Select Committee on International Development Minutes of Evidence

Memorandum submitted by the Department for International Development


  The importance of AIDS is that it is creating significant increases in illness and death, mostly among young adults. UNAIDS estimates that around 16 million people have died since the beginning of the epidemic. Although some would have died of other causes, the vast majority would still be alive if it were not for HIV/AIDS. Deaths to date are the tip of the iceberg: more than twice as many are currently living with HIV infection. Most of these will die within the next ten years. During that time many more will have become infected (around 16,000 new infections per day at present). This will create a continuing, rolling burden of illness and death well into the 21st century. The effects of this steep rise in illness and death rates are therefore mostly still to come.

  The majority of the 16 million deaths have happened in recent years. There has been time to observe the impact on individuals and households, and to some extent on health services and enterprises in the most affected countries. It has been less easy to observe the impacts on the economy as a whole and on prospects for development. It has been notoriously difficult to predict the course of the epidemic: the worst hit countries have been affected far more badly than expected, while other countries have had fewer cases than anticipated. The risk factors are well understood, but accurate epidemic forecast needs a much better understanding than we have of the levels of risk behaviour in different countries and communities, and of the precise ways in which the risk factors influence each other. At the same time, the economic future is notoriously hard to predict. Trying to combine forecasts of the epidemic with forecasts of the economy at macro level is then doubly difficult. This memorandum will describe some of the research on the future economic impact of HIV/AIDS, and will explain some of the difficulties in obtaining a clear vision.

  The memorandum will also present the findings of research into the impacts of HIV/AIDS on livelihoods: on households, formal and informal work forces, and enterprises. It will look in some detail at specific issues such as education, which is especially important as a form of investment in the future. The memorandum will flag some of the main policy implications, in particular the need for the response to be multi-sectoral under much stronger national and local leadership.

  Most of the information that exists deals with Southern Africa. This is where the epidemic is at its worst and where it has therefore attracted the most research and analysis. We refer to other countries in cases where good, illustrative data exist. If it becomes possible in coming years to define more precisely the macroeconomic impacts of HIV/AIDS, this will happen first in the worst affected countries of sub-Saharan Africa. Rather than wait for such specificity, however, it is important for leaders in all countries to understand the existing and possible impacts of increasing illness and death on enterprises, households and individuals, and to place a suitable level of priority on actions for mitigating them. The level of that priority will depend, to a large extent, on best judgements about the future course of the epidemic in each country, and on improvements in our knowledge about impact. There is a considerable, unfinished research agenda for understanding impact better, and for applying the knowledge to policy and practice.

  The memorandum begins with a brief overview of the huge varieties among national epidemics, and then takes a view of the impact of increasing illness and death on households and enterprises. It considers people as providers of labour within households and in the public, private, formal and informal sectors. It describes some of the thinking on how high illness and death rates affect "investment in the future", especially at the macroeconomic level and in education and health services. It then takes a look at the international development targets, for some of which the impacts are easier to predict than others. It notes some of the rather speculative material on the impact of increasing illness and death on political and social stability.

  The second part of the IDC's call for memoranda requested information about the response to the effects of HIV/AIDS. The memorandum will, in fact, try to cover that as it works through the topics listed above.


  The purpose of this section is to emphasise how uneven the epidemics are among countries and within them. Because of that unevenness, the impacts will vary greatly from place to place; the local, national and international responses will therefore need to be tuned to those variations.

  HIV prevalence is most often estimated for adults between the ages of 15-49. Most new cases occur between the ages of 15-24 (for women) and 20-29 (for men). In more than a dozen sub-Saharan countries, over 10 per cent of 15-49 year olds have HIV infection. In a few of these countries, rates are up to 20-25 per cent. In some towns or communities in those countries, the rates are significantly higher: 40 per cent and more has been recorded, for example, along major transport routes.

