Download The impact f HIV and AIDS on South Africa is and will remain

Metropolitan scenarios to help South Africa and South Africans Live the Future
Are HIV and AIDS hampering development and dampening economic growth in South Africa, and should
investors be wary of the impact of HIV and AIDS on business?
Financial services group Metropolitan recently completed an HIV & AIDS scenario project entitled Live the
Future that has put the epidemic and its impact on economic growth into perspective. The results are totally
in line with those of the recent study conducted by the University of Stellenbosch’s Bureau for Economic
Research, which stated that while HIV and AIDS will undoubtedly impact on the economy of the country, we
are not facing a doomsday course of events.
Metropolitan first published the Doyle AIDS and demographic model in 1990 with the aim of creating a
realistic picture of HIV and AIDS in the future as opposed to the catastrophic consequences that were being
predicted at the time. The model projected that there would be around 5 million HIV positive South Africans
in 2005; current best estimates are between 5.3 and 5.4 million.
The group’s Live the Future scenario project has mapped out four different futures for South Africa
depending on how we choose to deal with HIV and AIDS. The organising question was “How will HIV and
AIDS, and our responses, shape the future of South Africa by 2025”.
Economic impact determined using human development index
Given its focus on ensuring that South Africa responds in a way that will enable us as South Africans to Live
the Future, the Metropolitan project took a totally fresh approach when examining the impact of HIV on the
economy of the country. It made use of the human development index (HDI), which is a measure of gross
domestic product (GDP) per capita but also takes education and life expectancy into account when
determining economic prosperity.
Although GDP per capita will not necessarily decrease (it could in fact increase), HIV and AIDS has had, and
will continue to have, a severe negative impact on the remaining two elements of the HDI, providing the
clearest possible indication of the adverse impact of the epidemic on our economy.
For example, life expectancy at birth in South Africa has reduced from 62 years in 1995 to 51 years in 2005,
and this despite moderate to high economic growth. This means that somewhere in the plot of our “success
story” we have lost an accumulated 1.5 million South Africans due to AIDS deaths in the prime of their lives.
Autumn of Limited Opportunity
In what Metropolitan has dubbed the “Autumn of Limited Opportunity” scenario, the HDI is low despite a high
GDP growth rate. In this scenario, GDP per capita will increase due to high GDP growth and a reduction in
the population growth rate. A high HIV infection rate will result in an adult HIV prevalence rate of 14% by
2025, with life expectancy not much higher than 55. South Africa will be a society enjoying high economic
growth that is very unevenly spread, leading to a steep increase in income inequality.
In the first economy the HDI will remain high, with quality education and high life expectancy for those who
can afford a good standard of living. However, rural households and households in the second economy will
be severely affected by HIV and AIDS, resulting in low GDP per capita, poor education and low life
expectancy. Research conducted in poor rural communities shows that they are already starting to manifest
signs of the so-called Autumn scenario.
As a result of the low HDI, it is likely that the skills shortage in SA will be exacerbated in this scenario despite
strong economic growth. Skills will then have to be imported due to a lack of adequate skills development by
the local education system. Business will concentrate on capital-intensive industries and contract work will
become popular. There will be a booming market in the first economy, with insurance remaining expensive
but innovative.
Summer for All People
The most optimistic of Metropolitan’s four scenarios, namely the “Summer for All People” scenario, shows
the importance of a high HDI if economic prosperity is to be achieved. A South Africa emerges where people
live longer and become better educated and more skilled as a result of a lower rate of new HIV infections.
The adult HIV prevalence rate reduces to 7.4% from the current 19%. The HDI increases slowly from 2005
onwards as a result of improved life expectancy (59 years instead of 51), better education and higher GDP
per capita.
The stronger, more skilled labour force in the Summer scenario drives South Africa into a new era of
economic growth. Business starts to utilise labour effectively, and the cost of labour is competitive. More
people enter the first economy, thereby spreading wealth. Skills are developed and retained. Foreign direct
investment improves and South Africa becomes more competitive globally.
Conclusion
Overall, the Metropolitan scenario project made it clear that although the short-term impact of HIV and AIDS
is difficult to quantify, the long-term impact is far-reaching. The impact of the epidemic on current standards
of education in SA is indisputable and this, combined with lower life expectancy, means that the epidemic will
remain an important driver of the future wealth of our nation.
