ADB approves USD100mn loan to overhaul Sri Lanka’s vocational training system

The Asian Development Bank (ADB) has approved a $100 million results-based loan to transform Sri Lanka’s technical and vocational education and training (TVET) system, aiming to equip more young people with industry-relevant skills and strengthen the country’s competitiveness.

The Skills Development System Transformation Program will back government efforts to improve training quality, strengthen links between training providers and industries, and expand employment opportunities for youth. It will also target an increase in women’s employment in nontraditional fields such as automotive technology, engineering, ICT, construction and renewable energy.

“A skilled workforce is essential to Sri Lanka’s long-term economic transformation and competitiveness,” said ADB Country Director for Sri Lanka Shannon Cowlin. “This program will help create stronger pathways from education to employment by making training more responsive to industry needs, expanding opportunities for young people and women, and ensuring that graduates have the skills required by a modern and evolving economy.”

While Sri Lanka’s economy is recovering, it continues to face skills shortages in priority sectors, high youth unemployment and low female labour force participation, with many employers reporting difficulty finding workers with the skills a changing economy demands.

Aligned with the government’s TVET Sector Strategic Framework 2026–2035, the nationwide program will run from 2027 to 2031 and is expected to directly benefit more than 100,000 young people through improved access to employment-oriented training.

It will expand career guidance for secondary school students, build teacher capacity, and improve coordination between schools and training institutions. To modernise TVET delivery, the program will set up a center of excellence for automotive technology, roll out a hub-and-spoke training model across all nine provinces, upgrade learning facilities, and launch new industry-aligned courses in priority sectors. It will also deepen employer partnerships through workplace-based learning, industry-linked certification, and stronger private sector engagement mechanisms.

On governance, the program will introduce a national accreditation system, performance-based financing, and a unified digital training management information system to align skills development with labour market demand.

Financing comprises a $50 million regular loan, a $50 million concessional loan, and a $500,000 technical assistance grant.

ADB is a multilateral development bank supporting sustainable, inclusive and resilient growth across Asia and the Pacific. Founded in 1966, it is owned by 69 members, 50 of them from the region.