Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: ICR00005113
IMPLEMENTATION COMPLETION AND RESULTS REPORT IDA 5517-LK AND IDA 5516-LK
ON A
CREDIT Public Disclosure Authorized IN THE AMOUNT OF SDR65.70 MILLION
(US$101.5 MILLION EQUIVALENT)
TO THE
DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA
FOR A SKILLS DEVELOPMENT PROJECT Public Disclosure Authorized June 15, 2020
Education Global Practice South Asia Region Public Disclosure Authorized
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
CURRENCY EQUIVALENTS (Exchange Rate Effective April 17, 2020)
Currency Unit = Sri Lanka n Rupee ( LKR) LKR181.19 = US$1 US$1.38 = SDR1
FISCAL YEAR July 1 – June 30
ABBREVIATIONS AND ACRONYMS
ADB Asian Development Bank CBA Cost-Benefit Analysis CGTTI Ceylon-German Technical Training Institute CMP Center Management Plan CoE Center of Excellence CPF Country Partnership Framework DLI Disbursement-linked Indicator DLR Disbursement-linked Result DP Development Partner DTET Department of Technical Education and Training EOP End of Project ERD External Resources Department ETA Employment-linked Training Agreement FM Financial Management GDP Gross Domestic Product GoSL Government of Sri Lanka HR Human Resource ICT Information and Communication Technology IMSCC Inter-Ministerial Sector Coordination Committee IO Intermediate Outcome ICR Implementation Completion and Results Report IESC International Executive Service Corps IPF Investment Project Financing IRR Internal Rate of Return ISR Implementation Status Report ISSC Industry Skills Sector Council KPI Key Performance Indicator LFS Labor Force Survey M&E Monitoring and Evaluation MIC Middle-income Country MIS Management Information System
MSDELR Ministry of Skills Development, Employment and Labor and Industrial Relations MSDVT Ministry of Skills Development and Vocational Training MTR Midterm Review MYASD Ministry of Youth Affairs and Skills Development NAITA National Apprentice and Industrial Training Authority NIFNE National Institute of Fisheries and Nautical Engineering NPV Net Present Value NVQ National Vocational Qualification NYSC National Youth Service Council PAD Project Appraisal Document PBF Performance-based Funding PDO Project Development Objective PMU Program Management Unit PPP Public-Private Partnership QIS Quality Improvement System QMS Quality Management System RBL Results-based Lending RPL Recognition of Prior Learning SDD Skills Development Division SDP Skills Development Project SSDP Skills Sector Development Program SLGTI Sri Lanka-German Training Institute STEP Skills Toward Employment and Productivity TA Technical Assistance TPV Third-party Verification TVEC Tertiary and Vocational Education Commission TVET Technical and Vocational Education and Training UNIVOTEC University of Vocational Technology VTA Vocational Training Authority
Regional Vice President: Hartwig Schafer Country Director: Idah Z. Pswarayi-Riddihough Regional Director: Lynne D. Sherburne-Benz Practice Manager: Mario Cristian Aedo Inostroza Shobhana Sosale, Elizabeth Ninan Dulvy, Task Team Leader(s): Kinley Clemens Salmon ICR Main Contributor: Tashmina Rahman
TABLE OF CONTENTS DATA SHEET ...... 1 I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ...... 5 A. CONTEXT AT APPRAISAL ...... 5 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) ...... 11 II. OUTCOME ...... 12 A. RELEVANCE OF PDOs ...... 12 B. ACHIEVEMENT OF PDOs (EFFICACY) ...... 13 C. EFFICIENCY ...... 20 D. JUSTIFICATION OF OVERALL OUTCOME RATING ...... 21 E. OTHER OUTCOMES AND IMPACTS (IF ANY) ...... 21 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ...... 22 A. KEY FACTORS DURING PREPARATION ...... 22 B. KEY FACTORS DURING IMPLEMENTATION ...... 24 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 26 A. QUALITY OF MONITORING AND EVALUATION (M&E) ...... 26 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ...... 28 C. BANK PERFORMANCE ...... 29 D. RISK TO DEVELOPMENT OUTCOME ...... 31 V. LESSONS AND RECOMMENDATIONS ...... 31 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ...... 34 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ...... 46 ANNEX 3. PROJECT COST BY COMPONENT ...... 48 ANNEX 4. EFFICIENCY ANALYSIS ...... 49 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 56 ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) ...... 57 ANNEX 7. SUPPORT TO SSDP FROM OTHER DEVELOPMENT PARTNERS ...... 59 ANNEX 8. DETAILED DESCRIPTION OF RESULTS-BASED COMPONENT 1 ...... 63 ANNEX 9. PROPOSED RESTRUCTRING ...... 65 ANNEX 10. ACHIEVEMENT OF DLIS UNDER SRI LANKA SKILLS DEVELOPMENT PROJECT ...... 67 ANNEX 11. STUDENTS RECRUITED AND GRADUATED FROM PUBLIC TRAINING INSTITUTIONS68 ANNEX 12. REVIEW OF THE SDP CHOICE OF KEY PERFORMANCE INDICATORS ...... 69 ANNEX 13. SUMMARY OF BORROWER’S PROJECT COMPLETION REPORT ...... 71 ANNEX 14. CHANGES IN LEADERSHIP DURING SSDD IMPLEMENTATION ...... 76 The World Bank Skills Development Project (P132698)
DATA SHEET
BASIC INFORMATION
Product Information Project ID Project Name
P132698 Skills Development Project
Country Financing Instrument
Sri Lanka Investment Project Financing
Original EA Category Revised EA Category
Partial Assessment (B) Partial Assessment (B)
Organizations
Borrower Implementing Agency
Ministry of Skills Development, Employment and Labour Ministry of Finance, Economic and Policy Development Relations
Project Development Objective (PDO)
Original PDO The Project Development Objective is to expand the supply of skilled and employable workers by increasing access to quality and labor market relevant training programs.
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FINANCING
Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing
21,700,000 2,380,603 0 IDA-55160
79,800,000 56,123,462 47,812,019 IDA-55170 Total 101,500,000 58,504,065 47,812,019
Non-World Bank Financing 0 0 0 Borrower/Recipient 417,000,000 0 0 Asian Development Bank 100,000,000 0 0 KOREA, Govt. of 26,000,000 0 0 GERMANY: German Technical Assistance 17,000,000 0 0 Corporation (GTZ) Total 560,000,000 0 0 Total Project Cost 661,500,000 58,504,065 47,812,019
KEY DATES
Approval Effectiveness MTR Review Original Closing Actual Closing 20-Jun-2014 23-Oct-2014 29-Nov-2017 31-Dec-2019 31-Dec-2019
RESTRUCTURING AND/OR ADDITIONAL FINANCING
Date(s) Amount Disbursed (US$M) Key Revisions 23-Sep-2019 47.81 Change in Implementing Agency Change in Components and Cost Cancellation of Financing Reallocation between Disbursement Categories Change in Institutional Arrangements Change in Implementation Schedule
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The World Bank Skills Development Project (P132698)
KEY RATINGS
Outcome Bank Performance M&E Quality Moderately Unsatisfactory Moderately Unsatisfactory Modest
RATINGS OF PROJECT PERFORMANCE IN ISRs
Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 06-Oct-2014 Satisfactory Satisfactory 0
02 17-Apr-2015 Satisfactory Satisfactory 0
03 19-Nov-2015 Satisfactory Moderately Satisfactory 6.58
04 03-Jun-2016 Satisfactory Moderately Satisfactory 6.58
05 31-Dec-2016 Satisfactory Moderately Satisfactory 21.84
06 26-Jun-2017 Moderately Satisfactory Moderately Satisfactory 34.66 Moderately 07 16-Jan-2018 Moderately Satisfactory 41.24 Unsatisfactory Moderately 08 27-Jul-2018 Moderately Unsatisfactory 45.65 Unsatisfactory 09 30-Jan-2019 Unsatisfactory Unsatisfactory 45.65
10 16-Aug-2019 Unsatisfactory Unsatisfactory 47.81
SECTORS AND THEMES
Sectors Major Sector/Sector (%)
Education 100 Tertiary Education 30 Workforce Development and Vocational Education 70
Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%)
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Private Sector Development 100
Jobs 100
Social Development and Protection 20
Social Protection 20
Social Safety Nets 20
Human Development and Gender 80
Education 60
Access to Education 15
Science and Technology 15
Teachers 15
Standards, Curriculum and Textbooks 15
Labor Market Policy and Programs 20
Labor Market Institutions 10
Active Labor Market Programs 10
ADM STAFF
Role At Approval At ICR
Regional Vice President: Philippe H. Le Houerou Hartwig Schafer
Country Director: Francoise Clottes Idah Z. Pswarayi-Riddihough
Director: Jesko S. Hentschel Lynne D. Sherburne-Benz
Practice Manager: Amit Dar Mario Cristian Aedo Inostroza Shobhana Sosale, Elizabeth Task Team Leader(s): Halil Dundar Ninan Dulvy, Kinley Clemens Salmon ICR Contributing Author: Tashmina Rahman
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The World Bank Skills Development Project (P132698)
I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES
A. CONTEXT AT APPRAISAL
Context
1. At the time of appraisal, Sri Lanka was a lower-middle-income country experiencing healthy and sustained economic growth. With the end of the civil conflict, the annual gross domestic product (GDP) increased from 3.9 percent in 2009 to an average of 4.9 percent in 2014. The GDP per capita stood at US$3,820 in 2014, above the average for the South Asian region but considerably lower compared to the average for a middle-income country. The economy was also undergoing structural shifts from a largely rural, agriculture-based economy to an urban economy led by industry and services. In 2012, the share of agriculture of GDP stood at 11 percent, while industry and service stood at 31 percent and 58 percent, respectively. In this context, the Government of Sri Lanka (GoSL) prepared and adopted the economic development plan. The plan envisioned the transition of Sri Lanka to middle-income status by 2016. The plan aimed to transform Sri Lanka into an economic hub in Asia to take advantage of the country’s location and diversify the economy in five strategic areas—maritime, aviation, commerce, energy and knowledge. To achieve this transformation and promote globally competitive industries, the GoSL recognized that ensuring its workforce was adequately skilled would be crucial.
2. Though Sri Lanka had witnessed tremendous gains in education attainment rates compared to other South Asia countries, employers were struggling to find appropriately skilled workers. Sri Lanka had a net primary enrollment rate of 99 percent and had achieved gender parity in both primary and secondary education in 2014. At the time, estimates showed that Sri Lankan students completed on average ten years of schooling, considerably above the regional average of six years. However, out of a cohort of around 450,000 students who completed the Grade 11 terminal exam from the general education system, only around 20 percent were expected to move on to higher education and only a third of the rest would likely enroll in a technical and vocational education and training (TVET) program.1 Hence, almost half of the students leaving secondary school had no opportunity for further education and training. This also indicated that only a tiny proportion of the labor force had any vocational education or training. Concurrently, a rapidly changing economy and new technologies led Sri Lankan employers to demand workers with quality technical and soft skills. The GoSL understood that many of the skills gaps and skills mismatches of the workforce could be addressed through TVET. Therefore, concerted efforts in TVET were needed to address the skills challenges, improve workforce productivity, and achieve the goal of becoming a middle-income country.
The team would like to acknowledge and appreciate the excellent operational assistance received from Shalika Subasinghe (Education Consultant) in the preparation of the ICR.
1 Dundar, et al. 2014. Building the Skills for Economic Growth and Competitiveness in Sri Lanka. Washington, DC: World Bank.
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3. TVET provision in Sri Lanka faced several challenges that undermined its goal of becoming a competitive middle-income country. According to information in the Project Appraisal Document (PAD), these challenges included the following:
(a) Low quality and relevance of skills development programs in relation to the needs of labor market. The factors that contributed to the low quality of programs included the need for updated training standards and curricula; shortage of qualified teaching staff with industrial experience; lack of quality instructional materials, equipment, and facilities in most TVET institutions; and lack of quality assurance mechanisms and weak collaboration with private sector in skills development.
(b) Access to TVET was low, especially for women and the economically disadvantaged youth. As a result, only a tiny proportion of the labor force had some vocational education or training.
(c) Limited public financing for skills development had led to underinvestment, limiting efforts to improve the quality and relevance of existing programs, and to carry out critical reforms needed to expand access to quality programs in areas of economic priority.
(d) Centralized structures and procedures made it difficult for institutions to ensure demand- orientated skills development and left little room for industries and employers to play a role in identifying the skills needed by the industry. The TVET sector was highly fragmented, complex, and poorly coordinated, involving more than 30 statutory boards and 15 ministries in the public sector.
4. At the time of appraisal, the Ministry of Youth Affairs and Skills Development (MYASD)2 was responsible for more than 70 percent of publicly provided training delivered through several specialized agencies, each with its own board and procedures.3 The Tertiary and Vocational Education Commission (TVEC), an autonomous body, formulated the skills and youth development policies, coordinated institutions within its purview, and managed the program administration and monitoring and evaluation (M&E). The remaining public training was offered by other ministries such as the Ministry of Agriculture and Ministry of Tourism.
5. Rationale for World Bank support. To address the skills challenges and transform the TVET sector into an effective skills development system, the GoSL adopted the Skills Sector Development Program (SSDP), a sectorwide, medium-term program to be implemented between 2014 and 2020. The Government requested technical and financial support from the World Bank and development partners in executing the SSDP (annex 7). The World Bank had a long-standing partnership with the GoSL in both general and higher education sector development. Established as a credible and reliable long-term partner
2 During implementation, TVET provision subsequently shifted several times to other new ministries, discussed in detail in annex 10. 3 These agencies include the Department of Technical Education and Training (DTET), the National Apprenticeship and Industrial Training Authority (NAITA), the Vocational Training Authority (VTA), National Youth Service Council (NYSC), Ceylon-German Technical Training Institute (CGTTI), the National Institute of Fisheries and Nautical Engineering (NIFNE) (which later became Ocean University), and the University of Vocational Technology (UNIVOTEC).
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in education to the GoSL, the World Bank’s strategic engagement through the Skills Development Project (SDP) was viewed as being critical to (a) encourage stronger results orientation, (b) strengthen program and implementation design, and (c) provide important technical assistance (TA) and facilitate knowledge generation on skills for a competitive middle-income country. The World Bank’s support also aligned with the Country Partnership Strategy of FY13–FY164 at the time which sought to deepen engagement by helping Sri Lanka achieve its middle-income country agenda, especially through investment in education, skills, and research and innovation to support structural shifts in the economy.
4 The World Bank Group. April 2012. Country Partnership Framework for FY13-FY16. Report No. 66286-LK. Washington, DC.
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Theory of Change (Results Chain)
Figure 1. Theory of Change for the SDP
Activity Outputs Intermediate Results Immediate Project Long-term Outcomes Outcomes Supporting timely and adequate ▪ Recurrent and capital Improved budget planning, preparation and management in skills sector financing of the skills sector (DLI 1) budget releases spent in [ accordance with an Imprest PDO Indicators] Improved plan Developing and implementing M&E Timely availability of reliable data on governance ▪ No. of trainees capacity building plan (DLI 2) ▪ M&E plans implemented, institutional and sector performance and enrolled in and analytical reports management public and Designing, piloting, evaluating, and produced of skills sector PBF successfully introduced in public expanding a Performance Based ▪ PBF awarded to public private training Increased supply institutions Funding model (DLI 3) institutions institutions of skilled workers
Establishing Industry Skills Sector Links between TVET sector and Improved ▪ Completion Councils (DLI 4) employers strengthened quality of rate of trainees ▪ ISSCs established for priority training enrolled in sectors Setting up an effective quality programs public ▪ Training providers Increased number of training providers assurance mechanism and establish a with quality management system institutions quality management system (DLI 5) registered ▪ Training programs Increased number of registered training institutions and accredited programs Enhanced accredited labor market Implementing a comprehensive ▪ QMS set up in training relevance to human resource (HR) policy and plan institutions Teacher vacancy reduced programs for TVET personnel (DLI 6) ▪ TVET teachers recruited ▪ Average ▪ TVET teachers and other earning of staff trained Upgrading skills of TVET teachers in TVET teachers and other staff skills Increased TVET priority areas through professional access to Increased supply improved graduates development programs (DLI 7) quality and relative to of employable relevant ▪ ETA model piloted, earnings of workers Increased number of skilled workers programs Implementation the employment- implemented and scaled up GCE ‘O’ level linked training model in priority with jobs supported by ETA model in priority sectors graduates sectors (DLI 8) ▪ Students placed in jobs Improved through ETA program social ▪ Employers’ Conducting awareness programs and ▪ Improving use and dissemination of Awareness programs perception of satisfaction dissemination of labor market data information on the TVET sector conducted and labor market TVET Index on training opportunities and information disseminated employment benefits on TVET (DLI 9) Note: ETA = Employment-linked Training Agreement; GCE = General Certificate of Education; PBF = performance-based financing; QMS = quality management system.
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6. Figure 1 illustrates the Theory of Change for the Sri Lanka SDP. The project aimed to achieve two main outcomes: (a) expand the supply of skilled workers and (b) increase the supply of employable workers. These outcomes were to be achieved through improving coordination, governance, and management of skills sector; improving quality and labor market relevance of training programs; and improving the access to quality training programs. To achieve these results and ultimately the objectives, the project included a set of interventions supported by nine results-based activities, which were part of the SSDP, thus promoting sustainability of the initiatives. Disbursement-linked indicators (DLI) supported outputs and results linked to improve skills and employability of trainees as discussed:
• First, DLIs worked to strengthen skills sector governance and management through adequate and timely budget releases (DLI 1), enhanced M&E capacity in the sector (DLI 2), and introduction of a PBF model in public training institutions (DLI 3). This resulted in adequate and timely expenditures to support investments in skills, skills analysis and reports produced to better inform policy and operations, and implementation of PBF for improving performance of public training institutions by aligning incentives with performance.
