The Cost of AIDS and the Role of Business (Mark Schoofs)

8/7/2019 The Cost of AIDS and the Role of Business (Mark Schoofs)

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The Cost of AIDS

and the Role of

Business

J2J

XIV International AIDS Conference

Barcelona, SpainJuly 4, 2002

Mark Schoofs


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Vicious Cycle Poverty causes

disease

and

Disease causes

poverty

DISEASEPOVERTY


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AIDS kills people in their

prime Most diseases mainly kill children or the

elderly

AIDS mainly kills people who are: Parents, who leave orphans Teachers and professionals with specialized

knowledge Laborers in factories, farms & mines Subsistence farmers, who provide food for

whole families


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HIV slows economic growthGrowth Impact of HIV (1990-97) (80 developing countries)

-1.6

-1.4

-1.2

-1

-0.8

-0.6

-0.4

-0.2

0

0 5 10 15 20 25 30 35

HIV Prevalence Rate (%)

R

eduction

ingrowthra

teGDP

percapita

(%,pery

ear)

Source: R. Bonnel (2000) Economic Analysis ofHIV/AIDS, ADF2000 Background paper, World Bank. Slide adapted

from UNAIDS: Socio-Economic Impact of HIV/AIDS in Africa, presented by Anita Alban and Lorna Guiness, ADF

2000.


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How AIDS weakens

economies Business

Individual workers get sick,lowering productivity

Turnover and absenteeism

lower profitability beyonddirect loss of productivity

Teamworkstablerelationships among keypersonnelis disrupted

Extra people must be hired

for each position

Society Health consumes more of

govt budget, leaving lessfor social investment

Families spend downsavings, reducing capital

Tax revenues fall Skilled workers &

professionals die or mayflee: brain drain

Foreign investment andtourism decline

Mass orphaning


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Orphans as a result of

AIDS, Zambia

00

200 000200 000

400 000400 000

600 000600 000

800 000800 000

1 000 0001 000 000

200 000 Number of orphans200 000 Number of orphans

19801980 19901990 20002000 20102010200520051995199519851985 projectionprojection

Source: HIV/AIDS in Zambia, 1997. Slide adapted from UNAIDS: Socio-Economic Impact of HIV/AIDS in Africa, presented by Anita Alban and Lorna

Guiness, ADF 2000.


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Rusina Kasongo She lives in Zimbabwe She lost two sons, one

daughter and their

spouses to AIDS Her husband died in an

accident She is raising 10 orphans

alone Studies show orphans are

less likely to go to school*

*For example: In the Central Africa Republic, school enrollment rate among orphans was 39%, two thirds of the national rate of

60%. Source: Survey from CAR, UNICEF, 1999, reported in UNAIDS: Socio-Economic Impact of HIV/AIDS in Africa, presentedby Anita Alban and Lorna Guiness, ADF 2000.


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The orphan problem only

gets worse In Africa, grandparentsusually take care oforphans

Orphans are at higher

risk for HIV When orphans produce

orphans, these 2nd -generation orphanshave no grandparents

so are even worse off HIV destroys the

extended-familysupport system

S e c o n d - g e n e r a

T h e y h a v e n oW h o w i l l t a k e c

O r p h a n s

P a r e n t sK i l l e d b y A I

G r a n d p a r e n

Source: Geoff Foster, Family AIDS Caring Trust, Zimbabwe.


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Cloud & Joseph Tineti They live in Zimbabwe

They are 14 and 11

years old.

They have no adultliving with them

The second generation

of orphans will likely bein a similar predicament


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Solution: Keep the parents

alive360

66

$0$50

$100$150$200

$250$300$350$400

Invest

ment

inHe

alth

Econ

omic

Gain

Investing $66 billion inhealth (including AIDS)per year by 2015 yields a6-fold return: $360 billion

in direct earning ofindividuals and fastereconomic growth $66 billion = $13 extra per

