Businesses lose a quarter of a trillion dollars each year due to malnutrition

New research reveals true extent of stunting to private sector in emerging economies

London, 7 June 2022 – New research from The Power of Nutrition and Modern Scientist Global reveals businesses in low and middle-income countries lose more than a quarter of a trillion dollars (up to $264.6 billion) in revenue every year, due to their employees experiencing chronic undernutrition in childhood. The novel study – The Economic Cost of Stunting to Businesses in Low- and Middle-Income Countries – is the first to quantify the cost of childhood stunting to the private sector in emerging economies.

Affecting more than one in five children globally, stunting (defined as low-height for age) is caused by prolonged undernutrition in a child’s early years. As well as restricted physical development, it impacts educational performance and causes lost productivity for wider society.

The new research, led by global public health research consulting firm Modern Scientist Global in collaboration with The Power of Nutrition is published in the Lancet EClinicalMedicine journal. It models for the first time the potential impacts of health and education outcomes caused by childhood stunting on businesses’ revenue, workers’ income, and countries’ Gross Domestic Product (GDP). Key findings include:

• The private sector loses more than a quarter of a trillion dollars each year (up to $264.6 billion).
• Workers lose up to 20% of their annual income.
• Countries lose up to 10.1% GDP.

The new data confirms malnutrition hampers the development of an entire society. Private sector workers who were stunted as children earn less as adults, are less productive, and have limited purchasing power to sustain themselves and their households. In Ethiopia, the data shows that garment factory workers lose up to 18% of their already low average $50 monthly salary due to stunting. Reduced disposable income increases the chances of malnutrition and poverty repeating in further generations, as well as leading to reduced business returns and stagnant economic growth.

The research also demonstrates that investment in stunting reduction efforts today yields some of the highest returns in development, with $1 invested annually potentially yielding up to $81 for national economies (an 8,000% return on investment).

Describing the significance of this new study, Meera Shekar, Global Nutrition Lead, World Bank said

This new evidence is a ground-breaking piece of research that shows how integral good nutrition is to greater human capital and economic prosperity. It is a call for private-public action to tackle malnutrition and avoid huge losses of potential.

The novel findings come at a time when global malnutrition rates are on the rise, driven by the impact of Covid-19, prolonged conflict and the effects of climate change. More recently, global food security and access to nutrition is threatened by the overwhelming soar in food prices caused by the conflict in Ukraine. In parallel, global overseas aid for nutrition is in decline and, despite the Tokyo 2021 Nutrition for Growth Summit mobilising $27 billion in investments for nutrition, an annual $10.8 billion funding gap for nutrition remains.

Simon Bishop, CEO, The Power of Nutrition said:

This new research should be a wake-up call for businesses in low- and middle-income countries – and beyond. We already know stunting is a life-sentence for impacted individuals. This new data shows it is also a huge cost to business and economies due to lost productivity and consumer spending power. Tackling stunting should be a leading priority for business, to transform lives as well as profits.

The research was led by Modern Scientist Global, which analysed data using epidemiological and economic methods and machine learning technology. The project was supported by in-kind expertise from a network of businesses including Royal DSM, Kellogg’s, Olam International, Otsuka, and PVH Corp, development networks including the SUN Movement and multilateral organisations including the World Bank, and with funding from the Patrick J. McGovern Foundation.

Nadia Akseer, CEO, Modern Scientist Global said:

This study uses big data and cutting-edge AI methodologies to fill an important knowledge gap. By evidencing the true cost of stunting to business, this new data will be crucial in catalysing investment in nutrition and bringing more stakeholders to the table.

Claudia Juech, Vice President of Data and Society at the Patrick J. McGovern Foundation, added:

It has been our privilege to work with our Accelerator partner The Power of Nutrition to deploy the advanced analytics approaches and cloud computing technology that ultimately unlocked these critical insights on the economic impact of stunting.

Working with its partners, The Power of Nutrition has developed recommendations for businesses to address undernutrition. Aiming to encourage businesses to engage with the entire nutrition ecosystem, the set of broad recommendations aims to tackle undernutrition sustainably with a multisectoral approach.

