Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697633538223.pdf (Australia)
Inquiry into the role of the private sector in promoting economic growth and reducing poverty in the Indo-Pacific region Submission of evidence to the Foreign Affairs and Aid sub- committee of the Australian Parliament's Joint Standing Committee on Foreign Affairs, Defence and Trade Global Alliance for Improved Nutrition (GAIN) May 2014 1 The role of the private sector in promoting economic growth and reducing poverty in the Indo-Pacific regionSubmission 107 GAIN welcomes the opportunity to contribute to the Sub-Committee’s inquiry into the business of aid in the Indo-Pacific.
Our submission explores the potential of using private sector expertise and investment in the context of one major global development challenge – improving food and nutrition security.

From field to fork, this challenge involves the private sector.

GAIN works extensively with the global and local private sector around food and nutrition security including in the Indian Subcontinent, Indonesia, Vietnam, Cambodia and China.
We highlight our experience of strengthening business engagement in development in the food sector, and based on this, make some suggestions on ways Australia could evolve its aid program to harness business for development.

We would be happy to discuss this submission in more detail, give supporting oral evidence or facilitate a visit to one of the GAIN projects in the Indo-Pacific region.
GAIN The Global Alliance for Improved Nutrition (GAIN) was established in 2002 at a special session of the UN General Assembly on Children and became an independent non-profit Swiss foundation headquartered in Geneva in 2003.1 GAIN was set up by OECD donors and UN agencies, with a major investment by the Bill & Melinda Gates Foundation.
It evolved out of the UN system specifically to enable it to develop innovative partnerships with the private sector and look for sustainable, market-based solutions to malnutrition.

GAIN has played a leading role in developing approaches to malnutrition that harness markets and build sustainability into solutions to malnutrition.
GAIN has large-scale projects in 32 countries and GAIN-supported programs reached an estimated 859 million people across almost 40 countries by May 2014, with over half of them in Africa and the rest in Asia.
Our near term goal is to provide improved diets for 1 billion people by 2015.2 GAIN remains the only global organisation with an exclusive focus on malnutrition and contributes to platforms on nutrition and food security, including the Scaling Up Nutrition (SUN) movement (in which GAIN hosts the SUN Business Network Secretariat together with the World Food Programme).

We work closely with DFAT’s donor partners e.g.


Japan, Canada, the US, the EU and UK on creating an enabling environment for the private sector in food and nutrition security.

We have partnerships with many stakeholders, including multinational corporations, domestic businesses of all sizes within developing countries, NGOs and organizations representing the most disadvantaged and excluded.

GAIN leverages public funds 1 to 2.5 with private investment.
1 GAIN was created under article 83 of the Swiss civil code, and is registered with the Geneva registry of commerce under statutes dated 26 March 2003, with a special international organization status granted by the Swiss government 2 GAIN’s project results are available at: http://www.gainhealth.org/performance/project-results 2 The role of the private sector in promoting economic growth and reducing poverty in the Indo-Pacific regionSubmission 107 Tackling Malnutrition: How Can Business Play a Role in Improving Food and Nutrition Security?
Malnutrition is a complex phenomenon in part caused by poor diets which lack certain nutrients, as well as poor hygiene and sanitation.

It impacts heavily on rates of poverty, economic growth, and levels of trade and aid.

Until recently, malnutrition was overlooked despite its vital importance to the socio-economic progress of people, communities and economies in low-income and middle-income countries.

There have been recent successes.


Child mortality due to undernutrition fell from 3.5 million per year in 2008 to 3.1 million per year in 2011.

However, undernutrition was still responsible for 45% of the deaths annually of all children under five years of age.

The number of stunted children has also decreased globally, at an average rate of 2.1 % per year from 253 million in 1990, to 178 million in 2005, to 165 million in 2011.
Yet we still have today over 162 million children under five that are stunted.

There have not been significant changes in the levels of wasting, which affects 52 million children, and micronutrient deficiencies that affect over 2 billion people.

Hunger levels have improved very little, only declining by 17% since 1990, resulting in 842 million people worldwide who are considered hungry, according to estimates from the FAO.
At the same time, there is an epidemic of overweight and obesity, which now affects an estimated 1.4 billion people and is expected to rise to 3.28 billion by 2030, with a concomitant rise expected in health impacts linked to non-communicable diseases.