person per year in poorcountries, and this moneysaves 8 million lives

annually Plan: Poor countries

invest extra 2% of GDP,rich countries invest 0.1%

USD,billions

Per-capita Health Spenin Low-I ncome Countr

21

38

$0

$5

$10

$15

$20

$25

$30

$35

$40

C u r r e n t s p e n d i n g T a r g e t s p e n d i n g , 2 0 1

Poor- countryshare: $28 bn

Rich-countryshare: $38 bn

Economic gain

Source: Macroeconomics and Health: Investing in Health for Economic Development. Report of

the Commission on Macroeconomics and Health. World Health Organization, 2001


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Russia: the next crisis? Overall HIV adult

prevalence is stillbelow 1%

But between 1996

and 2001, newinfections rose5000%


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current Russian HIV

epidemic Most current HIV infections are in

injection drug users (IDUs), whooften end up in the institutionsleast able to deal with AIDS:

overcrowded, underfunded jailswhere addiction treatment isscarce and needle-sharing iscommon.

In Russia, sexually-transmitted

disease (STD) rates are high. WillHIV stay in drug users or spread?

Sources: Russian Federal AIDS Center. Ministry of Justice.


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Russias demographics Russias population is declining, even without HIV

African countries show population growth despite HIV adultprevalence rates of up to 30%

HIV exacerbates Russias population decline A declining population slows economic growth HIV mainly kills young people, so fewer productive Russians will

be alive to generate income for social security systems (such aspensions and health care)

Source: Ruehl C., Pokrovskiy V., Vinogradov V., The Economic Consequences of HIV in Russia, The World Bank Group, 2002,

www.worldbank.org.ru


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Modeling the economic

effect 17 key variables, such

as: Rate of transmission

among IDUs and from

IDUs to the generalpopulation via sex

Cost of antiretroviraltreatment

Economic parameterssuch as the share of the

labor force with HIV, theshare of govt revenuesused for publicinvestment, & minimumbudgetary expenditures

C u m ula t ive H IVo p t i m i s t ic 1 . 2 3 2 . 3 2 3 . 6 4 5 . 3

( m i ll io n s ) p e s s i m i s t i c 2 . 2 4 5 . 2 5 9 . 6 1 1 4 . 5

G D P l e ve l b a s e l i n e 1 0 . 8 8 1 3 . 5 1 6 . 4 21 9 . 6( rub le s , t i l l i ons )o p t i m i s t i c 1 0 . 8 8 1 3 . 5 1 6 . 3 3 1 9 . 3

pe s s im i s t i c10 .69 13 15 .2 717 . 5

o p t i m i st i c 0 - 0 . 1 5 - 0 . 5 5 - 1 . 2

p e ssim i stic-1 . 7 5-4 . 1 4 -7 -1 0 .

G D P g r o w t h b a s e l in e 4 . 7 1 4 . 0 9 3 . 7 3 . 4

(p e rc e n t) o p tim is t ic 4 .7 4 .0 5 3 .6 3 .2p e s s i m i s t i c4 . 2 3 3 . 5 5 3 . 0 2 2 . 5

o p t i m i s t i c -0 . 2 1-0 . 98 -2 . 7 -4 . 6

p e ssim i stic- 1 0 . 1 9- 1 3 . 2 - 1 8 . 4 - 2 5 .

% c h a n g e

(c om pare d t

b a s e l i n e )

% c h a n g e

(c om pare d t

b a s e l i n e )

World Bank Model for HIV inRussia

available at www.worldbank.org.ru

Source: Ruehl C., Pokrovskiy V., Vinogradov V., The Economic Consequences of HIV in Russia, The World Bank Group, 2002, www.worldbank.org.ru


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Modeling the economic

effect 17 key variables, such

as: Rate of transmission

among IDUs and from

IDUs to the generalpopulation via sex

Cost of antiretroviraltreatment

Economic parameterssuch as the share of the

labor force with HIV, theshare of govt revenuesused for publicinvestment, & minimumbudgetary expenditures

C u m ula t ive H IVo p t i m i s t ic 1 . 2 3 2 . 3 2 3 . 6 4 5 . 3

( m i ll io n s ) p e s s i m i s t i c 2 . 2 4 5 . 2 5 9 . 6 1 1 4 . 5

G D P l e ve l b a s e l i n e 1 0 . 8 8 1 3 . 5 1 6 . 4 21 9 . 6( rub le s , t i l l i ons )o p t i m i s t i c 1 0 . 8 8 1 3 . 5 1 6 . 3 3 1 9 . 3

pe s s im i s t i c10 .69 13 15 .2 717 . 5

o p t i m i st i c 0 - 0 . 1 5 - 0 . 5 5 - 1 . 2

p e ssim i stic-1 . 7 5-4 . 1 4 -7 -1 0 .

