Results-based lending, a new approach to project financing where disbursement is linked to project results, is helping ADB to better address challenges in Sri Lanka's education sector.
Title: Results-Based Lending Program in Sri Lanka
Description: Results-based lending, a new approach to project financing where disbursement is linked to project results, is helping ADB to better address challenges in Sri Lanka's education sector.
Text: Results based lending (RBL) is a performance-based form of financing, where disbursements are linked to the achievement of results rather than to upfront expenditures, as is the case with traditional investment lending. Principal Social Sector Specialist Gi Soon Song talks about her experience implementing RBL in Sri Lanka.
SOT: Gi Soon Song
Principal Social Sector Specialist
Asian Development Bank
I’m currently administering two first RBLs approved by ADB. One is education sector development program, the other one is in the skills sector enhancement program, which is approved in 2014, both are in Sri Lanka. We chose RBL as a modality because it actually suits the challenges faced by the education sector in Sri Lanka.
First of all, the government has a pretty good capacity and they achieved quite a lot in terms of equal access and some of the important areas such as gender parity and so on. But at the same time, they’re facing new kinds of challenges, now they have to look for more quality and relevance in their education as well as training that requires rethinking of their education strategy and the way they actually operate. RBL best suited the modality because of the existing capacity. They have operationally good capacity in terms of financial management, procurement, and other aspects as well as their usual education sector implementation program capacity.
RBL in Sri Lanka enable ADB to address 3 areas:
- Measuring what’s more important for the sector, by having RBL and focusing on the employment outcome and then taking that target as a link with the dispersement. Actually now, people in the ministries are asking themselves whenever they are initiating new things, or even in the daily discussion – Is this initiative or this step in the initiative would lead to better employment outcome? Is this helping our graduates be equipped to be employable? Is this what industry wants?
- RBL allows ADB to support innovation and flexibility because we define the results and then we do not define or prescribe the steps they have to go through, which was the case in investment projects. We define the consulting packages, procurement packages, so to a certain extent we are prescribing what kind of activities they have to do in order to deliver the results.
- The third point is – because of the more focus on the results that allows ADB to focus on more substantive issues and systematic issues rather than focusing on the individual transactions, and individual activities to be delivered.