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Developing Appropriate Financing Models to Enable the Scale-up of ECD Services

Authors: Jonathan Carter and Conrad Barberton
Date: 2014-05-21

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The first thousand days of a child’s life are critical, and appropriate early childhood development (ECD) is the bedrock for future growth and productivity. Opportunity costs of low levels of nutrition, stimulation and care are substantial, and often irremediable. Financing the scaling up of ECD services to full population coverage, and ensuring the sustainability of this financing model, involves an inter-departmental approach to funding a complete essential package for ECD. This report takes a strategic look at building the systemic capacity of the public sector to deliver this critical service.

 This paper explores the context for Objective 4 of the Ilifa Labantwana Work Programme. The aim of Objective 4 is to develop appropriate financing models to enable the scaling up of early childhood development (ECD) services to achieve population coverage. Developing a costing model for ECD services is relatively easy; the real challenge is to get the large-scale provision of ECD services financed on a sustainable basis.

Essentially, there are three options for financing the large-scale provision of ECD services on a sustainable basis:

  • Parents/caregivers pay for the provision of ECD services
  • Government pays for the provision of ECD services
  • ECD services are paid for by both parents/caregivers and government.

Currently, donor funding plays an important role in the provision of ECD services. However, this source of funding is not sustainable in the medium term, and would be insufficient to finance the scale-up of such services to achieve population coverage.

Parents and caregivers make an enormous contribution to the financing of ECD services. Often this is by choice – because they can afford to purchase the services, and want to give their children a good start in life. Very often it is out of necessity – because parents are working they need to pay someone to look after their children, and playschools or kindergartens are affordable options.

The reality of poverty in South Africa means that only a small percentage of parents can afford to finance ECD services for their children. The rest can’t. To rely on the private financing of ECD services would therefore serve to perpetuate existing social inequalities, with children from relatively better-
off families receiving ECD services of quality, and children from poor families and backgrounds receiving services of poor quality or no services at all.

Various arguments can be advanced as to why the government should take on the responsibility of financing the provision of ECD services. These include rights-based arguments, moral arguments, economic arguments, human capital arguments, public health arguments and so on. In the South African context, the most persuasive arguments revolve around the contribution that the public provision of ECD services can make to minimising the intergenerational impacts of current income inequalities, thus helping to give all children a more equal start in life, and thereby contributing significantly to equalising South African society.

However, the focus of this paper is not on why government should take responsibility for financing ECD services, but rather on the mechanics of preparing credible plans and budgets that will enable government to effectively finance and deliver ECD services. To this end, the paper explores how the division of revenue process and the national and provincial budget processes impact on the funding of ECD services. The discussion seeks to highlight entry points for influencing budget allocations for ECD, highlighting the importance of properly costed plans and budget proposals.