Select Committee on International Development Third Report

Section 2 — The Impact of HIV/AIDS

39. In this section we concentrate on the impact of HIV/AIDS on social and economic development. We put this before our consideration of prevention and care not because we think it is intrinsically more important but because we believe it is that aspect of the epidemic which remains seriously overlooked. In examining the various impacts of HIV/AIDS one runs the risk of ignoring the fundamental impoverishment of the epidemic — the loss of life. It is this devastation of human potential, and the grief and trauma inflicted on the bereaved, which remain our prime motive for action. But the fact is that the epidemic is having an effect far beyond the lives of those infected and their families. Health and education systems, the economy, agriculture, security are all threatened. It is now fashionable to insist that HIV/AIDS is not just a medical problem but also a developmental one. As we go on to demonstrate, this is absolutely true. However, the response of donors to this insight is to give greater weight to their prevention work and add to it a new emphasis on care. This is essential but not enough. All development must be done differently. For money to be well spent, projects and programmes must be robust against the depredations of HIV/AIDS. And they must be designed so as to counter its effects.

40. The following section looks at the impact of HIV/AIDS on different sectors and offers some suggestions as to what an HIV/AIDS-sensitive approach would look like. Consideration of these matters appears to be at an early stage, with limited research into impact and even less into how development should respond. Thus analysis of impact will on occasion be tentative and recommendations as to the response of DFID and other donors may be in the form of a 'menu' of options for further work.

The Impact of HIV/AIDS on the International Development Targets

41. In its initial Development White Paper — Eliminating Poverty: The Challenge for the 21st Century — the Government committed itself to a set of international development targets (IDTs), the results of a series of UN-sponsored international conferences. DFID emphasised that with the right policies and sufficient international will these targets could be met and poverty significantly reduced. DFID has been at the forefront of ensuring that these targets and the associated poverty-focussed development have been adopted internationally by such bodies as the European Union. There are seven key targets:

  • enrol all children in primary school by 2015

  • make progress towards gender equality and empowering women by eliminating gender disparities in primary and secondary education by 2005

  • reduce infant and child mortality by two-thirds between 1990 and 2015

  • reduce maternal mortality ratios by three-quarters between 1990 and 2015

  • provide access for all who need reproductive health services by 2015

  • implement national strategies for sustainable development by 2005 so as to reverse the loss of environmental resources by 2015

The Committee at the outset of this Parliament commended the adoption of these targets. A fundamental question for anyone considering the impact of HIV/AIDS on the wider developmental effort is whether the attainment of these targets is in any way affected by the epidemic.

42. Some of the targets have a direct relationship to the HIV/AIDS epidemic. For example, the target of reducing infant and under-5 child mortality by two-thirds by 2015 is affected by the increasing infection of infants through mother-to-child transmission of the HIV virus. Similarly, the two educational targets are, as we shall discuss later, made much less achievable as children are withdrawn from school to care for sick relatives or supplement a declining family income. More generally, HIV/AIDS is profoundly impoverishing. Given the fact that it is mainly spread through unprotected sexual contact, it affects disproportionately mature adults in their working years. Furthermore, the opportunistic infections resulting from AIDS can result in sickness over an extended period. As we have seen, the epidemic is particularly severe in poor countries. Thus, families which are already poor find their income massively reduced as 'breadwinners' fall sick. At the same time that they experience this loss of income, they require greater expenditure to care for those who have fallen sick. HIV/AIDS thus directly affects the numbers living on less than a dollar a day, the criterion of those in extreme poverty.

43. A document jointly produced by the UN, World Bank, IMF and OECD charted 'Progress towards the international development goals — 2000 A Better World for All'. This paper makes clear that the spread of HIV/AIDS stands in the way of achieving the infant and child mortality target and, more generally, that it "is impoverishing individuals, families and communities on all continents".[26] For each of the seven targets the paper charts progress to date globally against the average path necessary to achieve it. In each case progress has been limited and below the "average path". There is then a regional breakdown for each target. What is striking is that in almost every case (gender equality being an exception) sub-Saharan Africa lags behind the other regions in terms of position and progress. In the case of maternal mortality, Asia, excluding India and China, has fewer births attended by skilled health personnel, when compared to sub-Saharan Africa, but since 1988 the Asian situation has improved, albeit weakly. Sub-Saharan Africa has actually got worse. The region most severely affected by HIV/AIDS, sub-Saharan Africa, is both the poorest (in terms of the proportion of those living in poverty) and also the region making least developmental progress.

