Olivier Cadot - Professeurs et Recherche — HEC Lausanne

Journal of International Development
J. Int. Dev. 13, 381±389 (2001)
DOI: 10.1002/jid.801
HIV/AIDS AND DEVELOPMENT
IN AFRICA
SIMON DIXON1, SCOTT McDONALD2* and JENNIFER ROBERTS1
1
Shef®eld Health Economics Group, University of Shef®eld, UK
2
Department of Economics, University of Shef®eld, UK
1
INTRODUCTION
There were 3 million AIDS deaths in 1999 (UNAIDS, 2000), making HIV/AIDS the
world's fourth biggest cause of death, after heart disease, strokes and acute lower
respiratory infections. Over 70 per cent of the global total of 36.1 million people with
HIV/AIDS live in Africa (see Table 1), and within Africa the incidence of HIV/AIDS
cases is concentrated in sub-Saharan Africa, and especially those countries that form the
so called `AIDS-belt' (see Figure 1). The worst affected countries in the world are found
within this belt. In Botswana 35.8 per cent of the adult population are infected with HIV/
AIDS, in Zimbabwe this ®gure is 25.1 per cent, while South Africa, with a prevalence rate
of 19.9 per cent has the largest number of persons living with HIV/AIDS (4.2 million)
(UNAIDS, 2000).
Whilst it is recognized that the rate of new infections in sub-Saharan Africa may be
slowing down, and in fact fell from 4.0 million people in 1999 to 3.8 million in 2000, there
is little cause for optimism. The sheer size of the disease pool, together with the disease's
long incubation period, mean that HIV/AIDS will continue to have a major effect on the
African people for decades to come. There is also the possibility that the disease may
spread to some of the Western African countries that have so far been spared from the
worst of the epidemic. If the epidemic starts to spread exponentially in these countries, as
has happened throughout the AIDS-belt, the number of AIDS cases in Africa is likely to
restart its upward climb. There must also be concern about the potential for the disease
catching hold in Asia. While the prevalence rate in South and South-East Asia is only
about 0.6 per cent, the absolute numbers of persons living with HIV/AIDS is large (5.6
million), and India with a prevalence rate of only 0.7 per cent is the country with the
second largest number of victims (3.7 million).
Although most of the headlines have been concerned with the health care implications
and epidemiology of the disease, as demonstrated by the stark ®gures given above, there is
a growing appreciation of the long-term impact of the epidemic on the social and
Correspondence to: Dr. S. McDonald, Department of Economics, University of Shef®eld, 9 Mappin Street,
Shef®eld, Tel: 0114 2223407. E-mail: smcdonald@shef®eld.ac.uk
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S. Dixon et al.
Table 1. Regional HIV/AIDS statistics, end of 2000
Sub-Saharan Africa
North Africa and Middle East
Rest of the world
Total
Adults and Children
living with
HIV/AIDS
Adults and children
newly infected with
HIV
Adults
prevalence
25.3 million
400,000
10.4 million
36.1 million
3.8 million
80,000
1.4 million
5.3 million
8.8%
0.2%
0.4%
1.1%
Source: UNAIDS, 2000.
economic development of African countries. This issue is of fundamental importance to
African economies as it is at the heart of determining the standard of living for their entire
populations, not just those af¯icted by HIV/AIDS, and a crucial determinant of the ability
of countries to support HIV/AIDS victims. Knowledge of the economic consequences is
also necessary in order to understand the future development and well-being of these
countries as they suffer the human and economic cost of the epidemic.
Many case studies highlight the far-reaching impacts of the epidemic on African economies. A study in Zambia revealed that the annual average medical costs per employee for a
sample of six ®rms increased more than three fold between 1993 and 1997 due to AIDS
(UNAIDS, 2000). The cost to industry and agriculture is even higher when absenteeism due
to AIDS related matters, such as caring for sick family members and funeral duties, is taken
into account. In one study of an agricultural village in Tanzania it was found that if the
household contained an AIDS patient 29 per cent of household labour supply was spent on
AIDS-related matters (Tibaijuka, 1997). As well as the increased costs of production and
reduced labour productivity illustrated by these two examples, the public sector labour
market is also directly affected, limiting a country's ability to tackle the epidemic. In many
countries, government and health service posts remain un®lled; Swaziland estimates that
over the next 17 years, it will have to train more than twice the normal number of teachers in
order to maintain current service levels (UNAIDS, 2000).
