The Impact of HIV/AIDS on the Zambian Economy

1. The Impact of HIV/AIDS onthe Zambian Economy Presentation By: Linda Nonde, SAfAIDS Country Representative 6th May, 2010

2. How Many People Are Infectedby HIV/AIDS ? • Two-thirds of all people infected with HIV live in sub-Saharan Africa- region contains little more than 10% of the world’s population. • During 2008 estimated 1.4 million adults and children died as a result of AIDS in this region • Since the beginning of the epidemic more than 15 million Africans have died from AIDS.

3. How Many People Are Infectedby HIV/AIDS in Zambia ? • The joint United Nations programme on HIV and AIDs (UNAIDS) ranks Zambia as one of the 9 countries in the sub- Saharan Africa region that is highly affected by the AIDS Pandemic • An estimated 14.3% of the adult population aged 15 to 49 years are HIV-positive in Zambia. • In 2009, 83000 adults were newly infected with HIV, that is about 200 new infections each day.

4. Who Is most affected by HIV/AIDS in Zambia cont’d? • Most infected are adults in their most • productive years (15- 49 years). • Although the HIV epidemic has spread throughout Zambia and to all parts of its society, some groups are especially vulnerable - most notably young women and girls.

5. Who Is most affected by HIV/AIDS cont’d? • Among young women aged 15-24, HIV prevalence is nearly four times that of men in this age category. • A number of factors resulting from gender inequality contribute to the higher prevalence among women. Women are often taught never to refuse their husbands sex or to insist their partner uses a condom.

6. Who Is most affected by HIV/AIDS cont’d? • In a Zambian behavioural survey, around 15 percent of women reported forced sex, although this may not reflect the true number as many women do not disclose this information.

7. Who Is most affected by HIV/AIDS cont’d? • Young women in Zambia typically become sexually active earlier than men, with a partner who will be on average five years her senior, who may already have had a number of sexual partners.

8. Who Is most affected by HIV/AIDS? • Children have also been much affected by the AIDS epidemic in Zambia. In 2009,over 30,000 children were HIV positive. • However, being HIV infected is not the only way that children are affected by HIV and AIDS. • In 2007 there were 600,000 AIDS orphans in the country and AIDS orphans made up half of all orphans in the country

9. How HIV/AIDS Influences theDemography of Zambia • Reduced fertility, slower rate of population growth (estimated to fall to 1.7% in 2010 from 2.3% in 2000). • Altered age structure; percentage of people in economically active age group decreases (potentially reducing workforce by 1.7 million by end of 2010). • Working age cohort is estimated to be 26% smaller by the end of the decade compared to a no-AIDS scenario

10. Effects of HIV and AIDs on the Economy • The economic effects of AIDS will first be felt by individuals and their families, then ripple outwards to firms and businesses and the macro economy. • The overall impact of AIDs on the macro economy will be small at first but increases over time.

11. How HIV/AIDS AffectsIndividual Households • Loss of income of the patient (who is frequently the main breadwinner) • Rising costs for medical care, transport. • Higher costs as families take over care of children from deceased relatives. • Other members of the household divert time from income-generating activities to care for patients. • Children are taken out of school to save school fees leading to a loss of potential future income

12. How HIV/AIDS AffectsDifferent sectors of the economy • On private sector, Aids has a significant impact on firms in the sense that AIDs related illnesses and deaths to employees affects a firm by both increasing expenditure and reducing revenues. • The HIV/AIDS epidemic is imposing serious costs on the private sector . AIDS deaths may lead directly to a reduction in the number of available workers, since the deaths occur predominantly among workers in their most productive years.

13. How HIV/AIDS AffectsDifferent sectors of the economy • As younger, less experienced workers replace experienced workers, worker productivity may be reduced. The impact of AIDS will also depend on the skills of affected workers. If skilled workers who occupy important positions in the firm become sick or die from AIDS, the company may lose its institutional memory—that is, the “know-how” accumulated through many years of experience.

