180/25 💡 An Integrated SMART Framework to Transform Pakistan’s Skills Sector - Linking Skills to Paychecks Through Skills Impact Bonds.

Authored by Shoaib Mohsin – Senior Advisor & Consultant, Skills Development, TVET Reform & Impact Financing

As Pakistan celebrates its 78th Independence Day, the country faces a challenge defining its future: millions of young people are stepping into the job market each year, but there aren’t enough opportunities to match their ambitions. For too long, success has been measured by how many people were trained and not by how many found jobs.

That’s beginning to change. Pakistan has just approved its first-ever Skills Impact Bond (SIB), a bold new way to rethink job training. This model flips the script, unlike traditional programs funded by government budgets or donor grants. Here, private investors pay for training up front. They only get repaid if the graduates land jobs or see their incomes rise, which are independently verified outcomes. The idea is simple: training programs should be judged by results, not intentions.

Around the world, more than 200 such “impact bonds” in 35 countries have shown promise. In India, for example, a $14.4 million Skills Impact Bond is training 50,000 young people, 60 percent of them women. Early numbers are encouraging: more than 70 percent of women enrolled have already found jobs, and most stay employed for months afterward, outperforming national averages. In Argentina, a similar effort helped vulnerable youth in Buenos Aires neighborhoods move from uncertainty into stable employment. In Colombia, a workforce bond tied payments to job retention, ensuring that disadvantaged workers didn’t just find jobs but kept them.

These success stories underscore a fundamental truth: when governments, donors, and training providers unite under a common outcomes-based framework, everyone benefits. This collaborative approach minimizes duplication, fosters trust, and ensures that funds are only disbursed when tangible, verified results are achieved. It's a collective effort that we can all be part of.

With this lesson in mind, Pakistan’s new Skills Impact Bond is being introduced. Its proposed Integrated SMART Framework aims to ensure that every rupee invested directly translates into livelihoods, particularly for young people and women who need them most.

Pakistan’s biggest asset is its youth. The country’s future will depend less on the number of certificates handed out and more on the number of paychecks earned. The Skills Impact Bond will bring hope and opportunities for people investing in relevant skills training that will bring prosperity to the nation.

Coordination the Key to Successful Outcomes
While promising, SIBs are complex. They require cooperation between governments, investors, training providers, and evaluators. 

•    Federal and provincial authorities must have an integrated monitoring systems and financial management.
•    Standardized format for presentation and verifications of data to avoid redundanceis and over burdening the system.

To achieve crisp and transprent outcomes there is also a need for an one integrated MIS and single verification process that can reduce costs by up to 40%, enables faster payments to providers, and creates trust among donors and investors. The World Bank’s Punjab Human Capital Investment Project is already demonstrating this approach by linking provincial and federal databases to eliminate duplication.

Lessons Learned from Recent Programs Focussing on Skills Development
Several recent initiatives show what works – and what future Skills Impact Bonds must build upon:

•    NAVTTC’s Skills for All Strategy is training 170,000 youth in ICT, hospitality, and emerging technologies through CBTA in 1,000+ institutes, with inclusion measures for women, persons with disabilities, and remote-area youth.

•    Punjab Skills Development Fund (PSDF) has trained over 600,000 youth across 250 trades, with 44% of graduates being women, proving that demand-driven and inclusive programming can achieve scale.

•    TVET reforms (EU-ETF & GIZ) led to the launch of the National TVET Policy and NVQF in 2015, creating unified standards for competency-based training nationwide.

•    GIZ’s Build4Skills and Shana Bashana piloted workplace-based training and helped women break into male-dominated trades through internships with companies like Siemens.

•    Karandaaz and BISP’s partnership digitized stipend payments and rolled out digital literacy to millions of women beneficiaries, showing how fintech solutions can reduce leakage and improve transparency.

The simplistic rule in skills development is when programs are market-oriented, inclusive, standardized, and tech-enabled, they deliver real results.

Based on my previous expertise in the field I proposed the following strategy for SIB.

Six Pillars of a Successful Skills Impact Bond
For Pakistan’s SIB initiative to succeed, it must be built on six essential components:

1.    Market-Led Sector Mapping – Align training with real labour market demand.

2.    Unified M&E Systems – Create one national outcomes database with single-source verification.

3.    Gender-Inclusive Design – Set participation targets, support women with transport and childcare, and promote non-traditional trades.

4.    Outcome-Based Pricing – Pay for verified employment results, with incentives for placing differentially abled and vulnerable groups.

5.    Investor Engagement – Provide transparent reporting and risk mitigation tools to attract capital.

6.    Capacity Building & Data Systems – Strengthen training providers and build an MIS linked with national identity and employment databases.

Suggested Action Pathway: A Phased Roadmap for Pakistan Skills Impact Bond
Designing and implementing an SIB requires a structured journey. A phased approach ensures systematic preparation, credible outcomes, and long-term sustainability.
 

Phase 1: Foundational Diagnostics
•    Conduct Integrated Skills Gap Mapping to identify high-growth trades with ROI and gender filters.

•    Undertake a Baseline Survey to capture target populations' demographics, employment status, and income.

•    Create a Beneficiary Profiling Database for tailored interventions.

👉 Outcome: Resources are directed where most needed, duplication is avoided, and policymakers have credible data for decision-making.

Phase 2: Strategic Design
•    Unified M&E framework and develop a Theory of Change linking inputs to measurable outcomes.

•    Establish a Unified Gender Equity & Inclusion Strategy, including action plans and outreach toolkits.

•    Create a Cost-per-Outcome Pricing Dashboard, benchmarked with global SIB rates.

👉 Outcome: Standardized frameworks save millions in consultant costs and ensure donor audit compliance.

Phase 3: Verification & Performance Systems
•    Design an Independent Verification Protocol (IVP) with transparent methods.

•    Introduce Digital Verification Tools and Service Provider Scorecards.

•    Build a consolidated Investor & Donor Engagement Toolkit, including IRR/ROI models and risk mitigation strategies.

👉 Outcome: Harmonized verification builds trust, saves dual audit costs, and improves investor confidence.

Phase 4: Engagement & Scale-Up
•    Develop Digital and Financial Literacy Modules & Toolkit with training manuals, IVR scripts, and mobile app mockups for beneficiaries (Distinct focus for Provincial and Federal level)

•    Provide Employment Readiness Toolkits covering CV writing, interview prep, and soft skills.

•    Introduce Retention Dashboards and Tracer Studies to measure job quality and 6–12 month retention rates.

👉 Outcome: Ensures long-term sustainability, reduces design cost by 30%, and strengthens investor payout verification.
 

This phased approach reduces duplication, ensures alignment with donor audit requirements, and creates systems that can be scaled nationally.

A Call to Action
Pakistan’s first Skills Impact Bond represents a bold shift towards results-oriented collaboration. But to turn this initiative into a lasting impact, integration is essential. 

As Pakistan celebrates its 78th Independence Day, the moment is right to rethink how we finance and deliver skills training. By piloting this framework, policymakers and partners can ensure accountability for donors, confidence for investors, and real opportunities for youth and women.

‘This is not just about financing training programs - it is about financing outcomes that transform lives’

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