In short, more than half the global population suffers from malnutrition of one form or another.

Recent evidence also points to the importance of good nutrition to economic development.
The recent Nutrition for Growth (N4G) Compact, part of the 2013 G8 Summit programme, estimated that 11% of GDP in Africa and Asia is lost to undernutrition every year,3 with productivity losses to individuals estimated at more than 10% of lifetime earnings.4 At another level, malnutrition is a large burden on healthcare systems, drawing important budgets and resources away from economic development.

It is estimated that the problem could cost the global economy $125bn by 2030.
Over the past five years, two series by the Lancet addressing Maternal and Child Nutrition have helped build an evidence base and consensus on the importance of investing in nutrition.

Over 50 countries have now joined the Scaling Up Nutrition (SUN) movement.

Within SUN priorities are: affordable access to nutritious foods; breastfeeding; optimal growth of children and reduced stunting; treatment strategies for wasting and improvement of micronutrient status.
Ambitious targets have also been set to end malnutrition by the World Health Assembly and the UN Secretary General’s Zero Hunger Challenge, reflecting the overall momentum in the international community to now take seriously ending hunger and malnutrition.

Moreover, as part of the post 2015 agenda a new sustainable development framework seems likely to include a goal on agriculture and nutrition security.
3 Sue Horton and Richard H. Steckel, ‘Malnutrition 1900-2000 and Projections to 2050’, The Economics of Human Change ed.
B Lomborg (Cambridge University Press, 2013) 4 World Bank, 2006, ‘Repositioning nutrition as central to development: A strategy for large-scale action’, Washington, D.C., International Bank for Reconstruction and Development/The World Bank 3 The role of the private sector in promoting economic growth and reducing poverty in the Indo-Pacific regionSubmission 107 This greater global attention has still not been matched by sufficient growth in new investment to finance reaching these new targets.
Current efforts focus heavily on public service delivery, with still limited interest in additional delivery strategies such as those involving non-state actors, and particularly the agriculture and food industry.

Increased funding will help, but delivery at scale requires a different way of designing and implementing cost-effective interventions.

The problem of undernutrition is of such size and scope that no one actor can solve this alone.
Governments, civil society, UN agencies and bilateral donors have been working hand in hand for decades to try to meet the needs of the poor.

The recognition that a large burden of malnutrition sits with the moderately and chronically malnourished is leading to a new orientation from a unique focus on treatment, to one that includes prevention.

This is opening opportunities for market-based approaches that benefit from private sector experience and distribution channels.
Malnutrition will remain extremely difficult to address while the burden of effort falls on constrained aid budgets, and stretched national health services.

These critical investments in public health need to be matched by sustainable reforms to food systems, led by governments but involving key economic actors from the private sector.
As a result, in the food and nutrition security sector, the private sector has an increasingly important role to play in complementing government delivered health services beyond contract manufacturing of nutritious products.

Engagement with the business community has become a critical component of effectively scaling-up and sustaining national efforts to create access to nutritious foods and services.
The importance of integrated and multistakeholder interventions led by government and harnessing the efforts of community, public health and the private sector underpinned the recent Nutrition for Growth Compact, and is being further reinforced by the recommendations of the UN Secretary General’s High-level Panel to advise on the global development framework beyond 2015, which considers nutrition an integral and important part of food security.
The Private Sector – Examples of Potential Contribution to Nutrition and Food Security We would like to provide five examples, which illustrate types of mechanisms and platforms that could expand the role of business in tackling food and nutrition security.

In all of these, the private sector is a key deliverer, partnering the public sector.

In all, public (aid) as an enabler and catalyst is important.

1.
1.

Fortification of food staples to reduce vitamin and mineral deficiencies which cause disease and death Micronutrient fortification of staples and condiments that are eaten by everyone including the poorest is an affordable and powerful tool in the global effort to improve nutrition and improve health.

Vitamins and minerals, also known as micronutrients, are a critical component of good nutrition.
In particular, folate (vitamin B9), iodine, iron, vitamin A, zinc, and other B vitamins including thiamin (vitamin B1), riboflavin (vitamin B2), niacin (B3), cobalamin (vitamin B12) and pyridoxine (vitamin B6) are important for healthy and productive populations.

