Economic Impact of AIDS in sub-Saharan Africa
34-46000000 people worldwide are infected with the AIDS virus. For 2003 alone, more than 3 million people died. That same year, Africa whose population is only 11% of the world population, housed two thirds of all patients with HIV in the world. Today, one African out of 12 is infected with the virus and / or sick.
The impact of the disease does not measure other than deaths. The social consequences are also significant. AIDS destroys the efforts made to enable the empowerment of women, destroyed the meager progress in terms of education, impacting the health care of people (in South Africa today, 80% of inpatient public hospitals are HIV positive. recedes malaria but tuberculosis and diseases related to malnutrition are progressing by leaps and bounds). The population growth in Africa is stopped. Perinatal mortality is regrimpea dramatically. Life expectancy has dropped to 49 years in the countries of Southern Africa when she is 78 years in European countries and North America.
Throughout the world, people aged between 20 and 40 years are most affected. This means that the forces, the African economic engines, are missing. The economic impact is considerable.
Impact on economic indicators and growth
Economic growth! a country is usually correlated to life expectancy. Consider that 0.5% economic growth is earned for each 5 years of additional life expectancy. With a life expectancy at 49 years, economic growth in Africa is seriously jeopardized. Spending on infrastructure, personnel and training required AIDS incurred considerable economic development of countries already well off track. Labor markets underdeveloped, the savings rate and insufficient investment, inadequate standards of governance and a generally low level of education are factors that aggravate the impact of AIDS on the entire region.
It is very difficult to quantify precisely the economic consequences of a given disease on the development of a region. The Committee "Macroeconomics and Health," World Economic Forum has tried to do for the whole of Africa, AIDS would cost between 11.7% and 35.1% of annual GNP. In fact, these figures may be slightly overestimated since the majority of the workforce consists of achieving workforce unskilled, easily replaceable in the business.
In all cases, the economic impact of the AIDS epidemic on African countries is and will be major. Current studies are unable to quantify the impact on agriculture, industrial production, food security and more on the inevitable social consequences of the epidemic: the destruction of families and social structures, millions of orphans left to their same (it is estimated 41 million orphans in Africa in 2010), reduction to zero of community networks. Some authors conclude that in the coming years, African economies will "implode under the impact of AIDS".
Three types of approaches are possible to assess the impact of AIDS on macroeconomic indicators
* Approach "cost of illness': it is to multiply the number of people affected by the virus treatment costs and lost revenue. This approach generally leads to overestimate the cost in developing countries, where the real impact on the cost of labor is difficult to estimate given the oversupply of labor supply.
* The functional approach that examines the impact of disease on the labor market, skilled labor and capital. AIDS affects all three parameters.
* Finally, the empirical approach that examines the slowdown in GDP growth in the countries most affected.
None of these three approaches gives satisfactory mink today, the real impact of the epidemic on the economies of African countries. Therefore, the experts here and there multiplied projections and estimates. Thus:
* WHO published in 2000 estimated that a country with more than 20% of its population HIV-positive undergoes annual decline of 1% of its GDP.
* The UNAIDS, the UN agency specializing in AIDS, in 2002, estimated that its share drop to 2.6%.
* The World Bank forecasts that the GDP of South Africa will, in 2010, 17% lower than it would have been without AIDS.
Some authors stress that the most difficult tasks lie ahead. Considering that the epidemic is in its infancy in the countries of southern Africa, they foresee a collapse of the economies of these countries in the next 10 years.
* In terms of catastrophic predictions, some experts at the World Bank fears that high mortality rates, difficulties in training and imparting knowledge to young people and the disintegration of family structures, might lead to child labor and the abandonment of policies of education for all.
* Finally, many experts point out that the standards of public health indicators are now considered by international investors. The countries most affected African countries are developing. A decrease in international investments will have a major effect on their growth.
Private companies are affected by macro-economic aspects of the epidemic because the environment in which they deploy their efforts is affected. However, companies have largely tendency to consider the impact of the epidemic to the extent that it affects their capacity for investment, production or sale. Yet there are five major areas directly affected by the epidemic and affecting enterprises in the first place:
* Capital cost
* The reputation of the company and more generally its image
* The market environment in which it operates.
AIDS affects each of these five areas.
Impact on workforce
In sub-Saharan Africa, four countries will see a reduction in their workforce of more than 30% in 2020 compared to what it would have been without the epidemic. Fourteen countries have decreased between 10 and 30% while 18 countries will see a decrease of 10%. In southern Africa, the workforce most affected is low and unskilled workers. From an economic standpoint, it is true that the pool of unskilled labor seems inexhaustible given the high rates of unemployment. The costs of AIDS to businesses are also less important. However, the combination of poverty, lack of training and a high prevalence of HIV makes the future market of labor rather dark, not conducive to business development as their markets. Conversely, the costs are more important than the workforce affected is qualified (see box). As we know, the skills profile of those most affected with the epidemic evolves. Initially, the most affected are those who can afford to travel and maintain multiple sexual liaisons. They are classified as economically leaders. As as the epidemic progresses, the social level and qualifications of people tend to regulate itself and the poor and least skilled become more obvious for demographic reasons.
Given the higher prevalence in the unskilled labor, companies, realizing the cost of AIDS on their economies, may be tempted to employ only workers whose seronegativity is proved. Such discrimination is illegal but in a labor market where unemployment is the rule, institutional safeguards should be put in place, further increasing labor costs.
The evolution of the epidemic, especially in southern Africa, are concerned that we're still only a beginning. For example, the mining company AngloGold estimated that the cost of AIDS in 2002 amounted to between 1.1% and 5.8% of its total labor costs. She believes that in 2009, this cost will be between 8% and 17%.
Other business impacts
It is difficult to accurately assess the consequences of the epidemic on economic demand. The most diseased population, young adults, is not only working but also one who consumes. It is known that the AIDS epidemic reduces the GDP of a country and thus the income per capita. Studies on the impact of AIDS on households clearly show a reallocation of resources to health care costs and funeral at the expense of education, housing, clothing and food.
The capital cost of the epidemic is largely dependent on market demand. In a large study of World Economic Forum and in a study in South Africa by the Bureau of Economic Research, companies seem to be few to be aware of the impact of AIDS on their own balance. Thus, investment firms do not seem to suffer for the moment.
Some companies are already engaged in the fight against AIDS. Renowned Global Business Coalition brings together heavyweights of Western trade. In Africa, chambers of commerce and industry have begun to react and try to unite businesses around AIDS, the image of South African SABCOHA. It is virtually impossible to assess now the impact of involvement in communication on the part of companies in the fight against AIDS. On the one hand, corporate citizens, submerged in the problems of their clients, are certainly more likely to be favorably received. On the other hand, in the vast majority of African countries, AIDS is so afraid that the consequences could be quite the opposite effects. Nobody can predict today what the outcome of this dilemma on the purchasing decisions of consumers.
Finally there is political risk. Social pressure increased due to inflation of poverty, reduction of state resources, the disintegration of civil society (especially the family and education), lower investment outside and habitual difficulty of governments in Africa to maintain transparency of information are factors of destabilization of power often already fragile. This is an additional risk for companies.
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