EARLY

CHILDHOOD
DEVELOPMENT
ACCELERATOR ACCELERATOR 1

SERIES Towards universal access:

A three-year acceleration
plan for ECD funding

SEPTEMBER 2022
Laura Brooks, Zaheera Mohamed, Colin Almeleh and Shakira Maharaj
2
INTRODUCTION:
A ROADMAP FOR
PUBLIC FINANCING
Achieving universal access to quality early childhood development (ECD)
services for all children presents the single greatest opportunity to reduce
structural inequality in South Africa. To invest in ECD is to disrupt entrenched
arrangements of care, power and privilege that continue to drive gender
inequality and intergenerational poverty, keeping black women on the
margins of social and economic life, and thwarting the future chances of
their children.

In his 2022 State of the Nation Address, President Cyril Ramaphosa noted that:

“The social economy, including early childhood development...

has significant potential not only to create jobs, but to provide
vital services that communities need.”

In particular, investing in early learning programmes (ELPs) as a

cost-effective strategy to build South Africa’s “social infrastructure”
brings multiple benefits to women – particularly black women – by
providing decent jobs, advancing gender equity and stimulating the
local economy.

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 We propose that investing in universal access to ECD programmes represents
an opportunity to achieve the following:

1. Close the school-readiness gap, where children from households in

income quintiles 1–3 are much more likely to start Grade R behind the
developmental standard and remain behind throughout their formal
education;

2. Improve skills and working conditions among the 165 000 women already
working in the ECD sector;1

3. Create more than 300 000 additional jobs in the ECD sector;2

4. Allow approximately 2 million women to participate in the labour market

by freeing up children’s primary caregivers;3

5. Stimulate local economies by creating both direct and indirect jobs in

communities and stimulating the purchase of local goods and services;4

6. Produce significant savings in a range of budget areas, including welfare,

social services, health and crime response;5 and

7. Grow South Africa’s GDP in the long term by improving returns from basic
education and, therefore, the literacy of our working population.6

1 Department of Basic Education ‘ECD census 2021: Summary of key results’ (2022).
2 Antonopoulos, R. and Kim, K. (2011). Public job-creation programs: The economic benefits of investing in social care? Case studies in South Africa and the United
States. Working Paper, No. 671, Levy Economics Institute of Bard College, Annandale-on-Hudson, NY.
3 Assuming an average of 1.5 young children per woman caregiver accessing full-day programmes.
4 De Henau, J. et al. (2019). Investing in free universal childcare in South Africa, Turkey and Uruguay. UN Women Discussion Paper Series No. 28. New York: UN Women.
5 Daviaud E, Besada D, Budlender D, Sanders D, Kerber K (2018). Saving lives, saving costs: Investment Case for Community Health Workers in South Africa. Cape Town:
South African Medical Research Council. ISBN: 978- 1-928340-32-4.
6 Hoddinott J, Maluccio J, Behrman J, Flores R, Martorell. Effect of a nutrition intervention during early childhood on economic productivity in Guatemalan adults.
Lancet, 2008: 371(9610): 411-416; Jamieson L & Richter L (2017) Striving for the Sustainable Development Goals: What do children need to thrive? In: Jamieson L, Berry
L & Lake L (eds) South African Child Gauge 2017. Cape Town, Children’s Institute, University of Cape Town. http://www.nber.org/papers/w19185, accessed 1 September
2021; Gustaffson M et al. The costs of illiteracy. Stellenbosch Economic Working Papers: 14/10. 2010. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1727649,
accessed 1 September 2021; Engle, P., Fernald, L., Alderman, H., Behrman, J., O’Gara, C., Yousafazi, A., de Mello, M., Hidrobo, M., Ulkuer, N., Ertem, I., and the Global Child
Development Steering Group. 2011. Strategies for reducing inequalities and improving developmental outcomes for young children in low-income and middle-income
countries. The Lancet, 378:1339-1359.

