federal Educ. Expend. 23.0 Percent 1990

Unit Costa (Public Education)Initial Education

SEP Formal 1,406 US$ 1991Non-Formal 31 US$ 1991

Preschool Education 164 US$ 1988Primary Education 127 US$ 1991

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DEFINLTIONS

Total Fertility Rate Average number of children who would be born alive to awoman during her lifetime if she were to pass through herchild-bearing years conforming to the prevailing age-specificrates.

Life Expectancy at Birth Average number of years an infant would live if prevailingage/sex-specific mortality trends at the time of birth were tocontinue.

Infant Mortality Rate Number of deaths of infants under one year of age in a givenyear per 1,000 live births.

Crude Death Rate Number of deaths per 1,000 population in a given year

Enrollment Rate Percentage of children of a given age group enrolled inschools at a particular level of education.

Coverage : The enrollment rate multiplied by the ratio of the number ofyears of the age cohort over the number of years of theeducational cycle (Annex 11).

Completion Rate Ratio between the number of students exiting last grade of aneducation cycle in a given year T and the number of studentsentering the firs. grade of the same education cycle in year T-[standard duration of education cycle] (close approximation ofthe percentage of students of a given cohort who completedthe education cycle).

Adult illiteracy Rate Percentage of population aged 15 and over who cannot reador write.

I. INTRODVCTION

1.1. This report presents an Initial Education (IE) Project, for which a Bank loan of US$80 millionequivalent to Nacional Financiera, S.N.C. (NAFIN), with the guarantee of the United Mexican States, isproposed. This project represents an integral part czf the Mexican Government's human capital formationand poverty reduction program, and aims to strengthen a non-formal Initial Education (1E) program foryoung children (ages 0-3), to be managed by the Public Education Secretariat (SEP) and the state-levelPublic Education Secretariats (SPES) (para. 2.4).

1.2. After nearly a decade of deep recession in the 1980s, Mexico's successful economic reformand adjustment programs have set the stage for renewed growth. The country's potential for growth is,however, still constrained by relatively low levels of human capital formation. In spite of significantresources spent on education, even today as many as 47% of newcomers to she labor force did notcomplete primary school. The net primary school enrollment rate is very high at 98%, but some 300,000children in poor areas do not attend or still have no access to school.

1.3. Low human capital formation is closely intertwined with poverty, and many features ofpoverty have roots in tie insufficiency or inadequacy of investments in human capital. Resolution of theseissues can only be achieved through sustaine"! human capital investmert carried out to a much largerextent and with more efficiencv thar, in the past. Dropout and repetition rates remain high: the nationwidefirst grade repetition rate is 32% and may reach as high as 50% in the poorer states. Likewise, while theprimary school completion rate nationwide is 57%, it averages only 40% in the four poorest (mostly rural)states. Undernourished people are more vulnerable to disease and early death, at risk of developinganthropomorphic deficiencies and of becoming less able to acquire knowledge and skills; the risks areespecially higher when deficiency occurs at an early stage in life. The incidence of undernutrition isparticularly high among the poor living in rural southern Mexico, where undernutrition is nearly four timeshigher than in the north. In the states of Chiapas and Oaxaca, about 70% of preschool-age children suifrfrom some degree of malnutrition, compared to a national average of 14%. Life expectancy is 55 years inrural areas as against 71 years in urban areas; and it is 53 years among the poor compared to 73 yearsamong the wealthy. The infant mortality rate varies widely between states, ranging from less than 20 per1,000 in Zacatecas and Veracruz to over 50 per 1,000 in Chiapas, Oaxaca, as well as in Mexico City.

1.4. Despite the comparatively high per capita income (US$2,490 in 1990), poverty has remainedwidespread and large regional and income disparities have persisted. A 1980 study of changes in standardof living showed that, across states, the differences were considerable, with leading states enjoying a livingstandard more than twice that of poorer states. With the economic crisis, social problems have becomemore acute as the poor have particularly suffered from the deterioration in real income and the fiscalretrenchment, which affected social services more acutely. Mexican poverty in 1991 is marked by thefollowing characteristics: (i) approximately 20% of the population is below the line of extreme poverty!';(ii) 77% of the extremely poor are located in rural areas; (iii) the extremely poor have the largest share ofchildren, the highest dependency ratio, and the lowest educational levels; and (iv) the urban extremely poorare better off than the rural, but have similar demographic and educational characteristics.

1.5. To properly address the need for human resources development and poverty alleviation, theMexican Government has torrmulated a strategy mainly embodied in the Education Modernization Program(EMP), 1989-1994, whh.. expands on the National Development Plan (1989-1994) and is complemented bythe recent (May 1992) National Agreement for Basic Education Modernization (NA; See Annex 2).Unanimously, these documents aim at: (i) improving the quality of the educational system, especially of

1/ The extremely-poor are defined as 'those people who are unable to purchase enough nutrients which, givenage zd ¢-x, allow maintenance of health and performance". The World Bank. Mexico in Transition: Towarda New Role in the Public Sector. Washington, D.C., 1991, p. 43. (Report No. 8770-ME).

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basic education; (ii) raising the national level of schooling; (iii) strengthening community participation in allaspects of education; and (iv) promoting decentralization of the educational system through the creation ofthe SPES (para. 2.4). The non-formal IE program is a critical part of the EMP, since it underpins thequality and efficiency of basic education and promotes communitv participation in the educational system aspart of its decentralization. Moreover, since the non-formal IE program focuses on children in rural andurban marginal areas, it self-targets poor families to address their educational needs.

1.6. SEP has operated two separate modalities of the IE program, formal and non-formal. Theformal program is designed for children of working mothers in the organized, urban sectors and operatesmuch like kindergarten, with an enrollment of about 158,000 children. The non-formal IE program isoriented toward low-income families (70% of participants are from rural communities with less than 2,500inhabitants) and trains parents of young children (ages 0-3) through the help of community educators. Thenon-formal program has suffered from continuous deterioration in quality and coverage: enrollmentsreached a high of 290.300 participants in 1985, but have since eroded to only 183,400 children in 1991,mainly due to lack of adequate funding. The Government wishes to revitalize this program and hasrequested Bank assistance to do so. Already, between 1990 and 1991, SEP's budget allocation for the non-formal IE program was increased by 87%.

1.7. The proposed non-formal IE project would support the Bank's social sector assistance andpoverty alleviation strategy in Mexico, complementing several other Bank-financed projects in the samegeographical areas and with expanded coverage in the next six poorest states. Since 1990, the Bank hassupported the Mexican Government's efforts to alleviate poverty and improve the efficiency of publicresource allocation and use in the social sector through:

(a) The 1990 Basic Health Care Project (Loan 3272-ME), to strengthen and extend basichealth care services and targetu nutrition assistance to about 13 million uninsured poor in thefour poorest states (Chiapas, Guerrero, Hidalgo, and Oaxaca) and the Federal District,particularly among the 3.0 million women of childbearing age and 1.7 million children underage five;

(b) The 1990 Low-Income Housing Project II (Loan 3140-ME), to provide funds forconstruction and upgrading of houses for low-income populations;

(c) The 1990 Technical Training Project (Loan 3358-ME), to improve operational andfinancial sustainability of public vocational and technical training program that providesemployment training to adolescents from poor families and the unemployed;

(d) The 1991 Decentralization and Regional Development Project (Loan 3310-ME), toimprove the infrastructure and productive capacity of rural communities in the four pooreststates;

(e) The 1991 Water Supply and Sanitation Sector Project (Loan 3271-ME), to providewater supply and sanitation services tJ about 24 million additional people, most of whombelong to the poorest population segments; and

(f) The 1991 Primary Education Project (Loan 3407-ME), to improve the quality andefficiency of primary education in the four poorest states.

