Economic benefits for affordable, accessible childcare can’t be overlooked

AS SOUTH Africa concludes its G20 Presidency, the inclusion of childcare in the Leaders’ Declaration affirms  that investing in the care economy is no longer an outlying issue, but a global policy priority and an engine of economic growth. 

While countries across the world struggle with sluggish growth and uneven labour participation that weaken productivity, investing in the care economy presents a clear opportunity to boost participation in the formal economy, strengthen skills and raise household incomes. 

When families cannot afford childcare, caregivers—most often women—are forced into difficult trade-offs: leaving children in inadequate or unsafe care, taking on informal or unstable work, reducing their hours, or exiting the workforce altogether.

These choices undermine household financial security, delay career prospects, increase time poverty among women and widen existing inequalities. This is precisely why integrating childcare into the G20 agenda is so important. It shifts childcare from being seen as a private responsibility to being recognised as a cornerstone of labour force participation, human capital development, and inclusive, sustainable economic growth.

As the G20 transitions from South Africa’s focus on solidarity to the United States’ workforce-led agenda, leaders have a pivotal moment to foreground affordable, quality childcare as a core economic strategy. Doing so positions both emerging and advanced economies to confront fiscal pressures and navigate profound demographic shifts.

 Investing in quality, affordable childcare delivers immediate, measurable, and transformative economic returns. Economist Impact’s Childcare dividend initiative (CDI) modelled the projected benefits of providing access to quality childcare across 15 key global economies, including the economic engines of South Africa, Kenya, and Nigeria. The research illustrates a clear case for investment. The potential returns associated with investing in the care economy across the continent are powerful.

In South Africa, the government has strengthened early childhood development policies and is working to expand access to childcare, yet high costs remain a major barrier for low-income families. The consequences are significant: when mothers who are ready to work cannot afford childcare, they are effectively pushed out of the labour market. In 2022 alone, South Africa is estimated to have forfeited US $5 billion in potential employment income as a result.

Critically, evidence underscores the economic dividends of investing in the care economy: on average, every dollar invested in accessible childcare has the potential to enable currently unemployed primary caregivers to generate roughly seven dollars in additional economic activity in South Africa.

Yet, structural challenges persist. The Institute for Economic Justice (IEJ) highlights pervasive gendered norms whereby women lacking formal employment are expected to provide unpaid care without adequate state support, deepening financial and gender inequity. This barrier is exacerbated by the persistent childcare affordability gap. 

The government’s Early Childhood Development (ECD) subsidy still only covers approximately 50% of the cost of operating a childcare programme, illustrating why the potential return on investment remains out of reach for households.

These economic losses are not unique to South Africa. Nigeria suffered the largest average employment income loss among the studied countries, approximately 1.09% of GDP, or US $4.4 billion, due to the lack of accessible, affordable childcare options.

This loss highlights Nigeria’s potential to uncover the largest GDP gains by 2027 by investing in care infrastructure, boosting enrollment. Kenya experienced the second-highest economic loss in 2022 (0.21% of GDP). Despite progress like the 2014 Tayari programme, high costs, poor regulation and substandard childcare centres remain systemic challenges that restrict women’s full participation in the formal economy.

Globally, countries demonstrating best practice integrate childcare as core economic infrastructure. In 2022, Canada implemented a plan to achieve $10-a-day childcare nationally by 2026. This significant public investment is explicitly designed to increase women’s labour force participation and drive growth, mirroring successful universal or highly subsidised strategies in countries like Germany and France.

The evidence is clear: affordable, accessible childcare is a powerful economic multiplier. It directly supports women’s employment in the formal economy, strengthens labour supply, boosts household income and consumption and generates new employment in the ECD sector. Crucially, high-quality early learning also builds the human capital and skills needed to boost long-term productivity and economic resilience.

 The care economy is a rare policy space where economic and social priorities converge. Framing childcare as an economic issue allows governments to integrate care into fiscal planning, labour strategies and education systems, rather than treating it as a marginal social programme. 

South Africa’s Presidency successfully centred on inclusion, equality and people-first economics, shifting the G20’s focus to long-term human capital development. The G20 declaration powerfully reinforced this direction. Most significantly, the declaration pledged to increase investment and social protection in the care economy and develop comprehensive intersectoral care policies by 2030 using the International Labour Organisation’s (ILO) 5R framework for decent care work.

As South Africa’s term concludes, there is a continued imperative to consolidate a more coherent economic narrative, one that connects labour participation, demographic shifts, family support and social infrastructure into a single growth agenda. 

As the G20 transitions to the US presidency, there is a chance to build on the momentum established in South Africa to adopt a practical framework for strengthening the care economy so that childcare becomes part of mainstream economic planning rather than an afterthought. 

The US must champion a global standard that embeds childcare as a core component of economic planning, while simultaneously confronting its own domestic affordability challenges.

Member States must be urged to translate the G20 Declaration into national care strategies, commit to specific targeted investment in the childcare workforce, and align financing to expand access to quality, affordable childcare. Governments, development partners and the private sector should rally behind a coordinated effort to improve and scale childcare services, recognising the powerful economic and social dividends that follow when the care economy is treated as an economic and social priority.

Sustaining the care economy as a global priority through 2026 and beyond is essential. By building on the progress already established and placing childcare at the forefront today, the G20 can drive economic prosperity while laying the groundwork for a more resilient, equitable, and inclusive future.

 Stewart is head of impact research, policy and insights at Economist Impact and Kasan is project lead of feminist economics researcher at Institute of Economist Justice