private sector and public needs

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World Economic Forum

January 2006

Harnessing Private Sector Capabilitiesto Meet Public Needs:

The Potential of Partnerships to Advance

Progress on Hunger, Malaria and

Basic Education

COMMITTED TO

IMPROVING THE STATE

OF THE WORLD


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2006 World Economic Forum

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Contents

Preface 5

Executive Summary 6

Introduction 10

Applying Core Business Competencies to Help Halve Hunger 11

Applying Core Business Competencies to Help Reduce the Incidence of Malaria 22

Applying Core Business Competencies to Help Achieve Universal Primary Education 31

What Works: Effective Partnership Models 41

List of Interviewees 44

References 45


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The World Economic Forum is pleased to issue thisreport, which examines how core industry capabilities

can be applied to three of the most pressing

development challenges of our time: hunger, malaria

and basic education. This project builds on previous

work by the Forum regarding public-private

partnerships (PPPs), including its 2005 Global

Governance Initiative Report, which elaborated four

fundamental modes of business engagement to

advance progress toward the Millennium Goals; the

2005 Global Corporate Citizenship Initiative report,

Partnering for Success: Business Perspectives on

Multistakeholder Partnerships, which distilled lessons

drawn from PPPs in developing countries; and theFinancing for Development Initiatives report, Building

on the Monterrey Consensus: The Growing Role of

Public-Private Partnerships in Mobilizing Resources for

Development. The latter, which was released at the

September 2005 UN World Summit in cooperation

with the UN and the Swiss Development Cooperation

Agency, presented the results of consultations with

more than 200 PPP practitioners on the potential role

of PPPs in delivering development assistance. This

report also reflects considerable learnings that the

Forum has drawn from its role in the Jordan Education

Initiative, a PPP aimed at education advancement

launched in partnership with the Government ofJordan, and the Global Health Initiative, which advises

and engages in a range of PPPs related to HIV/AIDS,

TB and malaria.

A recurrent theme in the Forums growing body of

work on PPPs is that companies are often far more

prepared to apply their business expertise or assets to

a problem they see in their operating environment

than to issue a one-off charitable cash grant. Yet

development institutions have not traditionally viewed

the engagement of core business skills and other in-

kind resources as an explicit element of their strategy.As a result, neither they nor other parts of the

international community have taken the necessary first

step of systematically analysing the possible

intersection of the core capabilities companies

possess and the so-called value chain of

development assistance needs in areas such as

infectious diseases, basic education, water and

sanitation, and so on. This report is a first attempt to

do so with respect hunger, malaria and basic

education, drawing upon the communities of experts

within the Forums existing initiatives and participating

companies. It is intended to be a practical tool that

companies, governments and others can use toidentify new areas of public-private cooperation in

development partnerships.

The project was coordinated by Lisa Dreier, AssociateDirector, who helps manage the Forums portfolio of

public-private initiatives. She drafted the chapter on

hunger, using as a starting point the framework for action

defined by the UN Millennium Project Hunger Task Force

in its 2005 report, Halving Hunger: It Can be Done.

Several Task Force members contributed significantly to

this chapter, including Hans Eenhoorn, retired from

Unilever, and Robert B. Horsch of Monsanto Company. A

number of other colleagues provided valuable and

substantive inputs including Ludo Oelrich of TNT, David J.

Spielman of the International Food Policy Research

Institute, Simon Winter and Steven Londner of

Technoserve, Berangere Magarinos of the Global Alliancefor Improved Nutrition, Bjorn Wille and Ulla Holm of Tetra

Pak, and Kathleen Kurz and Nata Duvvury of the

International Center for Research on Women.

The chapter on malaria was drafted by a team at the

Boston Consulting Group, including Lisa Carpenter, Dave

Matheson, Adrian McKemey, Ruchi Warrier and Wendy

Woods, with input from Lisa Dreier, Francesca Boldrini

and David Kim of the Forums Global Health Initiative. We

thank the reviewers, Girindre Beeharry of the Bill &

Melinda Gates Foundation, Awa Marie Coll-Seck of Roll

Back Malaria, Phil Davis of Sumitomo Chemical (UK) plc,

Chris Hentschel of Medicines for Malaria Venture, PaulHerrling of Novartis, Shiva Murugasampillay of WHO,

Steven Phillips of ExxonMobil, and Chris White of the

African Medical & Research Foundation. We also thank all

those who provided interviews for this chapter, who are

listed individually in the Annex.

The chapter concerning primary education was drafted by

Julie Kennedy of Millennium Promise and Lisa Dreier, with

inputs from Andreas Cox and Alex Wong of the Forums

Global Education Initiative. We thank Tom Cassidy of the

Harvard University School of Graduate Education; Kristin

Ehrgood of Sapientis; Michelle Selinger of Cisco Systems;Tim Unwin of Royal Holloway, University of London; and

Jim Wynn of Microsoft for their valuable review and inputs

on the chapter.

We thank all of these colleagues for collaborating with us

on this important analysis. We hope that it provides a

sense of the larger possibilities for meaningful public-

private partnership in the development arena.

Richard Samans

Managing Director


January 2006

Preface


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Executive Summary

A wide range of core business capabilities arehighly relevant to the Millennium DevelopmentGoals, a framework agreed to by the worldsgovernments to make major inroads intoeradicating poverty by 2015. A recent Forumstudy involving more than 200 practitioners ofdevelopment partnerships concluded thatprogress could be accelerated if the internationalcommunity were to integrate private sectorcapabilities into development assistance effortson a more systematic basis.

Many firms have already discovered that

compelling opportunities exist to apply corecompetencies to public-private partnerships(PPPs) in ways that clearly benefit their business.This report builds on the previous work of theForums Global Corporate Citizenship, GlobalGovernance, Financing for Development, JordanEducation and Global Health initiatives to examinein greater depth the private sector competenciesthat are particularly relevant in three developmentareas: hunger, malaria and basic education.

There are four main ways in which businessestypically engage in the process of economicdevelopment :

Through core business practices, forexample by creating employment, developinginnovative new products and finding efficient,profitable ways to deliver affordable goods andservices.

Through public-private partnerships usually a combination of business andphilanthropic activity that has an economicrationale but does not generate a market rateof return.

Through strategic corporate philanthropy andsocial investment, using cash donations orin-kind contributions of products or expertiseto catalyse and complement businessengagement, or fill gaps in public financing toaddress fundamental human needs.

Through transparent and responsible businessengagement in public policy dialogue, rulemaking and institution-building operatingindividually, through industry and tradeassociations, or in partnership with non-business actors.

The greatest leverage for society and thecompany is often found through the application ofthe companys tangible assets (such as

equipment and distribution networks) or intangibleassets (such as management expertise, brandingand marketing strength) rather than throughissuing a cheque. Indeed, some of the mostsuccessful partnerships have involved the in-kindapplication of such core company competencies,which have often resulted in a larger corporatecommitment than would have otherwise beenpossible.

Applying Core Business Competencies to

Help Halve Hunger

Hunger affects more 850 million people themajority living in Asia (particularly India and China)and sub-Saharan Africa. Famines form a smallpart of this picture, however the vast majority ofhungry people suffer from chronicmalnourishment, which undermines the health ofboth individuals and national economies. Theimpact is particularly severe on the young,causing 6.5 million child deaths per year; lifelonghealth and cognitive impacts; and significantlosses in national economic productivity.

Eliminating hunger requires an integratedapproach that addresses poverty, builds marketsand infrastructure, boosts agricultural productionand nutrition, focuses on health and enableswomens empowerment. Collaborative privatesector efforts to reduce hunger are rare, but havetremendous potential to bring both practicalsolutions and political action to hungrycommunities. Key opportunities for applying corebusiness competencies to the fight againsthunger include:

1. Increasing food production andstrengthening market systems in hungry

regions

Sourcing from small-scale producers.

(e.g. food and beverage manufacturers andretailers; agribusiness)

Developing small and medium enterprises

(SMEs) for producing, processing and

distributing food and agricultural

products.

(e.g. financial, information technology (IT), foodand agriculture, and extractive industrycompanies)

Expanding farmers access to new andexisting products and technologies.

(e.g. agricultural input, food and beverage,engineering and energy companies)


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1. Innovation of new technologies andproducts to prevent, diagnose and treat

malaria

Discover and develop new vaccines and

drug treatments.

(e.g. pharmaceutical and biotechnologycompanies)

Invent less expensive, easier to use

technologies for diagnosis.