44. DFID told us that "there has been little work so far to link [the epidemic's effects] directly to impact on the international development targets. But even without explicit data, it is generally accepted that in countries with the highest infection rates, it is unlikely that the international development targets will be met".[27] Countries they expected not to reach the targets as a result of HIV/AIDS included Botswana, Ethiopia, Kenya, Mozambique, Namibia, South Africa, Tanzania, Zambia and Zimbabwe. The infant mortality target is particularly affected by HIV/AIDS. By 2005-2010 infant mortality in South Africa will be 60 per cent higher than it would have been without HIV/AIDS. In Zambia and Zimbabwe 25 per cent more infants are already dying than would be the case without HIV/AIDS. By 2010 infant and child mortality rates in these two countries will have doubled.[28]

45. DFID's memorandum also points to the impact of HIV/AIDS on girls' enrolment in school, on the economy of a country (and thus on poverty rates) and on the health service, so overstretched as to be even less able to deliver universal access to sexual and reproductive health services.[29]

46. It is important to bear in mind that a large proportion of the world's poor live in two countries, India and China. Neither is as yet as severely affected by the HIV/AIDS epidemic as sub-Saharan Africa. Thus there is greater room for progress against the IDTs. If these two countries succeed in making significant inroads into poverty the global figures for the IDTs will look healthy, obscuring the fact that at a regional and country level the epidemic is condemning a continent to remain in extreme poverty, if not decline even further.

47. Other indicators of poverty should also be used in assessing the impact of HIV/AIDS. The most important indicator is life expectancy, not explicitly taken into account in the international development targets (though the maternal, infant and child mortality targets are obviously relevant). DFID state that "In the 13 or so African countries with adult prevalence of 10 per cent or more, HIV/AIDS will erase 17 years of potential gains in life expectancy, meaning that instead of reaching 64 years, by 2010-2015 life expectancy will regress to an average of just 47 years; this represents a reversal of most development gains of the past thirty years".[30] The Human Development Index (HDI) published by the United Nations Development Programme (UNDP) has since 1998 taken account of the demographic effects of HIV/AIDS. The calculation of a country's position on the Index includes life expectancy at birth as an indicator. The Human Development Index for 2000 makes grim reading. It states that "Twenty counties have experienced reversals in human development since 1990 as a result of HIV/AIDS, particularly in sub-Saharan Africa". Over a longer timescale "Seven countries in sub-Saharan Africa — Botswana, Burundi, Congo, the Democratic Republic of Congo, Kenya, Zambia and Zimbabwe — saw a reversal in 1985-98 in the progress they had made in building basic human capabilities in the previous decade (1975-85). The reversal is explained largely by the drop in life expectancy due to HIV/AIDS. Similar effects can be seen in Central African Republic, Namibia and South Africa in 1990-98.[31] Uganda is the only country which has managed to turn around such a reversal.

48. The impact of HIV/AIDS on life expectancy must be added to the other poverty indicators in an assessment of how HIV/AIDS affects development. Life expectancy is perhaps the most important of all criteria and there can thus be no greater developmental crisis than an epidemic that is actually reversing past developmental gains in life expectancy. It is clear that the HIV/AIDS epidemic has made the international development targets impossible to achieve in those countries where it has taken hold, and that past developmental achievements have been reversed. Any responsible development policy must take account of HIV/AIDS in every aspect of its approach.

49. Professor Alan Whiteside said, "One of the most striking features of most of the development goals — what they are, how they should be achieved, and what indicators should be used — is the degree to which the HIV epidemic appears to be ignored. There is little grasp of what AIDS means beyond the health sector. It is the contention of the author that it has the potential to undermine development in every sense of the word and undercut development goals".[32] UNAIDS state that "Estimates in 1991 predicted that in sub-Saharan Africa, by the end of the decade, 9 million people would be infected and 5 million would die — a threefold underestimation".[33] The IDTs were formulated in the early 1990s when there was a serious underestimation of the progress of HIV/AIDS and ignorance as to its developmental impact.

50. Targets are of course meant to be challenging and there is clearly no point in discarding targets when they appear too difficult to achieve. The fact that a target is not going to be met can itself be a spur to political action. HIV/AIDS has made many of the international development targets irrelevant to sub-Saharan Africa. The targets were agreed before the full extent of the epidemic was known. This fact needs to be acknowledged by the international community and seriously addressed. We recommend that the Special Session of the UN General Assembly on HIV/AIDS, to take place in June this year, consider how to reinvigorate efforts in sub-Saharan Africa to meet the international development targets, assessing current prospects in the region and what progress can be made, perhaps setting additional regional targets.

