A thriving, sustainable animal health inputs (AHI) industry is what we need in low-and-middle income countries (LMICs) such as those in Africa. This is where value chain players operate profitably to get the products and services to the farmer who is the ultimate beneficiary. In these regions, a large proportion of agriculture production is contributed by small-scale farmers. According to Africa Development Bank Group, 75% of production and employment in East Africa is contributed by small-holder farming. Unfortunately, while progress has been made in other sectors such as trade and services, agriculture still lags behind.
The barriers to trade in AHI have led to LMICs markets being insufficiently attractive to sustain the case for investment in the development of targeted products and markets by multinational companies, which typically have research and development capacity. In entities that exist to gain their shareholders a return on equity, there is competition for capital which tends to be concentrated in the most profitable areas. Some of the barriers to trade in LMICs include incomplete market information which hinders the sizing of the opportunity, packaging not small enough to suit the predominant small-scale producer segment, presence of poor-quality products due to reasons such as counterfeiting, incomplete or inefficient distribution networks that don’t optimally reach producers, cold chain issues due to energy and infrastructure inadequacy, demand aggregation to sustain large scale manufacture, or development of veterinary service resources among others.
GALVmed through the implementation of its new 2030 commercial development strategy, is looking to work with partners to address some of these barriers through bespoke platforms, one of which being the Market Intelligence Platform (MIP).
The AHI’s current size and future potential in sub-Saharan Africa must be better understood. With a significant lack of data, the industry tends to rely on best estimates and use incomplete and unreliable information. This is augmented with substantial levels of guesswork and approximations. The situation is highly undesirable and harmful for two reasons:
One, the industry’s best estimates can be wildly inaccurate and tend to be significant underestimates. For example, a comprehensive, bottom-up assessment of the Kenyan market by AgNexus Africa has recently valued the market at $110M p.a. Previous industry best estimates had typically placed the market in the region of $45 – $50 M p.a.
Secondly, industry investments reflect the degree of confidence in the underlying markets. The need for more reliable data for the African market greatly amplifies the uncertainty around this market, and industry investments in the region consequently suffer.
The outcome of this information shortfall contributes to a significantly reduced animal health industry investment in Africa. Many manufacturers either avoid the region entirely or limit and drip-feed their investments. The consequences are felt not only in the manufacturer’s marketing and distribution activities but also in R&D, where it is extremely difficult to justify development projects for African-specific products. For African small-scale livestock producers (SSP), this has important and far-reaching consequences. Product availability, product quality, and product prices are all negatively impacted. This translates to poorer animal health outcomes, lower SSP livestock productivity, and poorer SSP livelihoods.
For these reasons, the proposed Market Intelligence Platform which aims at both sizing the current and estimating the future markets through techniques such as advanced analytics will enhance animal health market transparency, improve decision-making, reduce business risk, indirectly improve market efficiency, and promote access to animal health markets. This will contribute to a more developed industry in the coming years.
Written by Tom Osebe, Senior Manager of Commercial Development & Impact, Africa.