• Second, DLIs facilitated improvements in the quality and market relevance of TVET through the establishment of Industry Sector Skills Councils (ISSCs) (DLI 4), setting up of QMSs in training institutions (DLI 5), and enhancing of teaching strength in TVET (DLIs 6 and 7). As a result, ISSCs were set up in economic priority areas, public and private training providers were registered and the program was accredited with setting up a QMS, and teacher recruitment carried out in public training institutions as well as TVET staff development opportunities provided for improving quality of instruction.
• Third, DLIs helped expand access to quality training programs through implementation and expansion of employment-linked training programs (DLI 8) and raising awareness on the value of TVET (DLI 9). As a result, the ETA model was successfully piloted and scaled up in priority areas and supported student job placement. Moreover, awareness building programs helped improve the use and dissemination of information on the TVET sector to attract potential trainees.
7. The outputs and intermediate results, as discussed, were first, to contribute to increasing enrollments in training institutions and improving completion rates for public trainees as achievement of the objective of increasing supply of skilled workers and second, raise income earnings of TVET graduates and improve employers’ satisfaction with skills of TVET graduates as achievement of the objective of expanding the supply of employable workers.
Project Development Objectives (PDOs)
8. The objective of the project as stated in its Financing Agreement was to expand the supply of skilled and employable workers by increasing access to quality and labor market relevant training programs.
Key Expected Outcomes and Outcome Indicators
9. The PDO statement as indicated in the SDP Financing Agreement identifies two objectives with the following outcome indicators:
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• Objective 1: To expand the supply of skilled workers by increasing access to quality and labor market relevant training programs
o Key Performance Indicator (KPI 1): Number of trainees enrolled in public and private training institutions
o Key Performance Indicator (KPI 2): Completion rate of trainees enrolled in public training institutions
• Objective 2: To expand the supply of employable workers by increasing access to quality and labor market relevant training programs
o Key Performance Indicator (KPI 3): Average earnings of graduates in skills development programs relative to earnings of GCE ‘O’ level graduates
o Key Performance Indicator (KPI 4): Index of employer satisfaction
Components
10. The project comprised the following two components: (a) results-based component that supported the Government’s SSDP and (b) technical assistance component.
Component 1: Program Support to the Skills Sector Development Program (Estimated Cost: US$93.6 million; actual cost: US$47.81 million)
11. According to the PAD, Component 1 comprised nine DLIs aimed to achieve results in policy areas of the SSDP under three pillars: Pillar 1 focused on strengthening sector governance and management through results and more efficient use of resources; Pillar 2 aimed at improving the quality and relevance of skills development through improving links with industry and employers, introducing quality assurance, and enhancing teaching strength; and Pillar 3 aimed to expand access to quality skills training through expansion of training services and information dissemination on TVET (see annex 8 for details).
Component 2: Innovation, Results Monitoring and Capacity Development (estimated cost: US$7.9 million; actual cost US$0.00)5
12. The objective of this component was to provide TA to enhance the MYASD’s implementation capacity and address capacity or monitoring constraints under Component 1 in helping achieve the SSDP goals. The component would finance surveys and evaluations, need-based short-term technical expertise, and professional development of the MYASD and its agency staff, particularly in areas of fiduciary management and M&E.
5 The Financing Datasheet shows a revised amount of US$2.38 million under Component 2. Following discussion with the Operations Policy and Country Services, the data were directly populated from SAP and could not be corrected in the system. The actual revised amount after cancellation for Component 2 is zero, that is, all allocated amount was cancelled.
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B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE)
Revised PDOs and Outcome Targets
13. The PDO and outcome targets remained constant during the lifetime of the project
Revised PDO Indicators
14. There were no changes to the PDO indicators during the lifetime of the project.
Revised Components
15. There were no changes to the components during the lifetime of the project.
Other Changes
16. Proposed restructuring. The midterm review (MTR) of the SDP, in November 2017, concluded that though the project made progress on most DLIs, the achievement of PDOs were unlikely. The MTR Aide Memoire notes, that of the four KPIs, only KPI 1 (enrollment) was on track to be achieved, while KPI 2 (completion) was far below target, and KPI 3 (earnings) and KPI 4 (employers’ satisfaction) were not being measured. This Implementation Completion and Results Report (ICR) also notes that the KPIs may not have been fully appropriate and reliable measures of the PDOs, which may have also contributed to the MTR conclusion.6 To take corrective measures, a Level 2 restructuring was proposed by the GoSL in February 2018, followed by prolonged discussions during multiple missions, up to March 2019, between the Government and World Bank teams to clarify the aspects of the project to be restructured. However, as no agreement was reached over time on the specifics of the restructuring and the project remained in an unsatisfactory status, the World Bank agreed with the proposal of the External Resources Department (ERD), in September 2019, for the project to be closed and remaining undisbursed funds to be cancelled. Details of the proposed restructuring are discussed in annex 9.
17. Cancellation of funds. The project underwent a Level 2 restructuring which was approved on September 23, 2019. IDA funds in the amount of SDR 31.38 million (US$43.30 million equivalent) was cancelled (see annex 10 for summary table).
Rationale for Changes and Their Implication on the Original Theory of Change
18. The funds were cancelled at the end of the project implementation period. The cancellation comprised 17 (out of 39) missed disbursement-linked results (DLRs) targets under eight (out of nine) DLIs and funds allocated under the TA component. Although the DLIs did not achieve their full targets, the progress made with the achieved 22 DLRs contributed to important reforms supporting the PDOs. Despite cancellation of funds, the DLI-supported activities continue to progress under the GoSL parent program with dedicated budget, and hence, their objectives envisioned under the SDP continue to be pursued. Based on this discussion, the cancellation of funds did not have any impact on the original Theory of Change.
6 Discussed in detail in the efficacy and M&E section as well as in annex 12.
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II. OUTCOME
A. RELEVANCE OF PDOs
Assessment of Relevance of PDOs and Rating
19. The relevance of PDOs is rated High. At the time of closing, the PDOs remained fully aligned with the Government’s national policy and strategies and the World Bank’s Country Partnership Framework (CPF) for FY17-FY207 priorities.
20. At the design stage, the SDP was fully aligned to the Government’s overall economic development plan and the SSDP (2014–2020). Thus, the SDP was directly relevant to the country’s key development priorities in the skills sector and continues to remain so. For example, the recent National Policy on Technical and Vocational Education (2019) envisages (a) improving the quality and relevance of TVET programs, increasing employer and industry collaboration in TVET provision, and enhancing human resources in TVET; (b) improving access to training, and (c) more efficient use of resources. Moreover, Sri Lanka’s Vision 2025 aims to drive economic transformation with targets to increase annual export income, attract foreign direct investment, and create employment opportunities for at least 1 million Sri Lankans by 2025. As a result, developing skills and competencies to match the demands of the job market remains one of core strategies to support the Government’s Vision 2025. The current Government’s manifesto continues to focus explicitly on improving the quality of training programs and enhancing access to TVET for producing “graduates who are globally recognized and who possess internationally acclaimed qualifications required by the local and international employment markets.”8
21. The SDP addressed important issues in the quality and relevance of training programs by (a) supporting increased collaboration with industry, (b) setting up quality assurance system, and (c) improving teaching strength in the TVET sector. The project also worked to enhance access to training programs by introducing activities under the ETA and improving information flow on technical and vocational education to attract students. Moreover, the project addressed critical governance issues, specifically in terms of adequate and timely budget allocation and implementation to skills sector. These interventions were well aligned with the policy areas of the National Policy on Technical and Vocational Education (2019) and would also prospectively contribute to the Government’s Vision 2025 of producing better skilled workforce for a globally competitive middle-income country.
22. Additionally, the World Bank Group’s current CPF for FY17–FY20 for Sri Lanka also identifies “strengthening education and training systems to deliver the skills needed for the advanced industrial and service sector activities of a globally competitive MIC”. The Systematic Country Diagnostic Update (2020) will help lay the foundation for a future skills development project. The SDP’s development objectives are to (a) expand the supply of skilled and employable workers and (b) increase access to quality and labor market relevant training programs. The objectives were fully aligned with the CPF priorities in education.
7 The World Bank Group. May 2016. Country Partnership Framework for FY17-FY20. Report No. 104606-LK. 8 Government of Sri Lanka. 2020.
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B. ACHIEVEMENT OF PDOs (EFFICACY)
Assessment of Achievement of Each Objective/Outcome
23. As discussed, there are two main outcomes that the project set out to achieve. Ratings of achievements of each objective and their justifications are discussed in the following paragraphs.
24. To expand the supply of skilled workers by increasing access to quality and labor market relevant training programs (Objective 1): Achievement of this objective is rated Modest.
Table 1. Outcome Indicators 1 and 2: Outcomes and Achievement Indicator Baseline Target Actuala Achievement (%) Outcome Indicator KPI 1: Number of trainees enrolled in public and private institutions Total 148,131 827,241 940,848 117 Male 81,047 452,609 538,781 123 Female 67,084 374,632 402,067 109 KPI 2: Completion rate of trainees enrolled in public institutions Total 77 81 67 –250 Male 74 78 64 –250 Female 81 84 72 –300 Note: a. The actual end line statistics for KPI 1 and KPI 2 are calculated as of 2018. All other intermediate outcome (IO) indicators are updated up to 2019, except for IO 7 on QMS which is up to 2017.
25. Number of trainees enrolled in public and private training institutions (KPI 1). The end of project (EOP) target for number of trainees enrolled in public and private institutions was surpassed as of 2018. The enrollment numbers achieved for all students, male, and female stood at 940,848 (EOP target: 827,241), 538,781 (EOP target: 452,609), and 402,067 (EOP target: 374,632), respectively.
26. Completion rate of trainees enrolled in public institutions (KPI 2). The completion rates of trainees in public institutions declined to 67 percent in 2018 from a baseline of 77 percent in 2013. Trend data show that completion rates in public institutions were initially on track, rising to 80 percent for all, 78 percent for male, and 84 percent for female in 2014, but started to decline quickly from 2015 onward. There is no available analysis on the factors contributing to this decline. However, consultations with TVET officials suggest that the provision of free TVET in public institutions in 2016 created a surge in enrolled trainees, many of whom were not dedicated to completing their program.9 While enrollments spiked, a sustained chronic shortage of assessors also led to a longer waiting period for assessment, with students completing training and moving on to jobs, often without undertaking the final assessment.
27. While KPI 2 measured the completion rate for trainees in public institutions, it is important to note that the SDP also contributed to raising the quality of private training providers. For example, the establishment of ISSCs (DLI 4), quality assurance (DLI 5), teachers’ professional development (DLI 7), and ETA (DLI 8) supported private providers to upgrade the quality of training under the SDP. Consideration for private sector as a beneficiary, where free TVET policy did not apply, showed a different scenario
9 The free TVET policy applied only to full-time courses in public institutions.
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whereby the completion rate among TVET graduates from private training institutions consistently increased over the SDP period.10
28. It would be important to consider the numbers of TVET completers using both KPI 1 and KPI 2 in assessing the objective of increase in the supply of skilled workers. Based on this approach, the total number of TVET program completers from public institutions remained consistently higher than the baseline in 2013, except for 2015 (annex 11). As the SDP also supported private providers, it would be plausible to assume that the project also contributed to increasing the supply of skilled workers through these institutions. Using the actual enrollment and completion rate by institution type, figure 2 shows the total enrollment against total completers across public and private TVET institutions from 2013 to 2018. Though there is a decline in the total number of TVET completers in 2018, the figure remains above the baseline year figure throughout the SDP implementation period, indicating an overall increase in total supply of skilled workers.
Figure 2. Total Students Enrolled and Graduated, by Gender 250,000
200,000
150,000
100,000
50,000
0 2013 2014 2015 2016 2017 2018
Enrolled Male Enrolled Female Enrolled Total
Completers Male Completers Female Completers Total
Source: Government of Sri Lanka, Labor Market Bulletin, various years.
29. The reasonable achievement in the outcome to increase supply of skilled worker was supported by progress in activities linked to nine DLIs with 39 DLRs in the results chain. Out of 39 DLRs, 22 were achieved. The 22 achieved DLRs were critical to build the foundation for new activities and reforms that were later scaled up or translated to regular activities toward the EOP life. As described in the Theory of Change, the achieved DLIs facilitated access to quality and labor market relevant training programs and contributed to increase in supply of skilled workers through steady and timely public budget allocation for uptake of quality improvements by TVET institutions (DLI 1), timely and reliable available data on institutions and sector (DLI 2), introduction of the PBF model to improve performance of public providers (DLI 3), improving relevance of training programs through industry involvement (DLI 4), setting up a quality assurance system for better delivery of programs (DLI 5), and enhancing teaching strength in TVET institutions (DLIs 6 and 7).
30. As noted in the PAD, improved governance, financing, and management was identified as critical to the objective of increasing the supply of skilled workers. The SDP ensured adequate and timely budget releases to the MSDVT and line agencies in line with the SSDP budget requirements throughout the five-
10 Government of Sri Lanka. Labor Market Bulletin, various years.
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years from 2014–2019 (DLI 1). This helped achieve expenditure of 98 percent of the recurrent budget and 100 percent of the capital budget at EOP, indicating adequate and timely public financing for improving the quality and relevance of existing programs and undertaking critical reforms needed to expand access to quality programs. Institutional performance data and reporting from five project implementing agencies (EOP target: 5 institutions) also helped provide reliable and timely data to inform policy and operations.11 For example, these reports informed on teacher vacancy, training needs, and trainee employment information to determine the performance of public providers.
31. The main design aspects of the PBF model were successfully conducted during the first two years of the program (DLI 3) but could not be fully implemented due to lack of government policy supporting additional funding to public institutions. The PBF model comprised two aspects. First, the development and implementation of Center Management Plans (CMPs) by each institution and second, additional funds against several set performance criteria following implementation of the CMP. As of 2019, 104 public training institutions developed and implemented CMPs. These CMPs were used to inform the GoSL’s regular funding allocation to the centers based on the needs identified and also motivate the centers to increase the number of students, increase utilization of resources, introduce new courses, improve industry and community involvement in skills training, and so on. However, the additional incentive-based portion of the PBF model could not be provided as eventually government rules were not changed to support the mechanism, as had otherwise been envisioned at preparation. Nonetheless, the SDD and public training institutions found the development of CMPs a useful exercise and continued this activity to help ensure efficiency in resource allocation against a center’s identified needs and set targets. This in turn is considered to have contributed to improving planning and management capacities among public providers and quality of training programs for better skilled graduates.12
32. The SDP established ISSCs in four economic priority areas including information and communication technology (ICT), construction, manufacturing, and tourism (DLI 4). The ISSCs helped bring industry expertise for sector skills gap analysis, development and updating of competency standards and training programs, teacher training, industry orientation and career fairs, and awareness building activities on TVET. These activities helped improve the market relevance of training programs and the skills of workers to be aligned to the job market demand.
33. The PAD also highlights that an effective quality assurance system was critical to raise the quality of training providers and skills of TVET graduates in Sri Lanka. Under DLI 5, the SDP set up a quality assurance system, which helped register 1,290 public and private institutions under TVEC (EOP target: 2,481) and accredit 2,691 courses (EOP target: 1,081). The activity also introduced and established a QMS in 234 training institutions (EOP target: 340) as of 2017. The QMS target did not fall short of the EOP target, but the indicator was not revised to reflect the revamped quality assurance activity, which was broadened and rebranded to ‘Quality Improvement System’ post 2017 by the GoSL. The Quality
11 The five project implementing agencies are VTA, NAITA, DTET, CGTTI, and university colleges. 12 The progress of each activity in the CMP is monitored quarterly, and each participating public training provider prepare reports, make presentations and share experience with others. Through this exercise, the ministry and SSDD also understood the requirement to train center managers, leading to the CMP preparation and center leadership and management training to become a regular activity under the program. It should be noted that based on the lessons learned and subsequent changes in the activity design, the program and Asian Development Bank (ADB) are currently tracking the activity as the ‘number of public training providers preparing and implementing Center Management Plans’.
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Improvement System (QIS) aimed to build on the QMS model and internalize quality assurance at the training centers from being process based to a participatory process.13 As of 2019, the QIS is being implemented in 178 centers. Hence, the quality assurance activities have been intensified and are progressing under the parent SSDP.
34. To improve teaching strength, the SDP supported teacher recruitment (DLI 6) and professional development of teaching staff (DLI 7). In 2014, an HR policy and professional development plan was developed, followed by implementation of staff performance allowance in five implementing agencies (VTA, DTET, NYSC, NAITA, and CGTTI) under the new HR plan in 2015. These reforms were considered critical to attract and retain talent in the skills sector. The DLI on teacher recruitment also supported filling of vacancies from 2016 onward; however, the EOP target for reduction in teacher vacancies could not be achieved. As teacher recruitment and deployment was a prolonged process, the new recruitments across the seven implementing agencies could not keep pace with the additional posts and turnover created during the SDP period. Nonetheless, the SDP administrative data show that an additional 832 posts were sanctioned, and 596 posts were filled between 2014 and 2019. Moreover, out of the seven implementing agencies, teacher-vacancy ratio reduced in five implementing agencies, declining by 4.6 to 3.9 percentage points between 2014 and 2019.14 In terms of professional development of TVET staff, the SDP trained 6,049 teachers (EOP target: 2,640) in advanced subject-based training, updated curricula delivery, leadership and soft skills, induction training for new staff, and diploma and postgraduate programs. The project also trained 1,492 assessors (EOP target: 1,000) in ICT, assessment practices, leadership, and soft skills to improve the quality of assessments. Moreover, 513 TVET managers (EOP target: 400) received training on leadership and management, financial and procurement management, and strategic planning to improve the administration of the TVET centers. According to beneficiary interviews, these training programs were viewed as ‘relevant and useful’ in improving teaching, assessment, and managerial skills and ultimately delivering improved classroom training for more and better skilled trainees.