(e.g. diagnostics and medical supplycompanies)

Develop innovative integrated vector

management solutions.

(e.g. consumer goods, energy and chemicalcompanies)

Transfer technology and build local

capacity to reduce costs and delivery time

(e.g. healthcare companies producing malariacommodities)

2. Operations and project management for

supply chain and logistics

Share tools and skills with the public

sector to improve efficiency, for example

in the areas of forecasting demand and

project management.

(e.g. logistics and consumer goods companies) Leverage distribution networks and retail

channels to increase access.

(e.g. food and beverage and logisticscompanies)

Implement malaria control programmes

for the workplace and surrounding

communities.

(e.g. all companies operating in malaria-endemic areas, such as mining and tourism)

3. Advocacy for public support and

facilitation of multistakeholdercooperation

Build public and political support for

advance purchase agreements and

subsidizing malaria commodities.

(e.g. pharmaceutical companies, media andpublic relations companies)

Provide a forum to convene shareholders

to address policy issues.

(e.g. healthcare and energy companies) Leverage distribution networks and retail

channels for community education.

(e.g. food and beverage, energy and retail

companies)

Extending essential services andinfrastructure to hungry areas.

(e.g. telecommunications, water, energy,transportation and financial service companies)

Acting to reduce the spread of HIV/AIDS.

(e.g. transport, mining, agricultural, media andpharmaceutical companies)

2. Improving nutrition through fortified

products and consumer education,

particularly for mothers and young

children

Fortifying food and beverage products for

the bottom of the pyramid.(e.g. food, beverage, retail and consumergoods companies; biotechnology and seedcompanies)

Empowering and educating women and

girls.

(e.g. retail, food, beverage, agribusiness, IT,financial service and media companies)

3. Strengthening governments commitment

and capacity to act against hunger

Building public and political support for

increased investment in hunger reduction.

(e.g. media, public relations, retail andconsumer companies)

Partnering with public agencies and NGOs

to strengthen their capacity.

(e.g. professional and financial servicecompanies, law firms and others with technicalskills)


Help Reduce the Incidence of Malaria

Between 350 and 500 million clinical episodes of

malaria occur each year, with a death tollexceeding 1 million primarily among childrenunder five years of age. The disease is endemic inparts of Asia and Latin America, but Africa isworst affected, suffering more than 80 % ofworldwide fatalities. Despite existing preventive,diagnostic, and treatment options, malaria deathshave increased since the 1970s. There are threebroad incentives for the private sector to apply itscompetencies to malaria reduction: to enablemarket opportunities; to address the risks tohuman resources and assets or capital; and toenhance intangible assets such as corporate

morale, reputation and goodwill. Keyopportunities for applying business competenciesinclude:

Executive Summary


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3. Fostering effective education

management

Promoting performance-oriented, results-

driven management and innovation.

(e.g. IT, logistics and transport, media andprofessional services companies)

Developing financing mechanisms and

planning.

(e.g. financial, professional services, IT andtelecommunications companies)

4. Engaging in advocacy

Building public support and politicalcommitment to improve education.

(e.g. all companies, particularly those requiringhigh skill levels such as technology firms)

Creating new models that engage all

stakeholders in collaborative PPPs.

(e.g. all companies, including both multinationaland national firms)

What Works: Effective Partnership Models

For many companies, public-private partnershipsamong business and governments, NGOs, ordevelopment agencies provide an effectiveavenue for tackling hunger, malaria or educationissues. Such partnerships, when structured andmanaged well, can combine businesscompetencies with the local knowledge, technicalexpertise and public reach of other groups. PPPsare highly diverse and can focus on the designand delivery of pro-poor solutions or strategic in-kind contributions of personnel, expertise,equipment or services.

The involvement of business personnel in a

partnership project often produces managementefficiencies, innovation and a performance culturethat can be as valuable as the financial resourcescommitted. However, broader use of the PPPapproach is constrained by financial, informationaland cultural barriers. More outreach, information-sharing, brokering and financing is needed toovercome existing obstacles and scale upeffective partnership models. Significantinvestment in fostering and growing local capacityis essential in order to sustain such initiatives overthe long term.


Help Achieve Universal Primary Education

More than 100 million school-aged children donot attend school; 60% of them are girls. Thevast majority (96 %) are in the developing world,particularly sub-Saharan Africa and South Asia.Among children who do enrol, many drop outbefore completing primary school. Developing-country education systems face significantchallenges. The cost of reaching the educationMDG is estimated at between US$ 7 to US$ 17

billion per year, which is unlikely to be attained bypublic funding alone. An effective educationsystem is critical for economic growth and for thedevelopment of a thriving private sector, therebyincreasing productivity while raising incomes andpurchasing power. Key opportunities for applyingcore business competencies include:

1. Establishing the basic conditions for

effective learning

Improving school infrastructure.

(e.g. construction, engineering, energy,telecommunications and banking companies)

Developing and supplying appropriate

supplies and equipment.

(e.g. information technology (IT),telecommunications, pulp and paper, andtransport companies)

Providing school meals and health

services.

(e.g. food and beverage, agribusiness,healthcare and pharmaceutical companies)

Expanding access to affordable, quality

education.

(e.g. all companies with an interest in

philanthropic support of educationalopportunities)

2. Improving educational content and skill

building

Strengthening curriculum, content and

teacher training.

(e.g. IT, telecommunications, media, publishing,scientific and technology companies)

Enabling appropriate 21st century skill

building for employability.

(e.g. IT, telecommunications, professionalservices, financial and engineering companies)

Executive Summary


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Table 1

Hunger, Malaria and Education Interventions Relevant to Industry Competencies

Industry Hunger-related

Competencies

Malaria-related

Competencies

Education-related

Competencies

Engineering/Construction Develop and market low-cost,efficient water pumps, cookstoves and energy sources

Build mosquito-proofstructures; vector control atbreeding sites

Build school infrastructure;develop technical trainingand curricula

Energy Implement small-scale energygeneration for water pumpingand food processing

Malaria safe reservoirs; publicadvocacy; workplaceprogrammes

Electricity and connectivity forschools

Food, Beverage andAgribusiness

Expand agricultural inputdistribution; produce and marketfortified foods; source from smallfarmers; invest in SME

development, local foodprocessing and supply chains

Apply marketing expertise,retail and distributionchannels to expand malariacommodity usage; workplace

health programmes

Fortified home-grown schoolmeals and take-home rationsfor girls; promote bestpractice among growers (e.g.

quality, sustainability)

Health Provide health and nutritionextension services; clinical carefor malnourished children

Develop new drugs,diagnostics and vaccines;medical infrastructure andtraining; advocacy

Basic health care andeducation in schools; healthextension services

Information Technology Provide information access forimproved nutrition, agriculturaltechniques and market prices

Surveillance systems to trackand predict outbreaks; healthmanagement systems

IT equipment, electroniccurricula, teacher training,teaching effectiveness

Media and Entertainment Expand public awareness andundertake advocacy on hunger

issues

Global/local malariaawareness and education

Educational content inpopular media; extending

educational reach

Mining and Metals Implement community nutritionand health programmes

Workplace and communitymalaria interventionprogrammes

Investing in communityeducation; skills development

Professional Services Conduct institutional capacitybuilding for government andNGO hunger alleviation efforts

Strategic approaches tohealth systems andmultisectoral initiatives

Institutional capacity buildingfor education management;skills development

Financial Services Provide microcredit andbanking services for smallfarmers and SMEs

Provide microcredit for healthcosts; support workplaceinterventions in SMEs

Finance school infrastructure;advise on schoolmanagement and studentskill development

Retail and Consumer Buy and process food locally;distribute nutritive/fortified foodsto hungry communities

Packaging for consumereducation; distributionnetworks for malariaproducts

Educational supplies;business skills training

Telecommunications Provide service in rural/poorareas; collaborate on mobile-based market/health systems

Mobile-based healthmanagement systems;remote data capture

Provide wireless telephoneand Internet connections;national broadband networks

Logistics and Transport Expand transport networks tolink hungry regions to markets;deliver food aid

Transport for commoditydistribution; Supply chainlogistics training

Improve delivery of essentialsupplies

Aviation, Travel/Tourism Increase public awareness andadvocacy in hungry areas

Malaria control programmesin the workplace andcommunity

Invest in education andtraining for future workforce

9

Indirect Fit

Strong Fit


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There are four main ways in which businessestypically engage in development-related activity:

Through core business practices, forexample by creating employment, developinginnovative new products and finding efficient,profitable ways to deliver affordable goodsand services.