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H. SECTORAL CONTEXT

2.1. Mexico made great strides in increasing both the access to and the quality of public educationbetween 1950 and 1980. During that period, illiteracy rates dropped from 40% to 18%, the number ofschools tripled, the number of teachers quintupled, and school enrollments increased sevenfold. Progresswas evident on all education fronts. By 1980, 25% of children aged 4-5 attended preschool, 91 % ofchildren aged 6-11 attended primary school, and the enrollment rate in lower secondary school reached48%. Net enrollment rates at the primary level now reach 98%, and at the lower secondary level, 57%.Since 1982, further progress was achieved but at a slower pace. Efforts over the last decade have beenconcertrated mainly on expanding preschool coverage; by 1991, 65.8% of childzen aged 4-5 had access topreschool education. In spite of these impressive quantitative achievements, the level of educationalattainment is still fairly low as the adult illiteracy rate is 11.0% (1990) and the average schooling of thelabor force is 6.2 years overall, ranging from three years in the poorest states to around eight years in therichest ones. Furthermore, several aspects of educational services have worsened due to low levels ofefficiency and to sharp decreases in the amount of resources invested in the sector.

2.2. Federal spending for education in real terms decreased between 1982 and 1988 at an averageannual rate of 5.7%, affecting mainly primary education. During 1989 and 1990, educational expendituresrecovered slightly and increased by approximately 10%. As a percentage of GDP, however, totaleducation spending declined from 5.5% in 1982 to 4.2% in 1990, still well below the 8% which the UnitedNations (UN) recommends for developing countries with a high population of young people. In 1991,preschool received 4.4% and primary school 20.9% of total SEP expenditures. While the share ofpreschool expenditures in total SEP allocations grew by 20% between 1984 and 1989, the share of IE andprimary school declined by 33% and 16%, respectively. Even though the 1991 IE budget indicates areversal of trend (87% increase over 1990 IE budget), it still accounts for only 0.4% of total SEP budget(para. 2.21(i)).

A. SECTORAL ORGANIZATION

2.3. The formal education system in Mexico includes basic education (initial, preschool, primary,and lower secondary), upper secondary, and university education. Of a total enrollment of 21.3 millionstudents in basic education in 1991-92, 67.4% were at the primary level (grades 1-6). The supply of basiceducational services is almost entirely (97%) under the control of the public sector.

2.4. The main institution in the education sector is the Public Education Secretariat (SEP).Through the recent NA (Annex 1), however, the state governments have assumed the management andoperation of all initial, preschool, primary, special, lower secondary, and teacher education institutionsthrough the creation of state-level Public Education Secretariats (SPES), which absorbed the formerCoordinated Services of Public Education (SCEPs), SEP's delegations at the state level. While maintainingits responsibility over these education levels and modalities in the Federal District, the federal government:(i) is transferring to the states all goods and facilities, along with all technical and administrative elements,rights, and obligations previously used by SEP to manage basic education in the states; (ii) will keep anationwide normative and compensatory role in designing study plans and programs, producing andupdating national textbooks, and promoting an equitable development of educational services among thestates; and (iii) will develop "special programs" for disadvantaged states, establish evaluation systems, andsupport educational research. The proposed IE project and the Primary Education Project (Loan 3401-ME)fall into the "special programs" category. The General Directorate of Planning, Programming, andBudgeting (GDPPB) is at the core of SEP's nationwide role, formulating annual budgets, trackingeducational indicators and statistics, and overseeing the aeivities of state-level entities.

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2.5. Since the IE program underpins the quality and efficiency of basic education, a short reviewof the issues and problems of basic education, especially primary and preschool education, will be made inthe ensuing sections before issues and problems of IE are discussed.

B. PRIMARY EDUCATION

2.6. Primary education (ages 6-11, grades 1-6) is the only compulsory level, making up the bulkof Mexico's educational system. Through a network of nearly 84,000 schools and nearly half a millionteachers, it reaches 14.4 million students (1991-92), about 98% of potential demand (Annex 3). Thiscompares favorably to the 86% (1990) net enrollment average for Latin America and the Caribbean as awhole. There is no significant difference in enirollment rates between male and female children.

2.7. Issues in Primary Education. Four crucial issues confront primary education. The first has todo with internal efficiency. Inefficient student flows are caused by high repetition and dropout rates,associated with late entrance, lack of initial (school readiness) and preschool education, poor teaching,insufficient didactic materials, and various non-school, poverty-related conditions. In 1990-91, primaryeducation repetition rates were officially estimated at 10.3% nationwide, and as high as 25% at the firstgrade level, the same figure observed ten years earlier. Independent estimates, however, place nationwiderepetition rates close to 20% for primary education and near 32% for the first grade.y In addition, everyyear approximately half a million children leave school before finishing third grade.

2.8. The second issue is quality achievement. In a SEP/Sistema de Informaci6n de la Calidad dela Educaci6n Mexicana study on 1987-89 data, 69% of primary education students scored a grade of 6 orlower on a 0-to-10 performance scale. Low educational quality can be traced to both school-related factorsand broader socio-economic conditions. The most frequently cited school-related factors were: (i) lack ofinitial and preschool education; (ii) deficiencies in teacher training or allocation; (iii) inappropriatecurriculum; (iv) lack of teaching materials; (v) inadequate supervision; and (vi) a short school year.

2.9. Access to schooling is a third issue. In primary education, the net enrollment rate hasremained at 98% for the last four years, but this nationwide figure disguises regional pockets of lowmatriculation. About 300,000 children still lack access to primary school. This is particularly due to: (i)extreme poverty and isolation; (ii) early entry into the work force; and (iii) unavailability of teachers towork in the rural areas. Moreover, the high dropout rate throughout primary school suggests another largepopulation no longer being reached by the educational system.

2.10. The fourth issue is quality of teaching. Less than 30% of the half million teachers possess alicenciatura, the qualification required for new teachers, and many lack appropriate training and experienceto effectively teach children in the crucial beginning grades. This poor training is compounded by the lackof adequate supervision, resulting in a deterioration of educational quality. Between 1983 and 1988,teacher salaries declined in real terms by more than one third, forcing many teachers to obtain second jobsand negatively affecting their dedication and commitment to classroom tasks.

2.11. The Government is addressing these issues through the EMP and other programs, withassistance from the Bank through the Primary Education Project (Loan 3407-ME). The proposed Eproject addresses the issue of school readiness, providing young children with a better opportunity tobenefit from primary and further education, reducing repetition and dropout rates in primary education andmaking more efficient public investment in the sector.

21 Emesto Schiefelbein. Output of the SMMG Model with data from the GDPPB. Santiago, Chile: UNESCO-OREALC, Sin System, June 1991.

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C. PRESCHOOL EDUCATION

2.12. Preschool is a non-compulsory schooling level, which lasts two years and is targeted atchildren 4-5 years old. Federal authorities deserve the credit for the rapid expansion of preschool coveragenationwide, over the past twenty years. Ninety-one percent of the enrollment attend public kindergarten.

