Chronic malnutrition, especially during a child’s early years, often results in irreversible mental and physical damage. Malnourished children complete fewer years of schooling; have more significant health problems as they grow; and as adults are likely to earn lower wages.
In Rwanda, despite the fact that the country has grown economically in recent years, malnutrition prevalence is at 33.1 percent, and 49 percent of children display stunted growth as a direct result of malnourishment. Addressing malnourishment through making fortified foods available is key to reducing its long-term effects.
Since 2015, FMO has co-invested in equity and debt through Building Prospects (BP) in Africa Improved Foods (AIF), which since 2016 has grown to become a leading manufacturer of high-quality fortified foods for pregnant women and infants up to 24 months old. Its products are distributed via the relief programs of the World Food Programme (WFP) and the Government of Rwanda (GoR) and as consumer products in the retail market, with 1.6 million people benefiting daily. Total investments in AIF are USD 10m B-loan led by IFC (fully repaid), and USD 9m Equity.
Uniquely, AIF has also implemented a business model to source raw materials locally for these foods where possible, allowing smallholder farmers to sell their maize unshelled directly after harvest, which decreases harvest losses and improves overall quality. Significantly, AIF’s two-pronged approach cuts across several SDGs at once, as the FMO-commissioned study by Orchard Finance / Carnegie Consult and the Royal Tropical Institute (KIT) shows.
FMO requested an impact evaluation of the investment over the period 2016-2022, focusing on (1) relevance and additionality of the investment, (2) the PPP’s alignment and performance, (3) employment effects, (4) impact on malnutrition, and (5) the impact of sourcing maize from farmers. An assessment was also made of the business case and financial sustainability of AIF Rwanda.
Regarding (1) relevance and additionality, the evaluation showed BP’s investment into AIF has a clear development relevance and is financially additional, as the investments were made at a greenfield stage of AIF, or subsequently, when AIF needed more capital. At these times, no similar financing alternatives were available, thereby clearly demonstrating BP’s additionality.
And regarding the PPP alignment and performance (2), the implemented construct is unique, with private sector, development institutions and the Rwandan government successfully joining forces, thereby contributing to SDG 17. The key strength of this model is that the various actors have not only contributed financially, but also have provided significant value in operational expertise, as well as driving widespread coordination and advocacy efforts with farmers and foreign governments.
In employment (3), AIF has succeeded in creating a reasonable number of decent jobs (164 permanent and 357 casual workers as of April 2022) and is seen as a frontrunner in terms of working conditions in the country (SDG 8). Additionally, satisfaction rates among permanent employees are high and strong attention is given to employee health and safety, plus the number of female employees (on the work floor as well as in management positions) has increased each year, thanks to AIF’s encouragement of a positive work environment for women.
The impact on malnutrition (4), according to an impact evaluation conducted by Clinton Health Access Initiative (CHAI), shows that households and children with access to AIF fortified foods showed a 40% reduction in the odds of being underweight (SDG 2), while the prevalence of stunting among children 18-23 months declined by 12 percentage points (from 47% in 2017 to 35% in 2021).
One of AIF’s successes is in developing a sourcing model (5) where maize is directly purchased unshelled from approximately 450,000 smallholders contributing to SDG10. Furthermore, thanks to the model, AIF achieves higher quality levels, while farmers face fewer post-harvest losses and their costs are reduced substantially. Moreover, AIF’s purchase from local smallholders has had a notable impact on Rwanda’s maize market, because given the higher prices that AIF offers, smallholders are incentivized to produce higher-quality maize, which has improved the market overall for other industries.
As for AIF’s financial sustainability, it will continue building and strengthening its business model by increasing retail sales and expanding the business to other countries.
The evaluation recommended that FMO and AIF, in collaboration with other financial institutions, explore opportunities to facilitate access to finance for smallholders, and that AIF utilizes a continuous improvement model to further enhance their social and environmental impact, as well as strengthening economic sustainability. In response to these, FMO and AIF have agreed on specific actions to address these recommendations.
Read the evaluation summaries here:
African Improved Food (Rwanda)
Fortified Blended Foods' Impact on Children in Vulnerable Households
Or visit our Reporting Center to see the rest of our evaluations