Through public-private partnerships usually a combination of business andphilanthropic activity, which has an economicrationale but does not generate a market rateof return.

Through strategic corporate philanthropyand social investment, using cash or in-kinddonations to catalyse and complementbusiness engagement or fill gaps in publicfinancing to address fundamental humanneeds.

Through transparent and responsible businessengagement in public policy dialogue, rule-making and institution-building, operatingindividually, through industry and tradeassociations or in partnership with non-business actors.

The greatest leverage for society and business isoften found through the application of acompanys tangible assets (such as equipmentand distribution networks) or intangible assets(such as management expertise, branding andmarketing strength) rather than through issuing acheque. Indeed, some of the most successfulpartnerships have involved the in-kindapplication of company resources, which haveoften resulted in a larger corporate commitment.

Public-private partnerships are highly diverse andcan focus on design and delivery of pro-poorsolutions or strategic in-kind contributions ofpersonnel, expertise, equipment or services.PPP practitioners have noted that theinvolvement of business personnel in apartnership project often produces managementefficiencies, innovation and a performanceculture that can be as valuable as the financialresources committed.

Public-private partnerships are not a cure-all, butwhen applied effectively to certain development

needs they can bring significant gains in bothbusiness and development terms. This reportidentifies high-leverage opportunities where suchwin-win benefits may be realized.

This report reflects the emerging thinking of abroad community of stakeholders and expertslinked to the World Economic Forums work onhunger, malaria and education. The generalconsensus is that there is significant, untappedpotential for greater application of business skillsand competencies to development issues. Thisis paired with a strong belief that suchcompetencies can be most effectively applied inpartnership with other stakeholders, such asgovernments, civil society groups, developmentagencies and experts.

There are certain things that the private sectordoes extremely well. These include operatingefficiently at a large scale, delivering essentialproducts and services where markets arefunctioning, developing innovative solutions totechnical or operational obstacles to meetcustomer needs, and taking a performance-oriented, results-driven approach tomanagement. All of these competencies areneeded to deliver development solutions on alarge scale. The private sector also has the abilityto tap additional financial resources for

development through direct investment, loans orphilanthropy, which can help close the financegap for meeting the MDGs.

Other types of organizations have different andcomplementary strengths. Governments providenational and local leadership, politicalcommitment and the necessary legalframeworks, together with the infrastructural,administrative and funding authority forprogramme and service delivery. Developmentagencies and private donors have convening

power, financial resources and technicalexpertise, often acting as a catalyst for newapproaches. Non-governmental organizations(NGOs) are best equipped to operate at thecommunity level, developing solutions andimplementation strategies appropriate for thelocal context and mobilizing public support tomeet development goals.

Introduction


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I. Introduction

In 2005, one-seventh of the worlds population isunable to access the food and nutrients neededto live a healthy and productive life. Hungeraffects more than 850 million people, themajority of whom live in Asia (particularly Indiaand China) and sub-Saharan Africa. Faminesform part of this picture, however, the vastmajority of hungry people suffer from chronicmalnourishment a silent tragedy thatdevastates the health of both individuals andnational economies. The toll on young children isparticularly devastating, leading to 6.5 milliondeaths per year and for those who survive, alifetime burden of impaired cognitivedevelopment and reduced immunity. Worldleaders have repeatedly pledged to eliminatehunger, but the problem persists and isworsening in much of sub-Saharan Africa. TheMillennium Development Goal on hunger calls forhalving the proportion of underweight childrenand undernourished adults by 2015.

Hunger is complex. It is more a symptom of

economic, social and governance failurescombined with agro-ecological constraints thana force in itself. People go hungry when theycannot grow or buy enough nutritious food;when mothers and girls lack education; whencommunities lack adequate health services andclean water, and when climate, conflict or natural

disaster disrupt food systems. People also gohungry when they lack the bargaining power toaccess government welfare services; when theylack the education to obtain paying jobs, andwhen competitive markets, particularly foragricultural products, do not function efficiently.

These problems, while enormous in their scope,can be solved. Most are not technically complex,but they are systemically complex. As a result,eliminating hunger requires an integratedapproach, addressing employment creation,markets and infrastructure, agriculturalproduction, nutrition, health and womensempowerment, public policy and institutionalcapacity.

The Business Case for Action against

Hunger

Business plays a vital role in the systems thatsustain healthy communities, reduce poverty andprevent hunger. By generating employmentopportunities; creating markets; growing,manufacturing and distributing food; providing

health and nutrition-related products andservices; building and maintaining infrastructure,and educating producers and consumers, theprivate sector is an essential player in sustainingand nourishing healthy communities. It is nocoincidence that areas with widespread chronichunger often have little private sector activity.


Help Halve Hunger

Figure 1 Prevalence of underweight among children under the age of five

Source: CIESIN, Columbia University


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The vicious circle of poverty and malnourishmentkeeps business out and hunger in. However, byworking with local partners business can makeinroads that bring needed opportunities, goodsand services to these areas.

The business case for companies to engage inhunger-reduction efforts varies by industry, bycompany, and by the companysactivity. It can includeaccessing new andemerging markets,building brandrecognition andreputation,stimulatingconsumer demand,motivatingemployees orenacting corporatevalues of social and civicresponsibility. For companieswith developing-country operations, working toreduce hunger can help develop a healthy andproductive local labour force, strengthen

community and government relations andcontribute to economic development.

The opportunities for business engagementoutlined below are similarly varied and can beapplied across a range of industries. The bottomline is that there is something every business cando to help reduce hunger that builds on its ownunique goals and competencies.

II. Top Opportunities for ApplyingBusiness Capabilities

The food production and nutrition value chain(illustrated in Figure 2, page 21) encompasses acomplex range of activities from farmland to foodconsumption. Beginning with the farm and theinputs needed to produce food and otheragricultural commodities, the chain extendsthrough agricultural processing, distribution,retailing and ultimately, preparation andconsumption. Effective operation of the valuechain requires that certain vital factors be inplace, including a viable natural resource base,input and credit markets and technical capacityamong farmers.

Also key are roads, transportation services andmarket intermediaries to move commodities toand from the farm; agro industries and relatedservices to process, package and market foodproducts; health and education services forfarmers, workers and consumers engagedthroughout the chain; and good governance toencourage growth and development. The status

of women, and womens ability to accessproductive assets as well as public health andeducation services, is vital across the chain.

Nearly every step in the food production andconsumption process offers opportunities forsome type of business involvement. Theseinclude developing new technologies; adaptingbusiness models to better distribute existingproducts; using companies human, operational

Applying Core Business Competencies toHelp Halve Hunger

Box 1 Hunger: Top Opportunities for Applying Business Capabilities

1) Increasing food production and strengthening market systems in hungry regions

Sourcing from small-scale producers. Developing and supporting small and medium enterprises (SMEs) for production, processing and distribution of

food and agricultural products. Expanding farmers access to new and existing products and technologies. Extending essential services and infrastructure to hungry areas. Acting to reduce the spread of HIV/AIDS.

2) Improving nutrition through fortified products and consumer education, particularly for mothers and

young children

Fortifying food and beverage products for the bottom of the pyramid. Enabling and educating women and girls.

3) Strengthening governments commitment and capacity to act against hunger

Building public and political support for increased investment in hunger reduction. Partnering with public agencies and NGOs to strengthen their capacity.

Two years after launching

its Moving the World

partnership with the UN WorldFood Programme, TNTs ranking in

the lead industry survey rose from 26

to 5. Employee morale is up: 66% of

TNT employees report feeling pride

in TNTs contribution to the

partnership.


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and economic assets to benefit poorcommunities; and engaging strategically inphilanthropic and advocacy activities tocomplement those activities. Through public-private partnerships companies can also helpstrengthen essential features of the enablingenvironment, for example in the areas of publicpolicy, public institutional capacity andinfrastructure.

There exist many potential opportunities forinvolvement in efforts to end hunger. Thosewhere private sector engagement could leverage

the highest potential impact are highlightedbelow. They fall under three broad categories,outlined in Box 1 and summarized in thefollowing text.