While these studies illustrate the economic impact of HIV/AIDS, they do not form a
coherent body of information that allows us to estimate the overall impact of the epidemic
on the development of African economies, nor do they allow us to predict what future
impacts lie in wait. The relative neglect of the epidemic until the last few years of the 20th
century mean that knowledge about the multiple impacts of the epidemic are largely
unknown and at best poorly understood. The selection of papers collected together here
represent a small contribution to extending knowledge about the epidemic.
The rest of this introduction is organized as follows. The next section comments brie¯y
on the evidence about the prevalence of the virus. The third section provides a brief
commentary on the possible impacts of the epidemic on economic development, which is
followed by a section on policy choices and responses, before ending with some
concluding comments. Throughout this introduction the discussion is related to the
contents of the seven papers that make up this volume.
2
PREVALENCE
A poor understanding of the epidemic in sub-Saharan Africa up to the mid-1990s, led to
prevalence estimates typically one seventh to one ®fth of those now produced by
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J. Int. Dev. 13, 381±389 (2001)
HIV/AIDS and Development in Africa
383
Figure 1. HIV Prevalence in Africa (percentage of adults (15±49) infected end of 1999)
UNAIDS. Since many attempts to assess the likely impact of HIV on development depend
critically upon the estimated prevalence of the epidemic to parametize estimates of the
implications for economic performance, health care expenditures, replacement rates for
school teachers, etc., it is readily apparent that a quantitative understanding of the
epidemic is essential. For instance despite the very large number of premature deaths
from AIDS in recent years, it is only recently that estimates of life expectancy have begun
to decline. For some countries in the AIDS-belt estimates are suggesting that life
expectancy is now less than 40 years (US Bureau of Census, 1998).
The ®rst paper in this collection, by Garnett, Grassley and Gregson, describes the key
features of the HIV/AIDS epidemic that make it a particularly dif®cult challenge. They
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S. Dixon et al.
draw attention to the long incubation period of the disease, which produces complacency
in the behaviour of individuals and governments alike. Planning is made even more
dif®cult by problems associated with monitoring and predicting disease prevalence. Taken
together with other factors a situation has been created where HIV/AIDS is having a
major impact on development through increased mortality and poverty, together with
reduced economic productivity. Nevertheless Garnett et al., can highlight examples of
success and hope; national programmes in Uganda and Thailand have helped reduce the
prevalence of HIV/AIDS, while biomedical innovations hold out the hope for new
treatments and vaccines. With an understanding of the key features described in this
paper, the reader will have a fuller appreciation and understanding of the complexity of
HIV/AIDS epidemic and the importance of the topics covered in the subsequent papers in
this volume.
3
HIV/AIDS AND ECONOMIC PERFORMANCE
While it is tempting to regard economic growth and development as synonymous, it is
obviously a gross simpli®cation. Nevertheless economic performance, and particularly
growth, does provide a useful, if crude, starting point for the assessment of development
and the impact of HIV/AIDS on development. Much of the empirical work has used
calibrated neo-classical growth models, wherein it is hypothesized that growth is primarily
determined by the growth of the workforce, the productivity of the workforce and
investment in future production. Early studies, e.g., Over (1992) for 10 African countries
with the most advanced epidemics and Cuddington and Hancock (1994) for Malawi,
concluded that the epidemic would have an appreciable impact on economic performance.
A conclusion that similar recent studies, e.g., BIDPA (2000) for Botswana, endorse.
However, the resultant estimates are highly sensitive to the parameterisation of the model.
Estimates by the IMF (reported by Haacker, 2001) suggest that in the long run, i.e. by
2050, GDP per capita might increase by 10 per cent or more in the worst affected countries
of Africa, but that capital out¯ows would reverse this conclusion so that GDP per capita
would decline marginally. But there has been little in the way of econometric analyses of
the epidemic.