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Despite the potential of ECD to redress poverty, inequality and unemployment in South Africa, access to the full
“essential package” of ECD services remains wholly inadequate and starkly unequal in terms of both coverage
and quality. Around 25% of children aged 0-5 attend early learning programmes,7 and less than 40% of these
are subsidised by government.8 This is likely a significant contributing factor to the 57% of children who face
barriers to thriving as they enter formal schooling.9 Poorer children are less likely to access early learning,
nutrition support and home visiting services compared with their wealthier peers. Meanwhile, government has
struggled to implement other key components of the 2015 National Integrated ECD Policy, such as resourcing
and capacitating existing home-based support programmes for vulnerable pregnant women, primary
caregivers and young children. This is despite households being critical to children’s early stimulation, care
and nutrition; the resource challenges caregivers face in providing this care; and the overwhelming evidence
linking household vulnerability to poor child outcomes.10

Reaching universal access to quality ECD services requires a financing plan beyond just the
subsidisation of ELPs. A series of actions is required that:

› increases the supply of ELPs;

› supports nutrition in all ELPs;

› ensures that the supply of ELPs is supported to meet compliance requirements;

› increases the number of practitioners and ensures they are appropriately trained;

› measures and supports quality where required;

› enables community health workers (CHWs) to support caregivers and young

children in the home; and

› develops mechanisms to provide income support for pregnant women.

As the Department of Basic Education (DBE) takes over the responsibility for ECD, and a range of legislation
and regulation for ECD is being reconsidered, the next three years provide a once-in-a-generation chance
to centre ECD in South Africa’s development trajectory and position it as core to our human capital
development strategy.

7 Based on 2021 ECD Census data.

8 https://www.dsd.gov.za/index.php/latest-news/21-latest-news/183-social-development-sets-up-workstreams-to-%20conduct-risk-assessment-and-state-of-
readiness-for-the-early-childhood-development-ecd-centres
9 https://www.thrivebyfive.co.za/wp-content/uploads/2022/09/Thrive-by-Five-Index-report-Revised-August-2022-FINAL.pdf
10 Anderson L, Shinn C, Fullilove M, Scrimshaw S, Fielding J, Normand J, Carande-Kulis V, and the Task Force on Community Preventive Services. The effectiveness of early
childhood development programmes. American Journal of Preventive Medicine, 2003 24(3S): 32-46.

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 WHAT DOES THE CURRENT
ECD FINANCING LANDSCAPE
LOOK LIKE?
Roughly 5% of South Africa’s national expenditure (1.5% of GDP) is spent on the full essential package of
ECD11 – R75 billion. The vast majority of resources are spent on maternal and child healthcare, delivered
in primary healthcare clinics. More than a quarter of the government’s ECD budget goes to childcare
grants. This is a significant contributor to why coverage and outcomes associated with maternal and
child healthcare programmes far exceed other services within the ECD package. Only 6.5% is spent on
early learning, nutrition support and responsive parenting interventions.12

Figure 1: Government ECD expenditure

6.5%

27% Primary healthcare for mothers and children

Child support grants

Early learning, nutrition support, responsive parenting

67%

Public expenditure on early learning (which totals R3.5 billion) is almost exclusively via the early learning subsidy.
Fewer than 627 000 children aged 0–5 benefit from this subsidy, which amounts to R2.8 billion. The early learning
subsidy is means tested, and is a per-child-per-day subsidy that is paid to early learning programmes that are
registered with the government after meeting a range of norms and standards. The remaining funding supports
government’s administration and management of the early learning function.

The informal nature of most ELPs restricts the number of programmes able to receive government subsidies. This
means that existing payment and disbursement mechanisms are often inaccessible. Meanwhile, the historical
positioning of ECD as a “childcare issue” has limited the potential to fully leverage other pockets of public financing
that target small businesses and enterprise development.

11 Ilifa Labantwana and Kago Ya Bana, 2018. A plan to achieve universal coverage of early childhood development services by 2030. Discussion document.
12 Desmond, C., Richter, L. & Martin, P. 2016. Development of an investment case for early childhood development in South Africa: Prioritizing investments in early
childhood development (study commissioned by UNICEF South Africa). Pretoria: UNICEF.