1. Increasing food production and

strengthening market systems in

hungry regions

1.1 Sourcing from small-scale producers in

hungry regions

Because approximately half the worlds hungrypeople are small-scale subsistence farmers, agood opportunity for business engagement is touse supply chains to procure produce from smallfarmers to boost their incomes and productionlevels. Such efforts are usually constrained byhigh costs and difficulty in ensuring that productquality standards are met. Companies canovercome this obstacle by partnering withfarmers organizations, NGOs and extension

agencies to develop marketing associations thataggregate small farmers produce andstrengthen their capacity to meet product qualitystandards.

This approach works for high-margin nicheproducts, such as organic coffee, nuts and otherhorticultural products, where customers areoften willing to pay an extra premium that coversthe additional transaction costs. Wherecompanies are not directly engaged inprocurement, they can still encourage theirsuppliers to buy from smallholders or to engage

in procurement practices that supportsmallholder agriculture, rural agro-enterprise anddevelopment in rural communities.

Women grow, process and prepare most food inhungry regions. In Africa, women produce 80%of food supplies, yet they own 1% of the land,receive 7% of agricultural extension and access10% of available credit. To be effective, efforts tolink markets to small producers must provideaccess and support to women producers. KeyIndustries with the capability to leverage demand

from small producers through their supply chainsinclude: Food and beverage manufacturers, retailers,

packaging companies and agribusinesses canbuy agricultural products from smallproducers.


Box 2 Examples of Sourcing from Small-Scale Producers

In South Africa, Pick n Pay and the Black Economic Empowerment fund provided funding and expertise to acommunity project growing fresh produce, to assist growers in meeting Pick n Pay quality standards. The ShoshungovePick n Pay Family Store provides a guaranteed market for the produce, plus ongoing mentoring.

In Nigeria, Tetra Pak is working with state and federal government and local entrepreneurs to expand cassava, maizeand sorghum production to replace imported ingredients in its heavily fortified NutriSip drinks. The drinks are distributedto 75,000 children through a school feeding pilot programme, fully funded and administered by the Nasarawa stategovernment. The project plans to reach 450,000 children by the end of 2006.

In Uganda, SAB Millers subsidiary, Nile Breweries, has partnered with the government to assist local farmers inproducing sorghum, from which it produces a new low-cost beer. In 2006 Nile Breweries plans to spend US$ 1 millionon sorghum 60% of which will go to the farmers, with the other 40% going to transport, procurement and processing.

Nestl provides free technical assistance to over 300,000 farmers supplying fresh milk to its factories in Chile, China,Colombia, India, Mexico and Pakistan. The company also assists coffee producers to implement environmentallysocially and economically sustainable farming practices.


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Box 3 Examples of SME Development for Food and Agricultural Products

income communities to sell nutritious, low-priced food products.

In Kenya, Safaricom worked with the Kenya Agricultural Commodity Exchange to develop a market price informationsystem to assist farmers in finding the best prices for their crops using mobile phone networks.

Olam, Technoserve and Global Trading collaborated to develop 14 SME cashew processors in rural Mozambique thatsell to global markets.

ExxonMobils strategy of distributing anti-malarial bed-nets and medicines through its gas stations could be adopted byother energy, retail or food and beverage companies using their distribution networks to distribute agricultural ornutritional products and information.

In India, Hindustan Levers Shakti initiative trains underprivileged rural women to become distributors and salespersonsfor low-cost personal care and hygiene products, securing market share in Indias large rural market while creatingeconomic empowerment for the women involved. The i-Shakti initiative provides villagers with information on health,agriculture, education and other relevant topics that can be downloaded from computers in small kiosks.

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1.2 Developing and supporting SMEs forproduction, processing and distribution

of food and agricultural products

Developing small and medium enterprises(SMEs) by providing financing, communicationsaccess and business education opportunitiescan help strengthen market systems and createa thriving private sector to drive improvements infood production, nutrition and economicdevelopment in hungry regions. In Africa andIndia, rapidly growing urban food marketspresent an opportunity for rural producers. If thisdemand is not captured, external suppliers will fill

the gap.

A major constraint to increasing food productionis farmers lack of access to agricultural inputssuch as fertilizer, improved seeds and adequatewater supplies, as well as training on how toeffectively use them. Producers of fortified foodsand agricultural inputs can benefit fromexpanding their distribution networks tounderserved markets in hungry regions bysupporting the development of rural agro-dealers, small-scale retailers and franchise

distribution models.

To assist farmers in marketing their produce,companies can help provide storage facilities,telecommunications services with market priceinformation systems, and business developmenttraining. Companies can also invest in local agro-processing facilities to capture more added valueat the local level, while increasing productioncapacity. In some cases this requires innovation

to be economically competitive. Investing in localproduction is particularly cost-effective forproducts with high transport or refrigerationcosts, such as milk or fresh produce. Industrieswith the capabilities to advance small businessdevelopment include: Financial services companies can develop

new business models to provide credit andbanking services to SMEs.

Telecommunications companies can developapplications useful to SMEs, such as SMS-based market price information systems.

Information Technology firms can provideInternet access, rural telecentres, low-costhardware and software applications useful tosmall-scale rural entrepreneurs.

Companies with rural distribution networks(producers and retailers of food, beverages,

energy, agricultural and medical supplies) thatbenefit from expanded distribution networksand aggregated points of sale in rural andunderserved regions and can actively helpdevelop them.

Food processors and producers, who caninvest in local food processing businesses.

Extractive industry companies can developsmall suppliers in remote areas and providedistribution outlets, for example in petrolstations.

All companies with managerial, technical orbusiness-development expertise can assist inSME development as a philanthropic or PPPactivity.

Applying Core Business Competenciesto Help Halve Hunger

In Brazil, Nestls Nutri program combines business and social inclusion by recruting and training residents of very low-


15/4815


1.3 Expanding farmers access to new andexisting products and technologies

Farmers need effective tools and technologies toproduce their goods, yet in many hungry regions itis prohibitively costly or difficult to access basicsupplies such as improved seeds, fertilizer orsmall-scale water pumps. In many cases, publicpolicy, targeted education and capacitystrengthening programmes are key to broaderdistribution and adoption of farming technologies.Particular attention must be paid to encouragingwomen producers to adopt such farmingtechnologies. Private sector innovation andtechnical skills can be directed towards developingnew low-cost, accessible products that serve theessential needs of hungry and food-insecurepeople. Of particularly high priority aretechnologies that increase yields, enhance thenutritional content of food crops and improve theenvironmental sustainability of cultivation. Theseinclude drought-resistant and/or nutrient enrichedfoodstuffs, water management technologies suchas harvesting and micro-irrigation, as well asenergy-efficient processing and cookingtechnologies. The need for new products

represents opportunities for innovation to tapemerging markets. Key industries with thecapabilities to develop such new products include: Agricultural input companies can develop

improved or nutrient-rich varieties of staplecrops, such as hybrid maize, improved wheatand soybeans.

Food and beverage companies can use theirbuying power to help increase demand forimproved crops.

Engineering and energy companies can developand market efficient, small-scale energy

generation technologies for use in agriculturalproduction, agro-processing and foodpreparation.

1.4 Extending essential services andinfrastructure to hungry areas

Hungry and food-insecure regions often havelittle or no access to essential infrastructure,including transportation, communications andenergy. A number of companies areexperimenting with new bottom of the pyramidbusiness models that extend infrastructure andservices to underserved markets. For example,several companies are investing intelecommunications services to rural areasthrough low-cost handsets, prepaid callingcards, community radio and shared leasing ofradio towers.

Other companies are exploring opportunities inthe financial services sector, such as wirelesselectronic transaction networks and otherapproaches. In energy and engineering,companies are innovating with off-grid energysources based on solar, wind, biomass andsmall-scale hydro facilities. New products forlow-cost home lighting such as rechargeablebattery lamps are being developed. However,most of these activities are still at experimental or

pilot stages, constrained by technology,transaction costs or poorly developed markets.Large multinational companies could createsignificant gains by developing and scaling upeffective business models, using their economiesof scale. Women often face greater economic,social and educational barriers in accessingmarkets and new products, which can beovercome by appropriate business models.

In areas with inadequate health and nutritionservices, companies can sometimes find ways to

extend such services through their operations.Employee health and nutrition programmes canbe extended to the community through co-

Box 4 Examples of Expanding Access to New and Existing Products and Technologies

The Rockefeller Foundation invested in developing vitamin A-enriched rice and has brokered IPR-sharing agreementsfor staple crop varieties, establishing the African Agricultural Technology Foundation to facilitate technology transfer andhumanitarian product development. It also successfully expanded rural input markets in East Africa by linking large agri-input businesses to small-scale rural stockists, using credit guarantee facilities to lower risks to the private sector.

