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Kamala Sarup: Economic Impact of HIV/AIDS

Economic Impact of HIV/AIDS

By Kamala Sarup

Nepal, already crippled with problems of underdevelopment, poverty, food scarcity, internal conflicts, is the hardest hit by the HIV-AIDS pandemic. If the number of HIV infections continue to rise at the current rate, the Nepal's economy could become crippled, increasing health costs and dampening workplace productivity. If HIV continues to infect younger people of productive age groups, it will have an all-round effect on our development. HIV related illness and death creates new poverty, deepens existing poverty and increases family and national indebtedness.

The economic repercussions of the HIV epidemic at macro level are already being felt in the public and private sectors in Nepal. The cause and consequences of the epidemic are closely associated with other challenges to development including poverty, unemployment, civil unrest, indebtedness and rural-urban movements. There's no question that if the epidemic reaches thausends — which is about two times what it is now — it will have a serious adverse consequence on the economy. In the context oof a stagnating economy, the cost of treatment will "be greater than the economic value of the lives. This will make a significant dent on the growth rate of Net Domestic Product of Nepal within the next few decades. Per Capita income levels are also expected to fall in future.

One of the active social worker Cicilia spoke to The Telegraph at Washington DC on the subject. She said "AIDS can severely retard economic growth by destroying human capital in three ways: AIDS primarily affects people in their productive years. The death of parents affects the transmission of knowledge and ability across generations. Besides, the loss of income due to disability and early death reduces the resources available for educating children and this, in turn, translates into low productivity of future adults. These adults will be less able to invest in the education of their children".

HIV/AIDS is mostly prevalent in the age group of 15-49 years. This age group is very much important from economic productivity point of view. This age group is again the mostsexually active group. If we have a look of the routs of the transmission of HIV, we find that sexual transmission of HIV is most common. It is the cause of transmission in almost 90 per cent of the total infections. This simply construes that there is an urgent need to propagate for the safer sex practices and awareness campaigns on HIV/AIDS at home and at work place.

AIDS activist Samjhana Gurung at Pennsylvania said " If the quantity and quality of work done by the productive work force drops; the overall income of the family and the community will greatly devastated. Poverty, for example, limits spending on health and nutrition as well as education. Lack of education will naturally mean lack of awareness about HIV. It also means fewer choices in the job market and lesser bargaining power to negotiate working conditions. Lack of employment opportunities drive women into the sex trade and are factors in increasing migration within the country".

Nepal economy would be severely hit if the number of AIDS victims surged to thausends in the next decade. The epidemic has cost millions of Rupees to individuals and their families. It is true to say that there is a great possibility of multiplier effects of the disease which can penetrate to the general population of Nepal in the near future.

She continued, "we need to upscale our efforts to mobilize adequate human and financial resources to effectively confront the epidemic. The millions required for anti-viral treatment could only be met by external financing if national health priorities were not completely distorted. We must work to mitigate the tremendous impact of the epidemic on the ability of governments to provide basic social services".

She further said "Long periods of separation from their families often lead migrant workers to indulge in high risk sexual behaviour. Especially vulnerable are young people in sex work, young intravenous drug users, young combatants, young civilians caught up in armed conflict, street youth and orphaned youth do not insist on use of condoms. Yet vast number of young people remain unaware or ignorant concerning HIV/AIDS. The information and services that could prevent infection are often not available to, or accessible by, young people, and national strategies reflect scant regard for young people's needs and realities".

Although the Nepal government has launched a nationwide programme to halt the disease, Nepal faces an uphill battle in tackling AIDS. Since most of the infected with HIV/AIDS are younger people. Higher medical expenditures will reduced not only saving but also other current expenditures. The labor force is calculated as the sum of the economically active population for each age group between 15 and 64. Economically active person also includes all persons who contribute to the supply of labor for the production of goods and services.

As costs of health care increase due to AIDS, there will be a negative domestic saving effect barring the case where the increase in medical spending is paid for by reducing other current expenditures. The fall in domestic saving will indicate a fall in capital formation, which in turn will lead to a potentially large adverse effect on per capita income over the long term. In addition to the direct dissaving by households that experience greater income variability in the presence of AIDS.

"I don't want to give a specific number on whether it will cut growth by a percentage point or one and a half percentage points or lead to a public or political crisis or financial crisis. But I know the consequences would be tragic and serious. Nepal needed millions of dollars to deal with the disease which, if unchecked, could "be one of the greatest calamities in history". Dr. Cicilia said.

High infection rate with HIV among the economically active persons in Nepal is a real cause of concern. For example, the proportion of HIV positive cases is found to be highest in the age group between 21-30 years. The resulting effect on the government budget will be exacerbated because more and more of the young will be orphans as the AIDS epidemic worsens, implying higher government costs if not total costs of raising children.

Although HIV cases are rising, the government is yet to provide sufficient funds to combat the syndrome. Apart from the Kathmandu Valley, HIV infection is concentrated in urbanised areas and districts in the mid-west and far west, where there is high labour migration. With few exceptions, a large number of people with HIV-AIDS have no access to services and doctors sometimes refuse to treat them. The challenge is to train medical staff, extend laboratory services, increase care and support system as well as provide voluntary counselling and testing services. Although prevalence of the disease is still low in the general population, it is increasing in several groups.

Social activist Nora said "AIDS treatment - which requires anti-retroviral (ARV) drugs and highly active anti-retroviral therapy (HAART) - costs about $600 a person a year. In a country where the per capita annual income is $220, medical care without government assistance is virtually impossible".

A decisive policy action is the need of the hour at this stage to minimize the negative effects of the AIDS epidemic on the socio-economy of Nepal. This needs a multi-sectoral and multi-disciplinary response, with collaboration between partners, Governments and non-Government research institutes, international agencies, community based groups and most importantly, the people directly affected. If resolute and concerted action is not taken against the spread of HIV/AIDS, the human death toll and suffering that will be inflicted will be catastrophic.The epidemic can also push up costs of worker replacement, absenteeism, insurance expenses and health care expenditures for the private sector.

If we don't act now, HIV/AIDS will become a social and developmental issue. Our accumulated economic growth will be wiped out.


(Kamala Sarup is editor of

© Scoop Media

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