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	Table of Contents
p. 8 of 22 BACK | NEXT Preface Executive Summary I. Introduction II. Development of the Policy Paper III. Education and Poverty Reduction IV. The Changing Context V. Experience of the Asian Development Bank A. Changing Nature of ADB Support B. Lessons Learned VI. Assistance Policies and Support for Education VII. Role of the Asian Development Bank VIII. Dimensions of the Education Policy IX. Education Policy Principles X. After the Policy Paper XI. Recommendation Appendixes

Policy on Education : V. Experience of the Asian Development Bank

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A. Changing Nature of ADB Support

14. ADB has been providing support to the education sector since 1970, when education—technical and vocational—was seen as an essential element of any strategy for national economic development. The days of human resource planning were at their height. Assessing the likely demand for particular types of skills, and developing training programs to produce the designated number of persons with the required skills were important activities. This rather mechanistic approach gradually fell out of favor as economists and planners began to recognize that (i) they could not predict with any certainty how many people with a particular skill might be required in a few years’ time; (ii) basic education had higher rates of return, and laid the foundation upon which broad economic development must ultimately rest; and (iii) even where particular skills might be required, government provision was by no means the most efficient and cost-effective strategy for doing so.

15. In the two decades from 1970 to 1990, ADB provided a total of about $1.5 billion in loans to the education sector, of which 48% was allocated to technical and vocational education, and 28% to higher education (Figure 1a). Technical assistance followed a similar pattern (Figure 2a). Within these subsectors, most of the ADB funds were used for expanding and upgrading facilities, and for procuring equipment needed for training, with smaller amounts going for staff development and institutional capacity building. By the late 1980s, ADB and the international development community as a whole began to shift resources to basic education, especially basic education for girls, as a broader view of development began to prevail. That view, while recognizing the importance of economic growth, gave much greater importance to human development as an indispensable and integral aspect of national development. The 1990 World Conference on Education for All (EFA) endorsed an ambitious declaration to provide basic education to all children and all uneducated adults by the end of the century (Box 3). At the conference, ADB pledged to increase its own lending for basic education.

16. The pattern of ADB’s education lending and technical assistance by subsector in the years since 1991 is quite different, with basic education accounting for 41% and technical and vocational education for only about 14% of lending (Figures 1b and 2b). Within the basic education subsector, ADB diversified its lending with support for primary education, lower secondary education (usually as part of an expanded definition of basic education), nonformal education, and early childhood development, with girls’ and women’s education receiving more attention. Not only did the subsectoral focus of ADB’s support for education evolve substantially during the 1990s, but the nature of the allocation changed as well. Increasingly, ADB shifted its support from the traditional hardware of facilities and equipment to the software of teacher training, curriculum development, provision of instructional materials, planning and management, and institutional capacity building. The process of identifying and preparing projects also changed, as participatory planning and beneficiary consultation became increasingly important to ensure that projects were designed in a manner that encouraged local ownership and local management.

17. ADB support for education lending has also evolved in terms of the type of lending modality used. ADB has channeled most of its resources for education through projects that are prepared in considerable detail, and have relatively little flexibility for alteration during implementation. Some have been sector loans for which the borrower and ADB agree on certain criteria for appraising particular subprojects, appraise a representative sample together, and leave the remainder for the borrowing agency to select and appraise. The program (policy) lending modality has not been often used in the education sector. Recently, the sector development program (SDP) has been added to ADB’s lending modalities and used successfully in Cambodia, Indonesia, Kyrgyz Republic, and Mongolia (Box 4), with new SDPs being prepared for the Philippines and Uzbekistan. The SDP is a blend of program and project lending, under which the borrower agrees to certain policy reforms in exchange for a quick-disbursing program loan, while the parallel project loan provides more detailed and targeted support for implementing activities related to policy implementation. The SDP is particularly appropriate in cases where ADB aims to help the government design and then support implementation of a broad framework of sector policy reform.

Figure 1a: Cumulative Education Sector Lending, 1970–1990

Figure 1b: Cumulative Education Sector Lending, 1991–2001

Source: Internal ADB database.

Figure 2a: ADB Cumulative Education Sector Technical Assistance, 1970–1990

Figure 2b: Cumulative Education Sector Technical Assistance, 1991–2001

Source: Internal ADB database.

18. ADB resources have tended to concentrate on schooling as opposed to education in the broader sense, for example, community education and nonformal education. ADB has focused its attention much more on funding inputs to the formal schooling process, for example, school construction, teacher training, instructional materials, and staff development. Fairly recent initiatives supported by ADB in early childhood development and nonformal education are signs that ADB is moving to a broader concept of education that goes beyond formal schooling and can better address the education needs of poor communities, including ethnic minorities.

19. ADB currently has 35 DMCs that are eligible to borrow. Of these, ADB has provided loans for the education sector in 24 countries since 1970. However, ADB support is unevenly distributed with only three countries accounting for two thirds of total education lending since the first loan in 1970: Indonesia (42.3%), Pakistan (10.8%), and Bangladesh (10.6%).

20. During this period, ADB began to use its technical assistance grant facility to support an increasing range of activities other than traditional project preparation. Technical assistance has been increasingly used to fund capacity building, education sector studies, research, and policy studies. Since 1970, ADB has provided about $118.8 million in technical assistance to the education sector, 80% of this since 1991. Between 1970 and 1990, ADB provided 86 technical assistance grants, of which 60% were used for project preparation; but from 1991 through 2001, 185 technical assistance grants were provided, and only 38% were used for project preparation— another indication of ADB’s evolving role of providing advice and guidance.

21. While ADB has increased its support for the basic education subsector, it has not increased its overall investment in education as a percentage of overall lending by any significant extent in the last decade. Even as the importance of human development and the role of education in human and economic development became ever more clearly recognized, ADB’s support for the sector as a percentage of total investment did not increase (although the absolute amount of funds lent for education did increase). ADB lending for education totaled about $3.8 billion from 1991 to 2001, more than twice the amount provided in the preceding 20 years. The proportion of education lending as a percentage of total lending has remained fairly constant, at around 6% per year since 1991 (Table 1). On average about 10% of all ADB projects have been for education. About 41% of all education lending has been from the Asian Development Fund, and thus on concessional terms. The remainder has been from ADB’s ordinary capital resources for nonconcessional lending. Given the importance of investment in education for both poverty reduction and economic development, one can still strongly argue that the percentage of ADB lending for education should be substantially increased.

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