Funding for the RUTF supply chain in eastern Africa comes from several donor sources: bilateral aid agencies, UNICEF National Committees, multi-donor pooled funds (e.g., the Consolidated Emergency Relief Fund), and Thematic Funds. These funds are used to pay for program implementation, and to make payments to vendors (e.g., RUTF producers and freight forwarders) for goods and services.
Flexibility of Funding: In line with good donor practices, UNICEF encourages donors to give un-earmarked funds. Most of UNICEF’s donors have acknowledged the importance of providing timely and flexible funding, demonstrated by their signing on to the Good Humanitarian Donorship (GHD) principles and to the Paris Declaration. However, implementing these guiding principles can be very difficult for donors given the restrictions they face, either due to government regulations or through requirements imposed by contributors. For example, UNICEF reported receiving a substantial private donation in 2008 that was earmarked exclusively for the purchase of commodity goods. This donation purchased 600 MT of RUTF, but included no funds to support programmatic delivery.
Coordination among donors and partner organizations: A lack of consistent, integrated planning among all major donors and partner organizations limits UNICEF’s and its partners’ ability to execute programs efficiently. Implementing partners have the most pertinent information on the type and schedule of funding that would allow them to execute programs more efficiently and effectively, and give donors greater value for their contributions. Under the current system, these partners have little leverage to align donor funding practices with program needs. Their dependence on good relationships with donors encourages acceptance of donor terms that are not always conducive to successful operations. In the Horn of Africa, bilateral donors such as USAID and ECHO have regional representatives in Nairobi. These agents are usually in regular communication with UN organizations and NGOs, and some informal coordination occurs among bilateral agencies in the field. However, there is no official system for doing so, and no consolidated database that tracks which organization has funded which proposal, and at what level.
Increased input costs: Due to increases in input costs, RUTF prices could continue to remain stable despite increased in demand. Changes in component costs directly affect the landed cost of production. According to data from VALID and the Clinton Foundation in Malawi, RUTF ingredients account for 68% of the cost of RUTF production. Noteworthy is the fact that milk powder currently accounts for 42% of the ingredient cost and 29% of the total cost of RUTF. As the demand for milk products has grown globally, the price of milk has risen accordingly: between 2006 and 2008, milk prices in the United States rose by nearly 50%.Where RUTF is locally produced in Africa, milk powder and vitamin and mineral packets are generally sourced from overseas and imported. It is possible that individual producers in Africa may pay a higher price for these inputs if their production volume is not large enough to create economies of scale, significantly affecting the landed cost of the product. These inputs are also subject to import taxes (17-50%), exacerbating the problem. This could cause the cost of locally produced RUTF to increase disproportionately to that of other large global producers.