G D P g r o w t h b a s e l in e 4 . 7 1 4 . 0 9 3 . 7 3 . 4

(p e rc e n t) o p tim is t ic 4 .7 4 .0 5 3 .6 3 .2p e s s i m i s t i c4 . 2 3 3 . 5 5 3 . 0 2 2 . 5

o p t i m i s t i c -0 . 2 1-0 . 98 -2 . 7 -4 . 6

p e ssim i stic- 1 0 . 1 9- 1 3 . 2 - 1 8 . 4 - 2 5 .

% c h a n g e

(c om pare d t

b a s e l i n e )

% c h a n g e

(c om pare d t

b a s e l i n e )

World Bank Model for HIV inRussia

available at www.worldbank.org.ru

Decline in Russian GDP

Growth due to HIV

-30

-25

-20

-15

-10

-5

0

2005 2010 2015 2020

Optimistic Pessimistic



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Effect of HIV Prevention

16

17

18

19

20

2020

Russian GDP:4 Prevention

Scenarios

No HIV

Pessimistic

Effective prevention

Reducing drug use

Effective prevention (cuttingHIV transmission four-fold)results in modest GDP gain

Key reason: Drug use, withnegative impact on economicproductivity continues

Reducing drug use, whichwould also slow the spread ofHIV, results in much larger

improvement Could this data be misused to

stigmatize drug users and tojustify not implementing needleexchange? If so, HIV couldspread more rapidly to general

population

GDP(inrubles,trillions)



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Effect of antiretroviral

treatment At Western prices, $9000 per

patient per year, treatingwith antiretrovirals (ARVs)actually lowers GDP. It would also consume more

than 80% of the Russianfederal government budget

At $3000, plausible withnegotiation, using ARVsboosts GDP. At $333, close to the current

lowest price, GDP improvesand ARVs consume onlyslightly more of the govtbudget than treating AIDSwithout ARVs

16

16.5

17

17.5

18

Russian GDP:

4 ARV Cost

Scenarios

No ARVs (pessimistic)

ARVs at $9000

ARVs at $3000

ARVs at $333

GDP(in rubles,trillions)



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Who can take action? Governments NGOs

Individuals Business

Multinationals definitely have the resources Mid-size firms usually have the resources

20,000 South Africans are on ARVs paid by theircompanies medical schemes Often neglected by the press


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Coca-Cola & Anglo

American Coke (beverages)

Offered marketingexpertise to helpframe prevention

Offered ARVs to itsworkers in Africa But only to its 1,000

directly employedworkers, not to the100,000 workersemployed by itsbottlers

Anglo (mining) Offers good TB and

OI treatment &prevention

2001: Committedto run a feasibilitystudy of ARVs onits mines 2002: Anglo back-

tracked, despite20% of its Africanworkers having HIV


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Migrant labor spreads HIV Mines needed cheap labor

Housed men in crowdedhostels and didnt allow

families. This system stillexists.

Hard and dangerous work

Prostitution spreads STDs


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Conclusions Disease causes poverty

But relatively small investments in health can save lives andbolster economies

HIV kills the most productive people, adults in theirprime, which hurts all economies But local factors matter: Russia & Africa have different

epidemics, demographics & economies

Hold business accountable

Are companies shouldering their responsibilities? Do labor practices promote health or illness?


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Acknowledgements Gabriel Rugalema, United Nations

Development Programme Joint United Nations Programme on

HIV/AIDS (UNAIDS) The World Bank Group in Russia Laurie Garrett, Newsday, & Omololu Falobi,

Journalists Against AIDS Nigeria Bob Meyers & Nena Uche, National Press

Foundation The Wall Street Journal and The Village

Voice

The Cost of AIDS and the Role of Business (Mark Schoofs)

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