35. To expand the supply of employable workers by increasing access to quality and labor market relevant training programs (Objective 2). Achievement of this objective is rated Modest.
Table 2. Project Outcome Indicator2: Outcomes and Achievement
Baseline Target Actual a Achievement (%) Outcome Indicator KPI 3: Average earnings of TVET graduates relative to earnings of GCE- ‘O’ level graduates Total 1.08 1.12 1.15 175 Male 1.00 1.04 1.18 450
13 The QMS required development and implementation of quality assurance plans following nine training processes and six quality assurance procedures by the participating training institutions. Following a review of QMS in 2017, the ministry and SSDD decided to broaden the quality assurance system and help ‘internalize quality assurance culture’ by adding two more objectives: first, development and delivery of quality culture training to quality managers and second ‘Quality is Fun’ program to develop a positive attitude among training centers in the implementation of quality assurance activities. The QIS added 12 new quality procedures to the existing QMS model to make the quality assurance process more participatory. (Source: Circular Notice on Quality Improvement and Assurance in TVEC Centers, 2017). 14 These five implementing agencies are DTET, CGTTI, UNIVOTEC, NYSC, and Ocean University of Sri Lanka.
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Baseline Target Actual a Achievement (%) Female 1.14 1.16 1.04 –500 KPI 4: Index of employer satisfaction 43.00 55.00 43.20 1.7 Note: a. The actual end line statistics for KPI 3 and KPI 4 are calculated as of 2018 and 2017, respectively. All other IO indicators are updated up to 2019.
36. Average earnings (KPI 3). The average earnings of TVET graduates relative to earnings of GCE ‘O’ level graduate reached a ratio of 1.15 in 2018, surpassing the EOP target of 1.12 and baseline of 1.08 in 2013. This indicates that post SDP, the earnings of ‘O’ level or below graduates with TVET qualifications continued to increase relative to the earnings of ‘O’ level or below graduates without TVET qualifications. For males, the same trend is observed with significant earning premiums associated with TVET qualifications post the SDP period. However, for female TVET graduates, though earnings remain higher than those without the training, the differences in average earnings have nonetheless declined over time. One reason for the decline in female TVET completers’ income is associated with their choice of program.15 Females generally tend to enroll in courses which did not generate corresponding increase in demand in the labor market over time, thus lowering the chances of employment and income as compared to men TVET completers.
37. Index of employer satisfaction (KPI 4). The end line survey for this KPI was not conducted as of 2019. The midline indicator was updated using the Skills Demand Survey 2017, which showed that 43.2 percent employers were satisfied with TVET graduates. However, the baseline and midline used different questions to capture employers’ satisfaction and hence, do not serve as a comparable measure. Moreover, the measure does not control for beneficiary and non-beneficiary students of the SDP- supported training institutions.
38. The KPI 3 (income) and KPI 4 (employers’ satisfaction) indicators are not fully satisfactory measures of the project’s development outcome of increasing the supply of employable workers. The choice to use a ratio of average earnings between TVET and O ’level graduates (KPI 3) may not be a reliable and valid measure to track the supply of ‘employable’ workers because factors exogenous to the project tend to influence employability. Research suggests the increase in workers’ salary over time is determined by the capacity of firms to introduce new technology and on-the-job training, whereas formal skills training is more likely to determine at-entry earning.16 On the other hand, changes in employers’ perception of skills quality of workers takes time. This is especially relevant for the project when considering the supply of TVET graduates benefitting from the SDP entering the job market relative to the overall skills supply in the Sri Lankan workforce. Therefore, the EOP target, involving over 10 percentage points increase in employers’ satisfaction within the timeline of five years was ambitious (refer to annex 12 for detailed discussion).
39. In absence of reliable KPI measures for this objective, the intermediate indicator on employment rate for youth ages 15–29 years following six to nine months of SSDD training could have provided an alternative measure to assess the outcome of expanding the supply of employable workers. However, the baseline was set at 86 percent using the Skills Toward Employment and Productivity (STEP) survey at preparation, because a credible baseline for employment rate of TVET graduates within six to nine months
15 Asian Development Bank (ADB). 2017. Tracer Study for TVET Graduates’ Employment in Sri Lanka. Center for Poverty Analysis: Sri Lanka. 16 Xiao, J. 2002. “Determinants of Salary Growth in Shenzhen, China: An Analysis of Formal Education, On-the-job Training and Adult Education with Three Level Modelling.” Economics of Education Review.
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after graduation did not exist and was planned to be collected during project implementation (PAD, page 21). However, a follow-up STEP survey or alternate mechanism was not conducted. Consequently, the indicator was not tracked.
40. For triangulation of information, the ICR team considered few other external evidences measuring various aspects of employability among TVET graduates which show positive trends during the SDP period.
• First, the employment rate among youth with and without TVET was recalculated using the national Labor Force Survey (LFS) rounds. According to the LFS rounds, the employment rate among youth ages 15 to 25 years with TVET increased from 70 percent in 2013 (baseline) to 74 percent in 2017. However, among those without TVET, there was no change in the average employment rate during the same period.
Table 3. Employment Rates among Youth 15–25 Years with and without TVET All Education 2013 2014 2015 2016 2017 Without TVET (%) 85 84 85 83 85 Sample 3,606 3,465 3,563 3,697 3,625 With TVET (%) 70 71 69 72 74 Sample 947 820 957 887 906 Difference (%) 15 13 16 10 11 Source: Government of Sri Lanka. LFSs, various years.
• Second, two rounds of the ADB tracer study on graduates from training institutes under the SSDP support found that the employment rate17 among TVEC certificate holders was 47.5 percent in 2011 which increased to 54.5 percent in 2016 but slightly declined to 51 percent in 2019.18 One of the main reasons for the slight decline in the employment rate between 2016 and 2019 was the increase in the number of graduates choosing to pursue higher education—almost 31 percent higher in 2019 than reported in the 2016 tracer survey. The tracer study rounds also found that among TVEC graduates, those who received a National Vocational Qualification (NVQ) accreditation had a consistently higher employment rate than non-NVQ qualified graduates.
• Using the national employment rate definition,19 the tracer study finds that the employment rate stood at 56.2 percent among TVET graduates in 2016, which increased to 64.8 percent in 2019 following six months of completion of the training program. For NVQ certified graduates, the rates were higher at 57.8 percent in 2016, which further increased to 65 percent in 2019.
17 This figure considers the full surveyed sample and does not account for those who are voluntarily unemployed, that is, not actively seeking jobs. 18 The tracer study surveyed 1,991 randomly selected graduates from seven selected government TVET institutions. 19 The employment rate using national definition considers those graduates who are voluntarily unemployed, that is, employment rate = (number employed within six months of course completion) / (Total surveyed sample – voluntarily unemployed).
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41. The ICR team considers the outputs and results of the SDP-supported activities captured by intermediate indicators are reliable measures to assess the project’s achievement. Particularly, the SDP- supported activities leading to NVQ certification20 and employment (DLIs 4, 7, and 8) contribute to the PDO achievement of more employable workers, albeit on a modest scale, in relation to the overall outcomes intended by the PDO. The NVQ system is designed to allow TVET students to undertake competency-based training, assessment, and certification which are recognized by industry as standards for skills needed for employment in a specific sector. The SDP supported the expansion and implementation of competency-based training through skills gap analysis, competency standards, and training curriculum development in five economic priority sectors (DLI 4) and increased supply of NVQ certified teacher and assessor through provision of professional development training (DLI 7). A total of 291,397 trainees (118,383 females) received competency-based training and certification (against EOP total target: 180,000) aligned with industry needs. Of these NVQ graduates, 7,247 trainees (2,601 females) completed the highest two levels of accreditation (NVQ 5–6), which signals advanced technical skills and higher employability for potential recruiters.
42. Under DLI 8, the SDP piloted and scaled up the ETA model which promoted public-private partnership (PPP) in skills training and encouraged private providers to raise the quality of training and ensure employment of graduates through an incentive-based scheme. The ETA was piloted in the construction sector in 2015 and expanded to five economic priority sectors (construction, manufacturing, hospitality, ICT, and health care) by 2019. As of 2019, a total of 5,092 students (2,601 females) benefitted from the ETA program (EOP total target: 3,500). According to the SSDD’s administrative data, the average employment rate of NVQ certified ETA beneficiaries following six months of completion of the program stood at 69 percent in 2016 and 50 percent in 2017 across the supported sectors and occupations. The average employment rate of beneficiaries varied, depending on the sector and occupation—the average employment rate for ETA graduates in high-demand sectors such as construction and health care stood at 95 percent and 88 percent, respectively, in 2018.21 With the expansion of the program, tracking of graduates following six months of program completion created a challenge in the absence of a management information system (MIS). The ETA program has the potential to significantly contribute to increasing access to TVET in areas where public provision is low, and to facilitating job placement for TVET graduates provided better tracking systems are in place within the SSDD and training partners.
Justification of Overall Efficacy Rating
43. Based on the Results Framework and available evidence, and positive evidence of achievement against the PDO outcome, the ICR team judges that the result is sufficient to warrant an efficacy rating of Modest.
20 The ADB tracer study rounds consistently confirm that NVQ completers had higher employment rates than non- NVQ holders, hence indicating that NVQ certification is positively associated with higher employability. 21 Data for ICT, manufacturing, and hospitality were not available for 2018.
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C. EFFICIENCY
Assessment of Efficiency and Rating
44. The ICR rates efficiency of the SDP as ‘Modest’ because of positive economic returns at completion, which is offset by delayed implementation experienced at project initiation and post-MTR period.
45. Economic analysis. The economic analysis at the appraisal indicated positive returns on investment for the SDP. At project appraisal, the net present value (NPV) of costs and benefits was estimated to be US$40.1 million and the internal rate of return (IRR) was 3 percent.22 The economic analysis at appraisal was based on the project target number of TVET graduates and their labor market outcomes using STEP 2012 for the entire SSDP implementation years (six years from 2014 to 2020). As there has been no follow-up STEP survey, at completion, the labor market outcome indicators have been updated using the annual LFS (2013 to 2017), which is not comparable to STEP 2012. Hence, the ICR reevaluates the cost benefit of the SSDP for both appraisal and completion using the LFS (details in annex 4).
46. With the labor market parameters (employment rate and earnings) using LFS (2014–2017), the NPV and IRR of the SSDP at appraisal would have been US$131.9 million and 5 percent, respectively. At completion, based on the actual number of TVET graduates and the cost of SSDP, the NPV is lowered to US$107.8 million because of the lowered benefit arising from less TVET completers compared to the target; however, the IRR has increased to 16 percent because of the higher reduction in project cost generating fewer negative cash flows in earlier years of the cash flow stream.
47. To check the sensitivity to assumptions, an additional cost-benefit analysis (CBA) was conducted with an estimated benefit based on the cohort-based age-specific earning profiles23 and the five project years from 2014 to 2019. The analysis was conducted using target beneficiaries with base scenario and actual beneficiaries with base and high impact scenarios. The analysis shows that the project generated an NPV of US$170.3 million and IRR of 10 percent during the project years (2014 to 2019) under the base scenario. The sensitivity analysis confirms that the SSDP was an economically sound investment with the NPV ranging between US$107.8 million and US$343.1 million and the IRR between 10 percent and 16 percent.
48. Efficiency in implementation. In terms of operational efficiencies, there were substantial implementation delays during the first year of project because of national elections and subsequent changes in ministries under which the project was housed. This created delays in the appointment of key staff in the Skills Development Division (SDD), which had the overall responsibility for project implementation. In addition, failure to successfully complete proposed restructuring also led to
22 The IRR at appraisal was found to have been miscalculated at 14 percent (PAD, p. 90) as it did not account for the long-term interest rate, which was around 11 percent. The correct IRR has been documented in the ICR. 23 Since the earnings increases as ages (LFS 2014–2017), using average earnings difference between TVET and non- TVET of all age groups since the beginning of their career will distort the discounted value of the benefit at present. A detailed description is included in the appendix of annex 4.
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implementation of post-MTR activities not being realized. These implementation challenges led to fund cancellations of around SDR 31.38 million.
D. JUSTIFICATION OF OVERALL OUTCOME RATING
49. The SDP is rated ‘Moderately Unsatisfactory’ for its overall outcome rating based on High relevance, Modest efficacy, and Modest efficiency ratings.
E. OTHER OUTCOMES AND IMPACTS (IF ANY)
50. Not applicable.
Gender
51. The SDP tracked gender-disaggregated data on enrollment and completion rates of training programs, which has been critical for regular tracking of women’s access to skills training. The project targeted some aspects of gender outcomes in TVET primarily by revising training programs and creating female-friendly facilities and by rehabilitating civil works in the existing training institutions. The SSDP supported the revision of the automobile sector training program to include courses that would attract female students in areas such as automobile technical sales assistants and color technicians. The ICT Industry Skills Council established under the SSDP also helped increase women’s participation in the ICT sector by establishing a Women Chamber for Digital Sri Lanka program to attract women to the ICT sector. Despite these efforts, the overall TVET female graduates’ earnings declined over the project period, with female enrolling in courses of less economic priority24 being cited as the main reason. This reduced female TVET graduates’ chances of employment and income as compared to male TVET completers.
Institutional Strengthening
52. Institutional strengthening was built into the SDP whereby the Pillar 1, Component 1 of the project explicitly focused on improving governance and management in the sector. The project improved budget planning and management capacities at the ministry and implementing agency levels through reform activities (DLI 1). It also helped improve the TVET sector planning capacity with activities aimed at regular analysis and reporting of institution- and agency-level data (DLI 2). The HR system of the ministry was strengthened by introducing an HR Policy and professional development plan targeted to support need- based teacher recruitment, incentivize good performance to retain talent, and develop teaching capacity in priority areas through relevant professional development opportunities (DLI 6). Finally, the project helped establish and strengthen ISSCs in priority sectors, enabling stronger links with industry (DLI 4).
Mobilizing Private Sector Financing
53. Improving private sector links in TVET programs was central to the SDP’s planned quality improvements under Pillar 2, Component 1. To ensure the relevance of TVET to the needs of industry and expand the provision of quality TVET, the project design strengthened and sustained links with the private sector in most areas. Specifically, the project supported the establishment of ISSCs in four priority sectors
24 Asian Development Bank (ADB). 2017. Tracer Study for TVET Graduates’ Employment in Sri Lanka. Center for Poverty Analysis: Sri Lanka.
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(ICT, construction, manufacturing, and tourism) to involve industry experts in the analysis of skills gaps and with the development of training programs aligned with job market needs. Through ISSCs, private sector investments, both funding and in-kind technical support, for better quality training were facilitated.
Poverty Reduction and Shared Prosperity
54. The SDP supported the development of TVET institutions across all provinces of Sri Lanka, taking an inclusive approach to improving access to quality skills training for the entire population. In Sri Lanka, students from families of socioeconomically disadvantaged backgrounds are more likely to enroll in TVET education than general education. Specifically, the SDP contributed to helping the most disadvantaged populations, such as low educated, unemployed, and informal workers, through activities such as the ETA model and the Recognition of Prior Learning (RPL) under Pillar 3 aimed at ‘improving access’ to training and employment opportunities. By targeting improvements to the quality of TVET and upgrading skills for better employment prospects, the SDP responded to poverty reduction and shared prosperity.
Other Unintended Outcomes and Impacts
55. The ETA piloted under the SDP served as a good foundation for receiving additional financing as a grant from the ADB to scale up the activity during the project MTR.
III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME
A. KEY FACTORS DURING PREPARATION
56. The project objectives were well aligned, and choice of interventions were appropriate to the country’s economic priority. The SDP was responsive to the Government’s policy priorities in skills development. The GoSL viewed the skilling of its human resources as critical for maintaining its competitive edge in global markets and realizing its middle-income country goal. The design was further strengthened by ensuring synergy with the GoSL’s SSDP, thereby advancing the GoSL’s commitment to take up challenging reforms in the sector (such as, quality assurance, PBF, and HR policy). Moreover, the project design benefitted from comprehensive research that had defined the challenges that could be addressed through the World Bank’s involvement.25 This was a first-time intervention for the World Bank in the sector and the project drew from lessons and assistance provided by IDA-financed projects in Sri Lanka and from skills projects in other countries. The project also drew lessons from the long history of ADB–financed SDPs in Sri Lanka.
57. The choice of lending instrument was appropriate. However, the complex project implementation arrangement and adequacy of incentives tied to results were important aspects that required more consideration at the design stage. The choice of the lending instrument, a results-based Investment Policy Financing comprising a results-based component with DLIs and a TA component, was appropriate. As the project focused on introducing reforms and new initiatives, DLIs were an appropriate mechanism to incentivize the client to achieve results in these priority areas. Moreover, the project was designed to be flexible in that all the new reforms were to have built-in pilots. However, the project involved various implementation agencies to achieve results, and institutional stability would ultimately
25 The World Bank carried out studies including a TVET sector assessment and a STEP skills measurement survey.
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affect sequential and timely DLR achievement. Additionally, all DLRs were equally priced—whether the DLR had a periphery or substantial implication for achieving the policy reform. DLRs which required substantial actions from the various implementing actors, especially targets scheduled for later parts of the project life, may have benefitted from higher values or pricing to adequately incentivize and align with stakeholders. This may have contributed to some of the DLRs being achieved on time, while others were delayed during implementation.
