As you know, there has been a growing debate around giving free products to the poor versus charging them some price, even if only a token. This has been especially true with long-lasting malaria bednets. Jeffrey Sachs has been the world’s most vocal and effective advocate for providing free nets to meet one of the Millennium Development Goals of 60% coverage, particularly of pregnant women and children. On the other side, many social marketers, economists, and aid workers believe that people don’t value free things and therefore don’t use bednets properly if they receive them through massive aid programs. Acumen Fund has always felt this to be a false debate.
An article in The Guardian reports on the significant successes experienced in Kenya’s give-away programs which are seeing malaria rates drop by 50%, causing the World Health Organization to state that free net distribution is the best policy.
We are thrilled to see such positive and hopeful results. Potentially millions of people can be saved through relatively modest investment – each net costs about $10 to distribute. At the same time, it is important to note that a market approach may be complementary to free distribution as the only policy for change. Indeed, a combination of free distribution with building private markets – even if highly subsidized – might be a much more effective and sustainable solution for the long-term.
There are two principal reasons to integrate market-oriented approaches with the give-away programs. First, ensuring affordable bednets are available in the local marketplace increases the chance of universal coverage. Acumen Fund visited a village of 4000 people in Zanzibar who had been given 600 nets by a generous NGO. The chief of the village shared his frustration that more than two-thirds of villagers had witnessed the power of the long-lasting nets and wanted nets but couldn’t find them in any markets. “We would pay what is necessary,†he told us, “but we cannot find the bednets in the market – or anywhere.†Universal availability is critical to universal coverage.
Second, free distribution alone risks not being sustainable into the long-term. Jeffrey Sachs estimates the cost to cover Africa (population 933 million) to be $3 billion per year to eradicate the disease by 2010. Nets last on average five years before needing replacement. Ensuring that funding and availability exist, especially in difficult-to-reach markets, can be strengthened through private distribution.
Acumen Fund partnered with A to Z Manufacturing in Tanzania and a professor at Dartmouth who is part of MIT’s Poverty Action Lab to explore the feasibility of private distribution. Through selling nearly 100,000 bednets, we gained a few key insights:
- A large majority of people would willingly pay up to $1.50 per net, especially once they understand product efficacy.
- Using existing private markets to distribute the nets is estimated to cost about than half of distribution through traditional aid channels.
- Public subsidy for each approach, therefore, is $10 under the full-subsidy program and half that for the private sector approach (assuming a $1 price point).
Given early signals of success in distributing nets affordably – and sustainably – warrants an experiment with even a very small percentage of public funds for malaria. A majority of East Africans can afford a $1 net and long-term sustainability would be strengthened if these nets were available. This would complement the estimated 10-20% of the population who cannot afford any price.
With 300-500 million cases of malaria yearly and very low utilization rates for bednets, experimentation with different approaches is imperative. There are no silver bullets and the world needs to try a variety of approaches – free nets, market approaches as well as selective indoor spraying and the continued search for a vaccine. We can beat this complex disease only if we keep things simple – but not too simple.
This looks interesting but it is due to the social and economic status of Kenyans.
Reply to David WainainaI will also advocate the same subsidy to AL and Coartem drugs so as to get rid of malaria disease completely.
By doing this growing of artemisia in Kenya will increase and more farmers will benefit leading to a complete poverty problem repair!
Could the nets be “given away” as a “joining” gift for a club, like “People United for Better Health”, which would have annual dues of one or two dollars? Every time someone in the US joins PBS, they get a book or a video, so could that model work in Africa? Bring in some guest speakers, have bi-monthly meetings, and any membership renewal dues would help reduce the subsidy needed in the future.
Reply to Tom Gearing