Thursday, 1 May 2014
How can markets work better for nutrition? Lessons from Nigeria
Yet at the moment, food markets in the country are failing the poor. Research by Sahel Capital and IDS in several Nigerian cities found no complementary food products for infants that contained enough nutrients at an affordable price. Since markets don’t allow poor people to buy products that are sufficiently nutritious, they are forced to either water down the products they feed to their children or rely on cheaper products that lack nutrients and can be unsafe. The result can be early death or a lifetime of ill health.
Can businesses tackle the nutrition problem on their own?
This failure isn’t due to lack of interest from businesses. There are lots of Nigerian food companies producing widely-eaten foods like porridges, pounded yam and custards. In case studies of two companies, we found that they had produced products that were fortified with micronutrients. The problem was that they could not make these products – and deliver them – at a price that was affordable for poor people.
Why weren’t products affordable? Reaching poor consumers created high costs for companies; shipping products to urban slums and rural areas was expensive and often required building new distribution chains. Meanwhile, convincing consumers that products were healthy and nutritious was also expensive, especially since consumers are suspicious of claims on food labels, in a context where fake products and false claims are common. These are problems that businesses struggle to overcome on their own.
How can policy get around market problems?
Nigeria’s experience provides important lessons about what can be done. The Federal government, State governments, donors and NGOs have backed a variety of strategies to encourage production of nutritious foods and get them to the people who need them.
Though not all strategies have been successful, the lessons are clear: the most successful programmes worked because they sidestepped some of the larger problems that constrain businesses from making nutritious foods at an affordable price. Rather than trying to resolve systemic problems like false products or bad infrastructure – which would require huge resources and major reforms, successful efforts found ways to work around these problems. Here are some examples of how organisations and partnerships worked around the market constraints.
Using non-profit distribution to reach the most vulnerable people
One of the most effective ways to encourage businesses to produce nutrient-rich products – and to make sure they reached the most vulnerable people – was for government or non-profit agencies to buy products and distribute them.
By taking on distribution, public agencies can cover the high costs of delivering to poor people, while also eliminating the problems of convincing consumers to pay for nutrition. They can also guarantee the quality of the product. These systems have suited those businesses that have participated; they provide a secure source of demand and allow the business to focus on product development and manufacturing.
Bringing companies on board for fortification
Other strategies can also side step the key problems. For instance, laws requiring all manufacturers to add vitamins and minerals to products like wheat flour mean companies don’t have to compete with each other on fortification; the government requires all players to pay the costs of adding micronutrients, and this cost is passed on to consumers.
A second benefit of this approach is that consumers don’t even have to be aware of nutrition needs, since they will receive nutrients through foods they already eat.
But this approach also faces major challenges. Unless companies’ profits fall when they fail to comply with the law, food processors have an incentive to cut corners. In Nigeria, despite a decade of support from international donors and NGOs, regulatory agencies haven’t been able to consistently monitor companies and sanction those that don’t fortify. The Nigerian experience highlights just how daunting it is to enable government to effectively regulate large industry.
What can Nigeria teach us about making markets work for nutrition?
With our partners in Nigeria, we are asking what the big problems are and what strategies government, businesses and partnerships can use to address them. Nigeria is unique; it has the largest population in Africa, its private sector displays unparalleled levels of dynamism, complexity and chaos and its public institutions face corruption on a staggering scale.
Yet the breadth of experience in Nigeria offers crucial lessons for other countries, and for development partners and others working on food and nutrition. Our research points to policy approaches that can work with markets to improve nutrition. These include ensuring public programmes deliver to the most vulnerable, while strengthening regulatory agencies and industry bodies, aligning agricultural policies to support more nutrient-rich foods and building more targeted partnerships that specifically address the market problems.
In the coming months, we’ll be sharing our findings and inviting people from across the food and nutrition sectors to share their own experiences. In the meantime, read about our key findings and share your own experiences in the comment box below.
In memory of Professor Isaac O. Akinyele, a leader in the field of nutrition, and co-author of the report on policy experience with markets and nutrition in Nigeria.
By Ewan Robinson, Research Officer, Institute of Development Studies