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Guest blogger Brian Trelstad is the Chief Investment Officer of Acumen Fund, a non-profit global venture fund serving the 4 billion people living on less than $4 a day. Before joining Acumen Fund, Brian Trelstad spent four years at McKinsey & Company as a consultant in the healthcare and non-profit practices and as an editor of the McKinsey Quarterly. Prior to McKinsey, he worked as a case writer at Stanford University’s Center for Entrepreneurial Studies and advised a number of early-stage technology companies.

By Brian Trelstad(This article first appeared on the Acumen Fund blog.)

Yesterday’s visit by President Bush to the A to Z Textile Mills factory in Arusha, Tanzania, was a tremendous boost for Africa’s fight against malaria and for African economic development. A to Z is now the only manufacturer of long-lasting insecticide nets in Africa, supplying nearly 8% of the continent’s demand for these life-saving products and employing over 5,000 people.

ABE, another local company that we have supported, has a long-term supply agreement to produce Artemisia, and by the end of the year should be producing about 15% of the world’s supply. ABE also employs thousands of farmers in cultivating a valuable cash crop.

As we reflect on our experience with these two malaria ventures, we think that the President’s Malaria Initiative could go further in spurring economic development in Africa with a few policy changes in the allocation of funding for malaria prevention and treatment commodities.
First: give preference to African manufacturers or suppliers of anti-malarial commodities. We recognize that the fight against malaria will need to stretch every dollar, but where costs are equal, global tenders should favor manufacturers or suppliers from Africa. The economic development potential could be significant if companies like Sumitomo and A to Z are able to expand their manufacturing beyond Tanzania, creating tens of thousands of jobs in the process.

Second: for long-lasting bednets, Global Fund-supported projects should award contracts on the basis of delivered costs, not factory prices. African manufacturers are at a disadvantage in having to import raw materials, but have much lower transportation costs. A to Z claims it can deliver a container of bednets to anywhere in Africa for 20% less than Asian suppliers can. More nets would reach more people for the same amount of public funding if this shift were made.

Third: begin to set aside subsidies for the private distribution of nets to complement the free distribution programs. The WHO has advocated that the most effective way of controlling malaria is free distribution of nets on a large scale. We agree, but are concerned that in five years, when the Global Fund’s push for free distribution ends, people will still need nets for their growing families and to replace worn-out nets.

We believe that now is the time to slowly grow private distribution channels that can sell nets at heavily subsidized prices. We have experimented in Tanzania and Western Kenya and think that a global subsidy of $4 to $5 per long-lasting net would be sufficient to stimulate wholesale and retail distribution of the nets into every corner of the continent.

Fourth: anticipate the problem of recycling the nets now. In five years, Africans will be throwing away 100 million used bednets a year. Before we hit that environmental crisis, the global public health community should begin to think through net collection and redistribution initiatives. There are no easy answers to this problem, but where a private supply chain exists, it can be reversed. By stimulating private markets and investing in plastic recycling capacity in Africa, we might be able to manage the problem of used bednets.