  Some countries in the Caribbean, including the north coast of South America, record the next highest HIV prevalence levels. The highest is around 5 per cent. In South and South-East Asia, about 2-4 per cent adults have HIV infection in Burma, Cambodia, parts of India and Thailand. These Asian and Caribbean countries are drawing the attention of policy makers who are concerned that infection levels may follow the same pattern as they did in the worst affected sub-Saharan African countries. While there is no evidence, yet, that they will follow the African pattern, HIV epidemics have proved to be highly unpredictable: urgent, intensified action is needed in these countries to make sure that explosive spread of HIV does not occur. Nevertheless, with infection levels at one-tenth or less of the worst hit countries in sub-Saharan Africa, the impact has, so far, been proportionately less.

  Table 1 shows the UNAIDS and WHO estimates for HIV prevalence by country as at the end of 1997.

  UNAIDS categorises the level of HIV prevalence in countries as low level, concentrated or generalised. In countries with low HIV prevalence, no sub-populations such as sex workers, injecting drug users or males who have sex with males have HIV prevalence of more than 5 per cent. The infections that do exist are mostly confined to those groups. Countries in which the pattern of HIV prevalence is categorised as concentrated are those in which more than 5 per cent of people in at least one such sub-population are infected. Infection remains below 1 per cent among pregnant women. It is not well established in the general population, but the level in pregnant women indicates that it has spread beyond the main risk behaviour groups.

  UNAIDS categorises the level of HIV prevalence as generalised in countries where more than 1 per cent of pregnant women are infected. This indicates that HIV is well established in the general population. The prevalence in risk behaviour groups can be expected to be high.

  Under this categorisation, the Asian countries mentioned above and several of those in the Caribbean would be grouped with countries in sub-Saharan Africa in which prevalence levels are 5-10 times higher. Classification systems are evolving and may capture this apparent anomaly in due course. However, it may also be useful to keep the threshold for generalised epidemics at a low level: the World Bank has pointed out that in countries with the worst epidemics, the most explosive growth began around the time that prevalence reached 5 per cent in adults

  For the purposes of this memorandum, it is also worth noting that in countries with low prevalence and those with generalised spread, the epidemics are concentrated in risk behaviour groups. In the worst-hit countries it may also be at very high rates across most of the population, but in much of the world the spread into the general population is still focused, mainly, on sexual partners of people in the high-risk behaviour groups.

  This has implications both for the impact, which concentrates around the groups most affected, and for the response, which must focus on preventing further spread within and from the risk behaviour groups and on mitigating the impact around them. As we shall see, that impact affects their families, their own enterprises, and their employers.

Table 1


(Source: Taken from UNAIDS/WHO "Report on the Global HIV/AIDS Epidemic—June 1998"; Geneva)

  The data provided in the above tables are summarised from the individual country 1997 Epidemiological Fact Sheets. For countries marked with an asterisk, not enough data were available to produce an estimate of HIV prevalence for end 1997. For each of these countries the 1994 prevalence rate published by WHO/GPA was applied to the country's 1997 adult population to produce the estimate given in the table (UNAIDS/WHO 1998 "Report on the Global HIV/AIDS Epidemic"; Geneva: pp59-67)

  Some figures are subject to rounding and may not total accurately, particularly figures for adults and children.

  Country estimates marked with a "d" are based on reported AIDS cases, corrected for under-reporting, multiplied by the cumulative reported case fatality rate by country.


  Households are complex and vary widely from place to place and over time. Variables, often inter-related, include the following:

    —  household structure: number of adults, children, grandparents and other relatives;

    —   number of cash earners, and whether resident or away from home;

    —  how much they earn, how consistently throughout the year, and how the income is spent and by whom;

    —  the degree to which cash requirements arising from illness and death will be met through borrowing; the availability and cost of credit;

    —  labour demands on the household, eg for farming/food production, other forms of production; whether labour is provided by children, adults or the elderly;

    —   if the household is an enterprise, its vulnerability to loss of household labour; the degree to which labour is replaceable; division of labour between women and men;

    —  if labour is replaceable within the household, whether the replacement comes from children; the long-term impact of their withdrawal from school;

    —  if the household depends on subsistence farming, the degree to which the subsistence element is supplemented by cash, and vice versa;

    —  investment decisions including savings and other assets, if any;

    —  how many and which sex of children at school (which affects future income and security foregone if they are withdrawn from school).