58. The project risks were clearly identified, and the mitigation measures were appropriate. Specifically, the implementation risks were precisely identified with respect to fragmentation of ministries and skills-relevant agencies, low capacity, budget inadequacy, timeliness of resource availability, and links with private sector. The corresponding risk mitigation measures were incorporated in the project design through interventions such as DLIs on adequate and timely budget availability, facilitating links with the private sector, and a TA component to address implementation capacity constraints. The fiduciary risk was well addressed through detailed risk management plan. Environmental risks from construction and upgrading activities were identified, and a guideline developed to manage risks during implementation. However, the SDP was assessed as not triggering any World Bank social safeguard policies at the time of preparation.
59. Program implementation arrangement with multiple development partners could have benefited from better coordination and alignment during preparation. Both the World Bank and ADB operations to support the SSDP were prepared at the same time in coordination but with significant differences in DLI design across similar interventions and project result targets. As both agencies used DLIs to support the SSDP, alignment of DLIs for similar intervention could have better complemented efforts on achieving results, strengthening policy dialogue, and effectively utilizing resources.
60. The M&E design, including the Results Framework, had limitations in tracking outcomes. The Results Framework was comprehensive and aligned to the objectives and intermediate results. However, obtaining reliable data to measure outcome indicators for the objective of ‘employable workers’ (Objective 2) was challenging. At the time of preparation, indicators using earnings and employers’ perception data were included to track and measure the SDP’s impact of producing more employable workers. However, factors beyond the project’s scope were likely to affect the average wages of graduates. Moreover, changes in employers’ perception takes time, as supply of TVET graduates benefitting from the SDP relative to the overall skill supply in the job market remained small. The EOP target for employers’ satisfaction, which involved over 10 percentage points increase within the five-year project life, was therefore ambitious and unrealistic. The M&E arrangement involved the use of national surveys to track outcome indicators under Objective 2, with TA support under Component 2, as necessary. At the same time, labor market surveys were also planned under the ADB operation under a grant support. In this case, better coordination in M&E arrangements and TA support within a common framework across the two development partners would have likely reduced transaction costs and benefitted the overall M&E design of the SDP.
61. Communication and coordination issues in TA provision. The GoSL was reluctant to use the TA credit under Component 2 because of a grant-based TA that supported similar activities under the ADB operation. Limited planning, communication, and coordination of TA between the World Bank, ADB, and the GoSL at the design stage for similar activities contributing to the program resulted in the non- utilization of IDA-financed TA during implementation.
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B. KEY FACTORS DURING IMPLEMENTATION
Factors Subject to Government Control
62. Frequent institutional changes, high staff turnover, and absence of steady leadership. The SSDP reporting was institutionally moved under eight ministries during the project implementation period. At preparation, the SSDP was under the purview of the MYASD. Not long after effectiveness, presidential elections were held (January to February 2015) and a new government was formed, bringing changes in leadership and decision-making positions at all levels along with changes in institutional arrangements. During implementation and following the elections, the SSDP was moved under the Ministry of Highways, Higher Education, and Investment Promotion in January 2015 and then again to a new line ministry, the Ministry of Skills Development and Vocational Training (MSDVT) in March 2015. These changes created delays in the appointment of key staff in the SDD, which had the overall responsibility for project implementation. The SDD staffing was completed in May 2016, with the project losing implementation pace at the start. However, frequent institutional changes and high staff turnover continued each year till project closure. During the SDP implementation period, the SSDP was moved under eight different ministries with subsequent changes in leadership at the ministry and implementing agency level (see annex 14). This evidently made it difficult to sustain policy dialogue and institutional memory with the Government, adversely affecting the implementation progress.
63. Skills sector coordination and engagement issues. Within the first year, the SDP established the Inter-Ministerial Sector Coordination Committee (IMSCC) for coordinating policy dialogue and reform issues between the Government, its partners, and stakeholders. The IMSCC was to be chaired by the Secretary of the Treasury with members for all skills relevant ministries and industry. However, as noted in the Aide Memoire (March 2015), following the Presidential elections, changes in cabinet structure and implementing agency leaderships subsequently affected the functioning of the IMSCC. This in turn had implications on overall coordination of the program. One major implication was on financing, whereby a dedicated budget line item for other co-implementing ministries was included in 2014 to motivate vocational training institutes to implement programs and help achieve objectives of the SSDD. However, after the Presidential elections in January 2015, the subsequent structural changes led to the dissolution of the dedicated budget line and coordination with other ministries became difficult. Moreover, the development of labor market relevant skills is a long chain of activities involving multiple implementation agencies. Their actions are often impeded by gaps in information or incentives. There were gaps in this chain in the SDP, partly because of the limited collaboration between implementing entities, especially industry stakeholders. As recorded in the MTR Aide Memoire, the first skills needs analysis on the priority sectors (construction, ICT, manufacturing, and tourism) was prepared with limited involvement of the key industry stakeholders. As a result, the analysis did not receive endorsement from the respective ISSCs and needed to be reconducted, thus creating a delay in the follow-on steps such as finalizing training plans and implementing new training programs. Overall, weak coordination, both horizontally and vertically, across multiple stakeholders created significant delays in project implementation.
64. Post-MTR uncertainty on restructuring. The MTR concluded that although there had been progress on the DLIs, the project was not on track to achieve the PDO. The MTR Aide Memoire notes, that of the four KPIs, only KPI 1 (enrollment) was on track to be achieved, while KPI 2 (completion) was far below target, and KPI 3 (earnings) and KPI 4 (employers’ satisfaction) were not being measured. However, in practice, there was an additional issue that the KPIs were not fully appropriate and reliable indicators
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to measure the PDOs at the time.26 Nonetheless, the SDD and World Bank agreed to introduce corrective measures and undertake a restructuring with a new set of activities, DLIs, and results indicators. However, despite the SDD’s initial agreement to restructure at the MTR, there ensued a lengthy period of discussion on the aspects of the project to be restructured. In February 2018, the GoSL officially requested the project to be restructured. This was the first restructuring request followed by several missions and exchange of follow-up letters to decide on the restructuring activities.
65. A main challenge was that the proposed restructuring included a new activity on establishing centers of excellence (CoEs), which was not part of the original project design. Although the GoSL agreed to the CoE activity, it took time for both the SDD and World Bank teams to agree on the activity design, partly as there were design issues and partly as a novel concept required significant capacity building for the implementing agency. For example, there was major disagreement on the CoEs functioning as autonomous entities. The Government expressed concerns that establishment of CoEs as autonomous entities would require a lengthy approval process involving the Department of Management Services, the National Budgets, and other agencies and therefore, more time to implement the program. Moreover, several actions that were to be carried out by the SDD in preparation for the restructuring (for example, the selection of CoEs) took time and were not achieved within the agreed timelines. In addition, following changes in ministerial leadership, the World Bank received an additional request for inclusion of construction of housing facilities for principals under the proposed restructuring, to which the World Bank had sought further clarifications but received none. Another key challenge was the World Bank’s proposal for changes in the implementation arrangement, whereby a new agency—the National Agency for Public Private Partnerships (NAPPP) under the Ministry of Finance—would implement a subcomponent on private sector training delivery, to which the Ministry of Skills had strong reservations.
66. These setbacks resulted in no agreements being reached on the specifics of the restructuring and the project implementation remained in unsatisfactory status following the MTR. This culminated in the proposal from the ERD to cancel the remaining undisbursed IDA financing and close the project. The World Bank agreed to the proposal in September 2019.
67. Inadequate use of M&E to track results. The Program Management Unit (PMU) lacked a comprehensive understanding of the importance of the Results Framework and the reporting requirements, mainly for the PDO indicators. It was first recorded in the MTR Aide Memoire in November 2017 that KPI 2 (completion) was below baseline, while KPI 3 (earnings) and KPI 4 (employers’ satisfaction) were not being tracked by the project despite KPI 3 having annual targets and KPI 4 having midline and end line targets. However, most of the intermediate indicators which tracked outputs were updated regularly based on administrative data and published statistics from national surveys.27 Post-MTR, amidst the ongoing prolonged dialogue on the proposed restructuring, the PDO indicators were not tracked either by the SSDD or the World Bank team, although progress was made on the intermediate indicators following the original project design as recorded in the ICR. One reason was that there was an understanding that the proposed restructuring would call for subsequent changes in the DLIs and the Results Framework. The absence of a dedicated expert in the SSDD to manage regular M&E activities also attributed to gaps in data collection and inadequate use of M&E throughout the project life.
26 Discussed in detail in the efficacy and M&E section as well as annex 12. 27 Except for the IO indicator on employment rate of TVET graduates, which again required some survey analysis to feed into the Results Framework.
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Factors Subject to World Bank Control
68. Frequent turnover in the World Bank task team leadership. There was a lack of steady task team leadership on the World’s Bank side. There were four task team leaders who led project preparation and implementation at different points in the five years of the project life. There was an absence of local World Bank leadership. For example, a co-task team leader, who could have supported the World Bank’s efforts to build a trusting client relationship and sustaining policy dialogue within the political economy context of the country. It is well known that these aspects take time to develop, especially as this was the first World Bank-financed skills operation to be supervised by the implementing agency. Regular day-to-day supervision was supported by a single consultant in the field. Moreover, implementation support missions were not regular during the early years of the project, whereby only five official missions were conducted between 2014 and 2017, followed by four more missions till project closure. These factors reasonably, and to some extent, adversely affected the quality of supervision and reporting of the SDP. This is reflected in the delay in reporting of untracked PDO indicators, lack of progress on agreed actions post-MTR, and subsequent lack of clarity and agreement on restructuring aspects between the SDD and World Bank teams.
IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME
A. QUALITY OF MONITORING AND EVALUATION (M&E)
M&E Design
69. The M&E design was comprehensive for the purpose of monitoring and measuring project performance. The Results Framework comprised four PDO indicators and 14 intermediate indicators, covering most aspects of the activities under the project. However, there were challenges with three (out of four) of the KPIs in accurately capturing the outcomes:
• KPI 2 was limited to tracking completion rates for trainees in public institutions although the project activities also contributed to quality improvements in private provision and thus contributed to Objective 1 (that is, overall supply of skilled workers).
• KPI 3, which measured relative wage earnings among TVET and ‘O ’level graduates, may not have been an appropriate choice as the average income earnings are affected by external factors, including macroeconomic conditions and availability of jobs, among others.
• KPI 4 which measured employers’ satisfaction was a relevant choice; however, the EOP target involving over 10 percentage point increase from the baseline could reasonably be considered as ambitious given the five-year project life.
70. The limitations of KPI 3 and KPI 4 made the assessment of the achievement of results of Objective 2 ambiguous. Annex 12 discusses these challenges in detail.
71. The M&E plan also included preparation of semiannual progress reports, reviews of sector performance, and evaluations of pilot activities planned under Component 1. Given the comprehensive M&E plan, the TA under Component 2 was designed to support the preparation of these various reports
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and studies. The project design under Component 2 also incorporated activities to strengthen program- level M&E through analysis and reporting of selected training agencies’ performance, skills gap analysis, and efforts for broader dissemination of labor market information under DLI support (DLIs 2, 4, and 8).
M&E Implementation
72. The overall M&E implementation was inadequate for monitoring and tracking of the SDP results. The project produced activity-wise progress reports, which were presented during implementation support missions. The annual skills sector performance reports for five years, from 2014 to 2018, were also produced. However, there were delays in systematic tracking and reporting of key project results indicators. Until 2018, KPI 3 and KPI 4 were not being tracked by the project despite KPI 3 having annual targets and KPI 4 having a midline target. Interviews with the SDD management suggest that there was an overall lack of understanding of KPI 3 and 4, which were survey based and had implications on project performance. However, most of the intermediate indicators that tracked outputs were updated regularly based on administrative data and published statistics from national surveys.28
73. The M&E implementation arrangement also required significant coordination and follow-up with partnering agencies and training institutions for results tracking and reporting purposes. Given the complex arrangement, the absence of a dedicated M&E expert at the PMU further weakened the M&E implementation capacity. The development of an MIS also did not take place, which would have helped with the data collection efforts across the various agencies. In practice, the project management head took on the additional responsibility of M&E reporting through consolidating updates on activities from each activity unit.
74. Despite the challenges, some important studies were successfully implemented under the results- based component. These include performance analysis reports of four major TVET agencies (CGTTI, DTET, NAITA, and VTA) and four skills gap analysis for ICT, construction, tourism, and light engineering sectors. These studies provided valuable insight on institutional-level performance and skills training needs in economic priority sectors. In addition, third-party verification (TPV) reports for verification of DLRs were also produced that helped confirm the activities undertaken and results achieved under Component 2.
M&E Utilization
75. The progress reports on activities supported by the DLIs were presented to the World Bank task team during implementation support missions. The information helped inform and agree on follow-on activities. The skills gap analysis conducted with support from the SDP helped inform training programs and other activities implemented by four ISSCs for ICT, construction, manufacturing, and tourism sectors. Additionally, the TPVs helped assess whether the DLI-supported activities were properly undertaken and validate the results achieved under Component 1. However, in terms of M&E at the project level, there was inadequate tracking and delays in reporting of results indicators. The absence of an integrated system of data management and analysis led to weak utilization of the M&E data. This constrained the use of evidence for decision-making and improving project operations. For example, for taking corrective measures to deal with declining completion rates of TVET students and low employers’ satisfaction.
28 Except for the IO indicator on employment rate of TVET graduates, which again required some survey analysis to feed into the Results Framework.
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Justification of Overall Rating of Quality of M&E
76. Based on the above discussions, the ICR assigns a Modest rating to the quality of M&E for the following reasons. First, the results and indicators identified for the M&E framework captured the Theory of Change’s key results with mechanisms designed to track intermediate results in a valid, reliable and accurate manner. However, there was a significant design shortcoming for three PDO outcome indicators in capturing the SDP attributable results. Second, there were significant shortcomings in implementation, particularly tracking, updating, and reporting on the KPIs and conducting M&E activities, including planned surveys and assessments. This was due in part to the fact that the project did not implement its primary activities in Component 2. These shortcomings did not, however, substantially hinder the project’s capacity to monitor IOs/outputs and evaluate DLI-supported activities that were implemented. The IOs were regularly reported through national surveys and were reliable to assess the results from the project. Moreover, program-level M&E (integrated into the DLIs such as skills surveys, TPVs, assessments) also provided positive evidence of results. Third, data generated through program activities were used in a modest capacity to update training standards and curricula and validate results under DLI activities.
B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE
77. Environmental safeguards. The project triggered OP/BP 4.01 (Environmental Assessment) and was categorized under environmental Category B because it could finance rehabilitation/renovation/refurbishment of the existing training institutions. An Environmental Due Diligence Guideline was developed focusing on environmental standards for planned rehabilitation and construction in the existing TVET institutions. Additionally, the SSDP adopted the Environmental and Social Safeguard Management Framework developed by the ADB, which was found to be acceptable by the World Bank with respect to OP/BP 4.01 of the environmental assessment. Throughout the project, an environmental safeguard expert was staffed at the PMU to monitor compliance, and a safeguard compliance report was produced in 2018. No significant issues were encountered, except for one complaint regarding the noise and vibration at the one of the training rehabilitation sites. The slow handling of the complaint led to a downgrade of the safeguard rating to Moderately Unsatisfactory as documented in the Implementation Status and Results Report (ISR) dated August 2019. However, before project closure the complaint was duly handled, and the complainant received compensation for damages from the project.
78. Social safeguards. The project did not trigger World Bank policies on social safeguards (OP/BP 4.10 and OP/BP 4.12). The SDP was expected to generate positive social impacts on the population because of increased access of TVET programs and promoting quality skills training for upward mobility for all social groups in an inclusive approach. No significant issues were encountered. The SDP supported renovations to the existing facilities, including improving access to facilities for physically disabled persons and providing changing rooms and facilities for women in training institutions. No significant issues were encountered.
79. Financial management. The project’s financial management (FM) was rated Satisfactory in the ISRs for most of the project life. The Moderately Satisfactory rating during the two implementation support missions were due to one or more of the following issues: (a) delays in external audit and (b) weaknesses in financial reporting and inadequate FM staff. During some stages of project implementation, the PMU and implementing agencies faced FM staffing issues. Active efforts were made to address the problems. Throughout the project implementation period, the PMU maintained adequate
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FM staffing, who handled the FM arrangements required for the project well. Additionally, the project submitted accurate and timely interim unaudited financial reports. The quality and submission of annual consolidated audited financial statements have also been satisfactory. The audit opinion was qualified in some of the consolidated annual financial statements. However, the associated audit observations for such qualifications were relatively minor as they did not reflect serious observations, shortcomings, and/or accountability issues on FM aspects.
80. Procurement. Procurement was rated Satisfactory in the ISRs throughout the project life mainly because no procurement activities were undertaken under Component 2 throughout the project life. Nonetheless, in anticipation of procurement activities, the PMU procurement staff received training on preparing a Procurement Plan and use of IDA’s electronic Systematic Tracking of Exchanges in Procurement system from the World Bank team.
C. BANK PERFORMANCE
Quality at Entry
81. Project preparation was based on a comprehensive body of analytical work and subsequent discussions with the Government.29 The preparation team helped put in place a project that responded directly to Sri Lanka’s national priorities for its TVET sector and was designed in synergy with the SSDP of the GoSL.
82. Institutional arrangements were complicated, in part reflecting the institutional complexity of the TVET sector in Sri Lanka. The SDP involved nine implementing agencies and university colleges30 to execute project activities that contributed to all areas of the Government program and was supported by 39 DLRs. This was also the first time for the ministry to implement two World Bank- and ADB-financed projects under results-based funding modality. For the World Bank, the project was a first-time intervention in the sector with a new ministry and implementing agency who would handle a new financing instrument. Considering these aspects, the operation may have benefited from a more prudent, selective approach in the scope of the support.
