Fighting HIV/AIDS is critical to achieving growth and prosperity

 Sensitising communities
The rising rates of HIV in Uganda are threatening the country's labour force and require renewed efforts by all stakeholders to fight the pandemic (Photo: UNDP Uganda)

Kampala - Uganda’s economy will be 39 percent smaller than it would have been by 2025 because of the HIV/Aids’ effect on the labour force, if efforts to reduce the impact are not stepped up.

This was revealed in a new study released on November 20, 2008, by the Government of Uganda and the Uganda Aids Commission with support from UNDP.

Key Highlights

  • Uganda has HIV prevalence of 7.3 percent and about new 130,000 infections each year.This translates to slightly over 10,000 new cases per month.
  • According to the survey, it costs about $5,000 (Shs9m) each year to provide anti-retroviral treatment per person. Currently, the government contributes only about 15 percent of the cost of procuring and dispensing ART drugs.
  • The public service has the highest HIV prevalence at 15 percent —more than two times higher the national average of 6.7 percent.

The study called ‘Assessing the Macro-Economic impact of HIV/Aids in Uganda’, adds that the growth rate of Uganda’s economy will slow down by 1.2 percent because of the effects of HIV/Aids.

Botswana-based economist, Dr Keith Jeffries, who was the team leader for the Ministry of Finance and Uganda Aids Commission, prepared the report. The findings were presented to stakeholders in a workshop in Kampala.

Although there is awareness of the general economic impacts of HIV and Aids in Uganda, little has been done on quantifying these impacts, and particularly, on quantifying the impact of alternative policies towards dealing with HIV/Aids. The lack of quantitative information hindered macroeconomic planning and the formulation of an appropriate HIV/Aids response.

The researchers used the current economic growth rate of 6.5 percent to arrive at their conclusions. The study shows that Uganda cannot sustain economic growth while at the same time financing the cost of treating people infected with HIV. If donors pulled out of paying for Anti Retroviral Therapy (ART) programme, the report says, Uganda’s economic growth would drop to below three percent per annum due to the high cost of treatment.

However, the report also notes that provision of anti-retroviral treatment to the affected population would contribute about 0.6 percent growth to the GDP annually. It further shows that spending on prevention efforts would be more cost effective if Uganda is to sustain current economic growth rate.

Uganda has HIV prevalence of 7.3 percent and about new 130,000 infections each year. This translates to slightly over 10,000 new cases per month. With about one million people living with HIV/Aids, the pandemic is denying the country a significant contribution of a big labour force. It also has negative effects on the economy because of the high cost of treating opportunistic infections associated with the disease.

The report also said that a drop in labour and investment due to HIV/Aids deaths will translate into a slower growth in wages, over the next 10 years, fuelling more labour migration out of the economy.

“Our surveys have found that a substantial portion of income that would be used in spurring on investment is used in treating opportunistic symptoms caused by HIV,” Jeffries said. He added that those affected by HIV/Aids spend heavily on treatment over a long time and ultimately on funerals.

Because it affects the poor more than it hurts the well-to-do, the report says, HIV/Aids increases poverty rates in the country by about 1.4 percent. “When a poor family is affected by HIV/Aids, the pain of poverty is felt more as it increases poverty by two percent on individual homes across the country,” Dr. Jeffries said while presenting the findings of the study.

He cited the public service as the sector with the highest HIV prevalence at 15 percent —more than two times higher the national average of 6.7 percent. It is followed by the hotel industry.

“Those with more wealth are more prone to recreational habits that predispose them to infection,” said Jeffries.

Jeffries further explained that the sectors where the skilled and unskilled people meet also have high HIV prevalence, which is why education is severely hit.“The high HIV prevalence in this (education) sector (nine percent), explains the high rates of absenteeism at work,” he said of teachers.

Most HIV-related deaths occur in the age group 25-54, the most productive age. The cost of this loss of vital human resource on the economy is projected at eight percent each year. Yet this does not cover the security services, which the survey left out.

According to the survey, it costs about $5,000 (Shs9m) each year to provide anti-retroviral treatment per person. Currently, the government contributes only about 15 percent of the cost of procuring and dispensing ART drugs. Donors contribute about 85 percent. Under the five-year National Strategic Plan, this expenditure is expected to go up from $170m to $511m by 2012.

But the researchers noted that Uganda’s severe logistical problems and corruption would make it hard to achieve the intended benefits. Besides, Jeffries pointed out, the bulk of funds directed towards the fight against HIV are disbursed outside the budget—directly from the donors, which presents a problem for the central bank to absorb. If not carefully handled, he said, it could lead to inflationary pressure.

The Commissioner of Planning in the Ministry of Finance, LonginoTisaasirana, said the findings of the study are providing useful information as Uganda is currently developing its five-year National Development Plan. He congratulated the research team and the UN team for supporting the initiative, which was the first of its kind in Uganda. He noted that Uganda has been acclaimed as a leader in HIV/Aids response globally but had never established what would be the impact of this condition to its economic growth efforts.

Ms Mai Harper, UNAIDS Country Coordinator, noted the UN and other Development partners in Uganda were hopeful, that evidence collected during the implementation of this study will inform key development planning processes such as: development of Nation Development Plan, national budgeting process for 2009/2010 financial year, implementation of the National Strategic Plan (NSP) on HIV/Aids response 2007-2011, review of sector investment plans, Mainstreaming agenda of HIV/Aids in sectors and district plans and different development partners and Government cooperation frameworks.

Responding to these findings, Uganda Aids Commission Director General, Dr. KihumuroApuuli, saidthat more needs to be done to deal with the effects of HIV.

“The problem is bigger than most people are talking about presently,” he warned. “We need every sector in society to find its own answers to this problem.”