  Households in poor countries are used to illness and death. For example, a poor woman in a poor country is more than 500 times more likely to die in childbirth than a rich woman in a rich country. However, in the countries worst affected by HIV/AIDS, the amount of adult illness and death is now been intensified many times over, and it is affecting mainly people in their productive and reproductive primes. Some households lose more than one adult; if that happens in a nuclear family, or if it happens to more than one cash earner or food producer in an extended family, the impact will be proportionately greater.

  For example, a study in Kagera, Tanzania, an area of extremely high AIDS morbidity and mortality, found the following:

    First, some households are more vulnerable than others to an adult death. The average household suffering an adult death had to reduce the consumption of survivors, but the size of the reduction varied, depending on the characteristics of the household and the deceased adult.

    Second, household coping strategies succeed in limiting the short-term impact of an adult death only at the expense of serious longer term consequences. For example, when prime-aged women die, malnutrition increases among their orphaned daughters under age three, and the schooling of older children is sacrificed.

    Third, adult mortality from AIDS and other causes is only one among many roots of poverty and low living standards in Kagera, and it is not the most important one.

  Variability in households' ability to cope with increased illness and death is influenced by the factors in the list, above, and the interplay among them. In rural areas, it can be further influenced by the robustness of the farming system. This has implications for rural-development policy makers, who need to concentrate on poor communities and households where livelihood security is fragile. This is not a new priority but the added burden of HIV/AID-related illness and death, and the increased threat to livelihood security, should give greater emphasis to the targeting of development programmes. It implies the need for a sound knowledge of patterns of poverty and how they are being influenced by HIV/AIDS.

  Most investigations into the impact on households have been in rural Africa, where agriculture is the largest sector and where many urban households have family links to the rural economy, mixing wage earning with farm production. There is, however, a useful and illustrative investigation from Thailand. Examples of impacts on households include the following.

  Rural Thailand:  the direct and indirect costs of an HIV/AIDS-related death on rural Thai households were greater than the cost of death of other causes. Direct medical care cost the equivalent of about six months' household income. Most of the indirect costs were accounted for by lost income. This was higher than for households experiencing a non HIV/AIDS-related death because the people dying from AIDS tended to be younger, and were therefore losing more years of work. The lost income of care providers accounted for only a small proportion of the indirect costs.

  About half of the families studied experienced substantial negative impact on family labour supply and production. The loss of production was nearly 50 per cent, contributing to about a 47 per cent loss in household income. Nearly half of the families that had experienced an AIDS-related death had a problem with caring for elderly family members: 43 per cent had to look after themselves, while extended family members cared for around half. Care for the elderly was more of a problem for households experiencing an AIDS death than for those with non-AIDS deaths. Nearly half of households experiencing AIDS-related deaths had experienced economic or non-economic discrimination, including pressure to leave a job, customers and employees leaving the household business, lack of new customers, and not associating with adults or children from households that had experienced HIV infection. The study found a few cases in which families had been pressured to leave the community or to withdraw their children from school.

  Households adopted a number of coping strategies. About 60 per cent of the households used savings to meet their increased costs. The savings were enough to cover nearly 90 per cent of total health care costs up to the time of death. Nineteen per cent sold assets, mostly land, vehicles and livestock. They used this money to meet the health care costs and to maintain other household consumption. Households with few resources reduced consumption. About half of households took this route, of whom nearly a third consequently experienced a serious reduction in welfare. On average, consumption of food and beverages dropped by about 40 per cent.

