Valid Nutrition: Producing Ready to Use Therapeutic Foods in Malawi

Valid Nutrition Malawi

Valid Nutrition is an innovative social enterprise and non-profit organisation (with Charity status in both UK and Ireland), that manufactures and brands “ready-to-use” nutritional foods (RUFs) to treat and prevent malnutrition. In Malawi, Valid has set up a factory in Kanengo for the production to satisfy the local market, currently of RUTF (Ready to Use Therapeutic Foods – for treatment of acute malnutrition) but hoping to extend to RUCF (Complementary – for prevention of Chronic).  Valid has been accredited by UNICEF for national supply and distributes RUTF to hospitals and clinics throughout country with the help of UNICEF, the Clinton Foundation and local State Agencies.  From the start in 2007 to date, the factory has produced over 18 million sachets, which equates to approximately 175,000 children treated and several thousand lives saved.

Valid Nutrition’s focus is on local market and aims to source ingredients from smallholder farmers and local suppliers as much as possible.  This is intended to foster competition and provide direct benefits to local economies and ultimately to develop a sustainable and commercial model of supply.  Since Valid entered the market, the price of RUTF has gone down over 30%.

However, Valid faces a number of challenges, these include: sourcing quality products locally (including sesame seeds and groundnuts), and a reliance on imported powdered milk vitamins and packaging. Raising foreign exchange requirements is also a big issue in Malawi.  Currently around half of raw materials have to be imported from the developed world.

Valid also faces the challenge of a limited cash flow to fund working capital requirements.  Valid needs to first receive payment for an order before it can purchase the ingredients necessary for the next order. Given the time required to purchase and test the ingredients, this results in the factory running well below capacity. This can mean financing working capital needs over six months – from order to actually receiving payment for goods produced. Overdraft rates in Malawi are currently running at over 40%.  Valid is exploring ways of restructuring centrally in order to achieve improved access to working capital by attracting social impact investors to help capitalise the operational side of the business.  This may involve the creation of a new hybrid corporate structure.

In the meantime in Malawi, we have partnered with Exagris Africa, a major local agricultural company. Once we can provide consistent supply for the domestic market, it is intended to export to neighbouring countries, especially Zambia where there is currently no production.

As well as producing RUTF food for distribution through hospitals and health centres, Valid has ambitions to manufacture a Ready to Use ‘Complementary’ Food (RUCF) range to prevent chronic malnutrition. Valid is keen to pilot a commercial model of distribution (and social marketing) of small affordable sachets of RUCF through retail channels and local vendors.

Valid Nutrition is an active private sector participant the SUN (Scaling Up Nutrition) Movement since 2011. It is a member of the SUN Task Force in Malawi. During the SUN launch in Malawi, Valid Nutrition represented the private sector by signing and reading a commitment undertaking to participate and adhere to national guidelines, policies and production/marketing ethics/standards of nutritional products. All of which is totally aligned with our Mission. [www.validnutrition.org]

 

Valid Nutrition: Producing Ready to Use Therapeutic Foods in Malawi

Valid Nutrition Malawi

Valid Nutrition is an innovative social enterprise and non-profit organisation (with Charity status in both UK and Ireland), that manufactures and brands “ready-to-use” nutritional foods (RUFs) to treat and prevent malnutrition. In Malawi, Valid has set up a factory in Kanengo for the production to satisfy the local market, currently of RUTF (Ready to Use Therapeutic Foods – for treatment of acute malnutrition) but hoping to extend to RUCF (Complementary – for prevention of Chronic).  Valid has been accredited by UNICEF for national supply and distributes RUTF to hospitals and clinics throughout country with the help of UNICEF, the Clinton Foundation and local State Agencies.  From the start in 2007 to date, the factory has produced over 18 million sachets, which equates to approximately 175,000 children treated and several thousand lives saved.

Valid Nutrition’s focus is on local market and aims to source ingredients from smallholder farmers and local suppliers as much as possible.  This is intended to foster competition and provide direct benefits to local economies and ultimately to develop a sustainable and commercial model of supply.  Since Valid entered the market, the price of RUTF has gone down over 30%.

However, Valid faces a number of challenges, these include: sourcing quality products locally (including sesame seeds and groundnuts), and a reliance on imported powdered milk vitamins and packaging. Raising foreign exchange requirements is also a big issue in Malawi.  Currently around half of raw materials have to be imported from the developed world.

Valid also faces the challenge of a limited cash flow to fund working capital requirements.  Valid needs to first receive payment for an order before it can purchase the ingredients necessary for the next order. Given the time required to purchase and test the ingredients, this results in the factory running well below capacity. This can mean financing working capital needs over six months – from order to actually receiving payment for goods produced. Overdraft rates in Malawi are currently running at over 40%.  Valid is exploring ways of restructuring centrally in order to achieve improved access to working capital by attracting social impact investors to help capitalise the operational side of the business.  This may involve the creation of a new hybrid corporate structure.

In the meantime in Malawi, we have partnered with Exagris Africa, a major local agricultural company. Once we can provide consistent supply for the domestic market, it is intended to export to neighbouring countries, especially Zambia where there is currently no production.

As well as producing RUTF food for distribution through hospitals and health centres, Valid has ambitions to manufacture a Ready to Use ‘Complementary’ Food (RUCF) range to prevent chronic malnutrition. Valid is keen to pilot a commercial model of distribution (and social marketing) of small affordable sachets of RUCF through retail channels and local vendors.

Valid Nutrition is an active private sector participant the SUN (Scaling Up Nutrition) Movement since 2011. It is a member of the SUN Task Force in Malawi. During the SUN launch in Malawi, Valid Nutrition represented the private sector by signing and reading a commitment undertaking to participate and adhere to national guidelines, policies and production/marketing ethics/standards of nutritional products. All of which is totally aligned with our Mission. [www.validnutrition.org]

 

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