Without them children develop birth defects, blindness and an inability to learn properly, among other long-term disabilities.
4 The role of the private sector in promoting economic growth and reducing poverty in the Indo-Pacific regionSubmission 107 Our food-fortification program has achieved scale and reached more than 850 million people around the world.

GAIN is building the evidence base to demonstrate the significant contribution that it can make, as well as increase investment to ensure the full potential of this delivery platform is exploited.
Increased compliance, improved standards and further implementation in existing countries, together with expansion to new geographies can bring an unparalleled contribution to the prevention and reduction of micronutrient deficiency.

The vast majority of people in the developing world – even those living in rural areas and working in agriculture – are dependent on markets and the private sector for the purchase of food.
Engaging the private sector is therefore crucial for the effective implementation of food fortification.

GAIN builds the infrastructure required for the projects by creating and supporting national cross-sector groups, known as national fortification alliances (NFAs) – these are a collection of representatives from government, civil society, development agencies and private sector, including food processing industries (e.g., oil refineries, flour millers, and salt factories).
Example: Reducing stunting and vitamin A deficiency in Indonesia In Indonesia 40 percent of children under 5 years old are stunted (low height for age).One in five preschool age children in Indonesia are deficient in vitamin A which seriously weakens immune systems.

GAIN partnered with the Ministry of Health and private sector oil producers on a major food fortification project.

This multi-sector partnership was designed to reach 80 percent of the population with vitamin A fortified vegetable oil.
GAIN invested US$ 3.5 million over 5 years to support oil refineries with the necessary equipment and training to produce fortified unbranded vegetable oil.

These funds also enabled the oil industry to buy the vitamins and minerals through the GAIN Premix Facility.

The project has worked with the leading Indonesian certified vegetable oil producers and 75 percent of the program is financed by the industry for a total of US$ 16 million over 5 years.
The result has been significant reductions in Vitamin A deficiency in Indonesia.

Elsewhere in Asia, the potential to reduce micronutrient deficiencies and the resultant disease burden has not yet been realised – and presents an opportunity for high impact interventions between governments and private sector partners.

2.

Improving nutrition via workforces and supply chains Widespread nutrient deficiencies can have a dramatic effect on productivity.
Conversely, a well-nourished workforce is more productive.

As such the Nutrition for Growth Compact emphasizes the importance of engaging new players, especially the private sector, in tackling malnutrition.

GAIN co-manages with the World Food Programme (WFP) the SUN Business Network, made up of 37 companies who have signed up to promote good nutrition, including via their workforces.

GAIN’s Workplace Nutrition Program rolls out proven nutrition interventions through new delivery channels.
The program works with Compact signatories, and a much wider set of interested companies, to improve health for employees through nutrition- sensitive policies.
Through the SUN Business Network, GAIN aims to support poor working women to improve their own nutritional status and that of their children and families, via 5 The role of the private sector in promoting economic growth and reducing poverty in the Indo-Pacific regionSubmission 107 the companies which employ them or source from them, and build this into the core business operations of these companies.
Key sectors are agricultural workers (we work in the coffee, tea and cocoa sectors) and factories in which women are heavily employed.

Yet this approach is equally open to engagement by companies in the resource sector and with large workforces or supply chains in countries with a high burden of malnutrition.

A driver of this initiative is that it improves family health and also company productivity through better health and reduced absenteeism.
Example: Improving nutrition for women working in the garment industry in Bangladesh Bangladesh has achieved impressive progress in several social indicators over the last decade.

However, it remains one of the poorest nations in the world with approximately 80% of its population living on less than US$ 2/day.
Malnutrition in Bangladesh is still alarmingly high, with 41% of stunting, 17% of wasting and 37% prevalence of anemia among children under five years of age, and is a major underlying cause of childhood illness and mortality in the country.

Low BMI of 35% of women of reproductive age relates to low energy intake and directly impacts women’s own well being, as well as that of her off-spring.

A study of female migrant workers in Dhaka revealed that the prevalence of anemia was between 37 and 52%.
Iron fell short at 67% and vitamin A at 61% of recommended daily intake.