HIV/AIDS, the economy and the private sector


51. HIV/AIDS is also having a significant impact on the economies of developing countries, an impact which is only going to become more severe as the HIV epidemic turns into an AIDS epidemic. Crown Agents warned that the epidemic would result in "a dramatically negative economic impact on national growth with huge losses in skilled workers, reduced productivity and eventual depletion of the national skills base".[34]

52. Before considering the macroeconomic impact of HIV/AIDS, we must examine effects at the level of business and private sector operations. One obvious way in which HIV/AIDS has an impact on business is through the loss of workers. The ILO in its Report 'HIV/AIDS: A threat to decent work, productivity and development' states, "AIDS deaths lead directly to a reduction in the number of workers available, and particularly workers in their most productive years".[35] The Report goes on to estimate the effect of HIV/AIDS on the workforce. We have discussed above the impact of HIV/AIDS on population growth. The ILO's conclusion is that "the labour force in high prevalence countries in the year 2020 is estimated to be about 10 to 22 per cent smaller than it would have been if there had been no HIV/AIDS. The labour force is still expected to keep growing. But because of the increased mortality, there will be about 11.5 million fewer persons in the labour force".[36] Anglo American stated, "In South Africa some companies are losing around 3 per cent of their workers each year to AIDS".[37]

53. Lower life expectancy will thus constrain developing economies in that there are fewer workers available. It has been repeatedly emphasised that HIV/AIDS affects disproportionately the adult working population, producing a "loss of people in their 30s and 40s: people who keep the wheels of commerce and the state turning, and provide the next generation of leaders"[38]. Christopher Wheeler from Standard Chartered Bank said, "Approximately three years ago we started to notice a higher incidence of sickness, of death in service, and so forth"[39]. He estimated that up to 30 per cent of their workforce in Zambia could be infected [40]. Clearly such high incidence of HIV in a workforce will have serious implications for staffing, not simply in terms of increased mortality but also much higher incidence of sickness and a decline in morale amongst the workforce.

54. The TUC said, "There is some evidence to suggest that with high unemployment and underemployment in many countries, the shortfall in the labour supply has been met by people seeking employment".[41] There will be presumably be a corresponding effect on labour costs. But workers are not always so readily replaceable. Most workers receive some training from their employers, an investment unrealised when the worker is lost through premature death. This effect is greater, the greater the skill of the worker lost. As the TUC put it, "Replacing such skilled workers is difficult and while it might be possible in some cases to substitute capital or technology for a dwindling workforce, this is not always an option. The situation is exacerbated by the toll that HIV/AIDS is taking on the education sector".[42]

55. The dangers of the loss of skilled staff were acknowledged by Standard Chartered Bank, "our staff are highly trained in the use of technology but, with there already being a shortage of skilled manpower, an organisation such as ours needs to minimise the risk of losing such staff and look after those that become unwell".[43] Given such dependency on skilled labour, the Bank is monitoring closely the impact of HIV/AIDS on numbers of staff, "In addition, vigorous recruitment and retraining drives are underway particularly in the businesses in some of the countries where infection rates are estimated to be between 25 per cent and 40 per cent — including Zambia, Zimbabwe and Botswana. This is in order to ensure we are able to maintain the level of service and staffing levels required by the business/customers".[44] Anglo American also make the point that even before the HIV/AIDS epidemic "Sub-Saharan Africa starts with the lowest proportion of skilled workers of any geographical region and with a disproportionate share of the world's poorest countries" — it is thus least able to support the loss of skilled workers to the disease.[45] ING Barings estimate that by 2015 19 per cent of skilled workers in South Africa will be HIV-positive.[46] They also warn of cost pressures arising from increased training, staff replacement costs, skill shortages and higher benefit payments.[47] Anglo American have introduced "the concepts of multi-skilling and self directed work teams have been implemented at many of the operations".[48]

56. Many of the effects of HIV/AIDS are quantifiable. Many others are not — they concern morale, confidence, a sense of security and purpose — and yet these are as fundamental to personal happiness and to social life. Standard Chartered Bank spoke in their memorandum of the impact on staff morale as workers lose loved ones and breadwinners, "One of our senior staff lost her husband, all her brothers, and two sisters to AIDS. She later died of AIDS. Her story is not rare".[49] They estimate that 70 per cent of staff in Africa "have close relatives and/or friends, who are infected with the HIV virus, have died or are dying".[50]

