Azerbaijan: Modernizing Vocational Education and Training for Economic Diversification Sector Development Program
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. It is also an integral part of the country partnership strategy of the Asian Development Bank (ADB) for Azerbaijan and its strategic pillar of improving infrastructure and strengthening human capital.
Haydarov, Aziz K.
Central and West Asia Department
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|Project Name||Modernizing Vocational Education and Training for Economic Diversification Sector Development Program|
|Country / Economy||Azerbaijan
|Project Type / Modality of Assistance||Loan
|Source of Funding / Amount||
|Strategic Agendas||Environmentally sustainable growth
Inclusive economic growth
|Drivers of Change||Gender Equity and Mainstreaming
Governance and capacity development
Private sector development
|Sector / Subsector||
Education / Education sector development - Technical and vocational education and training
|Gender Equity and Mainstreaming||Gender equity|
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. It is also an integral part of the country partnership strategy of the Asian Development Bank (ADB) for Azerbaijan and its strategic pillar of improving infrastructure and strengthening human capital. In addition, the SDP is aligned with ADB's Strategy 2030 and its operational priorities of addressing remaining poverty and reducing inequalities, accelerating progress in gender equality, and strengthening governance and institutional capacity; and with the human development cluster of the Central Asia Regional Economic Cooperation (CAREC) Strategy 2030.
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.
The expected impact is the modernization of Azerbaijan's human capital into a driving force for accelerating sustainable, inclusive, private sector-led, and diversified economic growth. The expected outcome will be the improved responsiveness of the VET system to the needs of the labor market and 4IR. The SDP's three outputs are: (i) Financing of vocational education and training improved, (ii) Quality and relevance of vocational education and training strengthened, and (iii) Institutional framework of the vocational education and training sector strengthened.
|Project Rationale and Linkage to Country/Regional Strategy||
Azerbaijan's economy still depends on the oil industry and is vulnerable to volatile oil production and prices. To accelerate economic diversification, the government's focus since 2016 has been on developing agricultural production and processing, heavy industry and mechanism engineering, tourism, logistics and trade, and information and telecommunication technology (ICT). Growth in these non-oil sectors is constrained by a skills shortage. Young workers often lack job-specific technical and soft skills such as problem solving, communication, teamwork, and leadership.
The SDP builds on the strategic recommendation that ADB program in Azerbaijan should have a greater focus on building human and social capital in parallel with developing and improving physical structure and support policy reforms. Addressing the long-standing VET sector's issues needs both the policy reform support and modernized VET institutions. The proposed program builds on the demand-driven technical and policy advice on VET and youth employment in 2020, the assessment of the impact of 4IR on Azerbaijan's high-growth potential sectors, and the ongoing support to public sector management and PPPs in Azerbaijan.
|Impact||Modernized human capital as a driving force for accelerating sustainable, inclusive, private sector-level, and diversified economic growth.|
|Outcome||Responsiveness of the VET system to the needs of the labor market and 4IR improved.|
|Outputs||Financing of VET improved|
|Summary of Environmental and Social Aspects|
|Environmental Aspects||due diligence ongoing|
|Involuntary Resettlement||due diligence ongoing|
|Indigenous Peoples||due diligence ongoing|
|Stakeholder Communication, Participation, and Consultation|
|During Project Design||The Ministry of Finance (MOF) will be the executing agency for the PBL. MOE will be the executing agency for the project loan. MOE and the SAVE will be the implementing agencies for the PBL.|
|During Project Implementation||The PBL implementation period will be June 2020-September 2024: the period of tranche one is June 2020-September 2022, and the period of tranche 2 is October 2022-September 2024. The PBL tranches ($60 million each) will be disbursed upon fulfillment of the policy measures of the respective tranche. The project implementation period will be September 2022-December 2025. A program implementation unit (PIU) will be established at SAVE to support implementation of the PBL and the project. The government will provide in-kind support, including office accommodation, for the PIU. A steering committee chaired by MOE, with MOF, SAVE, and the Ministry of Labor and Social Protection of Population as members, will oversee the program implementation.|
|Consulting Services||About 9 person-months of international and national ADB staff inputs are required to process the program. A transaction TA of $750,00 from ADB's Technical Assistance Special Fund (TASF-others) implemented during May 2022 May 2023 is proposed to help prepare the tranche 1's policy measures, support procurement readiness of the project, and enable smooth startup of the program's implementation. The TA will support provision of about 15 person-months of international and 25 person-months of national consultant inputs. The government will provide in-kind contributions, including office accommodation and counterpart staff.|
|Procurement||The project component, financed through ADB loan of $30 million and government counterpart funding of about $10 million, will support procurement of modern 4IR-relevant equipment and minor works related to the proper installation of the procured equipment in the selected VET institutions. It will also support capacity building of government staff and personnel of VET institutions, and help design and implement the policy measures under tranche 2 and the post-program partnership framework. Procurement will follow ADB's Procurement Policy (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers (2017, as amended from time to time)|
|Responsible ADB Officer||Haydarov, Aziz K.|
|Responsible ADB Department||Central and West Asia Department|
|Responsible ADB Division||CWSS|
Ministry of Education
Government House, Baku
370016, Azerbaijan Ministry of Finance
83, Same Vurgun Street AZ1022 Baku, Azerbaijan
|Concept Clearance||25 May 2022|
|Fact Finding||29 Jun 2022 to 14 Jul 2022|
|MRM||30 Aug 2022|
|Last Review Mission||-|
|Last PDS Update||27 May 2022|
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|Title||Document Type||Document Date|
|Modernizing Vocational Education and Training for Economic Diversification Sector Development Program: Concept Paper||Concept Papers||May 2022|
|Modernizing Vocational Education and Training for Economic Diversification Sector Development Program: Initial Poverty and Social Analysis||Initial Poverty and Social Analysis||Apr 2022|
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