Increased income has not translated into better health for most of the female workers.

Improving nutritional status of female workers will result in a reduction of absenteeism and accidents, and an increase in productivity and loyalty.

For the women this will lead to better health and higher income, when paid per working day / product output.
To contribute to the reduction of stunting and micronutrient deficiencies in Bangladesh, our project aims to improve the nutritional status of women of reproductive age, working in the ready-made garment industry.

The project will improve BMI and anemia levels of 42,000 female garment workers.
A further 42,000 children under 5 of garment workers are expected to benefit from improved infant feeding practices:  Ensuring garment industry workers receive energy-dense and iron-rich foods or food supplements in order to improve their health and productivity  Implementing a behaviour change communication intervention including messages related to nutrition, hygiene, reproductive health, family planning, rights and entitlements etc.
 Upgrading existing day care facilities in the factors, providing better care, nutrition, hygiene and early child development services  Leverage relationships with international buyers of apparel goods to motivate their supplier factories to provide better support for women’s health and nutrition and ensure sustainability.

6 The role of the private sector in promoting economic growth and reducing poverty in the Indo-Pacific regionSubmission 107 3.
Targeting nutrition interventions at the most vulnerable: market based solutions Improving maternal and child nutrition – particularly in the child’s first 1,000 days – can prevent malnutrition and stunting and break inter-generational cycles of malnutrition.

In order to contribute to improved maternal, infant and young child nutrition GAIN has increased access and use of nutritious products to over 14 million children and mothers.
This has involved working with the private sector to improve the quality of their products and grow the market for nutritious foods, often by encouraging companies to develop affordable and high-quality nutritious products and supplements.

These can then be delivered through commercial retail channels or public health facilities.
Either way the private sector is crucial – without multi-stakeholder approaches like this, the availability and accessibility of nutritious complementary foods and complementary food supplements would not be possible.
In partnership with the Bill & Melinda Gates Foundation, GAIN has developed a portfolio of business and hybrid public-private models that have given us a core understanding of how markets and public sector approaches can leverage each other, which delivery models are most successful in different contexts, and learnings on how best to support scale up of interventions.

It has identified the crucial role of behaviour change and is developing innovative approaches to success.
Example: A comprehensive approach to maternal and child nutrition in East Java, Indonesia Though standards of living are rising in Indonesia, nationwide 38% of under-five children are stunted, 13% are wasted and 18% are underweight, and micronutrient deficiencies remain highly prevalent.
Stunting in infants <6 months (28%) and highest prevalence in the 12-35 months age group (41%) suggest problems of undernutrition in mothers, as well as poor breastfeeding practices, inappropriate complementary feeding and high levels of infectious diseases.

While poverty and poor access play the largest role, the fact that stunting is not uncommon in the highest socio-economic segment (A) at 20% of young children suggests there is also a need for behaviour change in feeding practices.
Formative research has indicated high prevalence of formula feeding, complementary food based on adult diets, and on-demand consumption of unhealthy snacks, often just before meal times.

In answer to this situation, GAIN designed a comprehensive program to reduce stunting, integrating nutrition-specific program components with nutrition sensitive ones both through market and public sector channels.
The Indonesian government – through the Scaling Up Nutrition Working Group on Partnerships, and the Compact signed with the Millennium Challenges Corporation – aims to engage with Indonesian food and beverage companies to tap into their strengths and competencies.

However, real investment of the private sector so far remains limited because of perceived market barriers and high risk.
Indonesia could build an environment where private companies think more ambitiously about growing markets for maternal and child nutrition, for instance by investing in public-private partnerships.

The project aims to improve maternal and child nutrition through an integrated comprehensive intervention model at district level for increased impact on stunting.
It 7 The role of the private sector in promoting economic growth and reducing poverty in the Indo-Pacific regionSubmission 107 is expected to reduce by at least 15% the micronutrient deficiencies in 1.2M pregnant and lactating women and 3.8M children 6 to 24m old, and reduced stunting by 5%.

4.
4.

Reducing the Obesogenic Environment: Tackling the Double Burden, and Epidemic of Overweight and Obesity Overweight and obesity represent a large and increasing challenge for people in developing countries, their health care systems, and their economies as they are still faced with persistent undernutrition.

