Leveraging Outcomes-Based Financing to Transform Early Childhood Care and Education: A Global Evidence Review

• In Event: Investing in Early Learning: Exploring Innovative Financing in Early Childhood Care and Education

Proposal

The global education crisis, worsened by the COVID-19 pandemic, has left millions of young children without access to quality Early Childhood Care and Education (ECCE), particularly in low-income countries. Quality ECCE is vital for young children to develop the cognitive, social, and emotional skills needed to engage with the education system and society in the digital age. ECCE addresses complex, multi-sectoral needs, including education, health, nutrition, and child protection, necessitating effective and sustainable funding strategies.

Outcomes-based financing (OBF) approaches, which link funding to measurable outcomes, have been explored to financially incentivise stakeholders to improve effectiveness, efficiency, and accountability in ECCE services. The application of OBF in ECCE is relatively new compared to other sectors, highlighting the need to examine how this model functions across different contexts. Understanding what works, under which conditions, and for whom is crucial for informing future program design and implementation. This evidence review responds to the need to capture experiences and insights from projects designed and implemented using various OBF approaches in ECCE.

The evidence review analysed 22 ECCE projects that use OBF across 36 countries. The review adopted a multi-phase approach, including document collation, coding, and analysis, supported by interviews and convenings with ECCE and OBF stakeholders. The analysis used existing frameworks from OBF inquiries tailored to ECCE's specific challenges and opportunities. These frameworks guided the identification of key themes, including context and rationale, intervention design, stakeholder engagement, and outcome measurement. The findings offer valuable insights for stakeholders designing and implementing OBF approaches in ECCE within various contexts.

The review shows that OBF in ECCE is driven by goals such as enhancing service quality, attracting additional funding, improving accountability through innovative financing, testing the feasibility of new interventions, and improving private ECCE provision. Most projects included early learning indicators like literacy and numeracy measures, with some also covering other childhood development domains (language, motor, socio-emotional, executive function skills) that support learning. Projects were implemented in diverse contexts to reach underserved populations, with supportive policy frameworks for public-private partnerships. The review also notes OBF's potential to unify fragmented ECCE sectors by aligning diverse stakeholders around shared outcomes, though fragmentation and complexity across multiple sectors remain significant challenges. Projects mainly focused on education, with a few integrating broader policy sectors like health and nutrition. The review identifies knowledge gaps in understanding the broader country policy context of ECCE and OBF, outcomes measurement design, detailed project evaluation costs, and multi-sectoral stakeholder engagement.

This evidence review provides insights for policymakers and practitioners designing future OBF interventions and some initial data for comparative and international education scholars for future research.

Author

• Arushi Terway, NORRAG