BASF partnered with Western Seed Co. (a Kenyan firm), the Kenya Agricultural Research Institute (KARI) and theInternational Maize and Wheat Improvement Center (CIMMYT) to develop insect-resistant seed coatings for maizecultivated by Kenyan smallholders.

Monsanto Company is developing drought tolerant maize varieties that will be provided on a humanitarian basis tosub-Saharan Africa. It has donated rights to staple crops such as golden rice, virus resistant cassava and sweet potato,and insect resistant cowpea.

HarvestPlus provides challenge grants to fund development of nutrient-rich staple crop varieties.


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investment with other partners. Locally basedcompanies can also invest in water purificationand land and watershed restoration to recoverenvironmental assets that are essential to localfood security. Key industries with the capabilityto extend essential services and infrastructureinclude: Telecommunications, water, energy and

transportation companies can develop newbusiness models and adapted technologies toprovide accessible and affordable services tohungry regions.

Financial services firms can transform theirbusiness models and adopt new technologiesto extend credit and banking services tounderserved areas.

Engineering and construction companies candevelop new approaches to enable access topro-poor products and infrastructure.

1.5 Acting to reduce the spread of HIV/AIDS

In parts of sub-Saharan Africa, on-farm labourcapacity is being devastated by HIV/AIDS.Because the virus tends to strike adults of primeworking age, areas with HIV prevalence rates of

30 % or more may lose an even higherpercentage of their labour capacity. At the sametime, hunger weakens human immune systemsand can accelerate the onset or progress ofAIDS. The result is a vicious circle of HIV/AIDSand hunger that can drive entire communitiesand regions into severe food insecurity. Theprivate sector can play an important role in bothprevention and treatment of the disease. Keyindustries with the capability to reduce thespread of HIV/AIDS include:

Transport, mining, and large-scale commercialfarming companies have mobile or migrantworker populations that often serve as vectorsfor spreading HIV/AIDS. They can implementworkplace or community programmes forprevention, diagnosis and treatment of thedisease.

Media and public relations companies canadvise public health agencies on effectivepublic awareness campaigns for prevention.

Pharmaceutical, medical supply and healthadministration companies are directly engagedin HIV/AIDS treatment.

All companies operating in endemic regionscan implement workplace or communityprogrammes for prevention, diagnosis andtreatment of the disease.

2. Improving nutrition through

fortified products and consumer

education, particularly for mothers

and young children

A total of 700 million people worldwide are at

risk of micronutrient deficiencies. In Africa, 350million women and children suffer fromdeficiencies in iron, vitamin A and folic acid.Such deficiencies bring enormous societal costs:throughout the continent, iron deficiency alonecauses US$ 1.5 billion in productivity losses peryear and puts 2 million newborns at risk of deathdue to maternal anaemia. Among survivors, itlowers average intellectual capacity by 10 to15%. Vitamin A deficiency kills more than600,000 children under five years of age eachyear. Subtler forms of vitamin and mineraldeficiencies often with no clinical symptoms


Box 5 Examples of Extending Essential Services and Infrastructure to Hungry Areas

In Tanzania, Ericsson worked with the United Nations Development Programmes Growing Sustainable Businessinitiative to develop a new business model to expand its telecommunications infrastructure to rural areas. Cashewfarmers in the area, who currently hike to distant hilltops to use their mobile phones, are eagerly awaiting the service.

Visa established a partnership with the nonprofit Foundation for International Community Assistance (FINCA), whichprovides loans, savings programmes and technical support to small-scale entrepreneurs. and the United States Agencyfor International Development (USAID). The partnership is working to expand and increase the efficiency of microfinanceservices to the poor.

In a post-conflict area of Angola, BP Solar developed the Paranhos Solar Pilot Project with support from BP Angola andthe UK Government. It provides solar energy to the community school and medical centre, as well as for household andother uses. The program trains local technicians on maintenance, and is being evaluated as a model for nationwideapplication in rural areas.


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challenge, as P&G found with its fortifiedpowdered drink mix, NutriStar, which generatedexcellent medical results but insufficient marketdemand. Broad partnerships with public healthgroups and sustained social marketing can makea difference in building sufficient demand forsuch products. Multistakeholder engagementcan also help promote breastfeeding rather thanusing breast milk substitutes, a practice codifiedin international marketing codes. Key industrieswith the capabilities to fortify food and beverageproducts for the bottom of the pyramid include: Food and beverage manufacturers can

develop, distribute and market fortifiedproducts.

Retail and consumer goods companies cansell fortified products, marketing themeffectively to poor and hungry populations.

Biotechnology and seed companies candevelop and distribute vitamin-enriched cropvarieties to malnourished regions.

2.2 Empowering and educating women

and girls

Mothers health and education are essential to

providing adequate care and nourishment toinfants and young children, particularly in the vitalwindow from birth to 24 months. As the primaryproducers and processors of household food,they are key to addressing hunger. Many of thestrategies above will particularly benefit womenby expanding their access to technology, marketopportunities, adequate nutrition and services.Expanding womens access to credit andfinancial services, commercial distributionnetworks, information and training services alsosupports them to become consumers.

can impair cognitive development, compromiseimmune systems and cause birth defects. Foodfortification is widely recognized as a highly cost-effective solution, yet in many developingcountries its implementation is limited. Withoutregulation and high public awareness, manyfirms choose to avoid the cost and complicationof fortifying their products.

2.1 Fortifying food and beverage products

for the bottom of the pyramid

In hungry regions, there is a major need andopportunity for production and marketing of foodand beverage products fortified with essentialvitamins and minerals. Commonly consumedand available foods are the best targets: flourcan be fortified with folic acid, iron, and Bvitamins; edible oil with vitamin A; andcondiments (such as bouillon cubes) with ironand zinc.

Lack of nutrition education and awareness is asignificant factor in malnutrition, particularlyamong mothers and children. Consumereducation campaigns can raise awareness about

nutrition and sanitation issues,stimulating consumerdemand for fortified foodand beverages.Unilever hassuccessfullystimulated demand forits soap and fortifiedfood products throughpublic educationcampaigns. In some cases,however, changing consumer

habits and creating sustained demand can be a


Box 6 Examples of Fortifying Food and Beverage Products for the Bottom of the Pyramid

The Business Alliance for Food Fortification (BAFF), co-chaired by Unilever, Danone and Coca-Cola, encouragesbusiness leadership in eliminating vitamin and mineral deficiencies. Facilitated by the Global Alliance for ImprovedNutrition, BAFF encourages voluntary fortification by food and beverage producers based on international guidelines,while working with governments to develop national fortification plans.

In Ghana, Unilever worked with the national government to develop and market Annapurna iodised salt, capturing halfthe refined salt market within three years. In Cote dIvoire, the company worked with the National Fortification Alliance to

fortify oil with vitamin A.

Tetra Pak is involved in school feeding programmes in 45 countries, providing packaging for over 1 billion litres offortified milk.

1 UNICEF and the Micronutrient Initiative, Vitamin & Mineral Deficiency: A Damage Assessment Report for Nepal, 2004.

Probably no

other technology

available today offers as

large an opportunity to

improve lives and accelerate

development at such low cost

and in such a short time.

The World Bank1


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Womens education levels are one of the leadingfactors in successful efforts to reduce hunger.Investing in girls education has proven to be ahighly cost-effective investment, not only forhunger alleviation but also for broadercommunity health and development. One way toimprove girls educational outcomes andnutrition is through home-grown feedingprogrammes, which improve performance andincrease school attendance(particularly for girls).Providing take-homerations to girls can alsoprovide a strongincentive for families tokeep them in school,delaying marriage andgaining knowledge thatwill help improve their futurechildrens nutritional status. Bypurchasing school lunch and ration supplies fromlocal producers, these programmes can helpstimulate local agricultural production. Somecountries, such as China and Thailand, havesuccessfully used school milk programmes to

catalyse the development of thriving dairyindustries. By working with others along thevalue chain, agricultural and food companies caninitiate a similar approach. Some companies alsoprovide school lunches on a charitable basis.

The private sector can also play an importantrole in building public support for womensempowerment. Promoting women role modelsinside and outside the business, practicing andadvocating for equal treatment of women andengaging in partnerships to improve public policy

and institutions to serve women are all avenuesof potential engagement for committedcompanies. Key industries with the capabilitiesto empower, nourish and educate women andgirls:

Retail companies can distribute productsimportant to women, such as labour savingtechnologies. They can also promote andadvocate for womens empowerment.