2.13. Preschool education is available in three modalities: (i) Kindergarten (Jardines de ANflos),found mainly in urban areas, and fully equipped centers with specialized teachers; (ii) CommunityKindergarten, mainly in small and scattered rural towns, using community facilities, and untrainedteachers; and (iii) Preschool for Ethnic Communities, delivered in indigenous languages. Overall,preschool services were offered to 2.7 million children in 1991-92, 10% of whom lived in indigenous orrural areas. Preschool enrollment increased between 1984-85 and 1988-89 at an average annual rate of6%, and in 1990-91 was offered to 59.1 % of four-year-olds and 72.6% of five-year-olds, relatively highfigures when compared to average 25% and 66% enrollments, respectively, for Latin America and theCaribbean

2.14. Issues in Preschool Education. Four issues could affect the further development of preschooleducation: (i) preschool may be experiencing increasing difficulty to expand enrollment in marginal ruralareas, with enrollment rates varying from 49.5% (State of Mexico) to 98.6% (Tabasco), with the nationalaverage at 65.8%; (ii) insufficient coverage by IE programs have limited the expected effects of preschool,particularly in rural and indigenous areas. The focus of the proposed project on non-formal EE willcontribute to overcome this limitation; (iii) more comprehensive norms and increased supervision areneeded; and (iv) professionally trained teachers are lacking, as well as updated and sufficient supplies ofeducational materials. To address these issues, SEP's General Directorate for Preschool Education hasdiversified its school models (para. 2.13), improved its nationwide norm-setting and supervision capacity,and, has provided short-term training programs to both current and incoming preschool teachers.

D. INITIAL EDUCATION

2.15. To address long-felt problems of low human capital formation, poor preschool and primaryschool performance, and inadequate early childhood stimulation, Mexico introduced pre-primary educationservices during the 1880s. By the early 1980s, IE (ages 0-3) gained a position distinctive from preschooleducation (ages 4-5) in the Mexican education system, becoming part of the enlarged concept of basiceducation. In 1991, the total number of children benefitting from EE in Mexico represented 12% and 2%of preschool and primary education enrollments, respectively. General agreement was reached with theGovernment on the conclusions of the Bank's Green Cover Initial Education Strategy Paner (Report No.10129-ME), and the major issues c ncerning non-formal IE raised in this report were carefully consideredduring the design of the proposed IE project. Following is a review of the key issues in IE.

(a) Formal Initial Education

2.16. The first modality is a formal program - not to be confused with regular kindergarten-embedded in the Child Development Centers (Centros de Desarrollo *nfantil, or CENDIs, see Annex 2,paras. 6-7), a child care and preschool program mandated by Social Security Law for 0-5 year-old childrenof working mothers employed in the formal public and private secors (Ley del Instituto de Seguridad yServicios Sociales de los Trabajadores del Estado, Diario Oficial, 27 de Diciembre de 1983). Even thoughthe 1983 ISSSTE Law mentions the word "guarderfas" (or child-care place), this old-fashioned concept wasthen replaced in Mexico with the more inclusive concept of Child Development Center, a fringe benefitjealously cherished by the Mexican labor unions. Between 1983 and 1991, CENDI enrollments increasedby approximately 83% to a total of 153,700 children nationwide (Annex 3).

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2.17. The CENDI model responds to new advancements in the child-related sciences and includesday care, medical, dental and psychological care, initial and preschool education, food and nutrition. Thebulk of CENDI teachers (23,245) are "education assistants" (asistentes educativas) who make up 61.7% ofall CENDI employees, as the professional educators account for only 8.4%, and kitchen staff for 9.9% ofthat total, among 14 other CENDI employee categories, including doctors (1.8%), nurses (2.5%), andsocial workers (1.4%) (Annex 4, page 3). The "education assistants" receive a one-year post-secondarytraining based on a child psychology curriculum at a SEP-managed institute, whose graduates find easyaccess into either public or private CENDIs.

2.18. There are 1,362 CENDIs currently in operation throughout the country, under public, privateor parastatal agencies, with a total enrollment of 153,730 children (Annex 4, page 1). The most importantsingle provider of CENDI services is IMSS, which runs 258 (18.9%) centers and cares for 41,409 children(26.9% of the total) whose mothers are employed by private firms that do not have their own centers.Only 263 CENDIs (19.3%) are privately owned, with a total enrollment of 14,567 (9.5%) children. Thesecond largest provider of CENDI services is the DIF, with 256 (18.8 %) centers and 25,170 children(16.4%). Most CENDIs (516 or 37.9%) and children (60,315 or 39.2%) are concentrated in the FederalDistrict (Annex 4, page 2). SEP currently operates 102 (7.5%) CENDIs for the children of womenemployed in the education sector (a total of 17,253 children or 11.2% of total national enrollment) (Annex4, page 1). SEP CENDIs, however, are in the process of being transferred to ISSSTE, which is now incharge of most public institutions' CENDIs. This leaves SEP with more capability to provide theregulatory functions and technical supervision for all public and private CENDIs.

(b) Non-formal Initial Education

2.19. The second modality is a non-formal IE program oriented toward low-income parents, withchildren ages 0-3, not employed in the formal public or private sectors, and who reside in poor rural andurban marginal communities (Annex 2, paras. 6, 14). The program, started in 1981 and operating in all 31states and the Federal District, has suffered from shortage of budget resources and growth has beenstagnant for several years. The 1992 enrollment of 183,400 children covering 2.3% of all children ages 0-3 in the country represents a decline from 1985, when enrollment peaked at 290,300 children (Annex 3).Approximately 70% of current enrollments are from small rural communities. The program wasimplemented as a measure of social strategy to: (i) educate and empower parents (mainly mothers) toimprove their child development skills; (ii) provide better opportunities for children of poor families tosucceed in school; and (iii) enrich the family as a child's first learning environment.

2.20. In 1987, the Netherlands-based Bernard Van Leer Foundation financed an evaluation ofMexico's non-formal IE program (Annex 9, pages 5-7). The study found that the non-formal program wasequally effective as - and in some cases more effective than - the kindergarten programs in improvingthe child's school readiness and eventual primary school performance. The positive impact of the non-formal program was especially marked for indigenous children. Compared to a control group, studentsbenefitting from non-formal IE scored 8% and 13% higher in school readiness and academic skills,respectively, and were less likely to repeat the first grade (9% vs. 27%).

(c) Issues in Non-Formal Initial Education

2.21. Despite its valuable experience, the non-formal IE program has been hindered by severalissues, and suffers from a limited priority profile, insufficient institutional capacity, inadequate targetingmechanisms, poor educational inputs, loosely defined supervision, inadequate incentives for communityeducators, inconsistent community support, and sporadic linkages with complementary programs.

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(i) IE's small share within the overall SEP budget reflects the limited prioritv given to IEprograms until recently (Annexes 7 and 8). Even with an 87% increase from the previous year, the IEbudget for 1991 still accounts for only approximately 0.4% of SEP's total budget, and 80% of this smallamount went to cover SEP's legal obligation to provide CENDI services to children of its own employees.The non-formal IE program, while focusing on poor rural and urban marginal families, still lacks a stronginstitutional identity and adequate budgetary resources. Most of the program expenditures (85%) are linkedto salaries and per diem (Annex 8), and the US$31 cost per child is the lowest of any similar program inLatin America (Annex 10). The CENDI program (paras. 2.16-2.18) has a cost of US$1,406 per child. Bycontrast, primary education costs per pupil are approximately US$130. The SEP Initial IE Unit (IEU),with 336 employees, serves both the CENDI and the non-formal IE program. The proposed project wouldhelp the Government allocate more budget resources to improve quality and extend coverage of the non-formal IE program, and to restructure and enhance institutional capacity to this end (paras. 3.40-3.42).

