By Guest blogger Dr Steve Collins,
In these challenging economic times, a massive international investment opportunity is being largely ignored by the corporate sector. Traditional models that approach the treatment and prevention of malnutrition from the perspective of corporate social responsibility or charity, are not only failing to address the problem, they are also missing major opportunities for revenue growth.
Globally, almost 300 million children in the developing world suffer from malnutrition. This is nothing short of a disgrace. Aside from the inherent suffering, the devastating longer-term consequences of malnutrition are often not understood. There is a critical period, from conception to 24 months of age, (the so called “First 1,000 days”) when if a child is not provided with a diet providing a specific range of nutrients, their mental and physical development will be severely and irreversibly impeded. Without proper nutrition during this critical period, a child becomes intellectually blunted and never attains his or her full educational potential - no matter what support may subsequently be provided. The consequent increased ill health, sub-optimal earning capacity and greatly reduced life expectancy all result in huge economic costs for the countries concerned.
The scale of the problem is too big to leave to NGOs or the public sector. On the positive side, the innovative development of highly fortified nutritious pastes, commonly referred to as Ready-to-Use Therapeutic Foods, together with community-based therapeutic care, a new approach to delivering nutritional care to people in their villages rather than in hospitals, has revolutionised our ability to treat severe malnutrition. These products, are eaten directly from the pack, do not require mixing with water, are stable without refrigeration and are highly convenient and palatable. By providing these products directly to mothers in their homes and local communities, we have seen dramatic improvements in treatment and prevention, with death rates cut fivefold.
My own company, Valid Nutrition, has been set up as a social enterprise with the specific mission of manufacturing these life saving foods in developing countries and making them more available and affordable to those who need them most.
For the first time ever, we have the capability to treat malnutrition at real scale. However, in order to extend this approach to prevent malnutrition, we now need more effective engagement with the corporate and private sector. The debate shouldn’t be about if – but rather about how, the private sector should engage.
In my opinion, the reason engagement has moved so slowly is that it has been based too often on a dysfunctional corporate social responsibility (CSR) model. Despite all the hyperbole, CSR tends to be peripheral in most organisations and is not woven into the fabric of the business. It’s not always transparent and there are often strings attached. Sometimes it’s driven by a need to buy profile and even worse, CSR has been used as a type of moral counterbalance to business practices that have had direct negative impacts on the poor.
To really make a lasting difference, I believe the prevention of malnutrition must be integrated into the core business of major food companies. Realistically, that ultimately requires shareholders to receive a tangible return. At some point, companies must be able to generate profit out of their engagement with the so called “bottom of the pyramid” (the economically poorest one billion people on our planet). Controversial perhaps, but also rooted in realism.
The question is how can we align two such apparently conflicting aims – the prevention and treatment of malnutrition with generating reasonable profits for business?
Ultimately, there should be no conflict. The World Bank has identified malnutrition as the single greatest cause of poverty and underdevelopment. There is strong evidence that children who receive adequate nutrition go on to have substantially increased earning power as adults [43% more according to a major study published in The Lancet, in 2008]. A lifetime of increased earning power from an initial investment of less than $50, is a massive return that has huge potential to boost consumer markets and national economies. Given the vast numbers of people in this segment of the global population, investment in early child nutrition is highly economically attractive for both governments and industry alike.
We need to create viable business models that establish better mechanisms for engagement between public and private actors. There are two distinct and complementary models for engagement that combine and maximise the comparative advantages of each sector; one designed to increase the efficiency, impact and reach of free or subsidised products, the second, designed to increase the availability, purchase and consumption of beneficial nutritional products by those who can afford them. Both models require standards and metrics to guarantee the provision of efficacious products and protect the food security and self-sufficiency of vulnerable groups. Ingredients must be procured in developing countries in a way that supports local agriculture and avoids the dumping of subsidised farm outputs on the developing world.
The first model requires public nutrition interventions targeting the very poor. The low or non-existent purchasing power of these groups means that nutritional products must be free or heavily subsidised, funded by public bodies (governments/donors), manufactured by high-volume, low-margin businesses and targeted by public sector /civil society actors. Although many of the essential elements of this system are already in place, its efficacy and impact needs to be increased by better harnessing private sector capability. We need commercial engagement to expand the production, reduce the cost and enhance the distribution of new appropriately formulated ready-to-use foods. We also need to link these initiatives to public sector nutritional assessment and diagnosis through the use of prescriptions or vouchers. The widespread use of mobile phones, even in the poorest communities, provides an exciting and powerful potential mechanism for related cash transfers to offset against purchase price.
The second model requires appropriately formulated consumer food products to be sold to the lower levels of the socio-economic pyramid - at affordable prices. Whilst perhaps not always possible to reach the very bottom levels of the pyramid where malnutrition is commonest, each consumer persuaded to buy effective nutritional snacks, enhances the economic productivity of future generations and frees up vital public resources to focus on those who cannot afford even the simplest foods.
To achieve this requires innovation; even though ultimately the market is attractive, private sector companies entering this space on their own face high initial risk having to accept diluted margins for a considerable period. Unfortunately, typical shareholder requirements preclude this sort of patience and vision.
I believe that a new genre of social businesses, free from the short-term demands of shareholders, is required to open up this market and develop brands produced on a commercial basis that allow the penetration of suitable products down through the population pyramid. These social businesses can engage with and harness commercial sector capability through purchasing R&D and "route to market" expertise – structured imaginatively to avoid dilution of corporate margins.
Such social businesses, committed to addressing humanitarian need while also achieving a commercial return, are beginning to emerge. They recruit from and apply the disciplines of the corporate sector, are capable of becoming financially self sustaining and are, not dependent on donations. By combining an enterprising social vision with a disciplined business approach, many are now punching above their weight and can use their presence to leverage a much wider ethical engagement from other commercial actors.
The current model for nutritional development has failed the poor of Africa and many other nations, most notably India. Much CSR contributes to this failure through its focus on disbursements that do nothing to harness business capability or add value to the money given. On the other hand, socially orientated corporate engagement through the establishment of social businesses can create a multiplier effect that both improves nutrition and ultimately fosters sustainable economic development. This in turn can stimulate agricultural activity, thereby helping to create a positive economic cycle that both treats and prevents under nutrition. Such an approach will ultimately dramatically increase the social returns of investment.
By imaginatively broadening the scope of engagement with the private sector, we can finally start to make meaningful and sustainable progress in addressing the global disgrace of malnutrition.
About Dr Steve Collins
Dr Steve Collins, (MBE MD MBBS) is a medical doctor and leading international authority on childhood nutrition with over 25 years front line experience. He is the founder and Chairman of Valid Nutrition, an innovative Social Enterprise, which develops and manufactures a range of highly nutritious ready to use foods in Africa. http://www.validnutrition.org/