takes an economic and social toll
on households and economic growth most severe in Southern
Recovery, Vol.15# 1-2 (June 2001), page 19
By Belinda Beresford in Johannesburg
In Southern Africa, as elsewhere in the continent, the AIDS
epidemic is not just a health crisis. It is also "a major
threat to development and to human society," as Executive
Director Peter Piot of the Joint United Nations Programme on
AIDS (UNAIDS) put it at a conference in Nairobi in April.
While wreaking havoc on the present generation, the disease
jeopardizes the future as well, undermining African economies
and societies in ways that often are not immediately apparent.
Taking a narrow economic approach, however, some have
argued that AIDS is unlikely to inflict severe damage on
national economies because those infected are, in their great
majority, the poor and unskilled, who contribute little in
pure economic terms. This view ignores not only the human
dimension, but also the broader social and economic aspects of
development. It likewise ignores the existing evidence of the
many insidious ways in which AIDS already is harming key
sectors in those countries most seriously affected by the
Harvard University economist Jeffrey Sachs ( see box below)
pointed out at an international AIDS conference in South
Africa last year that HIV/AIDS damages society just as it does
the human body: it begins by killing those parts responsible
for building society, the women and breadwinners who sustain
and safeguard the community as a whole. Ultimately, AIDS
undercuts economic growth and harms development, but its
impact is felt first at the "cellular" level, among
Of all parts of Africa, the Southern African region has the
highest infection rates (see map).
Africa and Botswana, 15-year-olds currently have a one-in-two
chance of dying of HIV/AIDS. The US Census Bureau last year
forecast that Botswana, Zimbabwe and South Africa would
experience negative population growth as a result of HIV.
Slowly won development gains, such as life expectancy,
education and literacy, are being eroded. In Botswana, it has
been forecast that HIV will cut in half life expectancy at
South Africa, once seen as the economic powerhouse for the
region, is thought to have the greatest number of infections
in the world -- an estimated one in nine of the population has
HIV. The spread of the virus is not expected to peak for
another five years, when the estimated number of infected
people may rise from 5.2 million to 8.2 million, or nearly 17
per cent of the total population. Such projections, of course,
do not take into account new medical breakthroughs or changes
in people's behaviours, which could impede the disease's
Families hit hard
Among households, the direct costs of HIV/AIDS can be
measured in the lost income of those who die or who lose their
jobs because of their illness. Household savings fall,
consumption on items other than health and funerals declines
and expenditure patterns are distorted as families struggle to
cope with the demands of the sick and dying.
Mr. Robert Greener of the Botswana Institute of Policy
Analysis told Africa Recovery that while government
revenue from its diamond industry has been relatively
unaffected by the AIDS crisis, that of households has been hit
hard. Overall poverty rates will not necessarily get worse,
"but the rate of improvement will not be what it was. We
found that HIV will have a major effect on how [people] can
invest in their own future." He estimates that between 17
and 25 per cent of households will lose an income earner in
the next 10 years, with total income falling by 15 per cent in
the poorest homes. A government AIDS-impact study estimated
that overall household per capita income will fall by 8 per
cent, and as much as 13 per cent for the poorest quarter.
Households which otherwise might have remained above the
poverty line are pushed below it. This in turn can feed the
epidemic. As the UN programme, UNAIDS, has pointed out, at
least two of the behavioural responses to poverty can
exacerbate the epidemic: migration in search of work and
employment in the sex trade. When people are mired in poverty,
"taking care to avoid HIV/AIDS may seem a less
immediate concern for many people than simple survival."
Combating poverty, in turn, can help make people less
vulnerable to AIDS. A study in Bushbuckridge, South Africa,
found that providing micro-loans to groups of women gave the
women some financial autonomy, enabling them to better
negotiate safer sex.
On a wider scale and over time, the erosion of household
incomes and opportunities can damage the fibre of entire
communities and societies. Extended family networks, which can
cope with the normal traumas of life in poor countries, often
begin to fray when multiple orphans are dumped on them and
when the breadwinners can no longer support themselves, let
alone anyone else. The transfer of knowledge across
generations is lost, and socialization is reduced.
Health facilities under strain
Not only do overall household incomes fall, but also what
money remains tends to be diverted to meet the needs of the
sick. Family expenditure on healthcare rises, eventually
consuming savings and other resources in an attempt to keep
death at bay, and to pay for funerals when the battle is lost.
On a grander scale, countries' health systems themselves
become overburdened. Already understaffed and underfunded,
Africa's health infrastructure is struggling to cope with the
enormous demands placed on it. Public health facilities in
particular come under strain, as many private clinics and
doctors choose not to offer treatment for HIV/AIDS. The lack
of supplies can put healthcare workers at risk of becoming
AIDS distorts health-spending priorities. According to
UNAIDS, up to 80 per cent of hospital beds in Zambia and
Zimbabwe (as well as Côte d'Ivoire) are occupied by
HIV-positive patients. For governments, the epidemic poses a
number of dilemmas: to spend limited resources on trying to
prevent further infections, helping those already infected, or
combating other serious health problems, such as tuberculosis,
malaria and cholera.