(ii) Institutional capacity has received little attention in the past. At SEP, the central IEUhas been downgraded from General Directorate to Area Direction. Central and State IEUs need to developthe capacity to effectively plan, manage, supervise and evaluate the program, through: (i) an adequatenumber of key qualified financial management and planning personnel; (ii) an efficient information andmanagement system; and (iii) a monitoring and evaluation unit to provide feedback to the program. Theproposed project includes provisions for institutional strengthening in these areas (para. 3.39-3.48).

(iii) Targeting mechanisms are inadequate to distribute program resources among and withinthe states. As a result, resource allocations and enrollment levels are determined haphazardly. Since theproject aims at children from low-income families, the allocation of program resources among states and atthe local level will be more strictly based on poverty criteria (paras. 3.3-3.5). Under the project, planningfunctions will be strengthened and information and evaluation systems designed and implemented at thecentral and state level IEUs (paras. 3.39, 3.50-3.53).

(iv) Proeram quality has been adversely affected by the weakening of key inputs. Eventhough a large number of community educators exhibit very positive approaches and seem to be incommand of the main tools of activity, their skills level needs to be upgraded. Furthermore, the parent-community educator meetings need to recover their original role as the focal poini of educationalinteraction within the nucleus. Currently, the domestic visits, originally designed to reinforce the meetings,have instead become the main activity. Finally, training guidebooks and manuals, prepared in 1981, needto be expanded to include other required contents and updated to adopt more communicative language andvisual presentation. Under the project, parents' meetings would regain their original role, the training ofcommunity educators' would be improved, and guidebooks and handbooks would be expanded in contentand improved in communication strategies (paras. 3.9, 3.14-3.18, 3.29-3.34).

(v) A loosely defined supervision system causes overlapping and additional administrativecosts. Under the project, supervisory functions would be better specified, especially between modulesupervisors' and zone coordinators' occupational profiles. A more rational allocation for travel expenseswould increase supervision frequency and quality (para. 4.3).

(vi) Inadequate incentives for community educators and a poor record of payment haveaffected the program's ability to attract and retain qualified personnel, and have in consequence underminedthe program's potential impact. An increased institutional capacity should be able to deliver in a timelyfashion better compensation to the dispersed community educators. Their monthly compensation ofMex$80,000 (about US$26) is low when compared to other volunteer community workers with similarbackgrounds and responsibilities. Already, community educators' compensation level has been increased toUS$40 equivalent per imonth and would be increased to at least US$50 equivalent per month in real termswithin one year of the proposed loan effectiveness date (paras. 3.57, 4.3).

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(vii) Inconsistent Community Support. Reflecting weak social communication and diffusionefforts, the program has been unable to generate sufficient community support. The existing "CommunityCommittees," with only parents' participation, designed mainly to help recruit community educators, hasnot been systematically implemented. Under the project, community participation would be fosteredthrough newly-designed Pro-Childhood Committees (PCCs) (Comit&s Pro-Niflez) and a reli-nble socialmarketing strategy (paras. 3.36-3.38). PCC organization and composition are likely to yield positiveresults.

(viii) Adequate linkages with health and nutrition programs. Given the complementaryrelationship between psychio-social development and heaith and nutrition inputs, research has consistentlyindicated that IE programs quality and efficiency benefit from health and nutrition support. Under theproject, an agreement would be signed between SEP and the Federal and State Health Secretariats leadingto close cooperation with health and nutrition programs (paras. 3.60-3.61).

E. GOVERNMENT STRATEGY

2.22. The Mexican Government's policy on IE stems from the Constitution and is spelled out inseveral official documents. The Constitution (Art. 4th) establishes priority to meet children's "physical andmental needs" and provides them with support through parents and public institutions. The EMP Chapter 2"on basic education deals with initial education, preschool, primary, secondary and special education."The main objective of IE is "to provide children under four, especially in the rural, indigenous andmarginal urban areas, with equal opportunities of educational services" (EMP, 2.5.1). IE aims "to fosterthe development of young children's physical, cognitive, affective and social capacities, stimulating theiractive participation in the educational process. " During negotiations. the Government confirmed that thecontents of Annex 2 reflect Government poliay and strategv on IE.

2.23. "As a fringe benefit for working mothers, IE is delivered in the Child Development Centers(CENDIs), at federal, state-level and private institutions. It is also offered as a social support through anon-formal modality which trains parents on how to care for their children in urban, rural and indigenouscommunities" (EMP, Chapter 2). "CENDIs were created by a constitutional mandate" and "the non-schoolmodality (was) implemented as a measure of social justice" (EMP, 2.1.1). "Attention services aiming atchildren's well-being and development" are included among the mandatory services provided by ISSSTE toall public administration employees, federal, state or municipal (LAW, Art. 2nd, XI). These servicesinclude health, food, education and recreation to support children's integral and balanced development fromtwo-months-plus-one-day up to six years of age (LAW, Art. 5th).

2.24. "Starting in 1990, to expand initial education attention capacity" (EMP, 2.5.3). IE progranswill be developed "primarily in rural, indigenous and urban marginal settings,;' so that "it will be possibleto give priority attention to children in communities where considerable social and educational deficienciesare identified" (EMIP, 2.5.2.). "To promote the interest and the participation of society and thecommunication media, and the cooperation of the international agencies in the expansion of initialeducation, especially in the areas with the worst educational deficiencies" (EMP, 2.5.2). The Governmentintends to train "professional and paraprofessional personnel," so that the "Human resources training in itsseveral modalities constitutes the basic structure," which must "develop instances of continuing training andhorizontal cooperation among parents, community educators, module supervisors and zone coordinators, onthe basis of the needs identified in each community" (SEP, page 9). EMP aims to "support.. .the tasks ofthe non-formal modality carried out at children's home" (EMP, 2.5.2), "increasing the models of attentionwhich involve parents who, after duly trained, will promote their children's education" (EMP, 2.2. 1).

2.25. Government's policy includes "instructional materials and educational aids for young children,parents, (and) educators" (EMP, 2.1.1). "A handbook of initial education will be produced and distributed

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to provide information on how to develop educational activities, preserve family health and good nutrition,especially of the young children" (EMP, 2.5.3), and to deal with "contents related to environmentpreservation" (EMP, 2.1.1). "To broadcast through the social communication media orientation programsseeking parents' acceptance for initial education benefits and program's expansion" (EMP, 2.5.3). Theglobal IE target for year 2000 is 3,700,000 children under four of poor families in all the states. Thisnumber represents only 46% of the national demand of this age bracket. Along a ten-year program andmaintaining a yearly coverage of 370,000, the evolution would be the following: 1991-1994: 1,480,000or 35% of the target population; 1995-1997: 2,590,000 or 69.7% of the target population; and 1998-2000:3,700,000 or 100% of the target population (SEP, page 19)).