6
Although the state subsidy is valued at R17 per child per day, we estimate that the cost of a minimum level of
provision is around R30 per child per day. Restricted access to the state subsidy, along with its limitations in meeting
the full cost of provision, contributes to a reality in which parent fees remain the primary source of funding for early
learning programmes, despite 30.3 million (55.5%) South Africans living below the poverty line.13 Reliance on parent
fees threatens the sustainability of ELP operations, limiting their ability to plan for quality provision or expand their
services. Vulnerability to fluctuating income from fees is an impediment to scale because it discourages practitioners
from entering the sector. The consequence of this is a highly unequal ELP terrain, in which access to programmes,
income for practitioners and quality for children vary significantly.

Unlike ELPs, which are delivered through a range of (largely informal) non-state providers, home visiting programmes
are largely delivered by teams of CHWs as part of a National Policy Framework and Strategy. CHWs operate through
Ward-Based Primary Healthcare Outreach Teams (WBPHCOT), which are nested in public primary healthcare facilities
and are intended to serve as a bridge between communities, clinics and social services. Through home visits, these
health workers can support parents or caregivers to prevent stunting and advance early learning and stimulation
during the critical early stages of children’s lives – the first 1 000 days. Despite a relatively comprehensive WBPHCOT
policy framework and the fact that thousands of CHWs are already contracted by provincial departments of health,
at times through non-governmental organisation (NGO) intermediaries, these home visitors are not sufficiently
supported, supervised, resourced, capacitated or monitored. The result is that, despite the ideal foundations of
government prioritisation and significant participation from civil society, the CHW home visiting programme is far
from reaching its potential to support vulnerable households.

The funding challenge is a primary constraint to scaling up services. Political will, government capacity and systems
for planning, coordination, monitoring, quality assurance, regulation, support and oversight must be geared up to
effectively handle a significant increase in funds for ECD service delivery. For more funding to flow, there must be a
major shift in the ways that politicians, policy makers and wider society view ECD at large; together with innovation
in the administrative systems and institutional structures that support the ECD function.

Figure 2 (page 9) shows how the annual public budget for ECD services should increase over time as improved
government systems are put in place and reach is expanded. Baseline budgets will need to increase by an average
of 16% per year over a 20-year period to reach universal access to early learning, home visiting and a maternity
support grants.

In the next three years, we see opportunities for crowding in a range of state funds to support ECD quality
improvement and expansion. If South Africa is to set public budgets on a new trajectory, the focus now needs to be
on building momentum in budget increases in the next three years (leveraging a range of state funding sources),
and simultaneously building the systems required to support increasing supply of quality services and the budgets
required to reach universal access.

13 https://databank.worldbank.org/data/download/poverty/33EF03BB-9722-4AE2-ABC7- AA2972D68AFE/Global_POVEQ_ZAF.pdf

7
 What can be achieved over the next three years?

› At least 320 000 additional children who attend ELPs can be subsidised;

› The overall number of children accessing ELPs can increase at a faster pace, buoyed by funds
to support training, programme start-up and compliance, and funds to support the functioning
of ELP delivery networks;

› The consistent allocation of public employment funds to the ELP workforce can support
emerging programmes and help them on their pathway to sustainability;

› ELP quality can be assured and supported, which will help justify increases in the ELP subsidy
allocation;

› Budgets for training and supportive supervision for CHWs and ELPs can increase; and

› A commitment can be made to introduce a Maternal Support Grant for pregnant women.
This will also improve the uptake of the Child Support Grant (CSG) in the first two years
of a child’s life by automatically converting into a CSG at birth.

THE THREE-YEAR PLAN FOR

UNLOCKING PUBLIC FUNDS FOR ECD
This section presents some of the opportunities we see for channelling existing state funding sources
to the ECD sector in the next three years, building the supply of quality services required to close the
access gap. During this three-year period, we must build the evidence base and drive advocacy efforts
to support increasing funds at an accelerated rate in future years to achieve universal access to quality
ECD services.

The overall budget allocation for ECD should increase from R5.1 billion to R7.4 billion over the next three years (2022
prices). About 70% of this total budget should be allocated to supporting and delivering ELPs and the remainder
to home visiting programmes for pregnant women and the youngest children. This will require an additional
R764 million in 2023/24 to the early learning component, with the year-on-year increase reaching R825 million in
2025/26, and averaging 13% over the period.

These increases are feasible within the overall budget framework considering they target multiple government
budgets. They will ensure that, by 2025/26, government subsidies reach 950 000 children, the required workforce is
trained and ECD programmes are supported to register.

