The Asian Development Bank has approved a $100 million results-based loan to transform Sri Lanka’s technical and vocational education system, equipping over 100,000 youth with industry skills while expanding women’s access to non-traditional careers.

The Asian Development Bank (ADB) has approved a $100 million results-based loan to help Sri Lanka overhaul its technical and vocational education and training (TVET) system. The financing aims to equip more young people with industry-relevant skills, strengthen the country’s competitiveness, and promote inclusive growth by expanding women’s employment opportunities in fields long dominated by men.

The Skills Development System Transformation Program will support the Government of Sri Lanka’s efforts to improve the quality and relevance of skills training, deepen links between training providers and industry, and open clearer pathways from education to employment. Implementation is scheduled from 2027 to 2031 and is expected to directly benefit more than 100,000 young people through improved access to quality, employment-oriented training.

Addressing Persistent Skills Shortages and Gender Gaps

Although Sri Lanka’s economy is showing signs of recovery after the severe crisis of 2022, it continues to face structural challenges. Skills shortages persist in priority sectors, youth unemployment remains elevated, and female labour force participation stays low. Many employers report difficulty finding workers with the competencies required in a changing economy.

Recent labour force data underscore the scale of the problem. Female labour force participation hovered around 31-32 per cent in 2025, far below the male rate of nearly 70 per cent. Youth unemployment for those aged 15-24 stood near 18-19 per cent, with rates higher among young women. Educated youth have faced particularly acute difficulties entering the job market, reflecting mismatches between qualifications and available work.

ADB Country Director for Sri Lanka Shannon Cowlin highlighted the strategic importance of the investment. “A skilled workforce is essential to Sri Lanka’s long-term economic transformation and competitiveness,” she said. “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.”

The programme is aligned with the government’s Technical and Vocational Education and Training Sector Strategic Framework 2026-2035 and builds on earlier ADB-supported reforms in the skills sector dating back more than a decade.

Focus on Women in Non-Traditional Occupations

A distinctive feature of the new programme is its emphasis on increasing women’s employment in non-traditional jobs. Target fields include automotive technology, engineering, information and communications technology, construction, and renewable energy. These sectors typically offer higher-paying opportunities yet have historically attracted limited female participation.

By design, the initiative seeks to break down barriers that have kept many Sri Lankan women, despite strong academic performance, outside the formal labour market or confined to lower-wage traditional occupations. Expanded career guidance for secondary school students, enhanced teacher training, and stronger coordination between schools and training institutions are expected to encourage more girls and young women to consider technical pathways.

Modernising Training Delivery Across the Island

To modernise TVET delivery, the programme will establish a centre of excellence for automotive technology and introduce a hub-and-spoke training model across all nine provinces. Learning facilities will be upgraded and new industry-aligned courses launched in priority sectors.

Partnerships between training providers and employers will be deepened through workplace-based learning, industry participation in skills assessment and certification, and stronger mechanisms for private-sector engagement. These measures aim to ensure that training content remains relevant to actual labour-market demand rather than remaining supply-driven.

Quality assurance will also be strengthened through a national accreditation system, performance-based financing mechanisms, and a unified digital training management information system. The digital platform is intended to improve efficiency, transparency, and the ability to match skills development with evolving economic needs.

Financing Structure and Broader Economic Context

The $100 million package comprises a $50 million regular loan, a $50 million concessional loan, and a $500,000 technical assistance grant from ADB. The results-based approach links disbursements to the achievement of agreed performance targets, an instrument ADB has used successfully in earlier skills programmes in Sri Lanka.

The investment comes as Sri Lanka continues to navigate recovery under an International Monetary Fund-supported program. While overall unemployment has declined to around 4 per cent, structural issues – outmigration of skilled workers during the crisis years, limited private-sector participation in training governance, and persistent gender disparities – continue to constrain growth. Recent analysis has also highlighted the potential for higher-value sectors to generate more productive jobs, provided the workforce possesses the necessary skills.

Building on Earlier Reforms

ADB has supported Sri Lanka’s skills sector for more than a decade. An earlier $100 million results-based loan approved in 2014, with additional financing in 2018, helped raise employment rates among TVET graduates and expand access for disadvantaged groups. The new programme seeks to accelerate and deepen those reforms at a moment when the economy requires a more agile and inclusive skills system.

International experience shows that well-designed TVET systems can reduce youth unemployment, raise female labour force participation, and support economic diversification. For Sri Lanka, success will depend on sustained political commitment, effective coordination across ministries, and genuine industry ownership of the training agenda.

Focus keyphrase: ADB $100 million loan Sri Lanka vocational training women’s employment

Tags: Asian Development Bank, Sri Lanka, vocational education, TVET, youth employment, female labour force participation, skills development, women’s jobs, economic recovery, Shannon Cowlin,