57. Dr Brian Brink warned against too alarmist a view of the impact of HIV/AIDS on companies, "When one first hears prevalence figures the reaction often is one of alarm but, in fact, the situation despite what might appear to be large numbers can still be very manageable".[51] Jenny Crisp from Anglo American referred to the company's operations in Zimbabwe, where the epidemic was quite advanced. She agreed that HIV/AIDS was having an impact but added, "it is not putting any of our companies out of business ... you might have a situation where you have a pool of employees and the infection level might be as high as 25 per cent but most of that 25 per cent at any one time in fact are well and fit, they are not getting sick. If you think that the average time from infection to becoming ill is eight years, then the 25 per cent will get sick over a six-year period. So the numbers who are getting sick each year, and our figures in Zimbabwe show this, is about two and a half. That is actually manageable".[52]

58. It must be remembered that those who came to give evidence are precisely those companies which are attempting to reduce infection rates in their workforces and mitigate the impact of the epidemic. Moreover, they are multinational companies with considerable resources at their disposal and better placed than most to accommodate extra costs. We should not make the mistake of assuming that all businesses are in the same position. Jenny Crisp agreed that there were many companies which were not facing up to the epidemic, "that is part and parcel of this whole denial. The denial does not necessarily apply to the individual, it applies to the organisation as well. I think it is something that is not peculiar to the AIDS problem. I think a lot of companies tend to be reactive rather than proactive".[53] Those doing something were "a small minority".[54] We are sure that many large, multinational companies have yet to assess the likely impact of HIV/AIDS on their activities, are missing vital opportunities to reduce HIV/AIDS incidence, and are thus going to see their productivity and profitability seriously impaired.

59. When pressed on whether the companies giving oral evidence to us would remain profitable in these countries Christopher Wheeler said, "I would suggest that for relatively sophisticated organisations who are able to provide the level of education and understanding of the issues, that is possible. I would suggest that there are many local companies who would find that difficult to achieve".[55] Clearly small and medium-sized businesses in sub-Saharan Africa will be severely affected as an increasing number of HIV-positive people succumb to AIDS. Christopher Wheeler told the Committee of work done by Standard Chartered Bank with local business and customer groups to spread prevention messages.[56] Jenny Crisp was less clear as to the opportunities for Anglo American to pass on HIV/AIDS good practice directly to local businesses, "We do not have a programme to address HIV and AIDS with our suppliers simply because they are so numerous and generally we do not have contact with them".[57] Dr Brink mentioned the Business Council on AIDS in South Africa as an important forum to assist SMEs in considering HIV/AIDS matters.[58] He stressed that "certainly for South Africa and probably southern Africa, the growth of small and medium enterprises is critical to the development of the economy, so we have to find a way that those small businesses also take their part in dealing with this".[59] DFID in its booklet Enterprise and Development states of SMEs that "Their often labour intensive nature means they are a leading source of job creation in developing countries. Their ability to respond flexibly to dynamic markets is imperative for sustainable economic growth in today's globalised economy".[60] DFID employs some 25 Enterprise Development Advisers and Field Managers in London and overseas who supervise a current portfolio of project commitments totalling over £200 million. We note that in the booklet 'Enterprise and Development' there is no mention of challenge posed by HIV/AIDS, never mind of how to face it. No doubt the document is not intended to be exhaustive. Nevertheless, the impact of HIV/AIDS on small and medium-sized enterprises, particularly in sub-Saharan Africa, must be addressed as a priority. We expect development programmes to be reconsidering such issues as the provision of credit and management of debt, linkages with larger businesses, and employment and training practices, in the light of the illness, and the absences which HIV/AIDS produces at work.

60. We consider that multinational companies have an obligation to assist, both directly and through Business Councils, small and medium-sized enterprises in countries affected by HIV/AIDS. This should include the sharing of best practice and perhaps of certain courses and facilities. It is also necessary for national governments and donors to have a strategy as to how to support the informal sector and SMEs through the HIV/AIDS epidemic.

