Investing financially in early childhood education is important. A recent benefit-cost analysis of investments in pre-primary education in developing low- and middle-income countries found that every dollar invested in quality pre-primary education and related services yields an estimated average of $9.25USD in benefits, with the rate of return on investment highest in the early years and through preschool programmes. Adequate public investment is needed for ECE due to its significant returns on investments, qualifying ECE as a public good.
The reality in many countries, however, is that allocations from public budgets are unlikely to cover quality ECE services country-wide, so complementary sources of financing need to be considered in order to scale up and deliver high-quality ECE. All activities for ECE that are included in the ESP should be fully funded. Further, as ESP implementation begins, needs may change and/or public funding initially allocated to fund ECE activities may be reallocated, resulting in yet fewer funds being dedicated to the ECE subsector. In this guide, we look at conventional financing mechanisms for ECE and discuss innovative sources and mechanisms of financing. We also include some information specific to GPE countries.
This is intended to only be an introductory guide. For more information, please see the resources that are included in the financing section of Tool 5.4 (Implementation Resource Guide).
This guide is intended to provide an introduction to public financing, innovative financing, and GPE’s funding model in order to help stakeholders better understand different possible financing modalities for ECE.
When to Use this Tool
While intended to be used during the implementation process, particularly if new sources of financing need to be identified, this guide can be used at all stages of planning.