Can Affordable Childcare Unlock Higher Productivity for Women in Africa’s Informal Economy?

Affordable childcare can boost women’s productivity, well-being and children’s development, with community-based services achieving higher take-up and broader welfare gains than workplace care. However, large affordability gaps mean governments, development partners and private providers will need subsidies, quality standards and scalable partnerships to turn childcare into sustainable economic and social infrastructure.

A study, Childcare for Informal-Sector Workers: Delivery Models, Access, and Welfare, conducted by researchers affiliated with the Ace Policy Research Institute, the World Bank, the Uganda Development Bank, and the Nova School of Business and Economics, provides new evidence that affordable childcare can be more than a social service. Based on a randomized controlled trial involving 883 working women across six markets in and around Kampala, Uganda, the study shows that childcare can reduce unpaid care burdens, improve women's economic efficiency and well-being, and support children's early development. But it also finds that where childcare is provided, how much it costs and who can access it will determine whether such programs can work at scale.

Childcare Frees Women's Time, but Productivity May Matter More Than Longer Working Hours

Before the intervention, participating women spent more than nine hours a day on childcare when primary and secondary caregiving were combined, and more than 80% were their child's primary caregiver. Many women were effectively trying to run businesses while simultaneously looking after young children.

Providing free childcare changed this pattern significantly. Across the two intervention groups, formal childcare use increased by 48 percentage points, equivalent to a 229% rise compared with the control group. Among women induced to use childcare, the time during which mothers or other household members were the primary caregiver fell by about four hours per day.

Yet the economic result challenges a common policy assumption. Women did not use their freed-up time simply to work longer. Among childcare adopters, working hours actually fell by about 13%. At the same time, hourly earnings increased by more than 50%.

For policymakers, this means childcare programs should not be judged only by female labor-force participation or additional working hours. Reduced interruptions and childcare-related multitasking may allow women already working in the informal economy to become more productive and earn more efficiently.

Community or Workplace Childcare? Different Models Deliver Different Benefits

The location of childcare had a major influence on participation. Community-based childcare achieved a take-up rate of 76.2%, compared with 61.9% for childcare located at or near women's markets. Compared with the control group, community care increased formal childcare use by 55 percentage points, against 41 percentage points for market-based services.

Convenience appears important. Women living closer to markets were nearly 20 percentage points more likely to use workplace childcare, while those who were already accustomed to bringing children to the market were more than 20 percentage points more likely to participate.

Community childcare produced stronger improvements in women's well-being, child development and willingness to pay. Market-based care, meanwhile, showed larger estimated economic responses among users, although the researchers caution that some economic differences were statistically uncertain.

The results suggest there is no universal delivery model. Governments seeking maximum coverage and broader welfare benefits may favor community providers. Workplace facilities could be more suitable for large markets and other employment clusters where many women work in one location.

The Financing Gap Makes Public Support Critical

Affordability is perhaps the biggest challenge to expanding childcare. Experience with formal childcare increased women's willingness to pay by about 25%, but families were still willing to pay only a fraction of the actual service cost.

Scale can reduce expenses. The largest market center, designed for up to 120 children, cost approximately USD 89 per child per term, compared with about USD 152 at smaller centers designed for around 40 children. However, women in the control group were willing to pay only around USD 29 per term, leaving a financing gap of roughly USD 60 even at the more efficient large center.

For the private sector, this creates both an opportunity and a risk. Existing community providers could become important partners in publicly supported childcare systems, allowing governments to expand services without constructing every facility themselves. Private operators, employers and market associations could also participate through public-private partnerships.

But expecting low-income informal workers to finance services entirely through fees is unlikely to work. Private investment without subsidies, employer contributions or other financing mechanisms could struggle to achieve both affordability and commercial sustainability.

The fiscal calculations nevertheless suggest that subsidies could deliver meaningful social returns. Under a cost-sharing arrangement, the study estimates that every USD 1 of net public expenditure could generate about USD 2.80 in social welfare through market-based childcare and USD 4.20 through community-based care. Under full subsidies, estimated returns remain at USD 2.30 and USD 3.00 respectively.

Governments and Development Partners Need to Treat Childcare as Economic Infrastructure

The strongest argument for investment extends beyond women's immediate earnings. Children participating in formal childcare recorded an improvement of close to 0.3 standard deviations in the study's development index among adopters. Some child-development gains also remained three months after free childcare ended, even as most effects on women's economic outcomes and well-being faded.

This matters for international development partners because childcare cuts across several policy priorities: women's economic empowerment, poverty reduction, social protection, human-capital development and early childhood education.

Future programs should therefore combine public financing with private delivery where appropriate. Governments could subsidize established community providers while developing workplace centers in large markets, industrial zones and other dense employment areas where economies of scale can lower costs. Development institutions can support financing, provider training, quality standards, monitoring and rigorous long-term evaluation.

Quality will be crucial. The projected economic returns depend heavily on children's developmental improvements eventually translating into better education, productivity and earnings. Expanding cheap childcare without adequate safety, trained caregivers and early-learning components could weaken those benefits.

The Kampala evidence ultimately suggests that childcare should be considered part of economic and development infrastructure rather than simply assistance for working mothers. Well-designed services can reduce unpaid care burdens, improve women's productivity and well-being, strengthen early childhood development and potentially generate returns extending across generations.