The second paper in this volume, by Dixon, McDonald and Roberts, reports an
assessment of the macroeconomic consequences of the HIV/AIDS epidemic in the context
of a neo-classical model of economic growth. The motivation is that while the human and
social costs of HIV/AIDS in Africa are devastating, any deterioration in economic
performance is likely to compound those costs and render countries less able to cope
with the epidemic. Using data from 41 African countries for the period 1960 to 1998,
Dixon et al., estimate an augmented Solow model in which the growth of income per head
is partly determined by health capital, where health capital, in turn, is partly determined by
the prevalence of HIV/AIDS. The main ®nding is that HIV/AIDS prevalence has a
pronounced impact on life expectancies, which suggests that the epidemic may now be
entering the stage where the loss of life is starting to impact appreciably upon social and
economic interactions. These results challenge those reported by Bloom and Mahal
(1997), who estimated that the impact of AIDS across a world-wide sample of 51 countries
showed a minimal impact on GDP per capita. Further sub-sample analyses indicate that for
African countries where the prevalence of HIV is relatively low, the impact of the
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HIV/AIDS and Development in Africa
385
epidemic conforms to `normal' economic expectations. However, when the prevalence of
the epidemic is relatively high the macroeconomic impact of the epidemic is unclear.
Growth models typically use aggregated data and thereby mask important information
about the demographic and sectoral impacts of the epidemic. In particular the AIDS
epidemic impacts disproportionately on young adults, thereby undermining the bene®ts of
investment in education and training. The models also assume (implicitly) that all types of
labour are perfect substitutes within the time period considered by the analyses, which
may be true in the long run but within the time frame that policy makers must operate
economies are characterised by imperfect substitutability. Consequently, reductions in
labour productivity will differ between skill groups, and ®rms struggling to train
replacement staff might heighten the impact of the epidemic. Especially if those sectors
most affected are important to the economy, e.g., mineworkers in South Africa. Just as the
differential impact of the epidemic on skills may vary across different sectors in the
economy, differential effects between sectors can also impact differentially on the
economy as a whole. Reductions in labour supply and productive ef®ciency will reduce
both output and competitiveness. If labour shortages become particularly severe in critical
sectors the macroeconomic effects are likely to be ampli®ed. Kambou et al. (1992) used a
general equilibrium model to assess the impact of these concerns in the context of
Cameroon. The results indicated that reductions in the availability of skilled labour are
likely to have particularly severe impacts on economic performance.
The third paper, by Arndt and Lewis, reports results from a dynamic general equilibrium
model for South Africa that assesses the implications of the epidemic for macroeconomic,
sectoral and unemployment effects. This type of model places a premium on information
about the economic implications of the epidemic; among the (peculiar) bene®ts to come
from this study are a realization of how little is really known about the epidemic. The
analyses indicate labor demand will be depressed by the decline in the overall growth rate,
a reduction in investment demand that will particularly reduce the demand for unskilled
and semi-skilled workers, and that the AIDS induced morbidity effects will further depress
demand for unskilled and semi-skilled workers. Rapid economic growth, especially in
sectors that use skilled and semi-skilled labour intensively, which if combined with real
wage moderation and/or cuts, should ameliorate some of the impact. This study reports
negative impacts from the epidemic that are greater than those commonly produced by
growth models, and moreover does so using a method that typically reports smaller effects
than a priori reasoning might suggest.
4
PRIORITIES AND DIFFICULT CHOICES
Economic models may be useful in assessing the impact of the AIDS epidemic, but they
cannot, by themselves point to the policies that will minimize the reductions in economic
growth and standard of living. The choice of policies is agonisingly dif®cult given the
delicate state of many African economies. Treatment of HIV/AIDS is extremely expensive
relative to other priorities, for example, the cost of one year's supply of AZT for one
person in the US was over 1,000 times the annual per capita health care budget of Uganda
in 1987. These treatment costs, which are based on dollar pricing, will move further out of
reach if the weakening economies of the developing countries experience currency
devaluation.