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 Figure 2: Cost to the state to reach universal access

R 100

R 75
BILLIONS

R 50

R 25

R0
2022/23 2024/25 2026/27 2028/29 2030/31 2032/33 2034/35 2036/37 2038/39 2040/41 2042/43

ELP subsidy Nutrition support ELP start-up support

ELP compliance support ELP training Public employment programme (PEP) for ELPs
ELP start-up support ELP quality assurance Home visiting
Maternal Support Grant Implementing agent costs Total budget

The way the early learning system is structured requires ELPs to be established and comply with numerous regulatory
and eligibility requirements before a child in that programme can benefit from a subsidy. The sector is diverse, and
programmes and their staff are at various points of readiness to access government subsidies. There is a pool of
programmes that are registered and ready to absorb the subsidy, while others require support to register.

A pipeline of new practitioners needs to be trained to expand services, and support through public employment
programmes is needed to stem workforce churn. The number of children projected to access ELPs, those in registered
ELPs and those receiving a subsidy, grows at different rates over the period. Therefore, costs are non-linear over the
full 20-year timeframe as some costs are more predominant than others depending on the needs of the sector. The
interplay of these rates of increase can be seen in Figure 3 (page 11).

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Table 1: Target state budgets to reach universal access

Maternal Support
Nutrition support

Budget increase
ELP compliance

Implementing
Home visiting
PEPs for ELPs

Total budget
ELP start-up
ELP training
ELP subsidy

agent costs
R million

ELP quality

% increase
assurance
support

support

Grant

y-o-y

y-o-y
2022/23 R2 815 R0 R98 R170 R0 R0 R0 R2 000 R0 R0 R5 083

2023/24 R3 382 R113 R120 R229 R245 R0 R0 R2 000 R0 R0 R6 090 R1 007 20%

2024/25 R4 084 R249 R129 R247 R396 R7 R0 R2 000 R0 R0 R7 112 R1 022 17%

2025/26 R4 932 R411 R141 R265 R623 R10 R0 R2 000 R0 R1 R8 383 R1 272 18%

2026/27 R6 125 R1 582 R345 R322 R981 R17 R0 R2 000 R0 R2 R11 375 R2 992 36%

2027/28 R7 464 R2 741 R517 R366 R1 583 R20 R0 R2 000 R0 R2 R14 691 R3 316 29%

2028/29 R8 964 R4 221 R333 R415 R1 662 R23 R63 R2 686 R1 188 R33 R19 588 R4 897 33%

2029/30 R10 642 R4 689 R354 R414 R1 745 R19 R70 R3 372 R2 495 R40 R23 840 R4 252 22%

2030/31 R12 515 R5 193 R377 R446 R1 832 R20 R78 R4 058 R2 620 R47 R27 186 R3 345 14%

2031/32 R14 602 R5 735 R401 R480 R1 924 R22 R86 R4 744 R2 751 R56 R30 800 R3 614 13%

2032/33 R16 926 R6 319 R426 R516 R2 020 R24 R95 R5 430 R2 888 R64 R34 707 R3 907 13%

2033/34 R19 508 R6 947 R453 R462 R2 121 R25 R104 R5 701 R3 032 R74 R38 427 R3 721 11%

2034/35 R22 374 R7 621 R482 R498 R2 227 R27 R114 R5 986 R3 184 R84 R42 598 R4 171 11%

2035/36 R25 551 R8 346 R513 R537 R2 338 R29 R125 R6 285 R3 343 R96 R47 164 R4 566 11%

2036/37 R29 070 R9 125 R545 R578 R2 455 R31 R137 R6 600 R3 510 R108 R52 159 R4 995 11%

2037/38 R32 964 R9 960 R579 R622 R2 578 R34 R150 R6 930 R3 686 R121 R57 623 R5 463 10%

2038/39 R37 267 R10 856 R616 R669 R2 707 R36 R163 R7 276 R3 870 R135 R63 595 R5 973 10%

2039/40 R42 019 R11 816 R654 R720 R2 842 R39 R177 R7 640 R4 064 R150 R70 122 R6 527 10%

2040/41 R47 263 R12 846 R695 R773 R2 984 R42 R193 R8 022 R4 267 R167 R77 251 R7 129 10%

2041/42 R53 043 R13 949 R738 R830 R3 133 R45 R209 R8 423 R4 480 R184 R85 036 R7 785 10%

2042/43 R60 751 R15 130 R784 R891 R3 290 R48 R227 R8 844 R4 704 R203 R94 874 R9 838 12%

10
 Figure 3: Reach toward universal access

4 000 000

3 000 000

2 000 000

1 000 000

0
2022/23 2024/25 2026/27 2028/29 2030/31 2032/33 2034/35 2036/37 2038/39 2040/41 2042/43