83. At preparation, the World Bank had clearly defined risks associated with the project along with appropriate mitigating measures, as well as safeguards- and fiduciary-related responsibilities. The project design risk was rated Substantial during preparation. This reflected the recognition of the fragmentation of responsibilities between ministries and agencies and a lack of coordination among them. To mitigate the risk, an IMSCC was set up to coordinate policy dialogue and reform aspects between the different skills delivery ministries, their partners, and stakeholders. In addition, a dedicated budget line for other co-implementing ministries was also included to provide incentives to coordinate and implement programs under the SSDD. However, institutional changes and frequent leadership turnover ultimately did not allow for the risk mitigation measures to be sustained. A TA component was incorporated to address the implementation capacity weaknesses and support M&E. However, the design of the TA could have been better coordinated to complement assistance that was being provided by other donors (such as the ADB). Environmental Guidelines were prepared, with clearly defined roles and responsibilities,
29 Dundar, et al. 2014. Building the Skills for Economic Growth and Competitiveness in Sri Lanka; World Bank 2012. “Sri Lanka STEP skills measurement Survey.” Washington DC: World Bank. 30 These include SSDD, TVEC, VTA, NAITA, DTET, NIFNE, NYSC, CGTTI, and UNIVOTEC and university colleges.
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along with the provision of an environmental specialist at the PMU. The fiduciary risk was well addressed through a detailed risk management plan.
84. The Results Framework was comprehensive, but there were key limitations to capturing the project development objective. This was mainly with respect to the outcome indicators pertaining to measurement of the supply of employable workers (discussed in detail in M&E section). Given the scope of the project, the Results Framework included 14 intermediate indicators. These were adequately aligned with the project activities. However, as the PMU did not include a dedicated M&E expert, concerted follow-up throughout the implementation period was not facilitated. As a result, data collection for a comprehensive Results Framework and timely reporting for managing the SDP were hampered.
Quality of Supervision
85. The implementation and supervision suffered from lack of steady task team leadership. The World Bank’s implementation was led by four task team leaders at different points of the five-year project period. All the task team leaders were based at headquarters, with one consultant to provide regular follow-up and reporting in the field. Steady World Bank task team leadership and the availability of more in-the-field implementation support would have benefitted implementation support, especially to sustain continuous dialogue and follow-up with the PMU and other sector institutions and training institutes.
86. The World Bank team fielded implementation support missions more regularly after the first year with a multidisciplinary team comprising education, procurement, FM, and environment and safeguards specialists. Due to the Presidential elections and institutional changes, there were delays in fielding missions during the first few years of the SDP. Only four supervision missions were implemented between 2014 and 2016, as recorded in published Aide Memoires. However, the World Bank team carried out more regular missions from the midterm onward.
87. There were delays in responding to the challenges with meeting project results. It was only during the MTR, in 2017, that it was noted that three (out of four) outcome indicators and several IOs were not being tracked, and subsequently that the SDP was likely not to meet its development objective. Up until the MTR, the focus of both the World Bank and the client had been on achieving the DLIs rather than PDOs as captured in the implementation support mission dated January 2018. The World Bank also did not respond to changes in the program activities despite the client and other development partners moving ahead with midcourse corrections. For example, in the case of quality assurance (DLI 5), the SSDD expanded and integrated the QMS activity into the rebranded QIS, which was not reflected in the World Bank’s Results Framework. Similarly, as the PBF could not be fully implemented, the World Bank could have considered tracking the CMP development and implementation in public training institutions (DLI 3).
88. There was a need for implementation support and supervision to focus on project outcomes and results as reflected in the Aide Memoires and ISRs. The Aide Memoires were detailed with next steps to advance implementation within a specific timeline. The ISRs were generally timely and candid, with changes in ratings to reflect critical issues for management issues. However, the reporting in the Aide Memoires and ISRs did not have a focus on results, especially as the Results Framework indicators were not tracked properly throughout the project life. Before the MTR, the discussion in the Aide Memoires and ISRs focused on achieving the DLIs. Post-MTR, the focus shifted to the proposed restructuring with included a set of new activities, DLIs, and outcome indicators. As a result, the Aide Memoires and ISRs
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have not been able to capture a consistent reporting of the implementation progress and results achievements.
Justification of Overall Rating of Bank Performance
89. Based on the above discussions, the World Bank performance is rated Moderately Unsatisfactory. At entry the World Bank supported the Government to achieve a project design albeit with shortcomings in implementation and M&E arrangements. During implementation, at pre-MTR the World Bank provided supervision with a focus on DLI achievements rather than PDOs, while post-MTR the supervision reoriented toward an extended discussion on restructuring and eventual cancellation of a significant credit. There were moderate shortcomings in supervision regularity and significant shortcomings in M&E throughout the project implementation.
D. RISK TO DEVELOPMENT OUTCOME
90. The risk to development outcome is Modest. In terms of policy commitment, the project’s objectives continue to remain one of the highest priorities for economic development for the new government. A well-functioning TVET sector, capable of delivering graduates with high-quality skills as required by the labor markets is fundamental for Sri Lanka’s sustained growth. Some of the SDP activities have already been internalized such as the quality assurance under TVEC and the expansion of ETA program as regular activities with dedicated budget under the Government program. New training programs introduced under the SDP are part of the regular curricula of training institutions. However, the main risks are still the employment and income generation aspects experienced by beneficiaries of the project, which have socioeconomic roots. Economic changes or rapid technological advances require continued financing for the ever-changing training requirements needed to maintain relevance to the constant introduction of new technologies. The GoSL, in this aspect, is continuing to work with development partners, including World Bank and ADB, on both analytical and operations fronts.
V. LESSONS AND RECOMMENDATIONS
91. Skills development should continue to be a priority area for cooperation between the GoSL, the World Bank, and development partners. The sectoral challenges remain; the factors impeding implementation and project performance identified in the ICR can be resolved and sectoral interventions can be effective, as demonstrated by well-performing activities under the SDP, including establishment and operationalization of ISSCs, professional development, and employment-linked training programs. Some lessons learned to inform future engagement are discussed in the following paragraphs. . 92. A stable institutional base for the PMU, supported by steady government leadership, is critical for project success. The PMU had eight parent ministries during the project’s five years with continual changes in leadership at various levels. This adversely affected implementation progress as decisions were not being taken in a timely and consistent manner. Further, there was significant loss of institutional memory. Consequently, policy and operational dialogue broke down. This was evident during the process of trying to reach an agreement on areas for restructuring. The stalemate continued for the last two years of the project life, resulting in the cancellation of scarce IDA resources.
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93. When designing results-based operations with complex implementation arrangements, institutional stability and appropriate incentives tied to targets are crucial in the timely achievement of DLIs. The SDP had a complex structure in a highly heterogenous landscape with multiple implementing actors. The changes in ministries, training providers, participants, employers, and industry leads during project implementation subsequently led to the DLRs not moving sequentially or timely as envisioned. An added layer of complexity was that all DLRs carried equal weight—whether the DLR had peripheral or substantial implication to achieving policy reforms. Therefore, achievement of some DLRs were timely, while others were delayed or not met.
94. Project M&E is critical to regularly track performance, inform operations, and undertake corrective measures on time. The pre-MTR period involved discussions with the client mainly around the achievement of DLIs and disbursements rather than achievement of PDOs. It is critical to ensure that regular discussions and reporting on the PDOs from project inception to build the client’s understanding of the results chain and the importance of monitoring and evaluating project performance as measured by results indicators. More importantly, the SDP is an example where the Results Framework failed to include PDO indicators that adequately captured the PDOs. This indicates the need to pay careful attention during the concept, preparation, and appraisal stages to the PDO and the selection of indicators attributable to the project activities contributing to outcomes.
95. The introduction of new activities and changes in implementation arrangements that require consensus building and substantial capacity building at project mid-life may adversely affect implementation progress. Following the MTR, the Government and the World Bank teams took a drastic step to move away from the original project design and restructure the SDP to include a new set of activities, implementation arrangements, and project outcomes. For example, the successful establishment of CoEs, which can take years, appears to have been ambitious given the lengthy government procedures and capacity-building needs for the implementation of the novel concept. In addition, the proposal to include a new co-implementing agency, requiring substantial additional resources and capacity building, also created significant disagreements among stakeholders. These setbacks resulted in a lengthy and unsuccessful dialogue for nearly two years. Meanwhile, implementation of the original SSDP continued. Despite the good intentions to make the SDP more relevant based on proposed new arrangements, the failure to do serves as an important lesson for future operations. A more prudent selection of approaches and interventions within the scope of an existing program that build on prevalent understanding and capacity of the client can save time and contribute to a more efficient restructuring process.
96. Sustaining dedicated and regular World Bank supervision, especially for projects with complex implementation arrangement and institutional capacity challenges, remains critical for implementation progress. On the World Bank’s side there were frequent changes in the task team leadership. Implementation support missions during the first few years were not regularly conducted, partly because of the country’s political context and partly because of the World Bank’s internal leadership transition periods. Further, there was minimal to no local supervision presence. This significantly hampered follow- up with the Government which was essential for ensuring project implementation progress. Better supervision quality and coordination during transitions, if not continuity in teams that design and implement the SDP, are important to address complex institutional aspects and develop and sustain client dialogue.
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97. Coordination and cooperation between World Bank and development partners within an overall strategic context can add substantial value in terms of achieving results, strengthening policy dialogue, and effectively using resource. Both the World Bank and ADB operations to support the SSDP were prepared at the same time. Both agencies agreed on a coordinated approach. However, there were significant differences in the DLI design across similar interventions and project result targets. In the case of TA, both agencies were financing similar activities. This resulted in inefficiencies. The Government opted for using the ADB grant for TA, and the World Bank IDA credit financing was not used. There was a crowding out effect. Programs being supported by the World Bank in collaboration with other development partners within the same sector would benefit from a strengthened policy and common strategic framework in engaging with the client.
98. It is important to integrate gender preference and economic earning potential for females of TVET courses to ensure better employment outcomes. Despite an increase in female the enrollment of females in the TVET courses during the SDP period, the labor market outcomes of female graduates were not favorable in terms of their average income earnings. This was mainly because female TVET students tended to enroll in courses which did not generate corresponding increase in demand in the labor market over time. Regular graduate tracer studies to provide information on labor market information by gender, dissemination of employment and earning prospects information to potential students, and targeted communication strategies are important for prospective female TVET students. .
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ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS
A. RESULTS INDICATORS
A.1 PDO Indicators
Objective/Outcome: Expand supply of skilled workers Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of trainees enrolled Text Total: 148,131 Total: 827,241 Male: Total: 940,848 Male: in public and private training Male: 81,047 452,609 Female: 538,781 Female: institutions 374,632 402,067 Female: 67,084
31-Dec-2012 31-Dec-2019 31-Dec-2018
Comments (achievements against targets): 117 percent achieved against the EOP target for total trainees; 123 percent achieved against the EOP target for male trainees; and 109 percent achieved against the EOP target for female trainees
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Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Completion rate of trainees Text All: 77 All: 81 Male: 78 All: 67 Male: 64 enrolled in public institutions Male: 74 Female: 84 Female: 72 Female: 81
31-Dec-2012 31-Dec-2019 31-Dec-2018
Comments (achievements against targets): -250 percent achieved against EOP target for All; -250 percent achieved against EOP target for males; and -300 percent achieved against EOP target for females.
Objective/Outcome: Expand supply of employable workers Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Average earnings of TVET Text Total: 1.08 Total: 1.12 Male: 1.04 Total: 1.15 Male: 1.18 graduates relative to earnings Male: 1.00 Female: 1.16 Female: 1.04 of GCE-O level graduates Female: 1.14
31-Dec-2012 31-Dec-2019 31-Dec-2018
Comments (achievements against targets):
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175 percent achieved against the EOP target for total; 450 percent achieved against the EOP target for male and -500 percent achieved against the EOP target for females.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Employer satisfaction index Percentage 43.00 55.00 43.20
30-Nov-2012 31-Dec-2019 31-Dec-2017
Comments (achievements against targets): 1.67 percent achieved against the EOP target
A.2 Intermediate Results Indicators
Component: Program Support to the Skills Sector Development Program
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Recurrent and capital Text Recurrent 98% Recurrent 98%, Recurrent 98%, releases spent in accordance Capital 75% Capital 85% Capital : 100% with the imprest plan 31-Dec-2013 31-Dec-2019 31-Dec-2019
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Comments (achievements against targets): 100 percent achieved against EOP target for recurrent budget expenditure; 250 percent achieved against EOP target for capital budget expenditure
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Timely availability of reliable Text 0 5 5 data on institutional and sector performance 31-Dec-2013 31-Dec-2019 31-Dec-2019
Comments (achievements against targets): 100 percent achieved against EOP target
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of public institutions Number 0.00 80.00 0.00 covered by performance based funding 31-Dec-2013 31-Dec-2019 31-Dec-2019
Comments (achievements against targets): The PBF model could not be fully implemented as government policy did not support incentive-based additional financing to the public institutions.
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Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Employment Rate of TVET Text Total: 86 Total: 88; Male: 90; Not Available graduates Male: 88 Female: 84 Female: 82
01-Nov-2012 31-Dec-2019 31-Dec-2019
Comments (achievements against targets): A comparable updated indicator was not available as of 2019.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Timely submission (by June Text Only 2 out of 9 entities 45 39 30th) of entity audit reports had timely audit of MYSAD and participating reports agencies 31-Dec-2013 31-Dec-2019 31-Dec-2019
Comments (achievements against targets): 86 percent achieved against the EOP target.
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Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Industry Sector Skills Councils Number 0.00 4.00 4.00 (ISSCs) or equivalent functional in priority sectors 31-Dec-2013 31-Dec-2019 31-Dec-2019
Comments (achievements against targets): 100 percent achieved against EOP target.
Note: As of December 2019, there were 4 ISSCs registered under the Company’s Act. A fifth ISSC in the area of Healthcare is yet to be registered.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of providers with Number 8.00 340.00 234.00
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NVQ 1-6 with QMS 31-Dec-2013 31-Dec-2019 31-Dec-2019
Comments (achievements against targets): 68 percent achieved against the EOP target
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of active registered Number 1081.00 2481.00 1290.00 institutions 31-Dec-2013 31-Dec-2019 31-Dec-2019
Comments (achievements against targets): 15 percent of the EOP target achieved.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of courses Number 1601.00 3601.00 2691.00 accredited 31-Dec-2013 31-Dec-2019 31-Dec-2019
Comments (achievements against targets):
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55 percent of the EOP target achieved
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Teacher vacancy ratio Percentage 34.46 10.00 33.40
31-Dec-2013 31-Dec-2019 31-Dec-2019
Comments (achievements against targets): - 4 percent achieved against the EOP target
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of students Text Total:18,399 Total: 180,000; Male: Total: 291,397 Male: receiving NVQ certification/ Male: 11,254 110,100 ; Female: 173,015 Female: diploma 69,900 118,383 Female: 7,145
31-Dec-2013 31-Dec-2019 31-Dec-2019
Comments (achievements against targets):
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169 percent achieved against EOP target for total students; 164 percent achieved against EOP target for males and 177 percent achieved against EOP target for female students
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of staff participating Text Teachers: (T): 0 (T): 2,640; (A): 1,000; (T): 6049; (A): 1492 ; in professional development Assessor (A): 0 MIT:480 MIT:: 513 programs Management of Industrial Training (MIT): 0
31-Dec-2013 31-Dec-2019 31-Dec-2019
Comments (achievements against targets): 229 percent achieved against EOP target for teachers; 149 percent acheieved against EOP target for assessors and 107 percent achieved against EOP target for managers.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of students Number 0.00 3500.00 5092.00 benefiting from implementation of the ETA 31-Dec-2013 31-Dec-2019 31-Dec-2019
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model
Comments (achievements against targets): 145 percent achieved against EOP target.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion
Number of students with Text Total: 162; Male: Total: 7650; Male: Total: 7247; Male: NVQ 5-6 diplomas received 99Female: 63 4,670 ; Female: 2,971 4,646; Female: 2,601
31-Dec-2013 31-Dec-2019 31-Dec-2019
Comments (achievements against targets): 95 percent achieved against EOP target for total; 99 percent achieved against EOP target for males and 87 percent achieved against EOP target for females
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B. KEY OUTPUTS BY COMPONENT
Objective/Outcome 1: To expand the supply of skilled workers by increasing access to quality and labor market relevant training programs
1. Number of trainees enrolled in public and private training Outcome Indicators institutions 2. Completion rate of trainees enrolled in public training institutions 1. Recurrent and capital budget releases spent in accordance with the imprest plan 2. Timely availability of reliable data on institutional and sector performance 3. Number of public institutions covered by performance-based funding [DLI 3] Intermediate Results Indicators 4. ISSCs functional in priority sectors 5. Number of providers with NVQ 1-6 with a QMS 6. Number of active registered institutions 7. Number of courses accredited 8. Teacher-vacancy ratio 9. No. of staff participating in professional development programs 1. 98 percent recurrent and 100 percent capital budget spent in accordance with the imprest plan 2. Five institutions prepared reliable data on performance 3. 104 public institutions covered by PBF Key Outputs by Component 4. Four ISSCs functional (linked to the achievement of the Objective/Outcome 1) 5. 234 providers with NVQ 1–6 with a QMS 6. 1,290 active registered institutions 7. 2,691 courses accredited 8. Teacher-vacancy ration at 33.4 percent
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9. 6,049 teachers, 1,492 assessors and 513 managers participated in professional development training
Objective/Outcome 2: To expand the supply of employable workers by increasing access to quality and labor market relevant training programs
1. Average earnings of graduates in skills development programs Outcome Indicators relative to earnings of GCE ‘O’ level graduates 2. Index of employer satisfaction 1. Number of students receiving NVQ certification/diploma Intermediate Results Indicators 2. Number of students benefiting from the ETA model 3. Number of students who have received NVQ 5–6 diplomas 1. 291,397 students received NVQ certification/diploma Key Outputs by Component 2. 5,092 benefitted from the ETA model (linked to the achievement of the Objective/Outcome 2) 3. 7,247 received NVQ 5–6 diplomas
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ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION
A. TASK TEAM MEMBERS
Name Role Preparation Halil Dundar Task Team Leader(s)
Chandrika Sunethra Samara Samarakoon Procurement Specialist(s) Mudiyanselage Jiwanka B. Wickramasinghe Financial Management Specialist
Mohamed Ghani Razaak Social Specialist
Darshani De Silva Team Member
Mokshana Nerandika Wijeyeratne Social Specialist
Supervision/ICR Shobhana Sosale, Elizabeth Ninan Dulvy, Kinley Task Team Leader(s) Clemens Salmon G. W. Anjali U. Perera Vitharanage Procurement Specialist(s) Bernadeen Enoka Wijegunawardene Financial Management Specialist Michelle Riboud Team Member Chandrika Sepali Kottegoda Team Member Alejandro Welch Team Member Mohamed Ghani Razaak Social Specialist Hasanthi Shalika Subasinghe Team Member Anita Lakshmi Fernando Team Member Ferdous Jahan Social Specialist Jorgen Billetoft Team Member Obaidullah Hidayat Environmental Specialist Bandita Sijapati Social Specialist Qi Shen Young Team Member
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B. STAFF TIME AND COST
Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY14 33.293 327,038.39 FY15 5.225 27,704.79
Total 38.52 354,743.18
Supervision/ICR FY14 3.663 22,162.52 FY15 9.125 90,024.51 FY16 20.000 145,650.90 FY17 4.500 27,341.28 FY18 2.325 91,624.53 FY19 28.136 251,544.69 FY20 31.703 189,189.57 Total 99.45 817,538.00
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ANNEX 3. PROJECT COST BY COMPONENT
Components Amount at Actual at Project Percentage of Approval Closing Approval (%) (US$ millions) (US$ millions) Program Support to the Skills Sector 93.60 47.81 51.20 Development Program Innovation, Results Monitoring and 7.90 0.00 0.00 Capacity Building Total 100.00 47.81 47.81
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ANNEX 4. EFFICIENCY ANALYSIS
Cost-Benefit Analysis
1. The economic analysis covers the economic returns of the investment made through the Government’s SSDP over 2014–2020. The impact of the project is not separable from the SSDP given that the SDP has been fully integrated into the national skills sector, covering five policy areas of the SSDP and the PDO-level indicators, including beneficiaries and labor market results, track the outcomes of entire skills sector. For this reason, at the time of appraisal, the economic analysis was conducted for the entire SSDP.