2.26. In February 1991, as a consequence of its early childhood development program (para. 2.23),the Government, after receiving UNICEF, UNDP and UNESCO assistance for project design, submitted tothe Bank for possible financing a ten-year nationwide non-formal IE program, which would have ultimatelycovered 3.7 million children at a total cost of US$392 million. This program aimed to: (i) improve thequality of the IE program by better educational materials and better selection and training of communityeducators and supervisors; (ii) strengthen the institutional capacity of SEP and state IEUs by redefiningorganizat'onal structures, introducing information and evaluation systems, and training staff; and (iii)promote community participation through a more intensive radio program and the activities of restructuredPCCs. The Government and the Bank decided to consider, not the whole proposal but a modified 1993-97first-phase version of the program, targeting Mexico's ten poorest states and seeking to improve the basiccomponents of the existing national IE program while incorporating new elements, particularly the lessonslearned from: (i) the evolution of the Government's strategy on early childhood development; and (ii) tenyears of IE program management experience and its 1987 assessment by the Van Leer Foundation (para.2.20). By the end of the project, 1.2 million children would have been reached in the project states.Assuming that the IE in the other 21 states would continue at the present rate of 106,000 children per year,the accumulated national total of the non-formal IE program would be 1.7 million children in five years.Since many institutional strengthening activities under the project would also benefit non-project states, it islikely that the increase in program quality would spill over and raise enrollments nationwide substantiallybeyond this figure.

2.27. The Mexican Government's IE policy framework is consistent with recent NationalDevelopment Plans, the 1989-94 EMP and is a labor-related legal mandate. This policy deals with IEconcept, objectives, modalities, coverage, human resources needed, educational materials to be developedand institutional basis, to be strengthened. Mexico has successfully pioneered IE experiences on a nationalbasis, and IE achie-ements have clearly outpaced the official documents and policy statements.Nevertheless, a basic issue remains to be more effectively addressed, and that is the importance attached tonon-formal IE vis-a-vis the mandatory features and resources tied to CENDIs, as highlighted in the Bank(Green Cover) Report, The Initial Education Strategy (Report No. 10129-ME, February 5, 1992), andsummarized in para. 2.21(i). The point is that formal IE has counted on a substantial share of IE resourcesprovided by a multiplicity of public agencies applying different operational standards. Somne coordinationis viewed as necessary among formal CENDI services at public institutions and, for equity reasons, somebalance ought to be found between resources of both IE modalities, especially in these times of povertyalleviation. This is not just a question of diverting resources from CENDI to non-formal IE, but ofchannelling more substantive amounts into non-formal IE. The Government's strategy omits this issue andthe Bank, on a sector approach, views a twofold procedure as indispensable: first, to continue the questwith the authorities - followed-up during IE project annual and mid-term reviews - for more resources tosupport, expand and improve non-formal IE; and second, make CENDI coordination and efficiency a topicfor Bank discussion with the Government within a broader perspective for educational and socialdevelopment in Mexico.

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F. BANK EXPERIENCE AND LESSONS LFFARNED

2.28. Even though scattered elements of early childhood development can be found in a few Bankprojects in the past (para. 2.47), this is the first time a comprehensive and free-standing IE project has beenproposed for Bank assistance. The Bank experience and learning, from which the present project couldbenefit, stems from four different sources: (i) education sector experience in Mexico; (ii) Bank-wideeducation sector experience; (iii) review of research literature; and (iv) international context.

(a) Education Sector Experience in Mexico

2.29. The primary focus of Bank assistance to the Mexican education sector in the past had been tohelp the Government increase middle level workers' productivity. Three training projects with loans wortha total of US$251 million (CONALEP I, Loan 2042-ME, 1981; CONALEP II, Loan 2559-ME, 1984; andthe Manpower Training Project, Loan 2876-ME, 1987) were financed by the Bank. A Third TechnicalTraining Project (CONALEP III, Loan 3358-ME), for US$153 million, was approved in 1991 to improvevocational training and its responsiveness to the labor market. A few lessons can be learned from theirimplementation and are discussed below.

2.30. CONALEP I (1981), CONALEP II (1984), and the Manpower Training Project (1987) havemet their targets, and there have been no serious implementation problems. Two main lessons can belearned: (i) in view of delays in project implementation due to lack of familiarity with Bank procedures, ashort launch seminar on project implementation should be conducted by the Bank (para. 5.20); (ii) in viewof the surplus training capacity in some remote areas, qualified personnel should participate in the analysisof demand and program targeting. The proposed project hired a qualified consultant for populationtargeting (paras. 3.3-3.5) and will conduct a launch seminar (para. 5.20).

2.31. In addition to these manpower training projects, the Bank provided, under the EarthquakeRehabilitation and Reconstruction Project (following the 1985 earthquake) US$55 million for rehabilitationof public schools in five states and the Federal District (Loan 2665-ME). Under the 1991 Decentralizationand Regional Development Project (Loan 33 10-ME), the Bank is also supporting the Government's effortsto increase the access of poor populations to basic social services, by financing the rehabilitation of primaryand secondary schools in four of the poorest states. In August 1991, the Bank approved a loan of US$250million equivalent for the Primary Education Project (Loan 3407-ME), to improve the quality andefficiency of primary education in the four states (Chiapas, Guerrero, Hidalgo, and Oaxaca) with thehighest incidence of poverty and lowest education indicators. This Primary Education Project was the firsttime that Mexico opened up its basic education sector for assistance from external aid agencies. Theseprojects have just entered implementation, and lessons from experience are not available yet.

(b) Bank-wide Education Sector Experience

2.32. Poverty Alleviation. Experience shows that the extremely poor cannot be reached effectivelyby formal educational programs. Programs that can exploit the complementarities between education,health, nutrition, and information provision need more attention. Emphasis must be centered on issues likechildren's development, food preparation and conservation, disposal of wastes and hyg'ine, immunization,safe water usage, family planning and health, and the like.2' There is evidence that educational and healthactivities directed toward women reduce child mortality, have a positive effect on child nutrition, health,and socialization, and have an overall multiplier effect on the formation of human capital. The proposedIE project is of a non-formal nature, focuses on the education of parents (mostly mothers), includes health

2' Ihe World Bank. Workd Development Report 1990. Poverty. Oxford: Oxford University Press, 1990.

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and nutrition sector cooperation (paras. 3.60-3.61), and can bring about improved family conditions thatenhance the ability of parents and chi!dren alike to enjoy better living conditions.

2.33. Project Design. Feedback from several education projects in Latin America indicates that aproper policy framework and an adequate institutional capacity are major factors determining projectimplementation success. In addition, the existence of multiple objectives and diverse components are ahindrance for project implementation, and that projects should exclude components weakly related to themain focus of the project. The proposed project focuses on non-formal IE quality and efficiency, in thecontext of a policy framework (Annex 2), to be managed by strengthened IEUs.

2.34. Project Management. When a project implementation unit is created separately from theorganizational units, these existing units often miss the opportunity to acquire technical expertise developedin the process of project implementation. Moreover, the externally financed projects and the overallprogram can develop simultaneously without proper synchronization, and lessons learned from theexperience with the externally-financed project do not form as part of the institutional capability. Theproposed project would be managed by strengthened IEUs at the central and state levels assisted by aProject Coordination Unit (PCU) and an Advisory Committee (paras. 5.7-5.16)

2.35. Decentralization. A growing Latin American experience has demonstrated thatdecentralization can play a pivotal role in managing schools and deliver the necessary educational servicesefficiently. A gradual decentralization process was initiated in Mexico in 1978, and cuiminated recentlywith the creation of SPES at each state, which assumed control and management of the basic educationsystem in each state (para. 2.4 and Annex 1). Duly strengthened state EEUs within SPES would operatethe proposed project in each state (paras. 3.390, 3.44-3.45, 5.9-5. 10).

