FINANCING ECCD

1. FINANCING ECCD A presentation by Jan van Ravens (van.ravens@yale.edu) for The World Bank Africa Early Childhood Care And Development Initiative,Second Technical Workshop July 26-28, 2010  Cape Town, South Africa

2. Step 1: Costing • Costing = estimating what it would cost – on an annual basis – to reach an X-number of children or families with an ECCD service of a certain quality • Total costs = unit costs * number of children • Unit costs = costs per child per year. Unit costs are related to quality • Number of children – the choice of the target group - is related to equity

3. Step 2: Financing (funding) • Financing = finding the money (mobilizing the financial resources) to cover estimated costs • This should be done on an annual basis. • The financing arrangement should be structural. It should not rely too much on incidental contributions • Contributions may come from various sources and they can be “in kind”. Parents can help to build a center; NGOs can provide materials

4. So this presentation addresses: • Unit costs > quality • Target group > equity (Multiplying these two results in total costs) • Financing > sustainability

5. But first an example (1 of 2) • We want to scale up a program for 4 and 5 year olds (assuming school entry is at 6) • 3 hours/day, 5 days/week, 40 weeks /year = 600 hours/year • Group size = 20. Teacher earns slightly less than primary school teacher. Short but good training. Frequent supervision. Good materials. Healthy and safe space. • Unit costs = ±10% of national income per head. For the 8 participating countries this is roughly between US$ 20 – and US$ 80. We take US$ 50 as average. • We prioritize the seven poorest districts. Here live 12,000 children of 4 and 5 years old, based on population statistics. • Total costs = US$ 50 * 12,000 = US$ 600,000 per year

6. Example (2 of 2) • Already enrolled in these districts: 10% of all the 4 and 5 year olds (based on statistics and/or household surveys like MICS or DHS) • Extra costs = 90% * US$ 600,000 = US$ 540,000 • Communities, parents, private sector and NGOs support the programme. This reduces costs to US$ 400,000 • (Most) parents pay a fee of US$ 10 per year. This brings total costs further down to US$ 280,000. To be covered for instance by national and/or local government • Usually, such an amount is just a small share of the annual growth of education, health and other ECCD related budgets

7. Unit cost (1 of 5) Partly recurrent costs: • Continuous. E.g. teacher salary or incentive, or micro-nutrients, stationary. Occurs every year, or even every day (but calculated on annual basis). Partly start-up costs: • Incidental; only once. E.g. building materials (capital investment) or initial training and community mobilization • Sometimes we can “annualize” costs. E.g. inventory may last for five years, so we divide initial investment by five to get annual costs.

8. Unit cost (2 of 5)

9. Unit cost (3 of 5) Concrete calculation of unit costs. Some examples. • Teacher salary: take salary of primary school teacher. Multiply by 75% (for instance!). Take half of this in case of halfday program. Divide by group size. • Learning materials: compose a package of good materials for one group. Divide by group size and divide by number of years it can be used. • Space: estimate costs of the space and divide by the “capacity”. E.g. one group of 20 in the morning + one group in the afternoon makes a capacity of 40 kids. • Estimate by observation of existing programs, but also normatively. Don’t replicate under-resourced programs

10. Unit cost (4 of 5) Other types of ECCD programs: • Parental education, in groups and/or on a one-to-one basis (e.g. for the 0-3/4) • Health care, dispensaries, vaccination, etc. • (Community-) IMCI, possibly with early learning/stimulation (as in Tanzania) The same logic applies to all these programs, though the elaboration will partly vary

11. Unit cost (5 of 5) Trade offs between unit cost and quality: • Unpaid / volunteer teachers are cheaper, but may lack motivation and may leave. • The larger the group, the lower the cost per child. But 20/25 seems the limit in ECCD. • The shorter the program, the cheaper. Halfday programs are just as good as fullday! • Initial training can be reduced, as long as refresher training and supervision are frequent. • Home-based programs are cheaper but may lack support, unless they are supported by a resource center (e.g. satellite model of Aga Kahn Foundation)

12. Target group (1 of 4) • Start from existing services. Scale up promising initiatives. • Universal access is always the goal, but is never achieved in one step. So what is the pathway? • Horizontal? E.g. first all the 5 year olds, then all the 4 year olds, then all the 3 year olds. • Or vertical? First all the 3, 4 & 5 year olds in disadvantaged areas or groups, then the same age range for the middle groups, finally the richer groups. • These are purely political issues, to be decided in and by countries themselves. • But the biggest impact – on child health, on school performance, et cetera – is achieved when we begin with the most disadvantaged groups.

13. Target group (2 of 4) • “Disadvantaged groups” can be identified by criteria such as low income; rural/nomadic; low school performance; highly affected by disease, conflict, disaster; et cetera. • Likewise, “disadvantaged areas” can be districts with low score on HDI, or with similar indications of disadvantage. • Fertility rate is very important. Is the annual number of newborns stable, or does it rise?

14. Target group (3 of 4)

15. Target group (4 of 4)

16. Financing (1 of 4) Unpacking the issue. Potential contributors are: • Users (families) • Government: national, local, and in between • Stakeholders: a very rich variety. • Local: women’s groups; forest user goups; micro-credit cooperations; community elders and wealthy families; local enterprises; et cetera • National: NGOs, micro-credit bank; large enterprises • International: World Bank; UN-organisations; INGOs

17. Financing (2 of 4) • Any combination of contributors – user, government, stakeholders – is possible. • But not are equally predictable. Avoid reliance of incidental contributions for recurrent costs. • Use the incidental contributions to cover start-up costs, e.g. corporate donations for buildings and inventory, or WB-, UN- and NGO support during the phase of introduction

18. Financing (3 of 4) • Users and communities are the safest basis. • Hence the interest in community-based ECCD. • Analysis in a middle income country (Indonesia) showed that most districts can operate ECCD centers on their own, but the poorest districts require structural assistance • If a few families in a community cannot afford the fee, other usually compensate. This does not happen if most are too poor.

19. Financing (4 of 4) • Means-tested fees are difficult to implement in most SSA countries. But differentiated per capita subsidies to districts may work: the poorer the district, the more money per child. • Earmarked taxes don’t work for ECCD. They are too volatile. • If the fertility rate is high, the number of newborns may grow quicker than government budget. This justifies international support, especially if primary education is not universal.