Global Economics

Charity vs. Capitalism in Africa


Africa's best hope to fight malaria is the wide distribution of mosquito-repelling bed nets. But who best serves that need: the public sector or private interests?

Jenifa John recently spent $1 on a billowy swath of gauze that could help keep her family alive. The 22-year-old mother of two in the village of Engutoto, Tanzania, bought a mosquito-repelling bed net that will keep parasite-bearing insects away from her young children while they sleep. It's a matter of utmost concern: Before she bought the net, one of John's children was hospitalized with malaria—and fortunately survived.

All across Africa, there's new hope in the long-running battle against malaria. In the last decade, funding to control the preventable, treatable disease has increased tenfold. And now, millions of insecticide-laced nets that keep mosquitoes away from sleeping men, women, and children are making their way into a growing number of homes, helping to defeat the spread of a disease that still kills up to 3 million people a year and 3,000 children a day. Experts say Africa could need upwards of 90 million bed nets to fight back against a disease that costs the continent an estimated $12 billion per year in lost economic potential.

Who Can Best Deliver?

But while the distribution of treated bed nets is a welcome development, many health-care advocates are troubled by how slowly it's happening. Indeed, the pace of progress raises profound ideological questions over the best way to disseminate the life-saving nets—and, indeed, all sorts of assistance. On one side are believers in the traditional aid model, who say that bed nets should be given away for free by governments and nonprofits to reach the maximum number of people as quickly as possible. On the other side are backers of so-called social marketing, who argue that bringing businesses into the mix improves efficiency and adds incentives and economic benefits to doing good. Harnessing the private sector, they say, creates self-reliance—not dependence.

Both sides make valid points. Advocates of free distribution worry that selling bed nets—even at heavily subsidized prices as low as $1—puts them out of reach of poor people and slows uptake. Indeed, a recent study in Kenya found that free distribution of bed nets raises their use to 66% of the population, compared with just 7% when they are sold commercially.

Such figures have prompted some advocates to call for the abandonment of social marketing in favor of free public distribution. Leading the charge is economics professor Jeffrey Sachs, who directs the Earth Institute at Columbia University and gained renown in the 1990s advising Eastern European governments on "shock therapy" transitions to free-market economies.

"Shock Therapist" Backs Giveaways

Sachs is outraged that after seven years of effort, the goals for distributing bed nets in Africa haven't been met via social marketing programs. Take Tanzania, which is known as the "epicenter" of malaria because of the high incidence of disease there. For years, its government has subsidized sales of nets to the most vulnerable populations for prices typically between $1.50 and $3.50 each. But even now, just one-third of adults and one-quarter of children are protected by nets while they sleep.

"Tanzania is not a success story, it's a debacle," says Sachs, who flew to the East African nation last July to persuade President Jakaya Mrisho Kikwete to adopt a new plan for free distribution of nets in 103 rural districts.

Despite his long history as a free-marketeer, Sachs thinks business isn't working fast enough in this case to address an urgent human crisis. So he's pushing for more direct action. "We'll distribute free nets all over Africa, and we'll do it again and again," he says. "There's no reason why markets should be able to handle this problem."

Others think Sachs and his supporters are giving up too soon on the private sector. They admit that paying even $1 for a bed net can be a hardship for people living on less than a dollar a day. But people who buy nets tend to take better care of them and use them more regularly.

Sustaining Manufacture and Use

"We've built up a system that gets people to appreciate and buy and look after [bed nets]," says Jane Miller, director of malaria initiatives for Population Services International Tanzania, a unit of a Washington nonprofit, Population Services International, which harnesses social marketing techniques to improve health care in emerging economies.

Unlike mass distribution programs, social marketing schemes have to be economically feasible. Though profits for the providers are often slim to nonexistent, the systems established to get socially beneficial products from the factory to the field may be more cost-efficient in the long run—and can create sustained jobs and earnings for locals involved in the supply chain. Indeed, distributing free nets could even undermine the nascent business ecosystems that have sprung up to manufacture and distribute bed nets.

PSI and Tanzania-based Ifakara Health Research & Development Center are among the groups that have built distribution networks in Africa for insecticide-treated nets, including retail agents in villages and wholesalers at a regional level. To be sure, the agencies welcome the recent surge of interest in malaria from governments and private donors. But they worry about creating a sustainable system for disseminating nets once the topic has fallen off the front page.

"We're trying to think more clearly about [what happens] after the donor money runs out," says PSI's Miller. "At the moment, the donors seem to saying that money is no object. But it certainly will be in the future."

Miller also is concerned that the mass distribution campaign advocated by Sachs could undercut the commercial sector for nets that has slowly developed in Tanzania. Consider Asif Ladak, a wholesaler of nets in the Tanzanian capital of Dar es Salaam. Ladak is concerned he will lose clients if Sach's free distribution plan is deployed.

A Mixed Approach

The ideal solution looks to be a combination of both free distribution and social marketing. "We think there will be opportunities for complementary public free distribution and stimulation of private channels," says Brian Trelstad, chief investment officer for the New York-based Acumen Fund, a nonprofit global venture fund that uses entrepreneurial approaches to solve global poverty. "People will need to have access to nets even when the wave of free distribution ends."

Trelstad says research by Pascaline Dupas of Dartmouth College and the Poverty Action Lab at MIT shows that bed nets would sell in greater volumes if they cost $1.50 or less—below prices that now range up to $3.50. And he thinks private distribution must remain an option because public institutions may not be able to blanket the countries that need nets at quite the rate that Sachs and others would like. "They're focused on admirable resources and goals, but there will be accountability issues for them as well," Trelstad says.

Sachs concedes that not all the nets he plans to distribute will reach the hands of the needy. "Will it be perfect? No," he says. "But this is one of the easiest problems I'm trying to solve. It's easy to distribute nets and there's high public awareness of how to use them." For the sake of Africa's population, let's hope that in this case everybody is correct.


Steve Ballmer, Power Forward
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus