THOUGH sub-Saharan Africa remains a notable exception, the world battle against illiteracy continues to make slow gains. Over the last two decades the worldwide percentage of adult illiterates has fallen from 38.5 percent to 26.6 percent.Since developing countries must channel most of their scarce education resources to elementary schools, much of the work and funding in the fight against adult illiteracy is done by voluntary groups. Hoping to spur them to do more, the United Nations Educational, Scientific and Cultural Organization (UNESCO) gives out five world prizes each fall totaling $67,000. This year there were 34 candidates. The oldest award is the Nadezhda K. Krupskaya Prize, sponsored by the Soviet Union since 1969. This year it went to the Adult Basic Education Society of Pakistan for work in developing materials and pilot centers that have helped 200,000 adults learn to read and write (see story, Page 12). The Society was particularly commended for including large numbers of women. Two of every three adult illiterates are women and two of every three youngsters not in school are girls, says Colin Power, UNESCO's assistant director-general for education in a phone interview from Paris. Women often have a much harder time than men in getting literacy help, he says. Yet the payoff is enormous: "If women become educated," he says, "the health of their children improves, infant mortality drops quite significantly, and the birthrate drops." The criteria considered by the awards jury include the size of the program, the degree of commitment, and solid evidence of achievement, according to Mr. Power. "It needn't be that millions of people have become literate [under one program]," he says. "It might be that a group has worked for a long time in a particularly difficult area." The Noma Prize, created by the late Japanese educator Shoichi Noma, was the only one given directly to a government this year. It was won by India's state of West Bengal for an intensive literacy campaign in the provinces where 10 million illiterates live. West Bengal, which must teach in Bengali, Hindi, and Urdu, recruited many of its teachers and students through house-to-house surveys. The government was also praised for incorporating materials on health, population, and self-employment for women. "Literacy programs are always linked up with the acquisition of basic knowledge and skills Power says. "What you read and write about and learn to compute with relates to your survival in the community. If it's not functional, you have dropouts and a reversion into illiteracy again." The Iraq Literacy Prize, sponsored by Iraq, which has reduced its own adult illiteracy from 66 percent to 5 percent over the last two decades, went to the People's Action Service Center of Venezuela. The center has promoted literacy through both community activities and one-on-one teaching since 1973. It has organized 300 training workshops for educators and 4,200 literacy courses. Though Japan is widely known as a nation of voracious newspaper readers, the UNESCO Co-Action Learning Center Movement in Japan won the International Reading Association Literacy Award. The group won for organizing global exchanges and for innovative fund-raising efforts on behalf of 67 literacy projects in Asia, Africa, the Middle East, and Latin America. The largest single award - the $30,000 King Sejong Literacy Prize from the Republic of Korea - went to the Institute of Adult Education at the University of Ghana. Since the early 1970s, the institute has designed courses in literacy and adult education and has taught adults in 10 villages near the campus. Power says that access to literacy material, rather than lack of awareness of its importance, is the largest barrier to improving world literacy. "People are often desperate for information - they want to get skills and they know they need them - but in the poorest countries, there's often no blackboard, no chalk, and no books."