Food, beverage and agribusiness companiescan develop products and distribution modelsthat meet the needs of women as bothmothers and farmers.

IT and financial service companies canprovide access to information and finance forwomen, while fitting local cultural contexts.

Media companies can increase publicawareness of gender issues and promotepositive role models for women.

Education and professional services firms canexpand education and professional trainingopportunities available to women.

3. Strengthening governments

commitment and capacity to act

against hunger

3.1 Building public and political support for

increased investment in hunger

reductionThe hungry are among the most politicallydisempowered members of society, often lackingorganized political representation or a unifiedpolitical voice. As a result, a lack of political will,poorly constructed policies, legislative andregulatory barriers, weak institutions andinsufficient public expenditure often exacerbatetheir plight. These governance failures contributegreatly to food insecurity.

Coordinated advocacy on hunger issues is rarelyseen in the private sector, but it has potential to

significantly influence global and national actions.On other issues such as health, businessalliances have proven to be an effective vehiclefor the private sector to coordinate advocacy


Our experience

in Thailand and China

confirms that school milkprogrammes can catalyse

the commercial growth of

dairy products.

Ulla Holm, Tetra Pak

Box 7 Examples of Empowering and Educating Women and Girls

In India, the World Economic Forums Rajasthan Education Initiative has engaged a group of IT companies (includingMicrosoft, Cisco, AMD, Infosys, Wipro and Intel) and the state government to provide improved curricula, teachertraining and schools meals in 100 girls schools.

In several states in India, Infosys, through the Akshayapatra Foundation, funds school feeding for more than 300,000

children, based on a belief that improving education contributes to developing a skilled workforce and improves nationaleconomic competitiveness. School meals are known to improve girls enrolment rates.

The Nike Foundation makes grants to projects promoting adolescent girls empowerment in developing countries.


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efforts, establish common priorities andprinciples, exchange best practices and engagegovernments in pro-poor policy reform. Abusiness alliance against hunger could makesignificant advances in raising the public profileof hunger issues and advocating pro-poorsolutions in food and agriculture in cases thatcorrespond to business interests.

Committed, individual leadership from thebusiness community can also have a significantimpact. By targeting key issues and audiencesthrough public and peer-to-peer advocacy,business leaders can use their knowledge andcredibility to leverage change at the highestlevels. This includes advocacy for pro-poor tradepolicy reform, funding for girls education,elevating the statusof women,increasinginvestment inagriculturalresearch andagro-industry,and

establishinglegal propertyrights for the poor.Many of these topics receive insufficient attentionfrom policymakers and could significantly benefitfrom greater private sector advocacy. Businessescan also tap their marketing skills to craftcompelling messages, gain public and mediaexposure and call for action by political leadersto end hunger. Key Industries with thecapabilities to build public and political supportinclude:

Media and public relations companies havetargeted communications skills and outletsthat can be applied to raise awareness andcatalyse action on hunger on an in-kind orpartnership basis.

Food, beverage, retail and consumercompanies can use their marketing expertiseto deliver key messages on hunger to a broadpublic audience.

All industries can potentially engage in policydialogue and advocacy efforts, individually orcollectively.

3.2 Partnering with public agencies and

NGOs to strengthen their capacity

For the food production and nutrition system towork, an enabling environment must include

infrastructure, health services, education, soundenvironmental management and concern for thestatus of women. Most of these essentialunderlying factors are extremely weak in hungryregions. The public sector normally bears theprimary responsibility for addressing theseissues, but it often has neither the capacity northe resources to do so effectively. The privatesector can engage in public-private partnershipsto address these weaknesses, applying its corecompetencies to strengthen public institutionsand service delivery.

Collaborative capacity building efforts often takethe form of PPPs among companies,government or public agencies and/or NGOs.The application of private sector technical andmanagerial skills to strengthen the capacity ofpublic agencies and NGOs can often bringgreater long-term value than cash or in-kinddonations. For example, TNT estimates that thetechnical advice it has provided to improve theWorld Food Programmes supply chain efficiencyand accounting has a benefit-cost ratio rangingfrom 5:1 20:1, in dramatic comparison to cashdonations (1:1) and in-kind donations oftransportation equipment and services (2:1),making it by far the highest-leverage activitywithin the partnership.


Box 8 Examples of Building Public and Political Support for Hunger Reduction

Globally, TNT helped found and is a primary sponsor of the UN World Food Programmes annual Walk the World event,involving its 161,000 employees. The company also engages in outreach to promote public-private partnerships toaddress hunger.

Ernst & Young is piloting a staff fellowship programme that offers high-performing North American managers anopportunity to work for up to three months with Technoserve, a US non-profit organization that designs and implementsbusiness solutions to problems of rural poverty.

Corporations have

the communications

capacity to advocate on a

large scale; we need to do

more of that.

Ludo Oelrich, TNT


20/4820


For public agencies, business partnerships canserve as a vehicle for catalysing efficiencyimprovements and use of performance-basedmetrics, potentially leveraging much broaderchange within the development system. Suchcollaborations provide professional andleadership development opportunities for allinvolved and can serve as an additional incentivefor staff recruitment and retention at companies.Key industries with the capabilities to strengthenthe capacity of public agencies and NGOsinclude: Professional consulting and accounting firms

can advise on strategy development,operational and organizational improvements,management and transparent accountingtechniques. They can also advisegovernments and other public sector bodieson policy and regulatory issues, benchmarksand best practices;

Law firms can advise on policy design,regulatory frameworks and judicial systems.

A wide range of other companies willing towork with partners on transferring specializedtechnical expertise (in engineering, logistics,

marketing, or nutrition, for example) or generalmanagement advice (improving efficiency,communications or accounting).

III. Conclusion

Hunger encompasses many issues, but alsomany business-related opportunities to engagein solving the problem. In rural areas with highlevels of hunger, the distribution of agriculturalinputs and improvement of market linkages isthe essential first step towards boosting foodsupplies, nutrition and incomes. Second, thehigh impacts and low costs of micronutrientfortification make it a priority across the board inboth rural and urban areas. Finally, advocacy andstrengthening public institutions is a relativelyunderused opportunity for the private sector tomake a significant impact upon hunger. Theseactions, together with a focus on empoweringwomen, local communities and developingcountry institutions, will create sustainablesolutions to end world hunger.

Box 9 Examples of Partnering with Public Agencies and NGOs to Strengthen their Capacity

The global mail, express and logistics provider TNT partnered with the UN World Food Programme (WFP), dedicatingprofessional support to improve the efficiency of WFPs emergency food aid delivery systems, and to improveaccounting practices to increase transparency of agency operations. The company estimates that such knowledgetransfer projects are by far the highest-leverage activities within the partnership.

Accenture sponsors a not-for-profit group, Accenture Development Partnerships (ADP), to provide business andtechnology consulting expertise to NGOs in international development. It offers unique professional development toAccenture staff while providing high quality capacity-building services to NGOs at accessible rates. ADP has worked witha number of organizations in the international development sector on a variety of projects including strategy andplanning, supply chain and logistics, ICT, organizational development, change management and operationaleffectiveness.


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Figure 2 The Food Production and Nutrition Value Chain

Climate regularity

(temperature, rain)

Soil health

(fertility, topsoil)

Biodiversity

(plant, animal, insect)

Water resources

(rainfall, groundwater,aquifers)

Land access

(tenure, lease, co-ops)

Policy

(environmental, landtenure andinheritance)

Community

practices

(environmentalmanagement;land/resourceaccess)

Crop varieties and

quality Seeds

(suited to climate andpurpose)

Fertilizer

(natural, chemical)

Water

(rainfall, irrigation,pumping, no- till,harvesting)

Crop protection

(IPM, herbicides,pesticides, etc.)

