Global Policy Forum

By Peter Wehrwein

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 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 Program on HIV/AIDS (UNAIDS), cites a study of urbanites in Cote d'Ivoire that showed 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 Cote 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 orphan children, so the cost of their care is largely unregistered on government balance sheets. But urbanization and migration of labor are eating away at extended family structures that have quietly shouldered childcare. Orphans suffer disadvantages even when relatives care for them. 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. Families in Zimbabwe who take in an orphaned child, for example, are compensated for school fees and school uniforms, according to Alban. But she questions whether Zimbabwe, with an adult infection rate of 26 percent and an estimated 600,000 orphans next year, will be able to afford this kind of special support.

Economic yardsticks inadequate

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. Mead Over, who with Martha Ainsworth was the principal author of the World Bank's 1997 book, "Confronting AIDS," 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 standard economic statistics such as GDP per capita are the wrong way to measure the economic impact of AIDS in Africa. She said the impact of the epidemic needs to be seen in the larger context of human welfare. "Countries have lost 10 to 20 years of life expectancy due to a single disease -- an enormous setback in individual welfare, reversing years of investments in human capital," Ainsworth says. "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 account the broader human welfare issues.

The impact is obvious

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 Daniel Tarantola, a senior policy adviser to World Health Organization Director-General Gro Harlem Brundtland, 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," Tarantola 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. Alan Whiteside, head of the Health Economics and HIV/AIDS Research Division of the University of Natal in South Africa, reports that up to 50 percent of the beds in South Africa's large provincial hospitals are occupied by people with AIDS. "What is about to come is 10 times worse," said Bloom, who visited South African late last year. "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."

A cumulative effect

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 such as Botswana and Uganda, that kind of reduction "will not be crippling," says Mead 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," Over says. "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."

The author, Peter Wehrwein, is editor of the Harvard Health Letter. This article is excerpted from the Harvard AIDS Review Fall 1999/Winter 2000.

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C íŸ 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.