Almost 75 per cent of today’s 43 million overweight/obese children under five live in developing countries.
Many of these same countries continue to suffer from undernutrition, creating a double burden of malnutrition.

This is especially the case in the Asia-Pacific region and the Indian Subcontinent.

The greatest growth in overweight people in recent years occurred in South East Asia, where the percentage tripled from a lower starting point of 7% to 22%.
Yet the prevalence of overweight and diabetes is rapidly increasing in all countries in the Asia-Pacific region, with some of the highest rates of adult obesity and diabetes found in the Pacific Island countries and areas of the Western Pacific Region.

For instance, the prevalence of overweight females reached over 90% in Cook Islands, Nauru, and Tonga.5 Likewise, over 90% of males in the Cook Islands and Nauru are overweight.
6 In Indonesia, more than 20% of adults and more than 14% of children 0-5 years of age are either overweight or obese; approximately 7 million people suffer from diabetes.7 In the Solomon Islands, an estimated 67.9% of adults are overweight, of which over 32% are obese.8 GAIN is well placed to assist developing countries with a high prevalence of overweight and obese people, to reduce the obesogenic environments (the environments that promote gaining weight) in the home, school, workplace, and at the community level.
Significant contributions can be made by advocacy for policies and regulatory solutions (drawing attention to evidence, strict advertising and marketing regulations re: target population groups (children), locations (not in schools) or timings (not during children TV time).

Innovative programming solutions can be developed and tested, building on existing intervention in school, community or workplace environments.

The private sector is central to this effort.


GAIN has been sharing ideas with DFAT on a possible framework to address this issue.

To combat the rapid growth in overweight and obesity will require leveraging linkages with the private sector to set out an agenda and action plan to improve efforts by food and beverage companies, retailers and food producers to produce healthier foods, improve their marketing practices, and to ensure the availability and affordability of a nutritious diet.
This builds on the important investments GAIN made in launching the Access to Nutrition Index (ATNI) which rates the performance of the top 25 global food and beverage manufacture in 2013 on their commitment to address undernutrition, overweight and obesity.

With a few exceptions, they found most of the companies scored poorly, with ample room to improve.

5.
5.

Seeking new finance models to leverage private sector investment In addition to public funding to address food and nutrition security, these issues require high levels of private investments.
A significant pool of investment capital is potentially available, 5 http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3543235/ 6 http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3543235/ 7 http://www.developmenthorizons.com/2014/03/the-double-burden-of-malnutrition-in-se.html 8 http://apps.who.int/gho/data/node.main.A900?lang=en 8 The role of the private sector in promoting economic growth and reducing poverty in the Indo-Pacific regionSubmission 107 but previously private sector finance in the food/nutrition space was limited by market constraints and uncertainties in capital deployment in the food/nutrition space.
GAIN’s Innovative Finance Program was established to engage a wide range of actors in the fight against malnutrition and find new ways to attract capital.

Our innovative financing tools have helped make investments in the sector more attractive, and reduce the high level of risks associated with such investments.
These include:  Risk management tools to reduce the risk on bank credit and investments in  agricultural activities, such as index based weather insurance Innovative credit mechanisms providing the lender with improved collateral guarantees, and thus facilitating the financing of agricultural value chains, especially for nutritious food crops and products  Targeted sector-focused private equity and debt funds to provide additional finance and sector expertise to SMEs and progressive smallholder farmer cooperatives producing nutritious foods along the agriculture value chain.
Example: GAIN-IFC Investment in Favorita An Ecuadorian diary company was interested in adapting a yoghurt product for the low- income infant and young child nutrition market but viewed it as too risky without external support.

To overcome barriers like this, GAIN has partnered with the International Finance Corporation (IFC), the private sector lending arm of the World Bank, to support the production of complementary foods.
Through the GAIN-International Finance Corporation Nutrition Trust Fund, GAIN supported REYBANPAC, a subsidiary of Favorita Fruit Company, to develop, market and distribute a semi-solid dairy-based fortified complementary food product called Lenutrit that is aimed at children 6 to 24 months old in Ecuador.