Many poor households affected by AIDS may not be able to
afford to send their children to school. Even in countries
where schooling is free, there are other costs such as
uniforms and books. Specifically to address this problem, the
World Food Programme has proposed that "take-home
rations" should be added to school feeding projects to
give families an incentive to send their children to school.
Such a programme could particularly help female children,
since cultural conditioning means that girls are more likely
to be kept out of school to become caregivers. Where HIV
infection rates are lower, school attendance, especially of
girls, tends to be higher.
Moreover, children may be the only able-bodied members of a
household if the adults are sick -- or dead -- and are likely
to concentrate more on survival and raising their siblings
than on education. Studies in Zimbabwe have found that of the
AIDS orphans on commercial farms, not one was attending
secondary school and almost half the primary school pupils had
dropped out by the time their parents had died. According to
estimates, more than 7 per cent of Zambia's 1.9 million
households are now headed by children aged 14 or less.
In some cases, students also may be subject to
disproportionately high infection rates. At one South African
university, it has been estimated that two-thirds of students
will be HIV-positive by the time they graduate. As such
students and pupils die, not only do Africa's economies lose
potential skilled workers, but the governments' educational
investment in them also is wasted. Similarly, families'
expenditures on their schooling have been in vain, and they
lose not just a loved one, but a possible source of future
Infection rates among teachers also are high. According to
South African economists Peter Badcock-Walters and Alan
Whiteside, in 1998 the mortality rate among educators was 39
per 1,000, or 70 per cent higher than in the 15-49 year age
segment of the population. In Zambia, during the first ten
months of last year, 1,300 teachers died of AIDS -- two-thirds
of the annual number of newly qualified teachers.
In many different ways, the devastation of AIDS among
individuals and families ultimately affects a country's
overall economic performance. The loss of experienced workers
and skilled professionals saps production in key sectors. More
insidiously, AIDS can erode the people's morale, weakening
their confidence in the future, further harming productivity
and undermining their willingness to save and invest.
Foreign investors also are becoming increasingly concerned
about the implications of the HIV/AIDS epidemic, at a time
when Africa is seeking to attract more international
investment. For foreign investors, notes Mr. Gordon Smith,
chief economist of Deutsche Bank in South Africa,
"uncertainty means sell rather than hold," much less
invest more money.
According to some estimates, annual per capita economic
growth in Africa is 0.7 per cent less because of the
cumulative impact of AIDS. Such estimates are seriously
unreliable, however. There is a paucity of accurate data both
on AIDS itself -- precisely who is infected, in which economic
sectors -- and on how the illness actually affects different
economic activities. Nor can the impact of AIDS be easily
separated from other factors. "AIDS is part of a whole.
It will have a macroeconomic impact," admitted Mr.
Whiteside, the South African economist. "But you cannot
disimpact AIDS from labour legislation, for example."
Nevertheless, numerous studies agree that AIDS can
seriously slow down economic growth, to varying degrees.
UNAIDS has estimated that when HIV prevalence rates rise to
more than 20 per cent, gross domestic product (GDP) in those
countries can be lowered by as much as 2 per cent a year. In
South Africa, the investment bank ING Barings has projected
that HIV/AIDS could drag down GDP by 0.3-0.4 per cent a year.
Another study has indicated that by the end of the decade,
AIDS could have knocked South Africa's GDP by 17 per cent, or
The UN Development Programme (UNDP), in its Botswana Human
Development reports, cites government studies that HIV/AIDS
will result in GDP being between 24 per cent and 38 per cent
lower by 2021. Mr. Greener says that 2 per cent of the
workforce in that country is showing clinical signs of AIDS.
He predicts that over 25 years, GDP could be 40 per cent lower
than without HIV/AIDS. "There will be an increased cost
of skills," he says. "There is a need to put in
place practices to maintain productivity and prevent a
Africa: labour force
losses due to HIV/AIDS (%)
Source: UN Africa Recovery
from ILO and UN Population Division data.
Farm output erodes
The agricultural sector is one of the hardest hit in
sub-Saharan Africa, where it is often the largest contributor
to the economy. As people sicken, the areas they cultivate may
shrink, and yields decline as physical weakness reduces
farmers' effectiveness. Food security is jeopardized, as
labour, time and money is diverted to deal with the illness.
Agricultural households may revert to subsistence rather than
cash crop farming, and the quality and quantity of food may
In Malawi, death rates among employees of the Ministry of
Agriculture and Irrigation have doubled, almost all because of
HIV/AIDS. In Namibia, studies indicate that agricultural
extension workers spend a tenth of their time attending
"The effect of AIDS on food production is both
immediate and long-term," Dr. Piot of UNAIDS has pointed
out. This has been confirmed concretely by a study from
Zimbabwe, which looked at the impact of an adult death on the
household's ability to produce different foods. It estimated
reductions of 61 per cent for maize, 49 per cent for
vegetables and 37 per cent for groundnuts (see
graph). But AIDS also hits long-term agricultural
capacity. Livestock is often sold to pay funeral expenses, and
orphaned children often lack the skills to farm or look after
livestock in their care.
