The Economic Impact of HIV/AIDS in Southern Africa

Since the first cases of HIV/AIDS were reported twenty years ago, nearly 58 million people have been infected and 22 million have died. Consensus in the international community has grown over the past two years that HIV/AIDS poses a threat to development, security, and economic growth. A few studies over the last ten years have looked at the impact on workers and their employers. With momentum building to prevent new infections and treat those already afflicted, more information is needed to assess economic impacts and cost efficacy of treatments.

On June 28, 2001, the Brookings Institution, the Council on Foreign Relations, and the U.S. Agency for International Development (USAID) sponsored a conference on measuring the costs of HIV/AIDS and organizing responses to it. The conference brought together researchers, business people, and policymakers to discuss economic impacts, prevention costs, education, and treatment. This report is a summary of the findings presented at the conference.

AIDS and Business in Southern Africa

At the conference, Professor Alan Whiteside of the University of Natal gave an overview of the AIDS epidemic, which is currently centered in sub-Saharan Africa. The African epidemic is not homogenous; Southern Africa has the worst epidemic, and HIV prevalence there continues to rise. In Uganda, prevalence has fallen, while in other countries it has stabilized or is rising more slowly. The scale of the epidemic in Southern Africa is particularly worrying given that this is the most developed part of Africa and it was hoped Southern Africa would be the continental powerhouse for economic development.

In 1999, sub-Saharan Africa’s GDP was $324 billion. Of this total, South Africa produced $131.1 billion, over one third. The average sub-Saharan African per capita annual income is $490 while in Botswana it is $3,246, South Africa $3,170, Namibia $1,890 and Swaziland $1,350. It may be that this relative wealth—combined with the gross inequality of incomes within these countries, which is not reflected in the composite figures—have played a role in the development of the epidemic.

HIV prevalence levels are a harbinger of the AIDS epidemic, with sickness and death due to AIDS following the HIV infection curve by several years (figure 1). HIV prevalence can, therefore, be used to project the number of future illnesses, deaths, and orphans, but cannot predict what the affects of increased morbidity and mortality will be for business and national economies in the medium and long term. At best, one can measure current impact in the knowledge that it will get worse.