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More generally, any attempt at a comprehensive prevention and treatment programme
requires resources that most developing countries simply do not have. Comprehensive
HIV prevention schemes require media campaigns, prostitute and school education, social
marketing of condoms, blood safety and needle exchanges. Broomberg et al. (1996)
estimated that provision of such schemes would require over US$2 billion annually for all
developing countries, with annual per capita costs equivalent to US$0.72 for selected
African countries. These estimates are based on limited data sources, and represent early
estimates of the scale and cost of prevention strategies. However, even these estimates are
far beyond actual expenditure; Tanzania and Uganda, for instance, currently spend less
that 10 per cent of that required for the prevention package examined by Broomberg,
implying that switching substantial funds toward HIV prevention is necessary.
Information on the cost-effectiveness of different interventions are required so that the
impact of prevention and treatment programmes can be maximised. Ainsworth and Teokul
(2000) identify the piecemeal development of HIV programmes as a weakness in many
countries. They criticize well-intentioned approaches that spread resources across dozens
of different activities rather than focusing on providing a small set of the most costeffective studies on a national scale. The treatment of mother-to-child transmission, for
example, is cited as a political rather than economic priority that may ` . . . have important
bene®ts but virtually no effect on the course of an epidemic fuelled by sexual transmission' (Ainsworth and Teokul, 2000, p.56).
Another politically expedient issue, which has served to divert attention away from the
essential task of assessing the most cost-effective government responses, is the row
surrounding the pricing of anti-retroviral therapy for patients with HIV/AIDS. There is
growing public outrage concerning the pharmaceutical companies' policy toward the
pricing of these therapies, which remain beyond the means of all African health systems.
However, even if drug prices are slashed following the collapse in April 2001 of the case
by the Pharmaceutical Manufacturers' Association of South Africa and 39 international
drug makers against the government of South Africa, the use of these therapies will not
necessarily be the most cost-effective approach to combating the epidemic. This is
because the effective use of anti-retroviral therapies needs a well-developed and wellresourced medical infrastructure to facilitate the monitoring of the therapy. Without
careful monitoring and high patient compliance, anti-retroviral therapy is not particularly
effective and may even encourage the development of newer and more virulent strains of
HIV. Consequently, the issue of drug pricing should not detract from ongoing research into
the cost-effectiveness of other interventions.
The remaining papers in this volume address some of the myriad of issues that are raised
by the need to respond to the epidemic. The paper by Kumaranayake and Watts starts the
process by considering the broad range of interventions that can be used to both prevent
and treat HIV/AIDS in sub-Saharan Africa. Given the endemic nature of the epidemic
there has been both a reallocation of resources towards HIV/AIDS and wide scale efforts
at mobilizing additional resources. However, despite these efforts, priority setting among
the various interventions remains a central issue, with broad debates about how resources
should be allocated, and particular concerns about treatment and the availability of drugs.
A fundamental problem in priority setting is the extremely limited evidence-base available
to guide policy makers. The authors' stress that debates on priorities must consider
the feasibility of alternative delivery mechanisms in different settings, and highlight the
importance of investing in infrastructure and capacity to increase the scale of activity. In
addition the mix of interventions will need to change over the course of the epidemic, with
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387
priorities for interventions shifting between population sub-groups, and from more
targeted to broader population-focused interventions, as the patterns of HIV incidence
change over time.
For many people one of the great sources of hope for development is education. But
there is mounting evidence that maintaining the number of teachers will be increasingly
dif®cult. Estimates by the IMF, reported by Haacker (2001), suggest that HIV/AIDS will
appreciably increase the proportion school leavers that will need to be recruited into
teaching if the current student±teacher ratios are to be maintained. But education is not
only important for social and economic development; it may also be important to
controlling the spread of the disease. The paper by Gregson, Waddell and Chandiwana
reports a thorough review and investigation of the impact of school education on HIV
prevalence. Many commentators have identi®ed a positive relationship between adult
literacy and adult HIV prevalence and have discussed the implications of this for disease
control. Gregson et al., replicate these simplistic analyses, but look deeper by analysing
how this relationship varies between sub-groups of African countries. They forward the
hypothesis that in the early stages of an epidemic, the spread of HIV is fastest in the bettereducated populations, due to their riskier behaviours, but once the epidemic has grown,
and its presence is known to individuals, the better educated populations change their
behaviour faster. This hypothesis is supported by a unique review and synthesis of the
results of all the available longitudinal studies from Africa. The paper offers an insight into
the complex social dynamics of HIV transmission, and is an important contribution to the
speci®c topic of school education and HIV control.
