What is it about the private sector that makes development actors want to partner with it? In Tanzania, for example, there are several alliances aimed at improving nutrition: the New Alliance supporting the Southern Agricultural Growth Corridor of Tanzania (SAGCOT); GAIN launching the Development Marketplace; donors working with business on the National Food Fortification Strategy.
Private sector engagement in nutrition challenges is contested; nevertheless, while I don’t believe rejecting this approach is the answer, we need a more critical understanding of the context in which the private sector operates and the issues that need to be addressed.
We must acknowledge that business consists not only of big multinational companies, but also involves local companies, microenterprises, small rural traders, and many others. Moreover, it is essential that we learn from companies that are already engaged in nutrition, understanding the challenges they have encountered, their successes, as well as their limitations.
With this in mind, I travelled to Tanzania last December to research a case study about ‘the role of business in providing nutrient-rich foods for the poor, mostly to understand if and how the private sector can overcome challenges relating to distribution, affordability, acceptability, and nutrition impacts among others; where policy support can be needed; and to learn lessons about innovative and effective business models.
Understanding the complimentary foods context in TanzaniaWhile in Morogoro I met a women’s group that owned a very small company that processes blended cereal flour1 (porridge) for infants. Though their production is small, they felt confident about growing their business. However, although they try, they struggle to learn ways to improve the quality of their product. Also, they lacked the knowledge and resources to control the nutritional content of their product, brand it or certify it under the Tanzanian Food and Drugs Authority.
Walking around the market I found a vast variety of ‘unbranded’ bags of blended flour, with different ingredients and sizes, usually with an unknown origin. This group is only one example of the context in which cereal blended flour processors operate in Tanzania. It is large, fragmented, very price competitive and, often, it offers little or no information regarding the nutritional content or quality of the products.
Case study - Power FoodsThe case study focused on Power Foods, the only company in Tanzania that operates a dual business model: the traditional business of the company, Power Flour, which makes consumer products; and Power Foods brand, which produces RUTF2 for institutional buyers such as UNICEF. This allowed us to compare the challenges faced by a more traditional market based business model (Power Flour) with a public non-profit distribution one (Power Foods brand).
Power Foods is a local pioneer medium-sized company producing blended flour, along with other products. Its products are fortified with essential micronutrients, packaged and branded, and certified by local regulatory agencies. Anna Temu, its founder, started the business 20 years ago to “process and distribute quality nutritious food products for children at affordable prices”, though still today, they struggle to reduce their costs and make their product affordable and accessible to low-income consumers, especially those located in remote rural areas.
What is striking about the findings is that the majority of Power Flour challenges are outside the company’s control. These include a lack of market signalling mechanisms to control the nutritional quality of its products, low consumer awareness about nutrition, and weak distribution channels to reach the most vulnerable areas.3 These create an environment where it is very difficult for businesses to produce fortified products at affordable prices. On the other hand, Power Foods’ experience of selling RUTF exemplifies how, having the quality, demand and distribution channels guaranteed by donors like UNICEF, these products reach their targeted population. However, RTUF is typically used in emergency situations only. Sustainability and funding are the critical challenges for non-profit distribution models.
Power Foods has proven successful at developing a business model selling nutrient-rich foods, well-known for its high-quality products and commitment to nutrition; however, it has not succeeded at making these products both available and affordable to low-income groups.
How can these challenges be overcome?
Chronic undernutrition affects over 30% of all children in Tanzania; it is clear that public distribution, or private business alone are not enough. In order to cover this gap, a holistic approach is required, with alliances that target systemic changes and involve other stakeholders, like governments, donors or civil society. Collaborative initiatives like running nutrition behaviour change communications and campaigns, or creating certification schemes for particular products.
The recent launch of the SUN business network in Tanzania, with more than 100 organisations, local companies, multinationals, UN, government, civil society, is an example of this collaboration. However, it is necessary to follow its activities to ensure they target structural nutritional challenges. They might find helpful the recommendations of this case study on how to collaborate with businesses to catalyse their potential.
By Maria del Mar Maestre Morales, Research Assistant, Institute of Development Studies
- See Ewan Robinson’s blog about the success and challenges of this product in Ghana.
- RUTF stands for ready-to-use therapeutic food and it is used for the treatment of severe acute malnutrition. For a more detailed discussion about these products, see Lybbert (2011)
- These constraints have also been encountered by businesses in other African countries, see Anim-Soumah et al (2013) and Robinson and Humphrey (2013) for examples of this.