In a virtual event last month that featured speeches from First Lady Dr Jill Biden, USAID Administrator Samantha Power, and Melinda French Gates, the World Bank launched its Childcare Incentive Fund.

The fund, which has support and initial pledges from the governments of Australia, Canada, and the United States, as well as private foundations including the Bill and Melinda Gates Foundation and the Ford Foundation, will support the delivery of the World Bank’s International Development Association’s new policy commitment on childcare. The expectation is that these pledges will catalyse at least USD 180 million in new funding to ensure quality, affordable childcare is available in low- and middle-income countries globally.

The support for the Fund is just one part of the US Government’s new commitment to expand affordable, high-quality childcare through improved care infrastructure globally.

COVID-19’s Effect on Women

The event highlighted how COVID-19 uncovered the many cracks in economies around the world, including the disparities between men and women across both developed and developing countries. According to the latest reports, there are now 2 million fewer women in the workforce than there were before COVID-19. Most of these women left to care for their children or family members during the pandemic and have yet to return.

Lack of funding for early childhood care and education not only affects children’s development but it limits women’s economic participation and overall job creation. Around the world, women are often unpaid for the work of caring for their families, or are unable to afford childcare services, forcing many women to work in the informal economy where they are unprotected by labour laws and are paid lower wages.

As part of the infrastructure partnership announced at the G7 Summit in 2021, the US, among other G7 countries, committed to meet the infrastructure needs of low- and middle-income countries by mobilising private-sector capital in four areas—climate, health and health security, digital technology, and gender equality and equity. Supporting early childcare and education and the goals of the World Bank’s fund fall squarely within those areas.

“We’re making this announcement in conjunction with the Biden Administration’s global infrastructure announcement,” said Samantha Power. She went on explain that there’s a global debate around what counts as infrastructure, but the fact that gender equity is included as a pillar in the infrastructure plans is important.

Each of the speeches and the discussion throughout the event highlighted how ensuring safe and accessible early childcare isn’t just good for children, it has a snowball effect that is good for women and in turn, economies.

“Investments in childcare will provide returns not only for workers but also for businesses, because when childcare is safe and affordable, parents can focus on their jobs,” explained First Lady Dr Jill Biden. “It’s an investment that lifts up families and entire economies.”

Finance for Early Childcare and Education

At the launch of the World Bank fund, USAID announced plans to invest USD 50 million toward global childcare infrastructure as part of Biden’s Global Infrastructure Initiative.

“The administration's commitment underscores the important connection between early childcare and education outcomes,” says Palladium’s Director of Economic Growth, Amanda Fernandez. “There is a great deal of opportunity to facilitate private investment in this space, so this development is very exciting.”

Fernandez adds that USAID CATALYZE, implemented by Palladium, is already working in the sector on reducing significant funding gaps in early childhood care and education with an emphasis on achieving gains in women’s economic empowerment, early childhood development, and job creation. According to

Michael Tetelman, CATALYZE EduFinance Activity Lead, notes that the team’s market assessments have shown great unmet needs in the space. “If you look to South Africa, there are early childcare centres full to capacity with children,” he says.

“Day care owners, many of whom are women, have told us they would expand and open more centres if they had the funding for it. There’s a tremendous opportunity to meet the needs of skilled and experienced childcare providers to continue improving their education and services.”

The USAID CATALYZE EduFinance Activity aims to improve and sustain learning outcomes for children and youth, in particular disadvantaged children, through the non-state education sector, including schools and ancillary enterprises.

Power added that it’s not just enough to provide early childcare education, but it must also be of quality. “We have an incentive program as well, where centres with better learning outcomes receive benefits in loan repayment and in financing…this is worth its weight in gold. The financial return on these kinds of early investments is exponential.”

Tetelman explains that quality early childcare education is a hallmark of EduFinance, which is comprised of an innovation incubator, which identifies, tests, and refines private sector approaches that can mobilise private finance and improve service delivery in target countries. “We also have a Community of Practice, which fosters networking, knowledge exchange and sharing best practices in education finance.”

Through the US Government’s Advancing Protection and Care for Children in Adversity Strategy, USAID committed to a world in which children thrive, and expanding access to quality and affordable childcare is an important way to invest in women’s employment, economic security, and opportunities for early learning. “This is a very new way of approaching a critical service that has significant impact on a child’s ability to learn, and we applaud USAID’s efforts to initiate this important work,” Fernandez says.

USAID CATALYZE, implemented by Palladium, aims to mobilise USD2 billion in blended finance over eight years (through 2027) to achieve a broad array of development objectives around the globe. For more information, contact info@thepalladiumgroup.com .