Children subsidised Children in registered ELPs

Children in ELPs Workforce (ELP)
Children receiving nutrition support Pregnant women accessing income support

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 DETAILS OF
SPECIFIC BUDGET PROPOSALS
TO FINANCE ECD SERVICE EXPANSION
This section details the financial resources required over the next three years and beyond for i) direct
service delivery costs and ii) funding required for enabling operational systems that support improved
access to and quality of ECD services. Table 1 (page 10) shows the estimates of these required financial
resources for each of these proposals over the next 20 years.

DIRECT SERVICE DELIVERY COSTS

EARLY LEARNING PROGRAMME SUBSIDY
By 2025/26, bolstered state and sector capacity should warrant an increase in the budget allocated to early
learning subsidies to R4.9 billion. This requires an average increase of R706 million per year or just over
R2 billion in new funding over the three years. This will reach an additional 322 000 children, and facilitate an
increase in the per capita per day value from R17 to R19,68. After 2025/26, as the systems ramp up, budgets
need to ramp up too. From this point, subsidy budgets need to increase on average by R1.5 billion per year
to reach universal access in 2042/43, costing R60.1 billion (R22.9 billion in 2022 prices). A R2.9 billion average
annual increase is an attainable target.

Figure 4 (page 13) shows the value of the ECD subsidy over the past 15 years. It shows that the value of the
subsidy in real terms (in the absence of inflationary increases) is R3 900, compared to the R7 129 it would be
had it been increased on an annual basis with inflation (plus one per cent) since 2008.

In order to fund a basic level of quality within ELPs, and covering the full cost of provision (including salaries,
food, rent, maintenance, materials, etc.), it is estimated that the value of the subsidy should be approximately
R8 420 per child per year (2022 prices).14 A declining per capita value means that even the children who benefit
from the subsidy may not receive quality services unless parents supplement programme income with fees.15
This undermines the purpose of the subsidy, which is to ensure that cost is not a barrier to access for the
poorest children.

14 This costing includes salaries and food as the main cost drivers, as well as materials, rent, maintenance and other programme costs.
15 Kika-Mistry, J. & Wills, G. 2022. “Compliance, cost and user fees in the Early Childhood Education Sector in South Africa”. Ilifa Labantwana and Resep Working Paper
Series. No ECD WP 005/2022.

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Figure 4: Annual per capita ECD subsidy

R9 000
R8 420
R8 000

R7 000
R7 129

R6 000

R5 000
R4 488
R4 000
R3 900
R3 000

R2 000

R1 000

R0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Current subsidy Subsidy at inflation +1%

Inflation linked (real) subsidy amount Appropriate programme cost

To calculate the cost of subsidising universal access to quality ECD programmes, we estimate the annual per capita
value for a subsidy that can support quality provision. These values were derived based on the costs of provisioning
quality programmes, where the proxy indicator of quality includes the child-to-staff ratio norms and standards
prescribed in the regulations to the Children’s Act. We assumed practitioner salaries to be set at minimum wage
(R4 020 per month). Data from the 2021 ECD Audit indicate that 90% of practitioners are currently earning less than
minimum wage. For this costing, we have excluded the cost of food. This is because we are proposing a separate
mechanism for supporting the provision of nutritious meals in ELPs (outlined in the next section).

Table 2 (page 14) shows the various subsidy values modelled for each of the programme modalities. Multiplying
these values by the number of children who will access each programme type, we estimate the total cost of
subsidies at R22.9 billion at universal access levels (2022 prices). Recognising that it will take time to build towards
a subsidy that covers the full cost of basic services and facilitates minimum wage, we model a gradual increase
in the subsidy value over the 20-year timeframe. As a funding instrument for nutrition support is gradually
introduced alongside this, additional funds in the per-child-per-day subsidy are freed up for salaries and
other costs.