2.36. Project Evaluation. Bank experience shows that the efficacy and the sustainability ofeducational reform programs depend to a great extent on monitoring and evaluation systems. Relativelyfew developing countries have established a sustainable capacity for educational monitoring and evaluation,and as a result the efforts of governments and assistance agencies have been hampered by a lack ofmeaningful information. Latin American experience suggests that improvements should be incremental,first putting systems in place at low levels of sophistication, then raising the technical level as institutionalcapacity is developed. The proposed project would create an TE Educational Management InformationSystem (EMIS) (paras. 3.46-3.48, 3.53) and the Project Evaluation System (paras. 3.49-3.54).

(c) Review of Research Literature

2.37. Given the Bank's limited experience with non-formal IE projects, research literature on theimpact of IE programs on a worldwide basis was reviewed as part of the project preparation andsummarized in Bank (Green Cover) Report 10129-ME, Mexico - The Initial Education Strategy (February1992). Lessons from this report have been incorporated into the project design with the exception pointedout in para. 2.27. The main lessons learned from additional literature review are summarized below andhave been incorporated in the proposed IE project design (Annexes 9 and 10 for further background).

2.38. Scientific Support. The supporting analysis in favor of IE is compelling. Its increasinglyaccepted value derives from its capacity to help improve the basic conditions for the psychological,sensory-motor and social development of children and, in particular, to prepare them for betterperformance in preschool, primary school, and later stages of education, and thereby for labor productivity.There is strong scientific support indicating a link between IE and the child's subsequent intellectualdevelopment and academic performance. Scientific evidence highlights the link between early sensorystimulation and the development of intelligence, 50% of which is established by age four. Furthermore,inadequate intellectual stimulation and affective care, as well as early malnutrition, are likely to result in

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severe, possibly irreversible damages to physical and emotional capabilities, which are crucial for furtherlearning. In this sense, elementary education and even kindergarten can be too late an opportunity todevelop these capacities in children.

2.39. Social Equity. Poverty is by far the most discriminatory of all social factors. A large part ofcognitive achievement differentials between lower socio-economic and higher income groups can beattributed to low levels of psychological stimulation among poor children, malnutrition and lack ofsanitation, all of which is directly associated with, or can be positively affected by education. IE can helpreduce societal inequalities rooted in poverty, by giving children from disadvantaged backgrounds a fairstart, especially those living in rural ana urban-marginal areas, girls, and other at-risk children. IE's lowunit costs and community orientation allow it to reach effectively children from low income families.

2.40. Efficiency. Early childhood education increases the return on primary and secondary schoolinvestments, contributes to human capital formation, raises participants' productivity and incr me levels,and reduces public expenditures (i.e., lower welfare, health and education costs). In the US Perry Pre-School Program4', in operation since 1962, a US$1 investment yielded US$6 in eventual savings due tolower educational and welfare expenditures and higher productivity among participants (Annex 9, pages 4-5). In the ongoing US Head Start program, US$1 spent is worth US$4.75 in costs saved later..'

2.41. Thirteen studies (only three of which include food and nutrition components) carried out inAsia, the Middle East, and particularly Latin America (Bank Green Cover Report 10129-ME, Mexico:The Initial Education Strate2y, dated February 5, 1992) suggest that IE increases school readiness skills,promotes timely school enrollment, lowers primary repetition and dropout rates, and improves overallacademic skills. The beneficial impact of IE is particularly pronounced among the traditionallydisadvantaged groups (e.g., girls and children with rural, indigenous, and lower-level socio-economicbackgrounds). For each study where a particular objective criteria for measuring program effectivenesswas utilized, positive results were seen: five studies showed there were significant improvements in thechild's skills; six studies found a positive relationship between IE and lower dropout and repetition rates;and in seven of the studies, children participating in early childhood programs had a better academicperformance than the control students.

2.42. IE programs often involve nutritional supplement and health care services. Evidence suggeststhat health- and nutrition-related programs are positively associated with physical growth, basic cognitiveabilities, school readiness and positive classroom behavior. A ten-year study in the state .of Puebla(Mexico) shows that children with food supplements walked at an earlier age and demonstrated languagesuperiority from the 20th week onward. In the early years of schooling, children with food supplementsperformed significantly better than unsupplemented children, as they: looked more often at the teacher(10% vs. 3%); participated more in classroom discussion (6% vs. 3%); and were less likely to sleep inclass (1% vs. 5%). None of the supplemented children failed the first year while more than one-third ofthe others did so.fi Agreements to be signed with the Health Secretariat and other social service programswould facilitate the delivery of health and nutrition services to project families (paras. 2.21(viii), 3.61).

4 John R. Berrueta-Clement et al. Chaneed Lives: The Effects of the Pem Preschool Program on YouthsTmrough Age 19. Ypsilanti, Michigan: High Scope Press, 1984.I/ Harrell, A. The Effects of the Head Start Program on Children's Cognitive Development: PreliminaryReprt. Washington, D.C.: U.S. Dept. of Health and Human Services, 1983.91 Chavez, A. & Martinez, C. School Performance of Supplemented and Unsupplemented Children from aPoor Rural Area, in A.E. Harper & G.K. Davis (Eds.) Nutrition in Health and Disease and InternationalDevelopment: Symposia from the XII International Coneress on Nutrition: Vol. 77. Progress in Clinical andBiolozical Research. New York: Alan R. Liss, 1981.

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2.43. Two Modalities. IE is carried out through two basic modalities - formal and non-formal.Formal IE is offered in Mexico through CENDIs which, like traditional kindergarten and nursery schools,have a structured curriculum established by the educational systeni and require specific facilities and a widerange of equipment. CENDI teachers are usually trained at a level of qualification often beyond thatnormally provided by teacher training institutions (para. 2.16). In contrast, non-formal IE has no fixedcurriculum and adopts a multiplicity of approaches (para. 2.47).

2.44. T he past two decades have witnessed an increasing consideration of the contributions that non-formal IE can make to the early educational process, especially in light of evidence that formal educationalprograms: (i) have failed to reach the populations most in need; (ii) are very costly; and (iii) do notaddress specific community needs. Conversely, non-formal strategies: (i) are designed to reach thepoorest segments of society; (ii) are more economical because they are not tied to heavy investments inphysical infrastructure, professional staffing or support systems; (iii) have the advantage of being closer tothe intended beneficiaries; and (iv) involve parents and communities, directly drawing on their owncultures, strengths, and customs. That is why non-formal 'IE has unique appeals to funders, planners,economists, anthropologists, and finance ministries in societies looking for practical ways of achievingrapid human resource development. Two basic modalities of non-formal IE can be found: a center-basedmodality, led mainly by non-professionals in a community setting; and a home-based modality, carried outby parents at home. The proposed IE project for Mexico emphasizes the home-based modality.

2z.1?5. From the evidence regarding the multiple benefits of early childhood developmentintervention, two main lessons can be learned in particular: (i) a more ambitious and integrated Bankcommitment to IE programs than in the past seems to be an innovative yet safe way to increase theprobability of a more efficient basic education, and a more productive life for its beneficiaries (paras. 2.38-2.41); and (ii) the non-formal IE approaches appear to focus more effectively on their target groups, showa wider spectrum of long-lasting benefits, and are cost-effective (para. 2.44).