Market access

(retailers, transport)

Financial access

(income, credit,vouchers)

Knowledge

(training, extension,education)

Policy

(public finance,regulation)

On-farm labour

(capacity, availability,productivity)

Paid labour

(finance, access,skills)

Animal labour

(access, finance,training)

Technology/

Mechanics

(access, finance,policy, information)

Processing

facilities

(commercial, small-scale)

Knowledge

(education,extension, training,information)

Infrastructure

(transport, energy)

Policy

(labour,import/export)

Producers

associations

(price information,training, storage,wholesaling)

Access to buyers

(consumers, brokers,retailers,manufacturers,exporters)

Financial services

and credit

(rural banking, creditaccess)

Transportation

infrastructure

(local, regional,international

transport networks,hubs, storage)

Education

(literacy/numeracy,businessdevelopment training)

Communications

infrastructure

(telecom, price infosystems)

Policy and

regulation(policy and publicfinance; legal andregulatoryframeworks, productquality standards)

Access to food

(physical, financial,social access; foodaid and safety netswhen needed)

Adequate nutrition

and quality of food(access to necessaryfoods and nutrients;product quality andsafety)

Consumer

information/

education

(nutritionprogrammes,education, media)

Ability to use food

(safe water, cookingfuel, adequate healthstatus)

Mothers' health

and status

(nutrition, education,health care access,breastfeedingsupport, access toproductive assets)

Child nutrition and

care

(education andnutritionprogrammes)

Policy and

regulation

(trade, food safety,women's rights,community nutritionprogrammes)

Environmental

Assets

Production

and

Processing

Agricultural

Inputs

Food and

Agriculture

Markets

Food

Consumption

and Nutrition


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Multiple events and initiatives have brought thedisease back to the centre stage of globalconcerns. Examples include: creation of The

Global Fund for AIDS, TB, and Malaria;6

recentpress coverage of the grants made by the Billand Melinda Gates Foundation to malariainitiatives; activities of the World Banks Global

Strategy and Booster Program;7 and creation ofthe US Presidents Malaria Initiative.8

The staggering human cost of malaria providesan overwhelming case for public sectorinterventions. This next section explores thebusiness case for the private sector to helpreduce the burden of malaria.

22

I. Introduction

Between 350 and 500 million clinical episodes ofmalaria occur each year, with a death tollexceeding one million, primarily among children

under five years of age.1 The disease is endemicin parts of Asia and Latin America, but Africa isworst affected (Figure 1), suffering more than80% of worldwide fatalities.2 The impact on bothhealth and economic output is severe. Yet theburden of disease is actually rising as resistanceto the drugs used for treatment has increasedsharply in the last 30 years. Despite existingpreventive, diagnostic and treatment options,

malaria deaths have increased since the 1970s(see Figure 2)3 and the Millennium DevelopmentGoal of halving its incidence by 2015 will bedifficult to attain.4

Malaria is caused by a parasite carried by thefemale Anopheles mosquito and injected into thehuman bloodstream by the insects bites duringits nightly feeding forays. The parasite invadesthe patients liver and red blood cells andproliferates to the point where it infects anotherfeeding mosquito, thus continuing the cycle ofdisease transmission. Malaria produces severefever, vomiting, headache and other flu-likesymptoms and can eventually lead to death.Young children and pregnant women are

especially vulnerable.5

Applying Core Business Competencies toHelp Reduce the Incidence of Malaria

Figure 1 Global Incidence of Malaria Episodes per Person

Figure 2 Increasing Burden of Malaria(3)

Source: World Malaria Report 2005.


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The business case for actionEnvisage a situation where a company plans toinvest US$ 2 billion dollars to add another plantto an existing site in Southern Africa. However,the investment is compromised by lowproductivity due to malaria absenteeism.Suppose that corporate leadership decides notto abandon the project but to improve thebusiness case by addressing the public healthissue. Imagine that this intervention succeeds inincreasing productivity to a level that more thanjustifies the investment and that the new plantreduces overall costs to the company, addingmaterially to the bottom line while also enabling atourist industry in the region.

This is not a hypothetical example. It is the realstory of an aluminium smelter operated by BHPBilliton in Maputo, Mozambique. A partnershipwith three governments made it possible, andresulted in reducing malaria incidence by nearly80 % within a 100,000 square kilometre area

over a five-year period.9

Incentives and capabilities to intervene in malaria

control differ across sectors. Examples fromindustries as diverse as energy, chemicals,pharmaceuticals and travel and tourism provideevidence that intervening against malaria can bethe business of business. From an incentivesperspective, tackling malaria can: Address the risks to human resources and

assets/capital. Enable market opportunities. Enhance intangible assets such as corporate

morale, reputation and goodwill.

Address the risks to human resources andassets/capital

For companies with operations in malaria-endemic regions, malaria is a risk toemployee health and to thehealth of workers families.This translates intosignificant costsassociated with acutehealthcare expensesand depressedproductivity.10 Byimplementing

workplace programsto roll back malaria,companies can protectthemselves from thesedirect and indirect costs.

Enable market opportunitiesMalaria is a key barrier to economicdevelopment. It perpetuates a vicious cycle ofpoverty and disease that negatively impactsproductivity and investment. The disease isestimated to slow economic development by upto 1.3% each year.11 Interventions can increaseproductivity, encourage market expansion, boosthousehold spending and change consumption

patterns.12 In particular,companiesparticipating in themarket forprevention ortreatment ofmalaria havethe incentiveto not onlyenhance theirbrand and/orsupportcorporate values,but also to facilitatemarket growth andprofitability. Key products include insecticide-

treated mosquito nets, insecticides andantimalarial drugs. Serving this market requiresexpansion of existing infrastructure and betteruse of both public and private channels.

Enhance intangible assets such as

corporate morale, reputation and goodwill

As the corporation hasbecome a dominantglobal and nationalinstitution, societysexpectations have

changed.Companies thatare able tocontribute toglobal health areexpected to do so.Companies with theunique capability todirectly impact malariaare expected to do so, andnot taking action creates the potential forreputational risk. For example, pharmaceuticalcompanies currently face significant public

pressure to engage in neglected diseasesolutions.


When people are

not well or are absent

because of malaria, we have to

hire temps, train them and bear the

medical costs of treatment and

insurance. That gets to be expensive.

We have found prevention to be a cost-

effective way to protect our employees.

Ursula Lebuso, HR Officer:

Employment Equity and HR

Projects, Sun International

As with any consumer

goods company, we recognizethat controlling malaria can be good

for our bottom line. Alleviating the

malaria burden improves economies and

opens up a broader range of choices for

our existing and potential future

customers.

Dr Murray Coombs, Business

Group Doctor, Unilever.

Our commitment to

a core principle of Zero

Harm enhances our license to

operate, discover and add value to

resources. Proving the concept ofresponsible mining generates goodwill

which has translated into stakeholder

value.

Andre van der Bergh, Regional

Advisor, Southern Africa Health,Safety, Environment, and

Communities, BHP

Billiton


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Current malaria interventionsMost stakeholders believe that the effectivecontrol of malaria requires a multi-prongedapproach that includes intervention in the threeareas of prevention, diagnosis and treatment. Prevention can be achieved either by inhibiting

the mosquito, so-called integrated vectormanagement13 (involving reducing water poolsthat serve as mosquito breeding grounds,indoor residual spraying, and insecticide-treated nets), or by the use of pharmaceuticalproducts, including anti-malaria drugs andpotentially vaccinations when they becomeavailable.14

Diagnosis is an underutilized intervention. Thisis changing, particularly in Asia whereexpensive ACT drugs are making diagnosismore routine. However, symptomaticdiagnosis remains dominant, which leads to asignificant number of treatments of non-malarial fever. This in turn increases parasiteresistance to treatment drugs.15 Laboratorysmear tests are also used, but the equipmentis expensive and requires sufficient

infrastructure and proper training. Althoughrapid diagnostic tests have entered themarket, they are relatively expensive.16

Treatment typically involves a course oftablets. The World Health Organization nowrecommends artemisinin-based combinationtherapies of two drugs as first-line treatmentto delay malaria parasite resistance.17 Severecases of malaria can require hospitalizationand intravenous drug treatments.

Interventions need to be managed as a collectiveportfolio through coordinated effort amongprivate and public sector stakeholders. Public-private partnerships (PPPs) have madeconsiderable progress as a vehicle to aligncapabilities, incentives and needs. For example,the Medicines for Malaria Venture (MMV), theFoundation for New Innovative Diagnostics(FIND) and the Malaria Vaccines Initiative (MVI)with substantial support from the Bill andMelinda Gates Foundation, have significantlyadvanced the R&D agenda on malaria

interventions.18

Private sector interventions in malaria will bemost effective where business incentives andcapabilities coincide with activities required bythe value chain, as described in the next section.