  Many households reallocated the time spent on various activities. This mostly involved more income-earning work, helping with the family business, reducing work within the family, looking for work, taking higher paid or supplementary work, or leaving work to help with family chores and care of the sick person. In particular, the elderly took on more work. Children were sometimes withdrawn from school, releasing short-term benefits but undermining future earning and life opportunities. Forty per cent of the households that had a family business hired substitute labour, considered a risky strategy in the face of rising expenses and falling income. Eleven per cent of the households borrowed money to help cope with expenses, mostly from relatives or money lenders, also from co-operatives for local revolving funds, but generally not from formal institutions such as banks. Amounts borrowed ranged from $360 to $9,500. The larger loans tended to come from money lenders, a particularly expensive form of credit.

  Fifteen per cent of the household received financial support from relatives or extended family members, averaging around $30 per month. This money usually came from adult children or the siblings of the head of household.

  Private health insurance and employer's benefits in Thailand do not cover HIV/AIDS illness, but some households claimed under these schemes by reporting the cause of death as non HIV/AIDS-related. This diverted part of the burden from a small minority of the households. Of those receiving financial support for medical care, about 10 per cent received services from a Government Rural Public Health Programme, and 14 per cent benefited from the Health Ministry's Voluntary Health Insurance Scheme. Another 9 per cent received employment welfare benefits from civil service or public enterprise employers.

  Not surprisingly, all of the above coping strategies were more difficult for low income households, including access to government subsidies for health care. Children from higher income households were more likely to be cared for by extended family members, while children from poorer households were more likely to be cared for by an orphanage or temple.

  The researchers concluded that the poorest and least educated suffered a greater economic shock than higher income and better educated households. Their ability to cope was more limited as they had fewer household resources and less access to non-family institutions to help pay for medical care. This implies that the poor have a greater risk than the wealthier of slipping into deep poverty; and that the burden will tend to fall particularly on individuals and their households because of the lack of institutional support for the poorest families. The researchers felt that the burden of medical costs would be likely to increase economic inequality.

  The study showed that AIDS deaths had greater economic impact than non-AIDS deaths because the infected adults were younger. The study supported previous evidence that AIDS deaths had a greater negative impact on household income and led to a larger reduction in consumption than non-AIDS deaths. Discrimination was also greater.

  The Thai Government had taken steps to reduce rural poverty since the early 1980s. The researchers proposed measures in a range of areas to adjust those poverty reduction strategies. These included the following: responding to increased demand for basic welfare, from both government and NGO sources; efforts to meet the educational and skills-training needs for young people, including the provision of alternatives to the sex industry for young girls; support for easier access to affordable credit in rural areas; strategies to enable poor farming families to have access to input subsidies, and other strategies such as exchange of labour during farming seasons; some kind of government assistance package to help extended family members to care for orphans and elderly dependants; an evaluation of government medical subsidy programmes, and steps to make sure they reach the poorest households; and the development of government policy to protect the human rights of people with HIV/AIDS, combined with public education campaigns against discrimination. It is noteworthy that most of these policy measures are about relieving the poverty-enhancing consequences of illness and death, and do not relate to AIDS specifically. This is an important point: as much as possible, the impact-mitigation focus at household level should be on the protection of livelihoods and well-being (both present and future) and not on this disease in particular.2

  We have gone into some depth on the Thai case study as it sets out many of the dimensions of the impact of HIV/AIDS at the household level. Studies of households in sub-Saharan African contain similar analysis. The following paragraphs draw on existing syntheses that usefully illustrate household impact in sub-Saharan Africa, without unduly duplicating the Thai analysis.

  Rural sub-Saharan Africa: research findings show that the main impact of HIV/AIDS, as with other causes of illness and death, is on human capital, especially in terms of labour. A case of HIV/AIDS-related illness and death generates a loss of about 2-person years of labour. While the death relieves the burden of care for that individual, it also represents the permanent loss of that person's labour. In the case of a woman's death in particular, part of the lost labour would have been used for care functions within the family. See Annex 1 for a useful summary of type and timing of input.