2. At appraisal, the economic analysis was based on the project target number of TVET graduates and their labor market outcomes using the STEP 2012 for the entire SSDP implementation years (six years from 2014 to 2020). As there has been no follow-up STEP survey, at completion, the labor market outcome indicators are updated using the annual LFS (2013 to 2017), which are not comparable to the STEP 2012. Hence, this analysis reevaluates the cost benefit of the SSDP using the LFS (a) with target TVET graduates with the quality improvement assumption of 1 percent increase in annual earnings for the TVET graduate and (b) with actual number of TVET graduates during the project years and their labor market outcomes.
3. With the labor market parameters (employment rate and earnings) using LFS (2014–2017), the NPV and IRR of the SSDP at appraisal would have been US$131.9 million and IRR of 5 percent, respectively. At completion, based on the actual number of TVET graduates and the cost of SSDP, the NPV is lowered to US$107.8 million because of the lowered benefit due to less TVET completers compared to the target; however, the IRR has increased to 16 percent because of the higher reduction in project cost generating fewer negative cash flows in earlier years of the cash flow stream.
Table 4.1. Comparison of Economic Benefit and Cost Using the Benefit Projection Assumption at Appraisal
CBA CBA Based on the CBA Based on (base scenario), Target at Appraisal Actual Benefit/Cost PAD (updated labor force outcome) (updated labor force outcome) Total benefit (present 275.8 367.5 257.7 value) (US$, millions) Total cost (present 235.6 235.6 149.9 value) (US$, millions, millions) NPV (US$) 40.2 131.9 107.8 IRR (%) 2 5 16 Projected for the Project year and quality Project year and quality SDDP project year improvement premium are improvement premium are 2014–2020; same as PAD; same as PAD; Labor force Labor force outcome updated Labor force outcome updated Key parameters and outcomes based on with LFS 2014 to 2017; the with LFS 2014 to 2017; assumptions STEP 2012; project target beneficiaries and Number of beneficiaries and the % increase in wage forecasted SSDP cost at project cost are updated based due to quality appraisal are used. on the Results Framework and improvement. the actual expenditure. Source: Project Appraisal Document, 2014; Author’s calculations. Note: Parameters estimates and assumptions are described in detail in the second column of table 4.4.
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4. The CBA for the education project relies largely on the project beneficiary projection, the earnings profiles, and the project years covered for the benefit and cost. To check the sensitivity to assumptions, an additional CBA is conducted with estimated benefit based on the cohort-based age-specific earning profiles31 and the five project years from 2014 to 2019. The analysis is conducted using target beneficiaries with base scenario and actual beneficiaries with base and high impact scenarios. The base scenario assumes no lasting impact of the SSDP on TVET graduate trends in the future after 2020. The high impact scenario assumes that the impact of the SSDP lasts five more years. In other words, the last-year impact of the SSDP on increased TVET graduates would last five more years after the termination of additional funding. The analysis shows that the project generated an NPV of US$170.3 and an IRR of 10 percent during the project years (2014 to 2019) with base scenario. The higher NPV with lower IRR results, compared to the results in table 4.1, are mainly because of the different net cash flow projections and the shortened project years. Nevertheless, the sensitivity analysis confirms that the SSDP was an economically sound investment with the NPV ranging between US$107.8 million (table 4.1) and US$343.1 million (table 4.2), and the IRR between 10 percent and 16 percent.
Table 4.2. Sensitivity Analysis Analysis with New Assumptions (Target) Analysis with New Assumption ( Actual) Total benefit (present value) 460.0 296.6 (base) 469.4 (high impact) (US$, millions) Total cost (present value) (US$, 219.8 126.3 millions) NPV (US$, millions) 240.2 170.3 (base) 343.1 (high impact) IRR 6% 10% (base) 14% (high impact) The project year is from 2014 to 2019; The project year is from 2014 to 2019; Labor force outcomes are updated based Labor force outcomes are updated based on Key parameters on cohort-based age-specific earnings cohort-based age-specific earnings profile; and assumptions profile; The project target beneficiaries Number of beneficiaries and the project cost and forecasted SSDP cost at appraisal are are updated based on the Results Framework used. and the actual expenditure. Source: Author’s calculations. Note: Parameter estimates, and assumptions are described in detail in the third column of table 4.4.
Estimated Impact
Number of TVET Graduates
a. TVET graduate comparison
5. The number of graduates has increased over the project years with underperformance in the early years of the SSDP and spikes in 2014 and 2017. Looking at the cumulative numbers, the project target at
31 Since the earnings increase with age (LFS 2014–2017), using average earnings difference between TVET and non- TVET of all age groups since the beginning of their career will distort the discounted value of the benefit at present. A detailed description is included in the appendix to this annex, Table 4.4, p. 54.
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appraisal was a 24 percent increase in TVET graduates compared to the baseline, and the actual increase is 20 percent.
Figure 4.1. Total Number of TVET Graduates
160000
140000
120000
100000 2012 2013 2014 2015 2016 2017 2018 2019
Target Actual Baseline
Source: Government of Sri Lanka, Labour Market Bulletins, Various Years. Note: Number of enrollments at beginning of year ‘t’ multiplied by the completion rate at ‘t’ (based on the Results Framework).
b. Public and Private Institutes
6. Although the completion rate for public institutes has decreased, it shows a clear upward trend in the completion rate of private institutes. Overall, the completion rates for public TVET institutes have decreased over the project years while that of private institutes increased from 51 percent in 2013 to 74 percent in 2018.
Figure 4.2. Enrollment (number) and Completion Rate (%) by Public and Private Institutes
250,000 90% 80% 200,000 70% 60% 150,000 50% 40% 100,000 30% 50,000 20% 10% 0 0% 2012 2013 2014 2015 2016 2017 2018
Public Private Public Private
Labor Market Outcome of TVET Graduates
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(a) Returns to TVET education (2013 to2017)
7. The overall rate of returns to TVET education, controlling for education level and others, has not changed over five years and shows no significant difference before (2013 and 2014 LFS) and after the SSDP starts (201532 to 2017 LFS). Overall, significant increase in returns happened only to the university degree, while significant decrease in returns for primary graduate were also seen.
Figure 4.3. Returns to Education (2013–2017)
60%
50% 47%
40% 34% 30% 31% 30% 19% 22% 17% 16% 20% 15% 13% 14% 10% 10%
0% Primary Lower O level A level Bachelor or TVET secondary more
2013 2014 2015 2016 2017
Note: Log of earnings regressed at each education level and age, age squared, and gender are included in the regression.
Labor Market Outcome33 for TVET versus Non-TVET
8. Among the youth ages 15 to 25 with education higher than primary and lower than university degree, the average TVET graduate earns 23 percent more than the one without TVET, and there were no statistically significant changes34 before and after the SSDP started. In the meantime, the all-age group earnings ratio of TVET to non-TVET graduate for the same education group shows slight increase from 1.39 in 2013–214 to 1.42 in 2015–2017. This result indicates the earnings gap between TVET and non- TVET increases with age (or job experiences) and this gap has widened during the project years. The youth employment rate for this education group is 71 percent with TVET and 83 percent without TVET, and there is no difference before and after the SSDP.
Project Cost
9. At appraisal, SSDP was estimated to cost US$648 million, out of which, US$350 million would have been the cost for the additional activities taken under the SSDP. This estimate was projected based on the
32 Year when the TVET graduates begin to go into the labor market after one year in TVET institutes supported by the SSDP in 2014. 33 Due to data limitation on recent TVET graduates, the youth (ages 15 to 25) labor market outcome is used as a proxy. Tracer survey is ongoing. 34 Based on regression results with TVET and post year (2015–2017) indicators and interaction term.
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total government spending in skills sector and budget estimates based on estimated program cost and additional activities for SSDP.
Table 4.3. Government Spending in Skills Sector and Projected Program Costing at Appraisal (budget in US$, millions)
Year 2014 2015 2016 2017 2018 2019 2014–2019 Budget (total)a 96.92 126.28 141.85 103.13 88.68 90.87 647.74 Forecasted budget for additional 47.28 76.64 92.21 53.49 39.04 41.23 349.89 activities, including SSDPb Note: a. Estimated total budget (nominal) for skills sector in the PAD. b. Following the logic for estimating the SSDP cost at appraisal, it was calculated based on total estimated budget in skills sector in each year minus US$50 million (actual expenditure in 2012).
10. Actual expenditure for the activities taken under the SSDP was not recorded in a systematic way; however, based on the actual expenditure of the MSDVT and the estimated skills development expenditure by other ministries and institutions, total spending between 2014 and 2019 is estimated at US$506 million. Among this, US$202 million is presumed to be the spending for the additional activities undertaken by the SSDP, which is calculated based on the increase compared to the baseline (actual expenditure level in 2013). This is about 58 percent of the forecasted budget at appraisal.
Appendix. Parameters and Assumptions for the CBA
11. The economic benefit is estimated as the increased lifetime earnings of the increased number of TVET graduates contributed by the SSDP. The lifetime labor earning is estimated using the present discounted value method and NPV and IRR are estimated with project cost. The sensitive analysis is conducted using different data sources, assumption on earnings projection, and the impact.
12. Labor market outcome. The data source at appraisal to calculate the labor market outcome is the STEP 2012 which focuses on the skills gap and labor market outcome of youth in Sri Lanka. However, the most recent data available are the LFS. The LFS has been conducted yearly and the survey design and questionnaire are consistent over time (2013 to 2017), which makes it ideal to detect any improvement in labor market outcomes over time. For the consistency in measure, the baseline indicators for labor market outcome, such as youth employment rate and earnings for TVET graduate, are updated using the LFS.
13. Earnings projection. The updated economic analysis uses cohort and age-specific earnings profile to calculate lifetime earnings of beneficiaries (earnings over 20 years after the graduation). At appraisal, the economic benefit terminates after the year 2034, which is 12 to 18 years after the graduation depending on the cohort. Another key difference is the earnings difference between TVET and non-TVET was calculated based on average earnings of all adult multiplied by estimated returns to TVET (17 percent) using the STEP 2012 at appraisal. This is updated using earnings of the adults with education higher than primary and lower than the university degree because the majority of TVET graduates (97 percent) has at least lower secondary level education, and the right comparison group is the non-TVET graduate with a similar education level.
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14. Impact. A set of analyses is conducted for comparison: one reflects the target indicators and the impact assumption suggested at appraisal; the other reflects the actual PDO indicators and the estimated labor market outcome of the youth with relevant education (as proxy for recent graduate) using LFS 2013– 2018.
15. Table 4.4 summarizes the abovementioned parameters and assumptions at appraisal and at completion for economic analysis.
Table 4.4. Parameters and Assumptions on Impact Benefit Projections Same as Updated Benefit Parameters for CBA at Appraisal Projections Note (table 4.1) (table 4.2) Earning and employment rate Data STEP 2012; LFS 2013–2017 LFS 2013–2017 outcomes are calculated based on LFS 2015, 2016, and 2017. Labor Market Projection Original: Average earnings Relevant population: Most of the TVET (97%) of all adults multiplied by Adults with higher than graduates have at least lower 17% (returns on TVET in primary completion and secondary level education; STEP 2012 controlling for lower than university Returns to TVET for youth (ages other education level); degree; 15 to 25) for this education group Update: the difference in age-adjusted earnings is 23% (41% for overall Earnings estimate for annual earnings between for non-TVET graduates population) and projected to TVET graduate TVET graduate and non- multiplied by TVET have same return over the next TVET graduate for the returns for youth (23%) 20 years and age-adjusted wage higher than primary is used for benefit projection. completion and lower than Earning is projected over university degree using LFS 20 years; real income 2015–2017. adjusted to 2014 price level 75% in baseline; 71% for youth of the KPI baseline employment rate is Employment rate Updated to 71% using LFS relevant education 86%; 70% in 2013 and 2014 (LFS) 2015–2017 group (LFS, 2015–2017) 12 to 18 years after 20 years after Earnings benefit graduation; benefit graduation valuation stops in 2034 Impact (SSDP) Number of graduates = total number of enrollments x Increase in TVET 151,175 (Target); 151,175 (Target); completion rate (KPI) graduates (cumulative) 104,350 (Actual) 104,350 (Actual) Increase in TVET graduates over project periods compared to baseline level Analysis shows no statistically Increase in significant changes during the 2% increase over 5 year 0 employment rate project years compared to baseline years. Increase in earnings Analysis shows no statistically 1% increase in earnings for due to quality 0 significant changes during the TVET graduate improvement
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Benefit Projections Same as Updated Benefit Parameters for CBA at Appraisal Projections Note (table 4.1) (table 4.2) project years compared to baseline years. SSDP is a six-year project (2014 to 2020) while the SDP is five years Project years 6 years (2014 to 2020) 5 years (2014 to 2019) (2014 to 2019).
Cost Total SSDP cost Projected Estimated based on the actual spending of MSDVT and the estimated spending of other ministries and institutes Macroeconomics indicator Inflation rate 7.5% (PAD); 5.2% Calculated based on the annual Updated to 5.2% rate averaged between 2009 and 2018 Long-term interest rate 12% 12% Exchange rate LKR:US$ = 130:1 LKR:US$ = 130:1 The exchange rate at appraisal is used for comparison. The current exchange rate (March 2020) is 180:1 (LKR:US$).
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ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS
Borrower’s Comments
With reference to the information on page 3, performance rating of the ICRR:
After the mid-term review in November 2017 and with the commencement of project restructuring discussions with a focus on center-based approach instead of the overall sector approach as per the original plan, all project activates on the Disbursement Linked Indicator targets and the disbursements (other than the disbursement of two DLIs for previous years) were stopped.
Therefore, during the period 2018 and 2019, no project activities continued focusing DLIs of the World Bank as the disbursements based on these DLIs were stopped. It is felt that continued ranking of the project after 2017 will not reflect the actual performance of a functional project as there were no activities or disbursements to measure performances. If there would have been a continuation of activities, the performance ranking for 2018 and 2019 would have been different with an improvement.
