Early childhood development is a stated priority of the South African government, yet the funding of ECD services remains fragmented, non-mandatory and heavily reliant on parents, caregivers and donors. Donor funding is not sustainable in the medium term and could never finance population-level coverage, while relying on private fees entrenches existing inequalities between children from better-off and poorer households. If ECD is to reach all children, and especially the most vulnerable, government has to carry the bulk of the cost.
Cornerstone was commissioned by Ilifa Labantwana to support Objective 4 of its work programme: developing appropriate financing models to enable the scale-up of ECD services. This technical report, authored by Jonathan Carter and Conrad Barberton, sets the groundwork for that work. Rather than rehearsing the well-established arguments for why government should fund ECD, it focuses on the mechanics of how: what it takes to prepare credible plans and budgets that can actually secure allocations through the budget process.
How ECD is funded, and where the decisions are made
The report traces ECD through the Children’s Act, the division of revenue and the national and provincial budget processes. Provinces are responsible for planning, funding and delivering partial care and ECD programmes, but the Act makes ECD a service that MECs “may” rather than “must” fund, which weakens the legal lever for compelling provinces to expand provision. Government funding can flow either through the unconditional provincial equitable share or through a conditional grant from the national Department of Social Development, and each route carries its own trade-offs.
The report walks through the annual budget calendar in detail – from the Medium Term Budget Guidelines and function group meetings, through the MTEC, MinComBud, the Budget Council and the MTBPS, to the Provincial Budget Benchmarks – and identifies the decision gates after which allocations can no longer be influenced. A schematic of the full revenue sharing and budget cycle is provided as an annexure.
Key findings
The report weighs the case for an ECD conditional grant and concludes that, while such a grant would guarantee a minimum budget in each province, conditional grants have a poor record of adding value, often simply displace existing allocations and reduce provinces to implementation agents. A more durable approach is to fund ECD through the equitable share and hold provinces to account through well-defined, measurable national norms and standards – a lever national government uses far less than it could.
It also finds that the lack of clarity around what ECD services actually consist of, together with a record of under-spending and over-optimistic implementation plans, has made it difficult for provincial departments of Social Development to put credible ECD budget bids forward. The new provincial budget programme structure introduced in 2014/15, which places ECD in its own sub-programme, is a welcome step towards making ECD spending visible and comparable across provinces.
The report closes by setting out the rationale for costing ECD services and a six-step approach to developing costing models that are compatible with the budget templates provinces already use, so that role-players in government can produce credible bids at district, provincial and national level. Defining concrete service delivery models for the Essential Package of ECD services is identified as the essential precursor to that costing work.
Published by Ilifa Labantwana as Technical Report 3 (2014). The report is available for download above.