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Policy Research – Managing ECD subsidy payments, South Africa

The ECD function for children 7 months to 4 years old is in the process of being shifted from the social development sector to the education sector. This means that provincial education departments will need to take over the responsibility of registering and funding ECD services. It is estimated that there are currently around 20 000 ECD centres being funded by provincial departments of social development. Responsibility for managing the funding and oversight of these ECD centres needs to shift to provincial education departments. In addition, there is an urgent need to expand access to ECD services further.

To expand access to ECD services the provincial education departments need to make ECD subsidy payments to a very large number of ECD service provides, many of whom are individuals operating as sole-traders or informal micro-enterprises. The challenge is that the provincial education departments do not have the required administrative capacity to:

  • identify these informal ECD service providers
  • assist them to open bank accounts to receive the ECD subsidy
  • assist them to register to receive the ECD subsidy from the PED
  • assist them to comply with the administrative and reporting requirements expected of recipients of the ECD subsidies
  • provide them with training, mentoring and other support to deliver ECD services effectively
  • exercise oversight of the ECD services they provide
  • ensure that they report to the PED on the services they provide 

Consequently, Ilifa Labantwana is exploring the feasibility of provincial education departments appointing of ECD subsidy agents / facilitators to assist with managing the processes outlined above. Two options have been proposed as follows:

  • Option 1: ECD funding agents – For Option One the problem being solved is the need for PEDs to sign SLAs with every ECD service, and the time-consuming and resource-intensive nature of administering applications, checks, contracts, payments and reporting processes with each separate service provider.
  • Option 2: ECD funding facilitators – For Option Two the problem being solved is the need for PEDs to ensure ECD service providers are eligible to receive ECD public funding streams and comply with the prescribed administrative and reporting requirements on an ongoing basis.

The objective of this assignment is to explore the feasibility of these two options. This will involve investigating at least the following aspects:

  1. The legal framework within which the two options need to operate and legislative amendments that may be required
  2. Institutional arrangements, roles and responsibilities under the two options
  3. The processes for the two options
  4. The cost-effectiveness of the two options

Ultimately the aim is to establish whether the options are legally feasible, practical from a management / process perspective and whether they offer value for money.

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