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ANNEX 6. SUPPORTING DOCUMENTS (IF ANY)
Documents
Strategies
World Bank. 2012. Country Partnership Strategy for Pakistan for FY13–16. World Bank. 2016. Country Partnership Framework for Sri Lanka for FY17–20. Project Documents
World Bank. 2013. Project Appraisal Document on a Proposed Credit for the Sri Lanka Skills Development Project Aide Memoires
Aide Memoire for Implementation Support Mission (July 7–17, 2014) Aide Memoire for Implementation Support Mission (March 11–19, 2015) Aide Memoire for Implementation Support Mission (February 8–12, 2016) Aide Memoire for Implementation Support Mission (November 29–December 8, 2019) Aide Memoire for Implementation Support Mission (February 19–23, 2018) Aide Memoire for Implementation Support Mission (May 3–June 2, 2018) Aide Memoire for Implementation Support Mission (August 14–24, 2018) Aide Memoire for Implementation Support Mission (February 25–March 8, 2019) Aide Memoire for Implementation Support Mission (February 25–March 8, 2019) Aide Memoire for Implementation Support Mission (October 29–November 1, 2019) Implementation Status and Results (Archived Date)
ISR #1 (June 23, 2013) ISR #2 (January 8, 2014) ISR #3 (July 29, 2014) ISR #4 (February 18, 2015) ISR #5 (October 1, 2015) ISR #6 (May 13, 2016) ISR #7 (January 13, 2017) ISR #8 (July 19, 2018) ISR #9 (Jan 17, 2019) ISR #10 (August 12, 2019)
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Reports
Strategies
Ministry of Finance and Planning. 2014. Skills Sector Development Programme of Sri Lanka 2014–2020. National Planning Department: SL. Policy
Government of Sri Lanka. National Policy on TVET 2019. National Education Commission of Sri Lanka. Project Reports
Government of Sri Lanka. 2014. National Skills Report of Sri Lanka. TVEC: SL Government of Sri Lanka. 2015. National Skills Report of Sri Lanka. TVEC: SL Government of Sri Lanka. 2016-17. National Skills Report of Sri Lanka. TVEC: SL Government of Sri Lanka. 2018. National Skills Report of Sri Lanka. TVEC: SL Other Reports
ADB. 2017. Tracer Study for TVET Graduates in Sri Lanka. Center for Poverty Analysis: SL. Safeguard Assessments
Government of Sri Lanka. 2018. Safeguard Performance Report 2018. Ministry of National Policies, Economic Affairs, Resettlement and Rehabilitation, Norther Province Development, Vocational Training and Skills Development and Youth Affairs: SL. Census and Surveys
Government of Sri Lanka. 2016. Labour Market Bulletin. Volume 2. TVEC: SL. Government of Sri Lanka. 2017. Labour Market Bulletin. Volume 1. TVEC: SL. Government of Sri Lanka. 2017. Labour Market Bulletin. Volume 2. TVEC: SL. Government of Sri Lanka. 2018. Labour Market Bulletin. Volume 1. TVEC: SL. Government of Sri Lanka. 2018. Labour Market Bulletin. Volume 1. TVEC: SL.
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ANNEX 7. SUPPORT TO SSDP FROM OTHER DEVELOPMENT PARTNERS
35 Development Partner Funding and Duration Implementing Agency Activities and Project Korea International US$3 million DTET, MSDELR Focused intervention Cooperation Agency Modernization and Upgrading of Technical Colleges and Colleges of (KOICA) Period: 2010–2021 Technology Project in Sri Lanka. It provided equipment and teacher training in the automobile sections of Maradana College of Technology, Kandy College of Technology, Kegalle Technical College, Sammanturai Technical College, and Bandarawela Technical College. Signing Memoranda of Understanding with KIA Motors (Lanka) Ltd and MICRO Holdings to develop industry and training institute links and provide on-the-job training opportunities for the students GiZ EUR 8 million MSDELR Focused intervention Vocational training in the KfW Development Bank financed the construction of Sri Lanka-German north and east of Sri EUR 4 million grant + Training Institute (SLGTI), teacher training, equipment, curriculum Lanka EUR 4 million loan development, and so on. GIZ is assisting 15 satellite centers in the north and east of Sri Lanka in improving their training courses. Entrepreneurial Period: 2011–2018 skills training, on-the job training, career guidance, curriculum development, teacher training, and so on. English and information technology skills are built into the courses. International Labour EUR 2 million UNICEF, UNDP, Focused intervention Organization (ILO) Skills UNOPS, FAO, IFC, Activities: (a) Implement modified/new demand-oriented training to support Local Period: MSDELR, and other programs with selected partner institutions; (b) implement capacity- Economic Development July 1, 2012–March 31, partners building programs for selected training institutions; (c) strengthening the (SKILLED) 2018 District Enterprise and TVET providers Networks Project Outcomes; and (d) strengthen the delivery of the district level employment services EU Support to Reconstruction and Upgrading of technical colleges in Batticaloa and Ampara in the Eastern Development in Selected Province and Vavuniya and Mannar in the Northern Province. Providing Districts in Sri Lanka (EU- equipment to upgrade 10 courses in those technical colleges. Providing SDDP) career guidance and soft skills training of teachers and supporting selected VTA and NYSC centers in the four selected districts.
35 Funding – originally approved amounts presented. Actual disbursement figures not included
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35 Development Partner Funding and Duration Implementing Agency Activities and Project Partners: UNICEF, UNDP, UNOPS, FAO, IFC, Ministry of Labor and Trade Union Relations, MYASD, registered vocational providers, district administrations, worker organizations, employers’ organizations, and district chambers. ADB US$100 million MSDELR Sector-wide intervention Period: 2014–2017 Supporting activities under the Skills Sector Development Plan (2014–2020) Skills Sector using the results-based lending (RBL) approach covering programs in the Enhancement Program SSDP. The focus is on system-wide improvements and is an island-wide (SSEP) project. The World Bank US$101.5 million MSDELR Sector-wide intervention SDP (US$47.8 million disbursed) Supporting activities under the Skills Sector Development Plan (2014–2020) Period: 2014–2019 using the RBL approach covering programs in the SSDP. The focus is on system-wide improvements and is an island-wide project. World University Services Amount: Can$14 million MSDELR Focused intervention of Canada (WUSC) 4,000 scholarships given to students from 11 districts to pursue vocational ASSET Project Period: 2015–2019 training programs in the public sector and private sector vocational training institutes. This covers all districts in the north and east, Puttlam, Matara, and Hambantota. Work with the private sector to identify demand for courses and ensure that scholarships are provided to students to pursue courses. Republic of Korea US$26.0 million MSDELR Focused intervention EXIM Bank • Construction of Korea-Sri Lanka National Vocational Training Institute in Period: 2016–2019 Orugodawatte • Upgrading of Gampaha Technical College Loan • Supply of training equipment and installation • Overseas training in the Republic of Korea for teachers • Dispatch of Korean experts Textbook development (for 10 trades)—mechatronics, welding, robotics, computer numerical control, pneumatics and hydraulics, refrigeration and air conditioning, automotive, electrical, electronics, and telecommunication Department of Foreign AUD 15 million MSDELR Focused intervention Affairs and Trade, The project piloted a flexible, market-oriented TVET program in Sri Lanka's Government of Australia Grant poorest provinces, focusing on the poor (especially women and people
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35 Development Partner Funding and Duration Implementing Agency Activities and Project Skills for Inclusive Growth Period: 2016–2020 with a disability) in the informal sector. It seeks to improve the ability of Project the poor to gain jobs in the expanding tourism sector. Support the full value chain of the tourism sector—for example, food suppliers, hospitality trainers, artisans, surf instructors, spa owners, accommodation providers, and taxi drivers—as well as district planners, park rangers, industry regulators, and business chambers in four districts in Sri Lanka: Trincomalee, Ampara, Batticaloa (Eastern Province) and Polonnaruwa (North Central Province). Government of the EUR 42 million MSDELR Focused intervention Netherlands, (US$33million) Establishment of National Vocational Training Institute, Polonnaruwa. National Vocational Loan + grant Construction, training, equipment, and model hostel Training Institute Period: 2016–2020 Government of India LKR 199 million Focused intervention Thondaman Vocational Training Centre, Hatton Period: 2017–2019 Government of Austria EUR 9.5 million MSDELR Focused intervention Institute of Engineering Loan Upgrading of Institute of Engineering Technology, Katunayake Technology Period: 2017–2020 Korea International US$2.5 million Ocean University, Focused intervention Cooperation Agency Period: 2017–2021 MSDELR Establishment of the Master Plan and Capacity Building of the Ocean University (previously NIFNE) United States Agency for US$12 million Administered by Focused intervention International Period: 4 years volunteers for YouLead creates a more skilled and flexible workforce through activities Development, Economic Growth that support and strengthen students, teachers, and institutions. Youth Employment and US$1.8 million partner Alliance and It fosters increased opportunities for self-employment by improving the Business Startup Project support implemented by skills of young entrepreneurs and working with financial institutions to (YouLead! Project) International encourage more lending to youth-led start-ups. Sabaragamuwa, Central, Period: 2017–2021 Executive Service Southern, and Northern Provinces, improve career guidance and Grant Corps (IESC) and other counselling, provide foundational skills critical to finding and maintaining a partners job, introduce new demand driven courses, conduct training of trainers, and so on.
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35 Development Partner Funding and Duration Implementing Agency Activities and Project Volunteers for Economic Growth Alliance administer and IESC implement the program. IESC has partnered with the Ceylon Chamber of Commerce, the American Chamber of Commerce, Arizona State University, Global Communities, Skills for Life, and Verité Research. ADB Additional Financing MSDELR Sector-wide intervention US$100 million Supporting activities under the Skills Sector Development Plan (2014–2020) Skills Sector using the RBL approach covering programs in the SSDP. The focus is on Enhancement Program Period: 2018–2021 system-wide improvements and is an island-wide project. (SSEP) Loan US$3 million MSDELR Focused intervention Grant. Japan Fund for To complement the existing assistance to strengthen private sector Poverty Reduction engagement and women’s participation in TVET and employment. Note: MSDELR=Ministry of Skills Development, Employment and Labor and Industrial Relations; GIZ = German Development Agency (Deutsche Gesellschaft für Internationale Zusammenarbeit); KfW = Kreditanstalt für Wiederaufbau; UNICEF =United Nations Children’s Fund; UNDP = United Nations Development Programme; UNOPS = United Nations Office for Project Services; FAO = Food and Agriculture Organization; IFC = International Finance Corporation.
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ANNEX 8. DETAILED DESCRIPTION OF RESULTS-BASED COMPONENT 1
1. The results-based component comprised three pillars and nine DLIs, which are discussed in the following paragraphs:
• Pillar 1: Strengthening Sector Governance and Management. This pillar aimed to support reforms that would strengthen governance and management of the sector through focus on results and more efficient use of resources. To help achieve these results under Pillar 1, the following three DLIs were used:
o DLI 1: Implementation of MYASD annual budget approved in line with the Government’s SSDP and medium-term budgetary framework. This DLI aimed to ensure adequate and predictable financing of the sector.
o DLI 2: Timely availability of reliable institution and agency-level data and periodic analysis of courses, centers, and teachers’ performance. This DLI aimed to improve M&E of training provider performance, increase coordination within the MYASD and across ministries, and rationalize utilization of the existing TVET resources.
o DLI 3: Introducing a performance-based financing (PBF) model for public training providers. This DLI aimed to design, pilot, evaluate, and expand a PBF model that would incentivize and reward good performance of public trainers.
• Pillar 2: Improving the Quality and Relevance of Skills Development. The objective of this pillar was to improve the quality and relevance of the skills development programs offered by all institutions. To help achieve these results under Pillar 2, disbursements were to be made against the following four DLIs:
o DLI 4: Improving the relevance of training programs for students through increased participation by employers. This DLI aimed to improve involvement of employers in training design and delivery through the establishment of ISSCs in four priority sectors and conduct skills gaps analysis and training packages with inputs from ISSCs.
o DLI 5: Improving quality assurance mechanism. This DLI aimed to set up an effective quality assurance system, which comprised institutional registration and course accreditation and establish a QMS within each training institution.
o DLI 6: Increasing availability of effective teaching staff in priority areas. This DLI aimed to help the Government implement a comprehensive HR policy and plan for TVET personnel and subsequently support teacher recruitment in public TVET institutions.
o DLI 7: Skills upgrading of existing teaching staff in priority sectors. This DLI aimed to upgrade skills of TVET teachers in priority sectors through implementation of a professional development plan covering pedagogic and industry exposure for instructors and assessors; in-service training for current teachers and induction and mentoring for new teachers.
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• Pillar 3: Expanding Access to Quality Skills Training. The objective of this pillar is to increase equitable access to quality skills development programs. To help achieve these results under Pillar 3, fund disbursements were to be made against the following two DLIs:
o DLI 8: Implementation of the Employment-Linked Training Agreement (ETA) model. This DLI aimed to increase the supply of trained individuals in priority sectors where skills gap had been identified through the ETA model that used the ‘purchase’ of training services from accredited training partners, both public other than the MYASD and private, and linked the tranches of disbursements with employment targets for trainees.
o DLI 9: Improving use and dissemination of system information. This DLI aimed to improve awareness of training opportunities and employment benefits and improve social perception of the value of TVET degree through dissemination of labor market data and easier access to information about training opportunities and outcomes.
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ANNEX 9. PROPOSED RESTRUCTRING
1. Following the MTR recommendations, it was agreed between the GoSL and World Bank that the SDP would need to be restructured to achieve its PDO. A restructuring mission was conducted during February 19–23, 2018. According to the Aide Memoire, the mission focused on restructuring of the project with the following principles in mind: (a) improve integration and coordination of skills development, (b) build better links to the labor market and to Vision 2025, (c) have a better balance between system reform and building more holistic capacity at the training center level, (d) review the DLIs to be simpler and more realistic and incentivize change, and (e) develop a solid operations manual on how the project will be implemented moving forward.
2. However, insufficient information and actions taken in preparation for the restructuring mission, the restructuring process could not be concluded. However, the areas detailed in the following paragraphs were tentatively proposed to be included as part of the restructuring:
3. The proposed revision of components during this mission were the following:
Component 1: Strengthening Sector Governance and Management
4. The focus of the activity was to be threefold: Subcomponent 1.1: Supporting the development of a functional MIS for TVET institutions, Subcomponent 1.2: Supporting the annual skills report on the demand for and supply of skills, and Subcomponent 1.3: Promoting inter-ministry and private sector collaboration on skills development.
Component 2: Improving the Quality and Labor Market Relevance
5. Two subcomponents were suggested under this. Subcomponent 2.1: Support to building the foundations of CoE in the public sector; Subcomponent 2.2: Supporting the private sector to deliver quality and relevant training implemented by National Agency for Public Private Partnerships (NAPPP) under the Ministry of Finance and hiring a marketing firm to change the image of the TVET sector.
Component 3: Strengthening Project Management and Technical Assistance
6. Component 3 was to support institutional strengthening of the Ministry of Skills and the NAPP and provide technical expertise to implement the activities envisioned under Component 1 and Component 2. Specifically, a technical support unit (secretariat) was to be established under the NAPPP to support the implementation of Subcomponent 2.2.
7. The proposed restructuring also called for significant changes in the implementation arrangement. The Aide Memoire for a follow-on mission in August 2018 records that agreement was reached that the implementation agency for Component 1 and Subcomponent 2.1 would be the Ministry of Skills while the implementing agency for Subcomponent 2.2 would be the NAPPP.
8. However, the World Bank received restructuring request letter from the ERD in September 2018 with the following prioritization of activities:
• Living quarters for principals/directors
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• Equip centers with modern machinery and teaching material • Establishment of a teacher training institute within UNIVOTEC and upgrade UNIVOTEC • Development and upgrading of modules and curriculars • Development of industry-specific centers at Hasalaka and Dambulla Technical Colleges (food processing) • Development of industry-specific centers at Maradana Technical Colleges (construction) • Development of an industry-specific center at Automobile Engineering Training Institute Orugodawatta (automobile) and continuation of construction programs.
9. In response to the letter from ERD, the World Bank has made the following proposal:
• Component 1: o Six university colleges, nine training centers under the VTA, and two training centers under the NYSC to be implemented by the SSDD o Three private training providers to be competitively selected.
• Component 2: o Establish a fund for small and medium enterprises and private training providers to support skills training and retraining to be implemented by NAPPP o Set up CoEs and support both public and private sector o Support the flexible learning model to reskill employees o Conduct awareness campaigns to promote the TVET sector o Develop a proposal to establish an Institute of Technical Teacher Development (or Faculty within UNIVOTEC) to train teachers o Build capacity
10. However, the Ministry of Skills sent a letter to the ERD in August 2019 with a copy to the World Bank regarding the disagreement of restructuring. The letter highlighted that the suggestion of the World Bank to get NAPPP to implement Component 2 was the major reason of the disagreement. The letter also highlighted some other design issues such as, the design assuming that all CoEs can be made autonomous. According to the Secretary, institutional autonomy requires discussions with the Department of Management Services and National Budgets, and other agencies, and therefore more time will be required to implement the program. There were no comments on the activities to be performed by NAPPP.
11. Following the disagreement, the ERD requested to cancel the remaining undisbursed funds, which led to the project closure in December 2019.
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ANNEX 10. ACHIEVEMENT OF DLIS UNDER SRI LANKA SKILLS DEVELOPMENT PROJECT
(SDR, millions) Past Disbursements Cancellation of Funds year 1 2 3 4 5
Component 1 2015 2016 2017 2018 2019 (i) Strengthening Governance and Management DLR 1: Implementation of the MYASD budget in line with the Government’s SSDP and medium- 1.56 1.56 1.56 1.56 term budgetary framework DLR 2: Timely availability of reliable institution and agency-level data and periodical analysis of 1.56 1.56 1.56 courses, centers, and teacher performance DLR 3: Improving performance-based funding 1.56 1.56 (PBF) model for public training providers (ii) Improving the Quality and Relevance of Skills Development Programs DLR 4: Improving the relevance of training programs for students through increased 1.56 1.56 participation by employers DLR 5: Improving Quality Assurance Mechanism 1.56 1.56 SDR31.38 DLR 6: Increasing availability of effective teaching 1.56 1.56 1.56 (US$43.3) staff in priority areas DLR 7: Skills upgrading of existing teaching staff in 1.56 1.56 priority sectors (iii) Increasing Access to Quality Skills
Development Programs DLR 8: Number of students benefiting from the employment-linked training agreement (ETA) 1.56 1.56 model DLR 9: Improving used and dissemination of 1.56 1.56 aggregate skills sector information Component 1 disbursement 22 disbursed out of 39 disbursed Component 2 disbursement 0 SDR34.32 Total disbursements (US$47.812)
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ANNEX 11. STUDENTS RECRUITED AND GRADUATED FROM PUBLIC TRAINING INSTITUTIONS
Year Number Recruited Number Completed Male Female Total Male Female Total 2013 66,102 46,407 112,569 48,152 36,614 84,766 2014 77,704 49,567 127,271 60,324 41,633 102,157 2015 70,162 47,159 117,321 48,664 35,888 84,552 2016 83,743 56,299 140,042 54,568 37,228 91,796 2017 94,725 70,513 165,238 60,518 48,045 108,563 2018 82,623 65,462 145,085 52,587 47,148 99,735 Source: Government of Sri Lanka, Labor Market Bulletin, various years.
