The Economic Impact of AIDS in Africa

By Peter Wehrwein

At a crafts center in Bulawayo, Simbabwe, a woman takes a break from weaving on her loom. This and other craft centers teach women skills that they can use to develop an independent income. Photo by Lorien Abroms, her personal collection.

As the HIV epidemic deepens in Africa, it is leaving an economically devastated continent in its wake. More than one-quarter of working-age adults are infected with HIV in some communities in sub–Saharan Africa, a statistic that brings profound economic repercussions for families and communities. Families that must care for a member who is ill with AIDS often deplete monetary resources that would otherwise be used to cover basic necessities and to invest in children’s futures. And when AIDS claims the lives of people in their most productive years, grieving orphans and elderly must contend with the sudden loss of financial support, communities must bear the burden of caring for those left behind, and countries must draw on a diminishing pool of trained and talented workers.

Anita Alban, an economist for the United Nations Joint Programme on HIV/AIDS (UNAIDS), cites a study of urbanites in the nation of Côte d’Ivoire that showed that families with a member sick from AIDS cut spending on their children’s education in half and reduced food consumption by about 40 percent as they struggled to cover health expenditures that soared to four times their usual level.

According to studies in Côte d’Ivoire’s largest city, Abidjan, Uganda’s Rakai district, and Tanzania’s Ziwa Magharibi region, families cope with these losses largely with cash and in-kind transfers from other families, a support infrastructure that reflects the interdependence of African society. According to Alban, relatives take in many of the orphaned children, so the cost of their care is largely unregistered on government balance sheets. But urbanization and the intra- and intercountry migration of labor are eating away at extended family structures that have quietly shouldered childcare.

Even when orphans are cared for by relatives, they suffer disadvantages. Studies have shown that orphans do not eat as well as other children and are not given the same opportunities to go to school. As a remedy, some countries have moved to provide special welfare services for orphans. For example, families in Zimbabwe who take in an orphaned child are compensated for school fees and school uniforms, according to Alban. But with an adult infection rate of 26 percent and an estimated 600,000 orphans next year, she questions whether Zimbabwe will be able to afford this kind of special support.

The Cost of Care
The cost of antiretroviral therapy—$10,000-20,000 per year per person—keeps these drugs out of reach for most HIV-infected individuals in sub–Saharan Africa. This same amount of money would cover the annual health care expenditures for 200 people in Zimbabwe, where annual per capita spending on health is less than $100. A family in Africa might spend between $600 and $1,500 to care for a person living with AIDS, according to Daniel Tarantola, a senior policy advisor to World Health Organization Director-General Gro Harlem Brundtland. "Some of this cost is borne by national health systems, but most of it is borne by individuals and families as no effective health insurance scheme exists."

In some areas of Africa, caring for those with AIDS is overwhelming hospitals and their staffs. Alban reports that in Zimbabwe, about half of all hospital beds are filled with patients who have AIDS-related symptoms. The disease is also taking a serious toll on doctors and nurses. "The overall result," states Alban, "is a rise in the price of producing health care and an increased shortage of resources—beds, essential drugs, doctors, nurses, and laboratory staff."

Martha Ainsworth, who with Mead Over was the principal author of the World Bank’s 1997 book, Confronting AIDS, says AIDS is bound to have a huge impact on "very fragile health systems that can’t even provide aspirin to many patients."

Some have suggested that one cost-effective approach to shoring up these fragile systems might be to emphasize low-cost treatment and prevention of opportunistic diseases. However, any nationwide debates on the financing of treatment and prevention programs are contentious, even when the programs are quite promising. In South Africa, for example, the question of whether the government will pay for the zidovudine (ZDV) used to prevent mother-to-infant transmission has been fraught with controversy.

Alan Whiteside, head of the Health Economics and HIV/AIDS Research Division of the University of Natal in South Africa, notes the country’s high rates of breastfeeding and dangers of formula feeding because of the lack of sanitation and clean water. About providing ZDV, he says, "Economically, it makes sense. Morally, it makes sense. Practically, it may be extremely difficult."

Impact on National Economies
One of the paradoxes of the HIV epidemic in sub–Saharan Africa is that for most of this decade, it has not made a dent on standard macroeconomic yardsticks such as gross domestic product (GDP), a measure of the total value of goods and services produced by an economy over a period of time. Over argues that declines in population growth caused by AIDS would tend to offset any declines in economic growth caused by the epidemic. This is due in part to the labor situation in Africa: In the cold logic of supply and demand, the labor surplus in most African economies means that workers removed from the workforce by AIDS can be replaced without a loss of productivity.

Yet many experts, including Ainsworth, believe that the standard economic statistics like GDP per capita are the wrong way to measure the economic impact of AIDS in Africa. She says the impact of the epidemic needs to be seen in the larger context of human welfare. "Countries have lost ten to twenty years of life expectancy due to a single disease—an enormous setback in individual welfare, reversing years of investments in human capital. GDP per capita or GDP growth do not capture this dimension of welfare loss, especially the lost welfare to those
who die."

Moreover, as the epidemic has worsened, so have estimations of its effect on African economies, even without taking into ac-count the broader human welfare issues. David Bloom, a professor of economics and demography at the Harvard School of Public Health, had been one of the economists chronicling the epidemic’s relatively mild impact on macroeconomic indicators. Now, however, he warns, "The whole economy [in Africa] could unravel."

Besides, says Tarantola, the scope of the epidemic is now so large now that numbers are no longer necessary to make the argument for the epidemic’s economic consequences.

"For those who live and work in Africa," he says, "the impact on individual, family, and community economies is obvious. Sickness, death, and the loss of productive capacity in communities where as many as one-third of the women in their reproductive years are HIV infected hardly needs to be supported by data."

Already the epidemic’s burden on the health care system is increasingly obvious, although efforts to quantify the impact have lagged. Whiteside reports that up to 50 percent of the beds in South Africa’s large provincial hospitals are occupied by people with AIDS.

Bloom, who visited South Africa late last year confirms this grim statistic and predicts, "What is about to come is 10 times worse. You are going to see a tidal wave of AIDS cases in South Africa, and the health care system is going to be hit hard."

Because it is difficult to measure the macroeconomic impact of an epidemic directly, economists have generally depended on economic models, which are built on a set of assumptions. Naturally, different assumptions yield different numbers. In Confronting AIDS, the World Bank factored in labor supply issues and the amount to which health care would be financed out of savings to come up with a "rough estimate" of a 0.5 percent reduction in per capita GDP growth.

One half of 1 percent may not seem like much. Indeed, for countries with high growth rates like Botswana and Uganda, that kind of reduction "will not be crippling," says Over. But he notes that a lower growth rate has a cumulative effect. "A country whose growth rate is 2 percent a year in the absence of AIDS will increase its GNP [gross national product] per capita by 81 percent in one generation, which is about 30 years. Now suppose that AIDS reduces growth to just 1.5 percent per year. The same country will increase its GNP per capita by only 56 percent in the same period."

Yet Over echoes the belief that figures such as these are mere signposts on a larger landscape of human suffering and tragedy. "They fail to measure the grief of the survivors and totally disregard the loss of the dead and dying."

—Peter Wehrwein is editor of the Harvard Health Letter.