ADB to support medium-term reforms in vocational education to diversify Azerbaijan's economy

The Asian Development Bank (ADB) plans to allocate $150 million in two tranches to finance the "Modernizing Vocational Education and Training for Economic Diversification" program in Azerbaijan, Report informs, citing ADB.

The total cost of the project is estimated at $160 million, where $10 million falls on the share of the participation of the Azerbaijani government in the project. The project implementation period is defined from September 2022 to December 2025.

"The government has requested approval and disbursement of tranche 1 of the PBL (policy-based loan) by the end of 2022. Coordination with the Ministry of Finance and MOE (Ministry of Education) on fast-tracking the government reviews and approvals will be required," ADB says.

Transaction TA (technical assistance) of $750,000 from ADB's Technical Assistance Special Fund (TASF-other sources), to be approved simultaneously with the concept clearance and implemented during May 2022–September 2023, is proposed to help prepare the program, support the completion of the policy actions under the PBL component's first tranche, and ensure procurement readiness of the project component; the TA will also enable a smooth start to the program's implementation.

"The proposed sector development program (SDP) will help transform vocational education and training (VET) in Azerbaijan to develop the human capital needed for economic diversification and the fourth industrial revolution (4IR), and promote gender equality. The SDP is closely aligned with the Government of Azerbaijan's strategic objective of transforming the country's human capital into a driving force to accelerate sustainable, inclusive, private sector-led, and diversified growth," the project description reads.

The bank notes that transforming Azerbaijan's VET system requires sector policy reforms to overcome the binding constraints, and modern VET institutions. In this context, the two-tranche, stand-alone policy-based loan (PBL) component will support the government's medium-term reforms to strengthen the financing, quality and relevance, and institutional set-up of VET; while the project component will help modernize the selected VET institutions and bolster the institutional capacity to deliver the reforms.

According to the bank, under tranche 1, the government will approve updates to the education sector's medium-term expenditure framework to ascertain funding for the targeted outcomes of VET, approve action plans for the introduction of per-capita (performance-based) funding and gender-responsive budgeting in VET, establish the Vocational Education Development Fund to finance VET institutions, and the Student Credit Fund to provide loans to VET students, and adopt regulation of performance-based student stipends, including for VET students.

Under the PBL component's tranche 1, the government will adopt 30 new VET curricula and programs to include soft skills and other 4IR-relevant skills; approve a resolution to add new occupations in agriculture, tourism, and ICT to the VET classification system to better meet the needs of these sectors; set up a transparent and competitive recruitment process for VET teachers and coaches; adopt an action plan to strengthen career counseling in VET; establish a pathway from VET to higher education by introducing the credit system; and adopt rules for recognizing prior learning to help economically active persons obtain formal qualification.

Under tranche 2, the government will adopt and implement per-capita (performance-based) funding and gender-responsive budgeting in selected VET institutions, approve regulations to ascertain VET funding from the Unemployment Insurance Fund, and approve one project involving private participation in VET and conduct accreditation of one private VET provider.

The project component will serve to upgrade and equip about five VET institutions to the labor market and 4IR standards, giving consideration to gender equality; and build the capacity of VET institutions to deliver the updated curriculum and training programs, including 4IR skills, and provide career guidance.

Under tranche 2, the government will adopt a new VET classification in line with labor market and 4IR requirements; adopt 30 new VET programs to also cover occupations relevant to green energy and 4IR; adopt a new incentive mechanism to better attract and retain human resources in VET; adopt and implement the national VET teacher training framework; revise the design standards of VET institutions to meet the requirements of 4IR, energy efficiency, and gender equality; and approve a 5-year plan for the modernization of vocational education infrastructure that includes private participation projects.

ADB was established in 1966 and has 67 member countries. The bank's headquarters is located in Manila, the Philippines. Azerbaijan was accepted as a member of the ADB on December 22, 1999, and the country's share in the bank's capital is 0.5%.

During the period of cooperation, the bank has provided $5 billion of loans to Azerbaijan.