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ANNEX 12. REVIEW OF THE SDP CHOICE OF KEY PERFORMANCE INDICATORS
1. Three of the four KPIs—pertaining to completion (KPI 2), earnings (KPI 3), and employers’ satisfaction (KPI 4)—may not have fully captured the project’s development outcome. For each KPI, the issues are highlighted as follows:
▪ KPI 2 (completion rate). KPI 2 tracked the completion rate for trainees in public institutions despite project activities also contributing to raising the quality of private training providers. For example, establishment of ISSCs (DLI 4), quality assurance (DLI 5), and teachers’ professional development (DLI 7) have supported private providers to upgrade quality of training under the SDP. The average completion rate, with sub-indicators for both provider types, may have provided a more accurate and reliable measure of project outcome on supply of employable workers (Objective 1).
▪ KPI 3 (earnings). The choice to use a ratio of average earnings between TVET and ‘O’ level graduates (KPI 3) may not be a reliable and valid measure to track the supply of ‘employable’ workers because the factors exogenous to the project tend to influence employability. First, macroeconomic conditions of the economy, availability of jobs, and productivity growth are important factors in determining wage growth along with individual characteristics (including skills).36 Second, global literature also suggests that pre-work formal education and training are positively associated with hiring, while over time, capacity of introducing new technology by firms, and on-the-job training are positively linked to wage growth.37 The SDP, in this case, was focused primarily on the pre-work skills training through TVET centers. Third, the data source for KPI 3 was the Labor Market Survey, which covers the whole job market. The SDP supported the Government’s program under the MYASD, which at the time of preparation accounted for nearly 70 percent of all public skills provision. As a result, the average income earnings among TVET graduates calculated from LFS cannot be fully attributed to SDP or the program.
▪ KPI 4 (employers’ satisfaction). While employers’ satisfaction (KPI 4) is a common indicator of measuring ‘employable’ aspects of workers, changes in employers’ perception of skills quality and employability of workers takes time. This is especially relevant in the case when considering the supply of TVET graduates benefitting from the SDP entering the job market relative to the overall skill supply in the Sri Lankan workforce. The EOP target for employers’ satisfaction for the SDP, which involved over 10 percentage points increase within the five- year project life, was therefore ambitious and unrealistic.
▪ Scope of Program versus data source. According to the PAD, KPI 3 (earnings) was to be updated from the national LFS, while KPI 4 (employer satisfaction) would be obtained from the establishment survey carried out by Department of Census and Statistics (PAD, page 21). The national surveys use samples which are representative of the population. This indicates that the national surveys would have wider coverage of skilled workers in comparison to the
36 Herk, K. V., and A. Kiss. 2019. “Short-term and Long-term Determinants of Moderate Wage Growth in EU.” Policy Paper Series. IZA Institute. 37 Xiao, J. 2002. “Determinants of Salary Growth in Shenzhen, China: An Analysis of Formal Education, On-the-job Training, and Adult Education with Three-level Modelling.” Economics of Education Review. 21 (6): 557–577,
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beneficiaries entering the market from the program. As earlier noted, the SSDD under the MYASD at preparation accounted for 70 percent of all public training. Over time, the PMU shifted to eight ministries, and the subsequent structural changes also imply potential changes in the coverage of skills provision. Hence, the achievement of Objective 2 (employable workers) using KPI 3 and KPI 4 using the recommended data sources therefore make it difficult to appropriately capture and attribute achievements to the SSDP (program) or SDP (project).
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ANNEX 13. SUMMARY OF BORROWER’S PROJECT COMPLETION REPORT
1. The purpose of this executive summary is to explain the progress of the achievement of DLI targets of the SSDP of the World Bank funding, during 2014–2018, which consists of two components.
1. The SSDP funding is based on the RBL modality which is subjected to successful achievement of the defined nine DLI targets, which are directly related to the program objectives defined under three main pillars of the funding of Component 1.
Pillar 1: Strengthening Sector Governance and Management
DLI 1: Implementation of Ministry budget in line with the Government’s Skills Sector Development Program and medium-term budgetary framework
2. Consistent target accomplishment of this DLI has been observed during the entire project period of the World Bank component (2014 to 2018). However, toward the latter part of 2018, there was a constraint on receiving adequate funds from the Treasury because of the cash flow issues of the Treasury.
3. The RBL modality demonstrated favorable impact on achievement of targets as the modality influenced the intended benefit realization of the program in the most efficient manner including appropriate funding toward necessary activities of the sector on priority basis and supporting timely completion of action. However, the negative impact of a good RBL funding model where funding is disbursed upon achieving implementing targets means that the Government needs to spend first. If there is a prolonged cash flow constraint or lack of funds, it is most likely to create a serious negative impact on the implementation of planned activities, where it constrains accomplishment of targets, which will in turn prevent timely fund disbursement. Therefore, it would be important to assess the RBL model and suggest innovative approaches to minimize the negative impact due to potential fund shortages of the Government.
DLI 2: Timely availability of reliable institution and agency-level data and periodical analysis of courses, centers and teacher performance
4. In 2014, the ministry adopted a comprehensive M&E framework to monitor and evaluate inputs, activities, outputs, outcomes, and impacts of the SSDP. According to the M&E framework, the ministry and implementing agencies are in the process of building a strong institutional mechanism and system for data collection, analysis, documentation, and dissemination of such reports among stakeholders.
5. The SSDP developed an in-house MIS as a measure to collect and analyze data related to skill sector development. However, it became partly functional to support limited activities. Further, the respective first few DLIs were achieved with a lot of manual interventions.
6. The present MIS is a still a fragmented system with serious drawbacks. Its development process was delayed, and it became almost impossible to proceed because of an inappropriate decision taken to develop software in-house without competent staff and technology. Serious limitation in further development of this existing system was observed by an information technology committee appointed by the Secretary of the ministry. A collective decision was taken to move to a new system which is field
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proven, reliable, flexible, and readily available in the market based on the recommendation of the committee. This was fully endorsed by the World Bank and ADB.
7. This idea of implementing a newly proposed MIS solution is strongly supported by all stakeholders, including both development partners, the ADB and the World Bank. The ministry obtained the approval of the Cabinet of Ministers and Department of National Planning recommendations and approved budget allocation from the Treasury. However, implementation was delayed because of various reasons beyond the control of the SSDP. The decision has been taken to implement the MIS through the Information Communication and Technology Agency, as directed by a circular issued by the Presidential Secretariat of the new government.
DLI 3: Introducing a performance-based funding (PBF) model for public training providers
8. The PBF model was designed and the first step was to prepare a Center Management Plan (CMP), previously known as Business Management Plan. The purpose of the CMP is to detail the activities to be undertaken by selected training centers as a pilot to contribute toward the achievement of objectives of the Government’s SSDP inculcating the best management practices at centers and encourage PBF.
9. Each plan expected to include a detailed budget with an activity plan to enable the ministry to disburse funds based on achievement of specified results and targets. This CMP will be demand driven and result based and comprise an analysis of local and national skills demand and include a strategy for development of the institution responding to identified skill sector demands. This shall include a budget for each planned activity with specific KPIs and the source of funding.
10. The main challenge in implementation of the CMP was the level of managerial competency of most officers in charge/principals and center managers as they are from more technical backgrounds and some are technical instructors who are acting as center managers. The SSDP and the managerial staff of the training institutes took a significant effort to guide center managers to prepare comprehensive and purposeful CMPs, which enabled achievement of the DLI targets. DLIs on implementation of the CMPs were achieved for all years except the second part of the last two years which is the PBF for centers. The PBF proposals given to the World Bank were not taken into consideration as an alternative restructuring approach was discussed. At present, funding to centers based on performance as proposed earlier is not implemented as it was observed that further improvements or the maturity of the manager at the center level needs to be achieved in all aspects of preparation and implementation of the CMP is aligned to the PBF model.
11. Full-fledged execution of a CMP based on the PBF model may not be the timely and most appropriate solution at this stage as it needs gradual strengthening of center management and hence an alternative extra funding method could be proposed as a measure to incentivize and encourage activities as the way forward at this moment. The general observation is that there is a noticeable improvement in centers that have implemented the CMP compared to centers that have not implemented the CMP. A complete review is planned on the implementation of the CMP and is expected to be completed by end of this year and this will give a more realistic understanding of the impact of the CMP implantation.
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Pillar 2: Improving the Quality and Relevance of Skills Development
DLI 4: Improving the relevance of training programs for students through increased participation by employers
12. In view of improving relevance of training programs, four ISSCs were established in the priority industry sectors (construction, ICT, manufacturing, and tourism). At this stage, all four councils are fully functional, and the tourism council is yet to gain its momentum moving along with its activities. ISSCs, which are employer-led organizations that constitute members from the respective industry, are representing the demand side of the training and are supposed to act as a bridge between vocational training providers who will be responsible for training delivery.
13. In addition to the formalized four ISSCs, there are employer-led committees in the health, agriculture, and automobile sectors executing the same tasks of councils and the Government is in the process of discussions attempting to formalize them as ISSCs.
14. Finally, now the councils have started contributing to the sector providing industry intelligence and inputs, enabling the ministry to produce skills that are necessary for the industry, and providing gainful employment to youth. Two councils (construction and ICT) have already completed the skills gap analysis and training delivery plans and they have completed revisions of their gap analysis. Further, the other two councils are in the process of completing the skills gap analysis for their respective sectors and are expected to complete the same within a few months. With the observation of positive trend toward activities of councils, achievement of all DLI targets would have been possible. The other challenge ahead is to ensure the self-sustainability of the councils and the ministry has already taken some action to support this effort and will continue to look into other possibilities in this regard.
DLI 5: Improving quality assurance mechanism
15. In view of improving the quality assurance mechanism, it was agreed to implement a QMS in the training centers with set targets in the increasing order of QMS implementation each year. It was observed that the targets were achieved until 2017, and during 2017 it was realized that the targets set beyond 2017 in 2014 were far too ambitious and implementation of the QMS at larger number of centers was clearly observed to be unrealistic. As all centers do not have the same capacity size and demand, the implementation of the QMS at relatively lager centers were conveniently completed. Implementation of the QMS at small centers where the institutes do not own the premises from where they operate or function in rented small premises, sometimes temples, created several constraints in improving the physical infrastructure because of multiple reasons. Because of public investment constraints on third- party property for infrastructure improvement, fewer number of students and staff, uncertainty of continuation of that location, and lack of facilities such as internet connectivity and other essential resources, it became an extremely difficult task to justify a case for improvement of such centers up to the standards of the QMS including the considerable unjustifiable investment on the infrastructure. On the other hand, because the number of students at these smaller centers is very small compared the total student population, it would be insignificant to create a negative impact with respect to implementation of the QMS. Therefore, during the MTR of the ADB, it was agreed to focus on the quality of training delivery under the revised version of the QMS, known as Quality Improvement System (QIS), rather than chasing the number of centers where substantial returns are not achieved for the effort. The ministry
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proposed the same to the World Bank during their MTR, but it was not considered as different approach on restructuring was discussed.
16. This new QIS addressed one other important aspect of lessons learned from the QMS implementation, which is the staff’s attitude toward quality, and created the necessary quality culture by activities such as having an internal ‘happy Committee’ and appointing quality ambassadors. This implementation of the QIS in over 200 centers now appears to be successful, and the number of centers where the QIS is implemented as a target has been accomplished under the revised targets of the SSDP.
DLI 6: Increasing availability of effective teaching staff in priority areas
17. The ministry has finalized and approved the HR Development policy and professional development plan, including a range of HR development activities on staff recruitment and retention, training, performance management, professional development, promotions, and retirement with necessary succession planning for all implementing agencies under the SSDP, and has achieved the relevant DLI for the first year. The DLIs for the following years based on the teacher-vacancy ratio targets were achieved because of consistent efforts and following up with concerned parties. The policy addressed all key areas, including introduction of staff allowances as incentives and necessary revisions to the scheme of recruitments, that contributed to fill up vacant positions and reduce staff turnover while achieving DLI targets.
18. DTET recorded a significantly lower vacancy ratio below 50 percent mainly because of obtaining the necessary approvals from the Department of Management Services. In contrast, other institutions demonstrated positive progress recording ratios above 80 percent and even above 90 percent in some cases. Furthermore, there have been significant delays in obtaining approvals from the Department of Management Services mainly because of the government recruitment policy and restrictions imposed from time to time.
19. Most importantly, the few staff shortages at DTET were covered with visiting teaching staff, causing minimal impact on the teaching requirements. It is also observed that having a certain percentage of teaching staff from the industry would be highly beneficial.
20. During the World Bank MTR in 2017, this issue was discussed, and the SSDP explained the difficulty of achieving the target of 90 percent, highlighting the necessity to revise the ambitious targets set at the beginning of the program in 2014.
DLI 7: Skills upgrading of existing teaching staff in priority sectors
21. Skills upgrading of the existing teaching staff has been consistent throughout the period and several initiatives have been taken with respect to teacher training, including higher professional qualification in teaching, industrial training management, overseas specialized training, industrial exposure, assessor training, and postgraduate scholarships. All DLI targets were achieved.
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Pillar 3: Expanding Access to Quality Skills Training
DLI 8: Number of students benefiting from the Employment-Linked Training Agreement (ETA) model
22. The development and implementation of the ETA model is an innovative approach that enables the Government to purchase training from private vocational training providers. This has been observed to be a successful model that can be used to deliver the intended outcome of strengthening private sector participation in the sector effectively.
23. The main challenge encountered during the initial period of implementation of the ETA model is the complexity of the procurement of training from the multiple private training providers for multiple training programs at different prices. The SSDP was able to overcome all issues that were contributing to slow progress by mainly reducing the complexity of the procurement and creating awareness of the ETA model among industry, including enhancing the regional geographical footprint outside Colombo. The consistent monitoring of activities and continuous assessments of performance of training providers during first few years (initial rounds) of the ETA model, contributed to the increasing trend of number of contracts signed with the increased number of enrollees. Having considered the lessons learned, the procurement process was optimized without compromising the national procurement guidelines while maintaining simplicity to attract qualified training providers from various parts of the country.
24. The implementation of the ETA model showed a very slow progress during the first few years, which delayed the achievement of respective DLI targets. Timely introduction of suitable remedial action enabled the SSDP to accelerate the progress and accomplish the achievement of all remaining DLI targets with greater participation of the private sector vocational training partners. The successful implementation of this model has now been recognized as a suitable model to facilitate necessary capacities for the students in the13th year of the education stream, introduced by the Government.
DLI 9: Improving use and dissemination of aggregate skills sector information
25. DLI targets were achieved for all years. Significant delays were observed in the final publications of information.
26. In the absence of a proper data collection tool for the entire TVET sector, including public and private training providers, TVEC had to make extra significant efforts to collect data, analyze, and document and disseminate information in the form of publication of annual labor market information bulletin and annual skills reports. The main disadvantage noted was information becoming obsolete because of delayed publication and not being applicable to the present situation. This further justifies the expeditious implementation of necessary information systems to ensure the availability of accurate and latest information.
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ANNEX 14. CHANGES IN LEADERSHIP DURING SSDD IMPLEMENTATION
Period Name of Ministry Name of Minister Name of Secretary Name of Program Additional Manager/Director Secretary in-charge Preparation Identification - MYASD Mr. Dullas Alahapperuma Mr. K.A. Mr. A.R. Desapriya — June 2013 Thilakaratne March 2013– Mr. B. Wijeratne Mr. Pradeep December 2014 Kumara Implementation January 2015 Ministry of Highways, Hon. Kabeer Hasheem Mr. Udaya R Mr. S. Higher Education, and Seneviratna Balasubramanium Investment Promotion March 26, 2015 MSDVT Hon. Mr. Piyasena Gamage Mr. R. M. Abeyrathna September 4, Hon. Mahinda Mr. P. Ranepura Mr. R.M. Abeyratne 2015 Samarasinghe December 2015– Mr. Pradeep January 2017 Haputhanthri March 2017 Mr. Udaya De April 2017 Silva May 26, 2017 Hon. Mr. Chandima Ms. Chandra Weerakkody Wickramasinghe April 2018 Ministry of Science, Hon. Dr. Sarath Amunugama (from May 2, 2017 May 1, 2018 Technology, Research, Mrs. W. M. K. S. D. onward) Skills Development and Wijayabandara October 2018 Vocational Training and Mrs. Wasantha Ms. Anuradha Kandyan Heritage Perera Illeperuma (from October 2018– MSDVT Hon. Dayasiri Jayasekera Mr. Sunil August 21, 2018) December 2018 Hettiarachchi December 28, Ministry of National Hon. Ranil Wcikramasinghee Mr. V. 2018–March Policies, Economic Sivagnanasothy 2019 Affairs, Resettlement and Rehabilitation, Northern Province Development,
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Period Name of Ministry Name of Minister Name of Secretary Name of Program Additional Manager/Director Secretary in-charge Vocational Training and Skills Development and Youth Affairs March 18, 2019– Ministry of Industry and Hon. Rishad Bathiudeen Mr. Ranjith Asoka October 23, 2019 Commerce, October 23, 2019 Resettlement of Ms. Himali to November Protracted Displaced Athaudage 2019 Persons, Co-operative Development, and Vocational Training and Skills Development December 2019 Ministry of Skills Mr. Dinesh Gunawardena Mr. D.M.S. Development, Labor, Abeygunawardena and Industrial Relations
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