14. How HIV/AIDS AffectsDifferent sectors of the economy • Many businesses will also suffer a shrinking market for their goods when HIV and AIDS epidemic in the community leads to the impoverishment of households which can no longer afford to purchase goods. Businesses that produce “luxury goods” are more likely to experience a decline in the demand of these goods.

15. How HIV/AIDS AffectsDifferent sectors of the economy • The impact of HIV/AIDS on firms depends partly on the age structure of the workers in the firm. For example, a study conducted in Zambia in Barclays Bank showed that mortality peaked in the 30-39-year age group. The death rate rose from 0.4 per cent to 2.2 per cent between 1987 and 1991, and the bank paid more than USD 58,000 in the form of ex-gratia payments to the families of employees who died from HIV/AIDS (Smith and Whiteside, 1995).

16. How HIV/AIDS AffectsDifferent sectors of the economy • The study also showed that medical expenses and training costs were on the increase whereas man-hours were reduced. • Not only does the absence of infected workers contribute to revenue losses at the firm level, but absence of healthy workers taking care for infected family members or attending funerals of co-workers of family members can also be detrimental for companies.

17. How HIV/AIDS AffectsDifferent sectors of the economy • In summary, the available studies of the impact of HIV/AIDS on firms point to an impact of the epidemic on the labour force, costs and productivity of most firms. The evidence available also points to a greater impact of the HIV/AIDS epidemic on small firms, those with less than 10 employees. The loss of a few employees in key positions in these firms can lead to their disappearance.

18. Impact on the Health Sector • The HIV/AIDS epidemic is posing tremendous challenges to the healthcare systems of Zambia. HIV/AIDS increases the overall health expenditures due to increased number of people seeking services and secondly health care for AIDS patients is more expensive than the cost of other conditions • Recently, Health Minister,Kapembwa Simbao admitted that AIDs has the ability to weaken an economy if not properly responded to. Hon. Simbao said that it is for this reason that the government was doubling its response to AIDs related programmes across the country

19. Impact on the Health Sector • The AIDS epidemic is also responsible for diverting expenditure towards higher levels of care needed for the AIDS patients. The latest anti-retroviral therapy costs more than US$10,000 per person a year. Although countries are exploring generic drugs that may cost US$300 per person a year, according to the latest estimates, this figure is still hardly within reach of many African countries.

20. Impact on the Health Sector • On average, treating an AIDS patient for one year is about as expensive as educating ten primary school students for one year (World Bank, 1999).

21. Macroeconomic implications • Aids deaths lead directly to a reduction in the number of workers available. The deaths occur to workers in their most productive years. • As younger, less experienced workers replace these experienced workers, worker productivity is reduced. • A shortage of workers leads to higher wages, which leads to higher domestic production costs. • Higher production costs lead to a loss of international competiveness which can cause foreign exchange shortages

22. Macroeconomic implications cont’d • Lower government revenues and reduced private savings because of greater health care expenditure and a loss of worker income can cause significant drop in savings and capital accumulation. • Reduced worker productivity and investment leads to fewer jobs in the formal sector • As a result some workers would be pushed from high paying jobs in the formal sector to lower paying jobs in the informal sector

23. What Is AntiretroviralTreatment • Anti-retroviral treatment does not cure AIDS, but slow down, or even halt the outbreak of AIDS, while the HIV infection persists. • This treatment has to be applied for the rest of one’s life. At the end of 2009, 68% of the 330,000 people in Zambia needing ARV treatment were receiving it and a third of all health facilities in the country were able to offer treatment.

24. Antiretroviral Treatment cont’d • Currently for every two people started on treatment, there is an additional five new infections. • Unless we “turn off the tap” of new infections, the rising cost will make requirement for treatment and care overwhelming, unachievable and unsustainable. • The HIV epidemic is a serious threat to all other human, social and economic goals of the country.

25. Conclusion AIDS has the potential to cause severe deterioration in the economic conditions of many countries. There is much that can be done now to keep the epidemic from getting worse and to mitigate the negative effects. Among the responses that are necessary is the need to Prevent new infections. There is an urgent need to prevent new HIV infections in order to reverse the epidemic and ensure that treatment is made available to all who need it.