HIV/AIDS & South Africa’s Economy

Editors note on our Health & Development series:

The correlation between access to first-rate healthcare and least developed countries is striking.  That correlation is more than superficial.  Causality runs in both directions: poor health leads to poverty by constraining the ability to work while simultaneously requiring expensive treatment.  But poverty limits access to expensive care and therefore leads to poor health.  All of this is exacerbated in countries without strong healthcare institutions.  As a result, fighting poverty is as much about providing healthcare opportunities as it is about providing economic opportunities.  Our ongoing series on Health & Development this year will focus on how the world is dealing with these interactions.

Since 2004, the South African government has covered the cost of antiretroviral therapy (ART) for 2.6 million South African people living with HIV. Its ambitious ART program has seen much success, though medication non-adherence (discussed in part one of this series) and the determinants of poverty (part two) threaten to reverse progress. As South Africa looks to continue its pursuit of sustainable development, it faces the difficult task of not only reducing its tremendous HIV/AIDS burden, but also forging a path forward for equitable economic growth and opportunity.

In South Africa, the cost of treating an HIV+ person is around $682 per patient per year. This figure includes the costs of actual antiretroviral medication (which is already provided to the government by drug companies at reduced prices), laboratory services, medical personnel, patient support groups and counselors, equipment and administrative services. The $682 figure does not include grants such as the child support and disability grants, both of which are common among households with an HIV+ member. It also does not account for second-line and third-line treatments, medications that are significantly more costly and prescribed in drug-resistant cases. Additionally, because HIV-positive people live longer when on antiretroviral therapy (ART), the $682/year accumulates over time, and people treated by ART end up incurring large health care expenditures before their deaths.

The World Health Organization (WHO) strongly encourages South Africa to expand its ART coverage to not only reach more patients, but also to catch patients earlier in their HIV infection. The logic behind this is straightforward: a rapid scale-up of ART is a classic example of how investing in preventative medicine can significantly reduce disease burden and healthcare costs in the long run. Theoretically, it should also drive macroeconomic growth, since healthier people means a more productive workforce. This economic argument, however, only holds when there are avenues for people living with HIV to re-enter the labor market and “pay back” the treatment costs that they incurred. This avenue has been conspicuously missing from South Africa’s development.

Since the global recession of 2008, the South African economy has fallen on hard times, growing sluggishly and below African average. This has exacerbated the issue of unemployment that has plagued South Africa since apartheid days, when black communities were legally excluded from job opportunities. While officially, the national unemployment rate today is 24%, the actual figure – which includes those who have given up searching for work – lies above 40%.  The unemployment rate of youth ages 15-24 is a staggering 51.5%, disproportionately affecting black males in particular.

The Southern Africa Labour and Development Research Unit of the University of Cape Town attributes these soaring unemployment rates to an inadequate education system. They contend that as the South African economy has modernized and grown, the demand for labor has shifted to heavily favor those with secondary schooling and/or higher levels of education. Many South Africans trying to enter the labor market do not have the education to gain employment; those already employed struggle to earn better wages. Only the select few who are highly educated, skilled, and connected can move up the earnings ladder, thus actually reaping the returns of economic growth. This issue of increasing inequality due to inaccessible labor markets is an archetypal problem that many developed nations have faced in transitioning from industry-based economies to manufacturing- and service-based economies. South Africa is not unique in having this problem, but it does face a unique set of factors that limit its ability to address it – namely, the world’s largest HIV/AIDS burden and the poverty that is inherently linked to it.

Globally, HIV/AIDS is understood to be an infectious disease of poverty, meaning it disproportionately occurs among the impoverished. In South Africa nearly everyone living with HIV falls within the lowest income quintile. History plays a heavy hand here: in the post-apartheid years, shantytowns sprung up with mass migration from rural to urban areas, as Africans who had previously been excluded from urban centers were now searching for work. Major mining operations had their own overcrowded settlements, and these shantytowns bred risky behaviors including alcohol abuse and sexual violence. Combined with limited access to healthcare, nutrition, and above all, education and information (until 2004, leading political figures of South Africa denied the legitimacy of HIV/AIDS), the spread of HIV among these impoverished populations was devastatingly rapid.

Thus, when analyzing the benefits of scaling up ART, one must be hyperaware of the structural and socioeconomic barriers to realizing some of these theoretical possibilities. HIV/AIDS is inherently part of the larger discourse concerning poverty and income inequality in South Africa – you cannot eliminate one without addressing the other.

For instance, the government should invest in ART while also investing in education and vocational training opportunities, to ensure that people have a means of being economically productive as soon as they are healthy. As it stands now, being HIV+ places a person at a significant disadvantage in the labor market, due to the extremely tough competition for employment. Even the slightest disadvantage can immediately put someone out of work, replaced by a healthier alternative. This is particularly easy to do because those who are HIV+ tend to provide unskilled labor. Firms may be wary of training workers, for this type of investment leads to higher production costs with no guarantee that these workers will remain healthy enough to pay back the costs in productivity later. The absence of a strong education system, vocational training, and societal support of HIV+ people is only exacerbated by food, income, and transportation poverty that many of these people face.

Scaling up ART without addressing these structural problems would be like providing floating devices to a man drowning in the open ocean. The neon pockets of air will have saved him from the acute probability of drowning, but without food, drinkable water, and a means to get back to shore, is he truly better off than before?


Image Credit: Jon Rawlinson via Flickr


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