HIV/AIDS has the potential to create cruel economic impacts in many countries. The economic effects of AIDS will be felt first by individuals and their families, then ripple outwards to firms and businesses and the macro-economy. It is typically different from most other diseases because it is infected people in the most productive age groups. The effects will vary according to the severity of the HIV/AIDS pandemic and the structure of the national economies.

Agriculture, fishing and livestock are the main business of the most poor or developing countries. Manpower is the main asset of these businesses. Agriculture is the largest sector in most economies accounting for a large portion of production and a majority of employment. By the way, the epidemic has impacted national economic growth in a number of countries e.g. Tanzania has experienced a 15 to 25 % fall in GDP as a result of the HIV/AIDS epidemic. This is due to a number of reasons. The epidemic condition takes up a large number of funds for the provision of basic health care and prevention services e.g. in Rwanda in 1995 an estimated 66% of public health expenditure was for HIV/AIDS patients.

HIV/AIDS may have a significant impact on some firms. HIV-related illnesses and deaths to employees affect a firm by both increasing expenditures and reducing revenues. Expenditures are increased for health care costs, burial fees and training and recruitment of replacement employees. Revenues may be decreased because of absenteeism due to illness or attendance at funerals and time spent on training. Labor turnover can lead to a less experienced labor force that is less productive. A survey of 16 firms in South Africa asked whether the company prevalence rate was known, and whether HIV/AIDS had created any problems for the company. Only four companies returned the survey forms. Specifically, neither a major retail company nor a publishing house had felt any impact of HIV/AIDS yet, while a major platinum mining company stated that four employees were dying of AIDS per month. A major industrial company based in KwaZulu-Natal recorded a 31% increase in the number of ill-health retirements between 1995 and 1997; of these retirements, 17% of them were due to AIDS.

A recent set of estimates by the Metropolitan Life Insurance Company in South Africa predicted that the impact of HIV/AIDS would double employee benefits costs by 2005, and triple by 2010. Either benefits would be reduced, or the remuneration costs paid by firms would increase by about 15%. Total indirect costs would add a further 10% to the wage bill by 2005, and 15% by 2010. The sources of the total indirect costs are shown in the chart.

According to AIDS researcher Mr. Mohammad Khairul Alam, "HIV/AIDS is a three dimensional disease. It spreads out by three major causes such as unconscious or unsafe sexuality, blood exchange(needle) /transfusion for patients, infected mother to child. HIV/AIDS through its direct impact on the human body it paralyses the physical condition, psychological morbidity and destroys social value. It also wipe out three things, such as it affects adults in their productive prime period, severely hampers economic growth of person, and hampers his family, at last by rotation; and, thus, it causes severe set backs to the nation's effects for progress. Everyone can protect it by avoiding risk behavioural sex (multi-partner sex, unsafe sex practice etc), by avoiding injectable drug (needle sharing is a burning cause of it), by avoiding getting blood without test."

National Consultant of Food and Agriculture Organization (FAO) Mr. Kh. Zahir Hossain said, “The economically vulnerable groups are the most affected with constrains on accessibility to information, treatment, and preventive masque. The disease is migrating from the high-risk groups to the weaker sections of the family - the women and children, and from urban areas to rural areas, thereby affecting the socio-economic fabric of the society. Partly for this reason, there is a growing recognition that many young people are sexually active and need sexuality education.”

The reality of impact of AIDS is difficult to assess. Most studies have found that estimates of the economic impacts are sensitive to assumptions about how AIDS affects savings and investment rates and whether AIDS affects the best-educated employees more than others. Few studies have been able to incorporate the impacts at the household and firm level in economic projections. Some studies have found that the impacts may be small, especially if there is a plentiful supply of excess labor and worker benefits are small.

Sources: UNAIDS, UNDP, CDC

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D. Henry McNally
HIV/AIDS Coordinator
Social Welfare Association for MSM (SWAM)
Lutherville, Maryland USA
E Mail : Henry_McNally@walla.com

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