The overarching objective of cooperation between Germany and Laos in the vocational training sector is to improve the quality and the labour market relevance of Technical and Vocational Education and Training (TVET), and skills development, as well as to support the employment of graduates of vocational institutes. Dual co-operative training (DCT), which involves collaboration between employers and vocational schools, is one major form of labour market-oriented vocational training in Laos. The direct involvement of enterprises in the planning, delivery and assessment of TVET is an indispensable paradigm shift in the predominantly school-based training sector in Laos and is seen as a key factor in achieving the socio-economic targets of the country.

Considering the local Laotian context, the German development bank KfW decided to introduce an innovative funding mechanism, the challenge fund approach. In this approach, funding is allocated to partnerships of TVET providers and companies as a result of a competitive application process. A consortium including PLANCO Consulting and IPC were contracted by KfW to set up a EUR 6.6 million Vocational Education Financing Facility (VEFF), dedicated to providing financial support to dual co-operative training (DCT) partnerships on a competitive basis. The measures funded will ultimately increase workplace relevance and practice-orientation of vocational training offers.

In order to facilitate the establishment and operation of the VEFF, consortium experts from PLANCO and IPC have:

• established governance and management structures
• mapped potential applicants
• refined the VEFF funding policy
• identified suitable third-party service providers (DCT advisers)
• established a TVET Financing Advisory Committee
• developed standard operational procedures
• established financial management systems, financial plans and a disposition fund
• developed an IT-based grant management system (GMS) and project website
• established a monitoring and evaluation system
• written a targeted communication strategy
• developed a project pipeline
• investigated the need for DCT curricula development and training of TVET teachers/in-company trainers