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 Table 2: Cost of ELP subsidy at universal access

TOTAL SUBSIDY RATE UNIVERSAL UNIVERSAL

TARGET (2022 PRICES) ACCESS (2022 ACCESS
CHILDREN PRICES) (R’000) (2042 PRICES)
(R’000)

Centres 2 361 729 6 131 14 480 146 38 420 138

Home-based small 595 171 8 294 4 936 442 13 097 851

Playgroups 342 610 2 937 1 006 279 2 669 958

Mobiles 72 624 9 191 667 460 1 770 970

Inclusive services
for children with 134 872 13 392 1 806 150 4 792 254
disabilities

TOTAL 3 507 006 22 896 477 60 751 171

NUTRITION SUPPORT THROUGH

EARLY LEARNING PROGRAMMES
Access to nutrition support can be extended to all ECD programmes regardless of registration status, which
will primarily target children between ages 2 and 5 years. A separate mechanism could be introduced, which
would reach children in any ECD programme known to government, irrespective of its registration status.
The value of the support has been costed at R7,50 per day (2022 prices) for ECD centres and childminders
(264 days), and R5 per child per session for playgroups and mobiles (160 days). This provides for nutritious
cooked meals and snacks for children attending full-time ECD programmes, and for nutritious snacks for
children in part-time programmes.

Over the next three years, nutrition support could reach 218 327 children at a cost of R307 million (2022 prices).
By 2042/43, the support would reach all 3.5 million poor children in ECD programmes at a cost of R15.1 billion
(R5.7 billion in 2022 prices).

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 HOME VISITING PROGRAMMES
It is estimated16 that a budget of R3.5 billion is required to train, equip, support/supervise, and pay the
stipend of 60 000 CHWs (at minimum wage) and salaries of team leaders and district managers as well as
general overheads, reaching households in income quintiles 1 and 2. This would represent less than 7% of
the current total public primary healthcare expenditure. We do not foresee the R2 billion budget for CHWs
increasing over the next three years. We project that the budget could increase to the required level between
2028/29 and 2032/33. In the short-term, greater evidence and advocacy is required for low cost approaches to
effective supportive supervision models and for better resourcing for CHWs.

INCOME SUPPORT FOR PREGNANT WOMEN

Over the next three years, advocacy and planning is needed to motivate for the introduction of a Maternity
Support Grant for pregnant women to offset low birth weight of babies – an early indicator of stunting.
Automatic conversion of the grant once the baby is born would also address low uptake of the Child Support
Grant in the first two years of life. Providing a Maternity Support Grant to the 75% of pregnant women who
are income-eligible would cost R2.376 billion per annum and reach 726 690 women per year. This constitutes
less than 1% of the total social grant budget for 2022/23. On an annual basis, underspending in social grants
is between 1% and 2%, and there’s a strong likelihood this income support can be funded from the existing
social grants budget. Since the Child Support Grant and its associated systems are already established, it is
likely that this level of uptake could be reached over a two-year period.

16 Daviaud E, Besada D, Budlender D, Sanders D, Kerber K (2018). Saving lives, saving costs: Investment Case for Community Health Workers in South Africa. Cape Town: South
African Medical Research Council. ISBN: 978- 1-928340-32-4.

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 FUNDING REQUIRED
FOR ENABLING OPERATIONAL SYSTEMS
In addition to funding direct service delivery costs, the ECD sector requires a range of systemic
interventions to enable universal access.

TRAINING AND UPSKILLING FOR ELP PRACTITIONERS

The 2021 ECD Census found that just over half (52%) of ECD practitioners have an ECD qualification at NQF Level 4
or above, and 27% underwent a relevant skills programme, while 22% do not have any relevant qualifications.17
It is thus likely that 50% of the existing ECD workforce (around 83 000 workers) require training, in addition
to the critical need to train new practitioners to support the expansion of services. The skills levels of 78 300
ELP practitioners and managers can be supported over the next three years, with an annual training cost
reaching R241 million (2022 prices) by 2025/26. This can be absorbed within existing multibillion-rand budgets
allocated to Sector Education and Training Authorities (SETAs), which have a track record of underspending.
This will establish the pipeline to drive human resource capacity to support universal access.