Solution - power of partnerships
Metropolitan’s research also highlighted the fact that South Africa will best be able to Live the Future,
enjoying the Summer for All People, if there is maximum collaboration and co-operation. This includes joint
initiatives between the public and private sectors, between big business and SMMEs, between governmental
organisations and NGOs, between institutions and individuals as well as across all levels of civil society.
The group intends using the scenarios to create a vision of a successful future that will galvanise key
stakeholders from the various sectors into action, inspiring them to align, broaden and intensify efforts to
mitigate the impact of HIV and AIDS countrywide.
Impact assessments
Workplace in general
As a result of its expertise and experience in applying the Doyle model, Metropolitan has conducted
numerous workplace studies for companies, organisations and government sectors to estimate the financial
and social impact of the epidemic due to AIDS illness and death. Without exception, all such studies have
shown that the financial cost of HIV and AIDS is severe and that there is invariably a saving to be made in
treating and supporting HIV positive employees.
Metropolitan workplace
Metropolitan’s pioneering work in this field has prompted many companies to introduce HIV and AIDS
workplace programmes for all their employees (not only the fortunate few with access to medical scheme
benefits), in many cases long before it became compulsory for medical schemes to provide anti-retroviral
treatment.
The group has found that the financial impact of HIV and AIDS on the business sector - as measured by
assessing the cost of death and disability benefits, sick leave, productivity losses and medical benefits - has
become severe. As disclosed in its 2005 annual report, published recently, Metropolitan estimates that it
spent around 2% of its payroll on HIV related costs in 2005 alone.
Through conducting an HIV and AIDS impact assessment in its own workplace, it has, however, calculated
that these costs could have been much higher in the absence of a comprehensive HIV workplace
programme.
Metropolitan has been making anti-retroviral treatment available to all its employees since 2003; savings in
2005 alone were estimated to be some R4 million, more than enough to cover the cost of the HIV
programme. The group expects the savings to be incremental, particularly if the take-up rate of the treatment
programme increases into the future.
Society
The impact of HIV on society can easily be observed by looking at the increase in adult mortality in South
Africa over the last few years. Statistics South Africa reported an increase in total female deaths in the 30 to
39 year old age group of over 200% from 1997 to 2002, with a 100% increase in the corresponding male
deaths. This is in line with the predictions of Metropolitan and various other demographers in the country that
there would be a rapid rise in AIDS deaths per annum between 1995 and 2005. It is estimated that there
were around 14 000 AIDS deaths in 1995, rising to 130 000 in 2000 and to 330 000 in 2005.
Various studies have been done around the socio-economic impact of AIDS deaths. As far back as 2000
Metropolitan was commissioned to do studies that revealed that AIDS deaths would place severe strain on
the state’s social welfare and health services in future.
As mentioned previously, the group found then, as has the University of Stellenbosch six years later, that
although “the impact on costs and effectiveness seem unlikely to be devastating in any one year, the
cumulative costs to the public service and human and social costs are likely to be substantial”. This means
that although AIDS is not likely to wipe out the South African public service sector or the population in one
go, it is very definitely eating into the socio-economic fibre of the country by steadily lowering the HDI.
Same conclusion – higher HDI will help to accelerate transformation
HIV and AIDS impact on individuals, on households, on the private and the public sector as well as on the
economy as a whole and eventually reduces the HDI to unacceptable levels. One of the pillars of South
Africa’s economic policy is the crucial goal of reducing unemployment and thereby helping to eliminate the
huge inequalities that still exist in South African society.
The unemployed in this country, with relatively poor access to education and healthcare, are the hardest hit
by the epidemic. AIDS depletes both their physical and their financial resources and leaves behind devasted
families ill-equipped to deal with the future. The annual rate of AIDS deaths of between 300 000 and 400 000
will increase economic inequality, thereby challenging efforts to spread the wealth of the nation.
ISSUED BY
SUE SNOW
FINANCIAL MEDIA SPECIALIST
METROPOLITAN HOLDINGS LIMITED
TEL 021 940 6119 OR 083 300 9745
DATE
25 APRIL 2006
QUERIES
NATHEA NICOLAY
AIDS RISK CONSULTANT
METROPOLITAN EMPLOYEE BENEFITS
TEL 021 917 3090
DESIREE DANIELS
EXECUTIVE MANAGER
METROPOLITAN AIDS SOLUTIONS
TEL 021 917 3012