The goal of the project is to commercialize this fortified yogurt in low-income regions in Ecuador through REYBANPAC’s distribution network.
The product was launched in early 2014 and is now available to customers around Ecuador.

The example illustrates how partnering with an investor such as IFC creates the ability to share risk, generates additional financing for nutrition by attracting investment capital, and promotes the sustained impact of nutrition interventions at the base of the pyramid.
Recommendations on a framework for Australian engagement with the private sector Our experience – over a decade of working with some 600 companies – is that it takes considerable time, investment and effort to create opportunities in which public investment (aid) can leverage private resources (skills, investment), and build the partnerships which can harness the potential of business to contribute to reduced food and nutrition insecurity.

Three recommendations stand out: 1.


A framework for engagement around the private sector requires a set of principles which establish the basis for engagement.

Such a framework could draw on the 9 The role of the private sector in promoting economic growth and reducing poverty in the Indo-Pacific regionSubmission 107 established principles of engagement for the private sector embedded in both the SUN and Nutrition for Growth Compact.

9 2.
9 2.

A structured approach to private sector engagement in food and nutrition security should aim to:  Strengthen the capacity of governments to engage with local private sectors on their contributions to national nutrition strategies by improving access to nutritious foods, and supporting the integration of nutrition into food security, sanitation, education and climate change adaptation.
Many local businesses also do not have sufficient access to technical and other resources necessary to launch or expand their business in alignment with national nutrition plans10  Facilitate new multistakeholder delivery partnerships between civil society, non- for-profit groups and NGOs and the private sector  Incentivise and support Australian companies to use their footprint and supply chain to promote improved food and nutrition security and specifically  Mobilise the research, development and technological capacities of the Australian agribusiness, food and beverage, ICT and mobile phone, transport and packaging sectors to support innovative interventions along the food value chain.
3.

Operationalizing new types of public private partnership through the aid programme requires Australia to consider:  Creating new financing mechanisms to support developing country companies and the Australian private sector to co-invest in aid efforts.

The function of such mechanisms to de-risk investment and use public funds to co-invest to tackle market development, behaviour change and capacity building required to reach the poor and create sustainable solutions.
Barriers to entry into new markets are particularly high in reaching the poorest communities.

Some examples of public- private challenges funds and social impact investing exist which could be examined as models.

There are also new instruments such ad development impact bonds which could be considered.
 Investing in dialogue with the Australian private sector to match market opportunities and social and health development needs in the region, addressing removing barriers to trade and investment, thereby creating an enabling policy environment and good governance 9 These detailed Governance / Principles of Engagement are available.
There require, for example, that business or organizations working with business commit to the general SUN Principles of Engagement and Principles of Engagement in the areas of human rights, labour standards, the environment and anti-corruption; and comply with UN guidance on health and nutrition, including adhering to International Code on Marketing of Breast Milk Substitutes and World Health Assembly resolutions related to Maternal, Infant and Young Child Nutrition.
10 In recent consultations for SUN conducted by GAIN/WFP, many companies have stated that their ability to contribute to the goals of the SUN Movement is severely constrained by lack of access to nutrition expertise, an underdeveloped knowledge base on how the private sector can contribute to improving nutrition and the lack of multi-stakeholder partnerships (involving government, UN agencies, business and civil society) that are essential to reaching those most in need.
10 The role of the private sector in promoting economic growth and reducing poverty in the Indo-Pacific regionSubmission 107  Supporting strategic policy work with the involvement of the private sector on major development challenges in the region e.g.

around the double burden of nutrition, and how to mitigate the obesity epidemic in the context of poverty and malnutrition.

Markets and the privates sector are key role players in tackling this problem.
Working in partnership with the private sector, to draw on its strengths, is fundamental to achieve impact at scale on nutrition issues and makes clear the vital role of markets in economic growth and poverty reduction.

Given the extent of development problems that impact on economic growth and poverty, new and innovative partnerships are required and much more of the private sector could get involved.
The Australian government could play a key role in driving this agenda in the Indo-Pacific region and GAIN would be delighted to contribute further to tackle the high rates of malnutrition in the region.

11 The role of the private sector in promoting economic growth and reducing poverty in the Indo-Pacific regionSubmission 107