61. We also heard evidence of the likely impact of HIV/AIDS on investment. Anglo American thought that there would be "reduced attraction for international investment due to increased country risk".[61] Furthermore, "the high incidence of HIV/AIDS in Africa reinforces the negative perceptions which some international investors have of the Continent, risking discouraging the private capital investment which Africa so badly needs".[62] In oral evidence, Dr Brian Brink, Anglo American, identified such a perception as "part of the education challenge. As a company we have to demonstrate very clearly that despite the fact that the epidemic is there ... it is still possible to run successful businesses and it is still an attractive investment opportunity".[63] James Cochrane from Glaxo Wellcome had not noticed any impact of HIV/AIDS on foreign direct investment.[64] Christopher Wheeler from Standard Chartered bank believed that the businesses operating in Africa suggested "that there are many opportunities within those countries for successful businesses at very good margins".[65]

62. Alan Whiteside provided two interesting case studies of the impact of HIV/AIDS on investment. The Joshua Doore Group, a South African based retail company, carried out a survey of the impact of HIV/AIDS on its businesses in 1998. Their conclusions were that the epidemic would have a significant impact on numbers of customers as well as an effect on spending as disposable income is reallocated. One decision they took as a result of this study was to diversify "geographically away from the HIV/AIDS epidemic. As a result, it has expanded into Eastern Europe and is opening shops in Czechoslovakia [sic] and Poland".[66] As a second example, he pointed to Botswana where in response to the impact of the epidemic on its workforce the country is buying in skills, "It buys in Sri Lankans and Bangladeshis and people from the Far East who are cheaper than people from Europe and Asia, and it will test them before they come".[67]

63. We suspect that few companies have as yet done the sort of forward-thinking study conducted by Joshua Doore Group into the impact of HIV/AIDS on their operations. It is certainly not apparent that consideration of the consequences of HIV/AIDS has as yet had a significant effect on investment (already pitifully low) into sub-Saharan Africa. As the epidemic progresses and AIDS-related mortality increases we suspect this will change, particularly as a result of a decline in the availability of professional expertise and shrinking of markets. The nature of the response will depend on the nature of the business. We have seen an example of how a retail business can diversify its activity out of high prevalence areas. For extractive industries, on the other hand, a way round the skilled labour shortage must be found. The bringing in of skills from outside the country is certainly not ideal and is not without its own danger of spreading the epidemic. It is important to develop the skills base of developing countries. Nevertheless, the crisis is such that less than perfect solutions are becoming the only solution. The importing of professional expertise as an emergency response is better than the collapse of an industry or public service. We believe that serious international consideration must be given to how to respond to the growing skills shortage in countries with high HIV/AIDS prevalence. We believe systems need to be put in place both to ensure that such skills can be brought in readily but also that such interventions are considered temporary and accompanied by greater investment in the education and training of local people.

64. We do not as yet see much evidence of a diversion or reduction of investment flows as a result of HIV/AIDS. We fear, however, this is not a product of reflection by the financial and business community, but rather a failure to reflect. Impacts will of course vary according to the nature of the industry. Those highly dependent on local raw materials will no doubt continue where they are and cope in other ways. The concern is over the impact of a shortage of skilled labour on any attempt by countries in sub-Saharan Africa to enhance their productive capacity and develop their industrial base.

65. More investment in sub-Saharan Africa is desperately needed. We must emphasise that such investment can take place successfully and profitably, even with an HIV/AIDS epidemic. What is needed is an intelligent assessment by business of the environment, and investment to be accompanied by effective prevention and care programmes in the workplace.

26   'Progress towards the International Development Goals - A Better World for All p.4 Back

27   Evidence, p.23 Back

28   Evidence, p.24 Back

29   Evidence, p.24 Back

30   Evidence, p.23 Back

31   Human Development Report 2000 p.150 Back

32   Evidence, p.73 Back

33   UNAIDS June 2000 Report p.7 Back

34   Evidence, p.268 Back

35   ILO Report: 'HIV/AIDS: A Threat to Decent Work, Productivity and Development', June 2000, p.12 Back

36   ILO Report: 'HIV/AIDS: A Threat to Decent Work, Productivity and Development', June 2000, p.18 Back

37   Evidence, p.150 Back

38   Evidence, p.75 Back

39   Q.268 Back

40   Q.268 Back

41   Evidence, p.287 Back

42   Evidence, p.288 Back

43   Evidence, p.160 Back

44   Evidence, p.160 Back

45   Evidence, p.151 Back

46   Evidence, p.151 Back

47   Evidence, p.151 Back

48   Evidence, p.152 Back

49   Evidence, p.161 Back

50   Evidence, p.160 Back

51   Q.265 Back

52   Q.305 Back

53   Q.308 Back

54   Q.367 Back

55   Q.316 Back

56   Q.344 Back

57   Q.345 Back

58   Q.345 Back

59   Q.346 Back

60   DFID 'Enterprise and Development'  Back

61   Evidence, p.151 Back

62   Evidence, p.151 Back

63   Q.331 Back

64   Q.330 Back

65   Q.332 Back

66   Q.139 Back

67   Q.140 Back

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