Training costs are estimated at R9 000 per person, and allow for 5% attrition annually. By 2042/43, 50% of the
existing workforce, and 330 000 new ELP workers can be trained, with annual costs growing marginally to R353
million (2022 prices) within a multibillion-rand budget.

START-UP SUPPORT FOR NEW ELPs

A pipeline of new programmes will be required to meet universal access targets. Early learning provision
must be acknowledged as an eligible micro-social-enterprise opportunity and leverage R4 million for start-
up support through Small Enterprise Funding Agency (SEFA) budgets by 2025/26 (2022 prices). Over the three
years, at a unit cost of R5 500, this will enable the start-up of 5 800 ELPs.

Leveraging micro-enterprise development funding will help ensure that ELPs receive the requisite start-up
investment and improve their likelihood of success. This is an important first step in accessing and securing
income flows for ongoing operational costs.

The Department of Small Business Development was allocated R2.7 billion for developing small businesses
and cooperatives within the 2021/22 financial year, of which R1.25 billion was allocated to the SEFA. The
Township and Rural Enterprises Programme (TREP) and Loans to Enterprises and Cooperatives are two
potential opportunities to source additional funding for the establishment and development of ELPs.

17 Department of Basic Education ‘ECD census 2021: Summary of key results’ (2022) <https://www.datafirst.uct.ac.za/dataportal/index.php/catalog/908/download/12309> .

16
Leveraging R4 million within a R2.7 billion budget is feasible and poses a minimal risk for ECD to be a test case
for micro-social-enterprise development. This will build the evidence required for a dedicated funding source
for ELP start-up support, which can support the number of new programmes required each year in the lead
up to reaching universal access, and accounting for 5% attrition annually. The cost remains low to the state
and will unlikely require an increase to the overall budget of the Department of Small Business Development.
By 2042/43, the budget would peak at R21 million (2022 prices), reaching up to 3 845 programmes per year.

COMPLIANCE SUPPORT FOR ELPs

Lack of financial resources to purchase relevant equipment, train staff, and ensure that a building is safe for
children are common barriers to entry for ECD providers and prohibit them from registering. The maintenance
component of the ECD Conditional Grant is available to support existing programmes to meet compliance
requirements. Starting with a baseline of R98 million, the ECD maintenance grant will need to increase
to R125 million by 2025/26 (2022 prices). This would support more than 1 500 existing ELPs’ infrastructure
improvements, and the construction of 54 new ECD centres over the three years.

The immediate opportunity is to influence where and how this budget is allocated, increasing the proportion
spent on unregistered sites and improving the implementation of the grant.

From 2026/27 onward, the compliance support budget will need to increase more aggressively
to cater for:

1. Non-infrastructure compliance support (e.g. learner and teacher support materials, furniture, catering
equipment, etc.) providing R5 300 per programme for 55% of programmes to achieve registration, and
allowing for a further 5% attrition annually;

2. Infrastructure compliance support providing an average of R150 000 per site for 20% of programmes to
achieve registration, and allowing for 2% attrition annually; and

3. New builds costed at R1.5 million each, and providing for each province to build five centres per year
between 2026/27 and 2042/43.

The DBE’s infrastructure budget is more than R12.4 billion. On average, 70% of this budget is spent annually.
This presents an opportunity to focus some of these funds toward ECD infrastructure. By 2025/26, the
estimated budget required for compliance support for ECD programmes would reach only 3% of the average
annual underspend of the DBE infrastructure budget. This indicates that there is significant fiscal space within
this budget for additional increases for ECD infrastructure and maintenance.

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 PUBLIC EMPLOYMENT FUNDS
Public employment programmes (PEPs) could play an important role in supporting the sustainability of
emerging practitioners. Over the next three years, 29 392 ELP workers (i.e. 23% of the current early learning
workforce serving poor children) should have their wages subsidised by public employment programmes
for at least one year. We must ensure ELPs are a core beneficiary of public employment programmes, and
that at least 20% (R1.24 billion) of these funds is leveraged to support ELP practitioners as supplementary
income. By 2027/28, R1.24 billion (2022 prices) must be leveraged annually from the budget available for public
employment programmes – this will subsidise the initial wage costs of 32 500 ELP workers each year. With
the emphasis placed on the social economy and jobs for social good, leveraging existing budgets is feasible.