High infection among miners
The mining industry is notorious for its high rates of HIV
infection, particularly where there are single-sex hostels and
attendant male-to-male sexuality and commercial sex. Migrant
labour adds to the problem, with workers carrying infection to
and from their employment on trips home, including in other
countries. Areas of Lesotho are now being devastated by HIV as
sick workers return from South African mines, a situation
exacerbated by the economic reliance of the small country on
Although there have been anecdotal reports of infection
rates as high as 60 per cent, some mining companies say this
is exaggerated and claim rates among their employees are close
to the national average. The mining companies in South Africa
are regarded as being at the forefront of businesses taking
action on HIV/AIDS.
In Botswana, the highly mechanized diamond sector, which
uses a smaller and more stable workforce, is likely to be
relatively unaffected by HIV, unlike the gold mines in
neighbouring South Africa. Few families realize direct
earnings from diamonds and most of the revenue from the sector
goes to the government. It therefore filters into the rest of
the economy only through government expenditure. Thus, to an
even greater extent than in many other countries, GDP, in per
capita terms, does not reflect personal incomes.
"Government is shielded, but people are not,"
observes Mr. Greener. "So that impact falls on the
Companies bear the costs ...
According to a Deutsche Bank study, while the HIV infection
rate among unskilled and semi-skilled workers in South Africa
is expected to peak at just under 33 per cent by 2005, for
highly skilled workers it is expected to be around 13 per
cent. Nevertheless, such skills are scarce, and the impact of
AIDS will be disproportionate. One study found that highly
skilled workers are on average about three times as productive
as unskilled workers, and productivity losses could account
for about 54 per cent of total economic costs.
Employers will face other costs as well, for example
through increased medical claims and insurance payouts. South
Africa's Metropolitan Life insurance company has calculated
that by the end of this decade payroll expenses could be 30
per cent higher as a result of HIV/AIDS related costs,
including pension and sick leave payouts. Absenteeism rises as
employees take time to nurse the sick or attend funerals.
"There will be a decline in workers' morale as they
become gripped with fear and uncertainty as they see people
around them dying," said Ms. Tsetsele Fantan, head of the
HIV/AIDS programme at the Botswana diamond company Debswana.
"There will be accidents as they start to lose
concentration. Management resources will be eaten away by
Skills shortages have been a perennial problem for
businesses in Africa, a situation that HIV is making worse as
more skilled workers die. Difficult or expensive to replace,
the result can be a vicious circle as public and private
infrastructure starts to decay. There have been reports of
power failures in Zambia because there were not enough
engineers to maintain the facilities. As HIV takes its toll,
financial resources for training are being spread to cover
more people, to ensure that enough will be available.
Anecdotal reports suggest that some companies train several
workers for every one they need -- they assume natural
attrition in the form of HIV will remove the extra hires.
... and take AIDS prevention seriously
Many large companies began planning responses to HIV/AIDS
years ago, including researching the likely impact on their
workforce. Although there are sometimes legal concerns about
employee testing, companies often do surveillance studies
using saliva samples as part of other health checks. The South
African mining firm Anglogold, for example, conducts anonymous
tests on its miners, with their consent, during their checkups
for tuberculosis. According to a manager at South African
Breweries, 40 per cent of the company's workforce in KwaZulu
Natal is HIV positive.
By planning ahead, the private sector has been able to
shield itself to an extent. Some companies have sought to
divest themselves of risk by outsourcing activities such as
long distance transport, where workers tend to have high rates
of HIV. One study by the Medical Research Council of South
Africa found that approximately 90 per cent of truck drivers
at one particular rest stop were HIV positive.
Some companies have concluded that the costs of introducing
prevention and treatment measures could be lower than not
The Anglo-American Corporation is just one organization
looking at providing anti-retroviral drugs to its infected
workers, especially if drug prices continue to fall. In
Botswana, Debswana has announced plans to provide
anti-retroviral therapy to each HIV-positive employee and one
dependent, a move that is also being considered by one of its
parent companies, De Beers.
Many firms have introduced AIDS awareness programmes, in
conjunction with health checkups and free treatment of
sexually transmitted diseases (STDs). Anglogold's research
centre, Aurum, calculated that the company was saving money by
treating STDs, in that it contributed to lower infection
The South African power parastatal, Eskom, has been running
HIV/AIDS programmes to educate staff and help those infected
to remain healthy. The company, which employs approximately
32,000 people, claims to have infection rates
"substantially less" than the national rate. Mr.
Baningi Mkhize, the occupational medical services manager,
says the company was inundated with employees wanting to take
advantage of a voluntary counselling and testing programme.
Staff who develop full-blown AIDS can join Aid for AIDS, a
managed care programme that concentrates on the disease. Eskom
itself earmarks R125 ($17) per employee for its HIV/AIDS
programme, projecting to spend R150 per person the next
In their efforts, employers are increasingly being helped
-- and prodded -- by their trade unions. The Congress of South
African Trade Unions, the largest union federation in the
country, is planning to launch a campaign to get employers to
pay for anti-retroviral drugs for infected workers.
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