- Ends -

NOTES TO EDITOR

Research Summary

• Published journal: Lancet EClinicalMedicine
• Research link: https://www.thelancet.com/journals/eclinm/article/PIIS2589-5370(22)00050-5/fulltext
• Further resources, including forward, summary, a case study and recommendations to businesses, can be found here: https://trello.com/b/TRLdXOxg/the-cost-of-stunting-research
• The research was commissioned by The Power of Nutrition, with funding from Cloudera Foundation (now the Patrick J. McGovern Foundation). The research was led by Modern Scientist Global. It was supported with in-kind technical expertise from a panel including Jonathan Akuoku, World Bank; Robert E. Black, Johns Hopkins University - Johns Hopkins Bloomberg School of Public Health; Bernardo Lessa Horta, Federal University of Pelotas (UFPel) - Postgraduate Program in Epidemiology; Ndidi Okonkwo Nwuneli, Sahel Consulting Agriculture & Nutrition; Nourishing Africa; Ritta Shine, Global Alliance for Improved Nutrition and John Hoddinott, Cornell University - Dyson School of Applied Economics and Management; Nikita Japra, Patrick J. McGovern Foundation; Meera Shekar, World Bank. The research was also supported and reviewed from businesses including Royal DSM, Kellogg’s, Olam International, Otsuka, and PVH Corp.

Key Findings:

Please refer to the full academic paper for detailed findings. Headlines include:

Costs to the private sector

• The profit losses are greatest in East Asia and the Pacific regions, as well as Latin America and the Caribbean.
  • Countries with the greatest absolute losses¹: China ($57.9 billion), Peru ($21.3 billion), India ($15.1 billion), Brazil ($11.0 billion), Mexico ($8.2 billion), Colombia ($4.2 billion), Philippines ($2.6 billion), Vietnam ($2.2 billion) and Thailand ($1.4 billion).
  • The highest losses as a proportion of GDP were from Sub-Saharan Africa (0.85%) and South Asia (0.78%).
• Childhood stunting costs the food, garment, and manufacturing sectors the most
  • The average firm in the food industry loses $21,199 in revenue annually due to stunting.
  • The average firm in the garment industry loses 26,425 in revenue annually due to stunting.
  • The average firm in the manufacturing industry loses over $27,000 in revenue annually due to stunting.

Costs to workers

• On average, private sector workers in LMICs lose more than 20% of their annual income as a result of stunting.
• Workers lose in total $297.2 billion in income annually
• Private sector workers affected by stunting lose between $31 and $1,736 in annual income.
  • Workers affected by stunting in Ethiopia on average lose over a fifth (up to 22%) of their annual income.
  • Workers affected by stunting in Madagascar on average lose nearly a quarter (up to 24%) of annual income.
  • Workers affected by stunting in Bangladesh on average lose over a fifth (up to 22%) of annual income.
  • Workers affected by stunting in Cote d’Ivoire lose nearly a quarter (up to 24%) of annual income.

Costs to economic growth

• Profit losses due to stunting affects growth and economic status – up to 10.1% GDP is lost due in the private sector every year .
  • Peru has the highest loss of up to 10.1% GDP each year
  • India loses up to 0.74% GDP each year
  • Kenya loses up to 1% GDP each year
  • Nepal loses up to 3.9% GDP each year
• Research shows that the effects of stunting on incomes are in the billions, with workers in Sub Saharan Africa and South Asia seeing the biggest losses relative to GDP.
  • South Asia: $28.2 billion (0.78% GDP loss).
  • Sub-Saharan Africa: $15.1 billion (0.85% GDP loss).
  • East Asia and the Pacific: $198.3 billion (0.73% GDP loss).
  • Latin America and the Caribbean: $36.3 billion (0.65% GDP loss).

The economic returns of nutrition investment

• Investing $1 annually in child stunting reduction efforts today can yield up to $81 for national economies (an 8000% return on investment).
• Companies operating in elementary occupations sector, such as mining, construction, and agriculture, would see the highest returns from investments in tackling stunting – between $46 and $95 returns per $1 invested.