(d) International Context

2.46. In recent years, three international events have made evident the new interest for earlychildhood education, addressing some of the institutional and organizational challenges facing earlychildhood programs at the national levels: (i) the Convention on the Rights of the Child was adopted bythe United Nations General Assembly in November 1989; (ii) the World Conference on Education for All,held in March, 1990 in Thailand under the sponsorship of the World Bank, UNDP, UNESCO, andUNICEF, placed special emphasis on the expansion of early childhood care and development throughfamily involvement and community interventions, especially for poor and disadvantaged children; and (iii)the World Summit for Children, held at the UN in September, 1990, brought together 158 Presidents andPrime Ministers. These meetings have at once expressed a new awareness of the importance of IE on thepart of international donors and generated more concrete commitments on the part of governments in favorof early childhood development. The Mexican Government played a leading role in the promotion of theWorld Summit for Children and has followed through its commitments made at the meeting with, inter athe preparation of the proposed project (para. 2.25).

2.47. Non-formal early childhood education has been a major area of innovation worldwide,especially in Latin America (Annex 10) as well as in countries as diverse as India ("Integrated ChildDevelopment Services," with Bank support, Loan 3253-IN); Colombia (Hogares Comunitarios, or"Community Homes," partly financed by the Bank, Loan 3201-CO); Kenya ("Harambees" - "Let's pulltogether" - movement); Brazil (Creches Comunitdrias, or "Community Nurseries"); the United Kingdom("Playground Movement"); and Venezuela (Hogares de Cuidado Diario, or "Day Care Homes"). Theseprojects tend to encourage community commitment, autonomy and decreasing dependence on outsiders.The proposed IE project shares some features of these projects.

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G. RATIONALE FOR BANK INVOLVEMENT

2.48. Bank involvement in the non-formal IE program would fit in well with the Bank's: (i) generalstrategy of adjustment and poverty alleviation; and (ii) education sector strategy in Mexico. First, it wouldrender more efficient investments in basic education. Through its effects on children's school readiness,the IE program would contribute to increased returns on investments in primary education, therebycontributing to human. capital formation. Second, by helping target social investments to poor areas, theproject would also increase the opportunity for poor children to subsequently benefit from education andwould contribute to a more equitable distribution of opportunities for welfare gains.

2.49. The proposed project would complement several Bank-financed projects that have supportedthe Government's efforts to improve the efficiency of public resource allocation in the social sectors and toalleviate poverty, such as the 1990 Basic Health Care Project (Loan 3272-ME), the 1990 Low IncomeHousing Project (Loan 3140-ME), the 1991 Decentralization and Regional Development Project (Loan3310-ME), and the 1991 Primary Education Project (Loan 3407-ME), all for the same poorest states. Theproposed IE project would complement these projects with an expanded geographical coverage, and couldprompt nationiwide policy changes in IE in terms of planning, human resource training and programevaluation (Annex 2). Additionally, the Bank is the only aid agency in Mexico involved in large-scalebasic education programs, and would be able to transfer to Mexico lessons learned from Bank experiencewith basic education through childhood-related projects in other countries. The Government of Mexico hasfairly extensively covered the child development needs of the organized urban labor force with a goodquality formal IE program, as mandated by the Constitution. However, the early childhood developmentneeds of the poor rural population has been barely covered. The Bank's involvement in this proposedproject would redress the imbalance in the coverage and quality of non-formal IE programs in Mexicothrough an innovative and cost-effective project.

m. THE PROJECT

A. PROJECT OBJECTIVES AND CONCEPT

3.1. The project would aim to alleviate poverty and increase human capital investment byimproving efficiercy and quality of the non-formal IE program in the ten poorest Mexican states through:(i) preparing young children of low-income families for timely school entry, and improvement of theirprimary schcol attendance and performance (Annex 2, paras. 4-5); (ii) educating parents, especiallymothers, in home-based child-development practices (Annex 2, para. 6); and (iii) strengthening theGovernment's policy-oriented capacity to plan, expand, monitor and evaluate the IE programs.

3.2. To achieve these objectives, the project would improve the design and operation of theexisting non-formal IE program, strengthen the institutional capacity of central and state IEUs, expand itscoverage in the ten poorest states, refine its targeting criteria, promote community participation, anddevelop linkages with complementary social sector programs. The project would help provide moresatisfactory remuneration levels to attract and retain better qualified community educators, provide bettereducational materials and more intensive and systematic supervision, monitoring and evaluation of programactivities and effects, and redesign institutional structures to increase overall management efficiency and amore balanced di.stribution of Government resources between SEP sponsored formal and non-formal IE.The project is with;n the scope of Government policy for IE as summarized in Annex 2, and would helpdevelop a non-formal education model that can be expanded and replicated in the rest of the country.

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B. PROJECT SCOPE AND TARGET POPULATION

3.3. The proposed project reflects the Government's intention to target the most disadvantagedsegments of the population in rural and urban areas. Because of institutional weaknesses at both nationaland state levels, the Government decided that the project should allow for sufficient institutionalstrengthening before further expansion. A ten state project would be sufficiently large to have a significantimpact on national enrollment rates and keep unit costs at an acceptable level. Using weighted proxies ofmarginality, age group (0-3) and indigenous populations, and school performance indicators, ten states havebeen identified (by order of marginality) for project implementation: Oaxaca, Veracruz, Chiapas, Puebla,Guerrero, Michoacan, Mexico, Hidalgo, San Luis Potosi, and Guanajuato (Annex 11 for furtherinformation). Fifty-two percent of the country's children ages 0-3 live in these ten poorest states.

3.4. As participation in the non-formal IE program is ostional, the scope of the project would bedetermined by the effective demand, i.e., the parental participation rate, expected to be about 60% and40% in rural and urban areas, respectively. (A survey of current program coordinators, supervisors andcommunity educators showed average participation to be 68% and 40% of parents in rural and urban areas,respectively, see Annex 11.) But since children are the ultimate target of project activities, the targetpopulation is measured in terms of children ages 0-3 enrolled in the project. Enrollment refers to theapproximate number of children ages 0-3 reached through participating parents which, based on 1990census data, average 1.3 children per family. Children ages 0-3 are eligible to participate once in the one-year program cycle during the project period, and therefore a true measurement of the enrollment rate(coverage) should be made over a four-year period, which is equal to four times the annual enrollment.Former participants will: (i) keep Parents' Guidebook with them as a permanent reference; (ii) continue toattend occasional PCC-sponsored meetings; (iii) receive support from the module supervisor; and (iv)attend new child-related educational materials. Current coverage of the non-formal IE program in the tenselected states as a whole is 7.4% of their total population 0-3. Projected coverage in the fifth year of theproject would be 33.5% of their total 0-3 population, with 50.1% in rural areas and 33 % in urban marginalareas, which is still below observed average participation rates. Table 3.1 shows present and projectedenrollment rates and coverages.

