ECD Financing
Supporting local providers to deliver affordable,
high-quality ECD services
Brain development in the early years happens at a rate unmatched during any other period of life. Stimulating interactions between children and their caregivers positively and permanently strengthens their ability to learn and maintain brain function for life. Yet, recent evidence on ECD suggests that 43% of children living in low- and middle-income countries are failing to reach their development potential due to a lack of adequate nutrition, stimulation and cognitive stimulation. This focus is particularly relevant to Save the Children’s work to support the most deprived, as the early years present a unique window of opportunity to address inequality and reduce early disadvantage.
Return on Investment
Research shows that every $1 invested in ECD for 3–5-year-olds can yield a return of $7-$12 to society. In Rwanda, ECD Policy recognizes that investments in ECD are indeed among the most cost-effective in the sector. Yet, only 0.6 % of the overall education budget was allocated to pre-primary in the 2020/21 Fiscal Year. Considering these statistics, Kumwe Hub drives a comprehensive investment initiative. The core objective is to sustainably bolster the early education sector, bridging the ECD gap and instigating enduring positive change. This holistic financing model has been started in Rwanda and is now intended for replication in other ESA countries.
How do we measure impact
With our ECD Financing, our metrics include:
- Increased number of children aged 6 months to 6 years accessing quality ECD services. This includes children from the poorest families as the financial burden is alleviated through concessional loans extended to low cost private ECD providers and grants provided to ECD centers operating in the most deprived areas of the country.
- Improved school readiness and educational outcomes
- Improved physical and mental health outcomes among children
- Improved child protection outcomes as children are not left alone or with other children during the day
- Higher student achievement, post-school productivity
- Increased participation of women in the labor force
How we do this
Kumwe Hub receives money from its network of investors and donors. Either this is a grant that donors don’t expect back but want to be sustainably re-used for multiple projects. Or it’s an investment taken at a rate of maximum 3% return.
We then ‘on-lend’ that finance to private ECD providers at a below market interest rate through our financial intermediaries (such as Goshen Finance and Inkomoko). The selected ECD providers use this investment to grow the capacity of their existing centers, set-up new ones and/or enhance the quality and accessibility of provided services. Priority is given to women-led and low-cost ECD centers.
In addition, Kumwe Hub – through Save the Children’s ECD experts – provides ECD centers with business and ECD training to ensure excellence in the management and quality of the ECD services, as well as decreasing the risks of loan default.
Underpinning it all is a strong impact assessment model that will enable Kumwe Hub to measure the impact of the investment and the technical assistance on the availability and quality of ECD services, and on development and economic outcomes for children and their parents respectively.
In parallel, Kumwe Hub conducts advocacy activities with both governments and financial institutions to create a more favorable environment for ECD providers to operate.
As the ECD owners pay back the loan with a small interest (usually after an agreed period of two years), investors get their money back and/or its reinvested into other ECDs. Kumwe Hub keeps a small percentage of the repaid amount to a) cover our own overheads, and b) provide grants (not loans) to other ECD centers operating in the most deprived areas of the country, such as our teen mothers center in Mahama Refugee Camp, who will always need free services.
