Blended Financing Models to Increase Access to and Incentivize Quality in Non-State Early Childhood Care and Education Centers

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

Proposal

Despite a strong focus on Early Childhood Care and Education (ECCE) in recent years, enrolment in East and Southern Africa has stagnated. (UNESCO Institute for Statistics (UIS). UIS.Stat Bulk Data Download Service). Access varies significantly within countries, with stark inequalities; in Sub-Saharan Africa, 52% of children in the wealthiest quintile have access to ECCE, compared to just 9% in the poorest. (UNICEF Global Database, data.unicef.org)

The private sector has stepped in to address some of the gaps left by LMIC governments struggling to finance ECCE. In Sub-Saharan Africa, 54% of preschool enrolment is in private institutions, compared to 11% in primary and 16% in secondary schools. (“Non-State Actors in Early Childhood Education: Implications for Education Equity and Quality”, Baum, 2020. UNESCO Global Monitoring Report). In countries like South Africa, all ECCE services are provided by non-state schools.

This presentation will explore how private sector initiatives are addressing challenges in early childhood care and education (ECCE) by improving access and quality. An outcomes-based financing model, known as the "Rewards and Recognition" program, is being implemented in Rwanda and South Africa to support ECCE services for low- and middle-income families.

In these countries, non-state ECCE providers struggle to find financing options to expand or improve their services. The program collaborates works local financial institutions, investors, and other funders to offer affordable financing and capacity-building support to low-cost non-state ECCE providers. To incentivize quality improvements, the Rewards and Recognition model rewards providers that demonstrate measurable gains in children's developmental outcomes with both financial incentives and public acknowledgment of their achievements.

In Tanzania, a different market-based model is being used, offering technical assistance to financial institutions to create ECCE loan products tailored to different types of providers. A case study will be presented on how a large commercial financial institution partner is integrating a suite of segmented ECCE loan products, lending its own private capital. This financial institution was supported to design loan product terms for the partner based on market research with over 70 day care centers and pre-primary schools. The resulting segmented products target 1) those less bankable due to registration status, financial management and enrolment, 2) small registered ECCE providers with limited financial records, and 3) medium to large ECCE providers that are well established with strong financial data.

This presentation will share results from the first round of the Rewards and Recognition program in South Africa and baseline data from Rwanda. Key lessons learned will include designing outcomes-based initiatives, measuring learning outcomes, and linking financial rewards to these improvements. Additionally, the case study from Tanzania will highlight outcomes of the market-based approach in financing diverse ECCE providers, engaging both the supply and demand side, in Tanzania.

Authors

• Lauren Pisani, The Palladium Group

• Andrew McCusker, Opportunity International

• Joseph Di Silvio, The Palladium Group