Public employment programmes such as the Community Works Programme and Expanded Public Works
Programme (EPWP) have historically provided opportunities to subsidise labour costs within ECD programmes,
which make up 50% to 80% of total programme costs. R4.2 billion has been allocated to the Community Works
Programme for the 2021/22 financial year. In addition, the Social Employment Fund is a new opportunity,
with a budget of R1 billion and a focus on ECD as a specific workstream. Furthermore, the EPWP has been
recognised as an additional opportunity to support ECD work. It has annual budgets of R479 million for the
Social Sector Expanded Public Works Programme Incentive Grant for Provinces in 2021/22 and R814 million for
the Expanded Public Works Programme Integrated Grant for Municipalities.

ELP QUALITY ASSURANCE AND SUPPORT

There is currently no dedicated funding source for quality assurance and support. Over the next five years,
a quality assurance and support system must be designed, implemented and funded. From 2027/28, 25%
of ELPs serving children in poor households would be quality assured each year, and 75% every two years;
assuming that 25% of programmes will require quality support each year.

At universal access, the cost of quality assurance and support will reach R90 million (2022 prices). Given that
ELP reach expands gradually, the cost of quality assurance also increases gradually to reach this full cost over
the 20-year timeframe. This is a new cost to the state but is kept relatively low.

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 IMPLEMENTING AGENTS TO SUPPORT ELP SERVICE DELIVERY
It is almost impossible for the state to achieve universal access on its own. A number of organisations
currently support thousands of ELPs, but with limited support from the state. With additional funds, these
organisations would be able to scale their support rapidly.

The state must recognise the role played by these organisations and develop mechanisms to partner and
contract with them. Going forward, government must contribute to the costs of these implementing agents.
As with the quality assurance and support system costs, this too is a new cost to the state. It would essentially
include central management costs, for example, ongoing maintenance of technology platforms, updating
curriculum materials and tools, core operating costs and personnel. We estimate these costs would amount
to almost R160 million at universal access (2022 prices). They could be carried jointly and almost equally by
the state and philanthropy/private sector funders, with the state carrying R80.5 million by 2042/43.

Table 3: Implementing agent costs

GOVERNMENT PHILANTHROPY TOTAL

Research and advocacy to

R 1 455 300 R 1 455 300
influence public systems

Human resources R 64 941 523 R 64 941 523 R 129 883 046

Development of and training

R 1 500 000 R 1 500 000
on tools for quality and scale

Core operating costs R 13 038 676 R 13 038 676 R 26 077 351

Maintenance of tech platforms R 1 000 000 R 1 000 000

TOTAL R 80 480 199 R 79 435 499 R 159 915 697

CONCLUSION
The next three years offer a real window of opportunity to shift the trajectory of ECD service provision
and, in doing so, disrupt entrenched cycles of inequality and under-development to benefit women and
young children over the longer term. An overall budget increase from R5.1 billion to R7.4 billion over
the next three years (2022 prices) will ensure that, by 2025/26, government subsidies reach 950 000
children, the required workforce is trained and ECD programmes are supported to register. Drawing on
the budgets of multiple government departments, these increases are feasible within the overall budget
framework, and will set South Africa on a trajectory to build the R94.8 billion (R36.6 billion in 2022 prices)
budget required to support universal access to quality early learning and home visiting programmes,
nutrition support provided through ELPs, and income support for pregnant women.

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 Now is the time to re-imagine our ECD ecosystem, and leverage its
radical transformative potential. Investing in ECD not only lays essential
developmental foundations for children, shaping their future health,
education and employment outcomes; it also harnesses the potential
of a women-led care economy, which has been historically underpaid
and overlooked, despite being the backbone of our health, education,
household and economic systems.”

Zaheera Mohamed
CEO of Ilifa Labantwana

For more information, contact Laura Brooks, ECD Expansion and Financing Senior Manager:

[email protected]
or visit
www.ilifalabantwana.co.za