ADB funds Sri Lanka skills, youth employment, women's participation

ADB commits $100 million for Sri Lanka skills development

The Asian Development Bank (ADB) approved a $100 million results-based loan on 29 September 2026, designated to overhaul Sri Lanka's technical and vocational education and training (TVET) system. This financing aims to equip more young people with skills relevant to industry demands, thereby enhancing the nation's economic competitiveness and fostering inclusive growth.

The initiative, named the Skills Development System Transformation Program, supports the Government of Sri Lanka's objectives to improve the standard and applicability of skills training, strengthen connections between training providers and industries, and broaden employment prospects for the country's youth. The overall goal is to address existing labour market mismatches and prepare the workforce for a modern economy.

Addressing skills gaps and youth unemployment

Sri Lanka currently faces notable skills shortages across critical sectors, despite its economic recovery, according to the ADB. The nation also contends with high rates of youth unemployment and low female labour force participation. Employers frequently report difficulties in securing workers possessing the necessary skills for a dynamic economy.

The ADB's program aligns with the Government of Sri Lanka’s Technical and Vocational Education and Training Sector Strategic Framework 2026–2035. This nationwide effort is scheduled for implementation from 2027 to 2031 and projects direct benefits for over 100,000 young individuals through improved access to quality, employment-focused training programmes.

Modernising training and industry collaboration

The program introduces several measures to modernise TVET delivery and strengthen its relevance. These include establishing a centre of excellence for automotive technology and implementing a hub-and-spoke training model across all nine provinces of Sri Lanka. Learning facilities will undergo upgrades, and new industry-aligned courses will be launched in priority sectors.

Furthermore, the initiative will deepen collaboration between training providers and employers through workplace-based learning opportunities. Industry participation will also be integrated into skills assessment and certification processes for learners, alongside mechanisms designed to boost private sector engagement.

Governance and quality assurance are set for improvement via a national accreditation system, performance-based financing, and a unified digital training management information system to align skills development with labour market demand, the ADB stated.

Implications for Sri Lankan industry and workforce

The ADB's $100 million investment, comprising a $50 million regular loan, a $50 million concessional loan, and a $500,000 technical assistance grant, is intended to create more direct pathways from education to employment.

Shannon Cowlin, ADB Country Director for Sri Lanka, stated that a skilled workforce is fundamental to the country's long-term economic transformation and competitiveness.

The program aims to expand employment opportunities for women in non-traditional fields, including automotive technology, engineering, information and communications technology, construction, and renewable energy.

For businesses, this initiative could address the reported difficulty in finding skilled workers, potentially easing labour market constraints and supporting industrial growth between 2027 and 2031.