The public health value chain for malaria

Employing malaria interventions requires a set ofunderlying activities an effective value chain(see Figure 3) ranging from research anddevelopment to marketing and distribution.Activities in the malaria value chain seek to

ensure the availability, affordability andaccessibility of effective interventions. Each stepof the chain has a unique and complex set ofchallenges that must be addressed to ensure

optimal impact.19

As the malaria parasite continues to developresistance to prevention and treatment options,effective interventions will increasingly depend onthe invention, development and delivery of newtechnologies such as vaccines, long lastingmosquito nets, new drug therapies, and so on.


Figure 3 Challenges Along the Malaria Value Chain


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For example, securing a sufficient number ofnew therapeutics will cost hundreds of millions ofdollars in research and development alone.Sustainable mechanisms are required to coverthese costs and thereby enable the applicationof private sector innovation.

Just as crucial are timely and well-informedpolicy decisions to ensure the availability of themost appropriate technologies and to protectagainst counterfeits. Adopting and implementingeffective policy requires coordinated stakeholderengagement, global and local advocacy forchange, and information sharing on new productcharacteristics.

Financing, procurement and manufacturing havea direct impact on the affordability ofinterventions. While accurate demandforecasting is needed to ensure a sufficientsupply of affordable options, it is difficult to makesuch forecasts in data poor environments.Reducing the cost of goods sold (COGS)through efficient supply chains and establishingeconomies of scale can drive down new

intervention costs. Affordable prices, particularlyin the private sector, require a competitivemarket environment and, in some cases,consumer subsidies, such as vouchers forinsecticide-treated nets.20

Current distribution infrastructure for malariainterventions is often insufficient to reach thosemost in need, particularly in remote communities.Effective health service delivery systems requirebuilding local capacity, extending distributionreach and supporting logistics coordination to

ensure access to prevention, diagnosis, andtreatment.

Finally, education activities are needed to optimizeuptake by increasing awareness and acceptability,stimulating demand and ensuring proper trainingof healthcare providers. Global advocacy toincrease awareness of malaria needs is also criticalto securing continued international commitment tothe malaria agenda.

Each link of the value chainrepresents an opportunityfor private sectorengagement. Below,Section II identifies andillustrates examples ofthe ways in which theprivate sector caneffectively leverage itscore capabilities tomeet some of the mostpressing challenges inmalaria intervention.

II. Top Opportunities for Applying

Business Capabilities

Business has three main sets of capabilities thatcan be deployed to address the needs along themalaria value chain: innovation, operations andproject management, and facilitation and advocacy.

As with any business decision, malariainterventions require that a corporation considerhow its core competencies can be leveraged.Business has three main sets of capabilities thatcan be deployed to address the needs along themalaria value chain: innovation, operations andproject management, and facilitation and

advocacy. Box 1 maps these capabilities againstthe needs identified in Section I.


Box 1 Malaria: Top Opportunities for Applying Business Capabilities

1) Innovation of new technologies and products to prevent, diagnose and treat malaria

Discover and develop new vaccines and drug treatments. Invent less expensive, easier to use technologies for diagnosis. Develop innovative integrated vector management solutions. Transfer technology and build local capacity to reduce costs and delivery time.

2) Operations and project management for supply chain and logistics

Share tools and skills with the public sector to improve efficiency, such as in forecasting and project management.

Leverage distribution networks and retail channels to increase access. Implement malaria control programmes for the workplace and surrounding communities.

3) Advocacy and facilitation of multistakeholder cooperation

Build public and political support for advance purchase agreements and subsidizing malaria commodities. Provide a forum to convene stakeholders to address policy issues. Leverage distribution networks and retail channels for community education.

Its key to understand first

whats needed, then what your

company would consider acompetitive advantage in this space,

and then join the dots to determine what

can actually be done.

Dr Steven Phillips, Medical Director,Global Issues and Projects,

ExxonMobil


26/4826

Box 2 Examples of Private Sector Product Innovation

Becton Dickinson developed the Quantitative Buffy Coat (QBC) apparatus for malaria diagnosis, which acted as acatalyst to create a tropical diagnostics industry.21

ICI, a British chemical company, led the development of the pyrethroid family of insecticides and established a unit forlow-cost distribution of the compound.22

Companies such as Bayer CropScience, Syngenta, Siam Dutch and BASF are involved in developing insecticidetreated nets (ITNs) for vector management.23

Novartis has developed an arteminisin-based treatment therapy that has been approved as a first-line treatment by theWorld Health Organization. GSK has a vaccine in development, and Ranbaxy is developing a synthetic version of anarteminisin-based combination treatment therapy.24

By directly associating business capabilities withneeds across the value chain, it is possible toidentify value-creating scenarioswhere, for instance,courier companiessupport distributionand the bio-pharmaceuticalindustry developsvaccines. Thissection highlightssome of thesedirect associationsand alsodemonstrates, throughcase studies, thatcompanies can contributebeyond their intrinsic strengths by creatingsynergistic partnerships across the private andpublic sectors.

1. Product Innovation

The new product development capabilities ofcorporate R&D (fostered by intellectual property

protection) are required to create new solutions.Examples of key industries leveraging innovationcapabilities are: Bio-pharmaceutical companies can discover

and develop vaccines and therapies. Diagnostics companies can invent simpler,

cheaper technologies. Insect control companies can improve current

technologies for integrated vectormanagement, such as spraying and mosquito

nets.

1.1 Case Study: Enabling early adoption ofinnovative insecticide-treated net

technology for vector management

This case study describes how a consortium oforganizations joined to innovate and deploy anovel insecticide treated nettechnology. Conventionalinsecticide treated bed-nets provide protectionfor up to six monthsand then must be re-treated. The shortlifetime and the effortrequired to re-treatthe nets limits theireffectiveness atpreventing malariatransmission.25

A partnership betweenExxonMobil, whose operations in Africa arealmost entirely in malaria-endemic regions;Sumitomo Chemical, a Japanese chemicalscompany; Acumen Fund, a venture philanthropyfund; A to Z Textile Mills Ltd., an African bed-net

manufacturer; WHO and UNICEF, resulted in theintroduction of a new mosquito net technologywith a lifetime of up to five years - the longlasting insecticidal treated net (LLIN). The A to Zplant now has the capacity to produce threemillion Olyset LLINs per year.26


To make a difference, you

have to be smart in picking

projects that support your strategy

and core business. Success comes

through operational partnerships where

benefits and risks are shared across the

stakeholders.

Phil Davis, Managing Director for

Environmental Health, SumitomoChemical (UK)

One has to constantly

adapt the model for innovation.

Royalty free technology transfer

worked on a small scale of three million

nets, but expanding to a global capacity

of 23 million is requiring a joint venture

approach.

Phil Davis, Managing Director for

Environmental Health, SumitomoChemical (UK)


27/4827

The key elements of private sector involvementin this case include:

Incentive: ExxonMobil and SumitomoChemical set an internal standard that amalaria death should be considered asunacceptable as any other safety-relatedfatality, thereby putting malaria on an equalfooting with other operational business issues.As one of the largest and lowest-costmanufacturers of bed-nets in Africa, A to Zwanted to establish and later expand itscapacity to produce the Olyset LLIN.

Innovation: Sumitomo Chemical transferredthe Olyset LLIN technology to A to Z royaltyfree and delivered the raw materials. AcumenFund provided US$ 325,000 of initial debtfinancing to fund the technology transfer to Ato Z and to build manufacturing capacity. Ithas also invested an additional US$ 675,000to establish alternative channels to develop acommercial market, for example using directsales agents.

Operations and project management: Toassist with technology transfer, ExxonMobilcontributed technical and projectmanagement assistance and granted US$250,000 to UNICEF to support purchase anddistribution of LLINs to the most vulnerablepopulations. Sumitomo continues to supportA to Zs quality control programme, which iscritical to ensuring global standards.

Advocacy and facilitation: ExxonMobil andSumitomo Chemical supported advocacy andawareness activities, such as staging a highprofile music concert focused on rolling backmalaria that raised funds to buy 50,000insecticide treated nets. Vouchers have beenintroduced by several partners, includingUNICEF, Population Services International(PSI), NetMark and GFATM to generatemarket demand for insecticide-treated nets.

Today, A to Z and Sumitomo Chemical areleveraging their distribution networks across thecontinent to extend LLIN reach to the mostremote communities and most vulnerablepopulations. Vouchers reducing the cost ofLLINs by US$ 2.75 to US$ 3-5 are distributed atprenatal clinics to pregnant women and can beredeemed at local retail outlets. Additionally,E

private sector and public needs

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