  Households may take a number of steps to adjust to the loss of labour, including reduction in consumption, working longer hours, bringing young people into work earlier or extending their working years longer, or changing household composition to adjust the dependency ratios. However, available information concerning changing dependency ratios as a result of HIV/AIDS is limited. Data from Kagera, Tanzania, suggest that in this region at least, HIV/AIDS has not greatly affected dependency ratios (World Bank, 1997). Although among the surveyed households, 130 individuals died over the research period (from a population of 759 households), over nine times this number left the households, over seven times this number joined the households, and 200 children were born. The average size of a household that experienced a death declined from 6.0 to 5.7 and the dependency ratio increased from 1.2 to 1.4. The authors conclude that "household size and dependency ratios changed very little". This one example suggests a fluidity of household structures and that households may often be able to cope with shocks through some re-balancing of their dependency ratios. Similar results were found in Rakai, Uganda, where household dependency ratios increased from 1.2 to 1.5 as a result of an adult death from AIDS.3

  For households dependent on agriculture, the consequent intra-household reallocation of labour can lead to declining crop production, resulting in food insecurity and an overall decrease in financial assets. Households may then respond with a further range of coping strategies. For example, in Uganda, a typical initial response by a farming household is to change to the mix of farm products, first to produce enough for subsistence and then to grow surplus to sell at the market.4

  Depending on circumstances, farming households that can no longer afford to pay wages may reduce the use of wage labourers, grow less intensive crops, and use labour from the extended family. Other households may hire additional labour to replace that loss.4

  Farm households may also reduce the area of land under cultivation, reduce the variety of crops, and reduce the number of livestock. When a parent dies, the children lose their main source of agricultural education and skills.5

  Other households may actually increase their livestock if soil becomes infertile or the growing of crops is too labour intensive. This assumes that, at least for the time being, they do not have to raise money through livestock sales. Households may also switch from larger animals to smaller ones.

  Research into the impact on small farm households needs to take account of existing practices and how they vary from time to time and place to place. FAO research has found, for example, that in some areas, "more than 40 per cent of farming households supplemented their income with non-farm activities—often home-based, low labour activities—as a matter of course. These activities varied in scale depending on the wealth of households involved".6 Many households supplement farm earnings or subsistence with non-farm earnings. The FAO noted that HIV/AIDS-affected households appeared to rely increasingly on non-farm, income generating activities. This was particularly the case for female headed households.v

  The success of households in generating different sources of cash income clearly depends not only on external opportunities, but also on the assets available to them and the diversity of their existing livelihoods. The FAO studies found that households that did not pursue off-farm income-generating activities often did not do so because they did not have the capital required. In contrast, households already involved in a fairly large number of income-generating activities, as well as farming, were able to buffer themselves against the impact of HIV/AIDS. This indicates that livelihood diversification is a key factor that mitigates against the impact of such shocks.7

  The paragraphs above illustrate the diversity of impact on households. The intensity of impact is determined to a large extent by households' ability to cope, and ability to cope is determined to a large extent by aspects of livelihood security. These include access to financial and non-financial assets, levels of income, access to employment, access to credit, levels of education, and access to health and social security systems. In agricultural areas (which is where most of the population in sub-Saharan Africa lives), agricultural policies need to be adjusted to reflect the coping strategies of poor households. Agricultural extension programmes need to be able to advise small farmers on what alternative livestock or cropping systems are available to them and to promote innovations in farming that families can handle when faced with adult illness and death. At the same time, poor families need access to affordable credit, a need that is intensified when their security is further undermined by illness and death. There is then a need for collaboration among the government departments responsible for agricultural policy, extension, and rural credit, as well as those responsible for a range of other services that should be available to poor families, including access to markets, education and healthcare. This analysis captures the reasons why the impact of unusually high levels of illness and death needs to be dealt with as a set of new development and service-provision challenges, rather than simply as a matter for the health sector.

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