Table 3.1ENROLLMENT AND COVERAGE RATES IN THE 10 PROJECT STATES

RURAL JURBAN TENAREAS MARGINAL STATWS

_ _ _ .. ,.AREAS

1991 Enrollment Rate 2.3 % 3.1 % 1.8 %1991 Coverage 9.4 % 12.5 % 7.4 %E 1997 Enrollment Rate 12.5 % 8.3 % 8.4%1997 Coverage 50.1 % 33.0 % 33.5

1 Relative to total 0-3 population, including inhabitants in non-marginal areas

3.5. Within the ten project states, current coverage rates vary significantly, from a high of23.6% in Guerrero to a low of 2.8% in Veracruz (Annex 5, page 1). The project is expected to raisethe urban marginal and rural coverage rates to meet the projected levels of demand and to reduce thedisparity among coverage rates in the ten states. Annual enrollment would rise from 77,000 to349,000 children, an average increase of about 54,000 per year. This figure was determined byassuming a 60% coverage in communities of 1,000 to 15,000 inhabitants and to keep project costswithin acceptable limits. Enrollment growth is projected at a rate of 46% annua;ly for the first three

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years, 25% for the fourth year and 13% for the fifth year. Annual increments begin at 35,000 in thefirst year, peak at 81,000 in the third year, and taper to 39,000 in the last year of the project, becauseexpansion is expected to become more difficult over time as more resources would be required toreach isolated communities. Poverty indicators would be used to select rural and urban marginalconmmunities and establish target priorities for project preparation (Annex 9, para. 9 and Annex 11).At completion, the project would have reached a total of 1.2 million children over a five-year period,which would account for 71 % of the total national coverage of 1.7 million children during the samefive-year period (assuming that annual enrollments in the remaining 21 states remain the sarne, seepara. 2.26).

C. PROJECT COMPONENTS

3.6. The project consists of three major components:

(a) The Human Resources Development Component (79.2% of total project costincluding contingencies) would upgrade the performance level of all personnel involved in themanagement and training process, and improve parents' developmental performance with theirchildren. It would in particular: (i) develop parents' skills in fostering their children's cognitive,psychomotor and social development; (ii) train community educators to lead their local activities withparents, children and the community; (iii) improve the supervisory and coordinating skills of modulesupervisors and zone coordinators; (iv) improve the performance of training leaders and technicalstaff; and (v) upgrade the managerial capacity of SEP's and SPES's high-level professionals.

(b) The Educational Materials Develogment Component (12.9% of total project costincluding contingencies) would improve the quality of printed instructional materials and createadditional audiovisual supporting instruments. It would in particular: (i) revise the existing Parents'Guidebook to include new areas like health and nutrition, family planning, and environmentalprotection, as well as more adequate illustration; (ii) revise the operating handbooks to accommodatethe use of new educational strategies and methods; (iii) produce better illustrated printed materialswith greater content for trair g and communication purposes; (iv) develop a series of educationalgames and videos; and (v) 1 .oduce a series of promotional and educational radio programs.

(c) The Strengthening of Policy-oriented Capacity (7.8% of total project costincluding contingencies) would strengthen the managerial capacity of SEP and SPES, and supportcommunity participation. It would in particular: (i) strengthen the central IEU at SEP; (ii) organizeIEUs at the State level; (iii) design and support the implementation of an EMIS; (iv) design andimplement an evaluation system (including process and impact analysis, quality audit, and special andtracer studies); (v) improve the supervision system; (vi) promote the organization of PCCs at localand state levels; and (vii) support the cooperation with other community-oriented services like healthand nutrition.

3.7. Administrative costs, which are distributed among all three components, amount toUS$2.0 million equivalent, representing 1.7% of total project costs including contingencies.

D. PROJECT DESCRIPTION

(a) The Human Resources Development Component (Costs: US$91.1 million)

3.8. The project would prepare, at all levels, the human resources needed to manage,mediate, and carry out the project services (Annex 2, paras. 12-13). The non-formal IE programrests upon a system of successive training. SEP professionals at the central level work with state

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personnel to train the zone coordinators, who in turn train up to ten module supervisors, who thentrain and supervise up to 10 local community educators. A community educator, together with 20parents and their children (an average of 26, approximately 1.3 children ages 0-3 per family), form anucieus (Annex 6). Sc me external trahiers (from universities, teacher training, and other institutions)would be invited to add new ideas to the process and encourage inter-institutional relationship.Quality intervention by trained human resources is at the heart of the project and provides theoperational framework for all other inputs. During negotiations. agreement was reached with theGovernment: (i) on the overall training plan for communitv educators. module supervisors. and zonecoordinators, and on reviews durinp annual and mid-tern reviews and planning meetings: and (ii)that evidence will be provided at the annual review meetings that: (a) communities have beenidentified in each of the ten DroLect states to meet the vrojct expansion targets set for year: and (b)the appropriate number of module supervisors and zone coordinators to meet the year's projectexpansion targets have been recruited (para. 7. 1(a)).

3.9. Training of Parents (Annex 2, para. 14). A group of about 20 parents (mostly mothers)would make up the basic operating unit of the project or nucleus, which would receive from thecommunity educator two forms of training: periodic group meetings and home visits. A total ofapproximately 900,000 parents would be trained over the project implementation period of five years(Annex 11, page 5) assuming 50% rural and 33% urban marginal participation. Assumedparticipation rates were based on program records and three surveys conducted with program agentsin the field (paras. 3.4-3.5, Annex 11, page 5). The meetings would consist of a series of fortygroup sessions of two hours each (a total of 80 hours) devoted to reading and discussing the topicscontained in the Parents' Guidebook (paras. 3.29-3.30), a special workbook organized around thecharacteristics and needs of the child through the early stages of development up to age four. Thetraining meetings would include practical activities for the parents to acquire skills related toproviding adequate stimulus to the child's development in the cognitive, psychological, and socialareas. The meetings would be conducted once or twice a week over a period of five to eight months.The group sessions would be normally held in a school, church, community hall, or any othersuitable place available. During negotiations. agreement was reached that evidence will be providedat the annual review meetings that parent training groups have been organized and that trainingcourses are being conducted (para. 7.1(b)).

3.10. Parallel to the group meetings, the community educator would visit the homes ofparticipating parents to reinforce the concepts learned during the group sessions, to observe howparents have understood and are applying these concepts in their daily interaction with their children,and to assist them in adopting or reinforcing acceptable child development practices and homeeducational activities "hat stimulate the desired development of the child's basic capabilities. Allparents would be visi'td at least once every two weeks. This home visit would be particularly helpfulfor illiterate parents who constitute about 20% of total participants.

3.11. In his or her work with the group of parents, the community educator would be guidedby the Community Educator's Handbook (Annex 2, para. 16), a manual of practical orientation onhow to conduct group sessions matching each of the learning units in the Parents' Guidebook and howto motivate interaction and exchange of experiences within the group. The project would provide foran improvement in the handbooks (paras. 3.29-3.34). In addition, the project would provide apackage of audiovisual materials for use by the community educator, including flip charts, leaflets,and tape recordings (paras. 3.35-3.36). Radio programs (paras. 3.37-3.38), with both promotionaland educational content, would be broadcast regularly by local stations to disseminate the project,motivate families to participate, and to crystallize support for the program. In communities with largenumbers of illiterate parents, more emphasis would be placed under the project on the use of

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audiovisual materials and radio, although well-illustrated printed materials have also been usedsuccessfully and would be considerably improved in visual context and message presentation.

3.12. Even though the intended beneficiaries of the project are children 0-3, the childrenthemselves would not participate directly in the proposed educational activities, except during thehome visits when they would be observed and practical feedback on their attitudes and behaviorprovided by the community educator. In general, parents (mostly mothers) would be t