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2000 ESARO: Evaluation of the Financial Implications of HIV/AIDS for Africa



Author: Patel, M.

Executive summary

Background

In collaboration with UNAIDS, UNICEF has developed a strategy for dealing with the major impact that HIV/AIDS is having on women and children in Africa. Programmes are operational in most countries and are rapidly increasing their scope and coverage. It is therefore important to obtain an "order of magnitude" estimate of the costs of an appropriate programmatic response.

Purpose / Objective

This short paper constructs an estimate of the economic costs to Africa of the epidemic. It explores selected prevention strategies and programmes and assesses their financial costs. These assessed financial costs of programmes, consistent with the UNICEF strategy aimed at the epidemic, are compared to previous work on the subject, including useful estimates sponsored by UNAIDS,
and explores the reasons for similarities and differences.

Methodology

The paper investigates and compares the cost of the HIV/AIDS epidemic and the costs of prevention, for the whole African continent. The paper uses a macro level, constructivist approach. Estimates of what a large-scale response might cost are based on current programme costs.

Key Findings and Conclusions

Across Africa, the economic costs of AIDS reached 5% of GDP by 2000. These costs have been doubling about every three years and are expected to reach 15% of GDP by 2005. The costs of AIDS are categorized as: output lost due to mortality, cost of absenteeism of workers, and health care costs. These three cost categories together yield a conservative total direct current cost of 4.5 - 5.5% of the annual GDP of Africa. This macro-economic analysis could be complemented by consideration of some social costs. Africa has about 1 million children with HIV/AIDS.

The combined cost of several types of preventive programmes is around 1% of GDP, or about $5 billion per annum. An investment of 1% of GDP of Africa per annum in HIV/AIDS prevention would prevent a decrease in GDP by 10% within five years. However, over the period 1996-1997 about $150 million a year or 0.03% of GDP was spent on prevention of HIV/AIDS. 90% of this was from external sources. Expenditure by African governments was equal to less than 0.003% of GNP of Africa. This government expenditure of $0.02 per capita was a mere 0.06% of the total current annual economic cost of AIDS to Africa.

The selected activities for this cost estimate were: activities to change the behavior of children, both in school and out of school youth; communication strategies for behavioral change; voluntary counseling and testing services; motivaiton to use condoms and supply of condoms; prevention of mother to child transmission programs; and care for AIDS orphans. There is previous work in this area which, using varied methodlogies, tends to confirm this fiugre and there are other estimates which have offered significantly lower cost estimates.

The financial costs of insufficient action have already far exceeded the costs of prevention. Expenditures of this order of magnitude are frequently justified in emergency situations and for major social goals. NATO spent over $40 billion on military action during the Kosovo War. The cost of HIV/AID prevention estimate of $5 billion is one-eight this total.

[all estimates are in US dollars]

Recommendations

Emergency widespread mobilization of governments and populations, even at a cost of 1% of GDP, is an appropriate, indeed essential, response level. If mortality levels across African continue to increase exponentially for another five years, the whole concept of costing the disease will become irrelevant. At that level of prevalence and costs, AIDS will constitute a continent wide natural disaster.



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Report information

Date:
2000

Region:
ESARO

Country:
Intra-regional

Type:
Evaluation

Theme:
HIV/AIDS - Situation Analysis

Partners:

PIDB:

Follow Up:

Language:
English

Sequence Number:
2001/800

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