Our professional lives are often so cramped with problems to solve, targets to reach and deadlines to meet that we may find it difficult to think. However, it is when we stop and make time to think that we increase the possibility to gain insights that will “move the needle”. At a recent “Private Sector Meeting” in London organised by Ducker Frontiers, the Bill & Melinda Gates Foundation’s Livestock team created such an opportunity and allowed their private sector partners to “take time out, look back and think about the future”.
Representatives of varying origins and interests discussed the accomplishments achieved since the importance of livestock was approved as a significant component of the BMGF strategy for economic growth for poor people. Since 2012, a strong foundation has been built for animal health deliveries by de-risking market entry and investments into research and development, registration of products and exploring inclusive and innovative business models. More companies are now actively engaged in working with small livestock farmers, and the 2021 targets set for product registration licenses and pharmaceutical products and vaccine doses delivered are likely to be met. In addition, enabling regulatory capacity building, public-private partnerships creation and animal systems facilitation have provided fertile grounds for future private sector entry.
Valuable lessons have been learned and a better understanding of the opportunity and the challenge ahead obtained: Due to its development trajectory, Africa is uniquely placed to offer investors and businesses both high growth from existing business and new, untapped opportunities. By 2050, one-in-four consumers will be African. Double digit growth rates seen in the 2000s are unlikely to return, but sub-Saharan Africa’s growth will still outpace other regions. Investors are prioritizing Africa (+11%) compared to Asia (4%) or developed economies (-27%). Port, rail and road constructions are making previously difficult-to-reach markets more accessible for firms and their distribution partners. Red tape remains a major challenge in sub-Saharan Africa, but regional countries are making swift progress reducing administrative burden. In 2019, the region had more pro-business reforms than other regions. Digital offers new solutions in some markets. 20% of the world’s landmass is located in Africa, representing a vast agricultural potential. Livestock production is expanding rapidly and markets such as Ethiopia, Tanzania and Burkina Faso will create new food sources to respond to the growing middle classes’ appetite for high-protein diets. In short, with the right strategies in place, businesses can capitalize on Africa’s opportunities and growth (source – Ducker Frontiers).
Business strategies and the efforts of the BMGF grantee and partner community will have to focus on overcoming or removing the remaining barriers for animal health investment in Africa: On top of the list stand the lack of distribution networks to cover rural parts of countries and the unpredictable regulatory environment.
Logistical costs of getting products to the end-customer in remote areas are still prohibitively high. The high operating costs for the local organisations affect the final cost and margin of the product and make competition with low-cost offerings and/or parallel imports challenging. Commitment of multinational companies to long-term investment in Africa is still hampered by the perception of high risk, cost and complexity in the African market (source – BMGF private sector survey).
The participants of the BMGF private sector meeting agreed that to achieve economic development and create functioning markets for the poor, there is a big need to break the vicious cycle of poor investment, lack of quality veterinary health care, animal disease burden (estimated at 6% of the total value of the livestock sector in Africa – D. Grace et al. 2015), reduced productivity and livestock market failures. To engage the animal health industry, there needs to be a better understanding of the size of the opportunity and clarity on the level of business risk. Africa is home to the largest livestock population in the world and will witness the greatest animal health market growth (Vetnosis: CAGR% 2018-23 >4.5%). Scale of the addressable animal health market in Africa is large – and growing, but to capture the opportunity, the business environment needs to become more conducive. And companies will have to make bolder investments, recognise smallholder farmers as customers and build smallholder farmer-specific portfolios, and value-added delivery through EDGE (Every-Day-Great-Execution).
Going forward, the objective of the BMGF and its grantee community is to collaborate more deliberately to remove animal health barriers related to availability, access, awareness and affordability of animal health interventions. The plan is to partner with two distinctive families of partners:
- Authorities, organisations and academia to strengthen systemic assets such as data and evidence, policies and advocacy, as well as the regulatory environment.
- With animal health manufacturers and distributors to foster research and development, registration and segment specific manufacturing, supply chain innovations, off-take markets and reduced cost of unit delivery.
On behalf of GALVmed I would like to express my sincere gratitude to the BMGF’s Livestock team and Ducker Frontiers for the valuable “Time to exchange, learn and think” provided. It was an inspirational gathering and I am looking forward to GALVmed’s continued contribution to solving the future’s pressing problems and making the African animal health market function for the poor.
Written by Dr Carolin Schumacher, Chief Executive, GALVmed