Undoubtedly government policies in Africa will need to change; but decision makers
require information to guide the policy making process. Haddad and Gillespie address this
issue in the context of policies relating to food security, nutrition, agriculture and the
environment and how policies might be formulation to better meet the needs of the poor.
They explore the linkages between poverty, nutritional status and the development of the
disease with respect to the implications for the welfare of the poor, especially the large
majority of people who live in poverty, who are resident in rural areas and who are
dependent upon agriculture and natural resources to sustain their livelihoods. Their
analysis emphasises policy choices that can mitigate the worst impact of the epidemic.
In so doing the authors echo the arguments of Bonnel (2000), who argued the need for
policies aimed at reducing income inequality, gender inequality and ethnic divisions. They
conclude that there is greater need for community involvement and ownership of
programmes; that existing rural and agricultural institutions should be used to disseminate
information and services; that nutritional support, with two-stage targeting, has the
potential to postpone the onset of full blown AIDS and prolong life; and that the multitude
of information gaps are constraining effective mitigation policies. A recurrent theme of
Haddad and Gillespie's paper is the shortage of `hard evidence' and how this inhibits the
policy making process.
Finally, Lamboray and Skevington address the issue of community involvement and the
development of `AIDS competent' societies, by drawing upon the work of the World
Health Organization's Quality of Life Assessment group. They stress the importance of
empowering individuals and communities as a means of reducing the spread of the
infection, developing appropriate and effective care and support mechanisms, and
devising strategies that are supported by both local and regional communities. The
approach stresses the importance of supporting bottom-up approaches to coping with
the HIV/AIDS epidemic. Hence the paper provides a powerful reminder of the fact that
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S. Dixon et al.
governments cannot supply all the solutions to living with an epidemic, and that when
formulating policy responses governments would be well advised to motivate collective
behavioural responses that can help reduce the spread of the epidemic and mitigate the
worst effects on those already infected.
5
CONCLUSION
Governments in sub-Saharan Africa are confronted by increasingly dif®cult policy
questions. Some government departments have been content to view the problems
presented by HIV/AIDS as the responsibility of the department of health, or have tried
to shape the problem as being caused by multi-national drug companies. This reluctance to
plan an overall government response, combined with the fact that ®scal crises and
structural adjustment programmes have already adversely affected health budgets, has
probably contributed to the spread of HIV/AIDS. In future governments will have to make
far-reaching and politically sensitive choices. For example, if the (economic) standard of
living is considered important when planning government interventions, prevention
programmes may have to be targeted at the most economically productive socio-economic
groups. It may even become optimal to allow expensive anti-retroviral treatment for
selected groups in speci®c industries, based on their contribution to economic output, in
order to allow time for replacement labour to be trained
The epidemic is clearly not simply a health problem. It may have potentially devastating
economic and social consequences, and it is essential that more is discovered about the
potential implications if individual governments and international agencies are to devise
appropriate policy responses. The sub-Saharan Africa countries constitute the majority of
the countries in the bottom third of the UNDP Human Development Index, hence those
countries most affected by the epidemic are those least able to cope with it. Indeed it is
heartening that some bodies are recognizing this: the International Development Committee of the UK Parliament has drawn attention to the ability of poor countries to fund
AIDS expenditures and urged that as much as possible of the World Bank's programme for
HIV/AIDS in Africa be in the form of grants as opposed to loans (House of Commons,
2001).
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Copyright # 2001 John Wiley & Sons, Ltd.
J. Int. Dev. 13, 381±389 (2001)